United States v. Puerto Rico Industrial Development Company

Filing 130

OPINION AND ORDER re 101 Motion for Summary Judgment. The United States' motion for summary judgment is GRANTED IN PART and DENIED IN PART. The trial scheduled to commence on February 5, 2018 (docket no. 114) is continued. It will be scheduled by separate order. Signed by Judge Francisco A. Besosa on 12/07/2017. (brc)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
UNITED STATES OF AMERICA,
Plaintiff,
v.

Civil No. 15-2328 (FAB)

PUERTO RICO INDUSTRIAL
DEVELOPMENT COMPANY,
Defendant.

OPINION AND ORDER
BESOSA, District Judge.
On September 25, 2015 the United States of America (“United
States”) filed a complaint against the Puerto Rico Industrial
Development

Company

(“PRIDCO”)

pursuant

to

the

Comprehensive

Environmental Response, Compensation and Liability Act (“CERCLA”),
42 U.S.C. § 9607 et seq.

(Docket No. 1.)

States filed an amended complaint.
answered the amended complaint.

Subsequently, the United

(Docket No. 8.)

(Docket No. 11.)

PRIDCO filed a third party complaint.

PRIDCO

Additionally,

(Docket No. 46.)

The United

States moved for summary judgment against PRIDCO pursuant to
Federal Rule of Civil Procedure 56 (“Rule 56”) on July 14, 2016.
(Docket No. 101.)

PRIDCO opposed the motion for summary judgment,

and requested that the Court defer resolution of this motion
pursuant

to

Federal

Nos. 116 and 117.)

Rule

of

Civil

Procedure

56(d).

The United States filed a reply.

(Docket
(Docket

Civil No. 15-2328 (FAB)
No. 127.)

2

For the reasons set forth below, the Court GRANTS IN

PART and DENIES IN PART the motion for summary judgment, and DENIES
PRIDCO’s request to defer resolution of the summary judgment
motion.

Moreover, The Court further ORDERS the United States and

PRIDCO to meet and confer with each other regarding the third party
complaint, which will be addressed at the January 16, 2018 pretrial
conference.
I.

Factual Background
This

matter

concerns

contaminated

groundwater

located

on

property belonging to PRIDCO in Maunabo, Puerto Rico (hereinafter,
“property”). 1

PRIDCO is a government instrumentality of the

Commonwealth of Puerto Rico, incorporated in 1942 to stimulate the
formation

of

local

firms

and

to

attract

foreign

(Docket No. 11 at p. 2; Docket No. 117-3 at p. 2.)
these

ends,

PRIDCO

maintains

an

infrastructure

investment.

To accomplish
development

program, and facilities for lease or sale to qualified investors.
(Docket No. 117-3 at p. 2.)

The property, which PRIDCO acquired

in 1964, is among these facilities.

(Docket No. 117-4 at p. 2.)

The property includes three industrial structures. (Docket
No. 101-4 at p. 17.)

1

Between 1969 and 2015, PRIDCO leased the

The Municipality of Maunabo identifies the property as L-283-0-06. (Docket
No. 11 at p. 2.) PRIDCO owns a second parcel of land that is also located in
Maunabo, identified as Lot-304-0-66. (Docket No. 101-15 at p. 17.) This second
parcel of land is unrelated to the CERCLA cause of action.

Civil No. 15-2328 (FAB)

3

property to: (1) System Engineering Labs (1969 through 1971);
(2) Coulter de Puerto Rico (1972 through 1980); (3) Solar Mar of
Puerto Rico (1980 through 1984); (4) Orle International Company
(1986 through 1989); (5) Puerto Rico Housing Department (1989
through 1991); (6) Municipality of Maunabo (1996 through 1998);
(7) Premium Fruit Company (1999 through 2003); (8) E.I.G. Aqua
Pura de Puerto Rico, Inc; (9) Juan Orozco, Ltd. (date of lease not
specified); and (10) Centro de Acopio Manufacturing (date of lease
not specified).
The

(Docket No. 101-15 at p. 4.)

Puerto

Rico

Aqueduct

and

Sewer

Authority

(“PRASA”)

operates four groundwater supply wells in Maunabo, providing water
to 14,000 people.

(Docket No. 101-6 at p. 12.)

One of the four

PRASA wells is located adjacent to the southern edge of the
property (hereinafter, “Maunabo well”).

(Docket No. 101-14 at

p. 17.)
Between

2001

and

2004,

PRASA

detected

volatile

organic

compounds (“VOC”), including trichloroethylene (“TCE”) and cis-1,
2-dichloroethene
customers. 2

(“cis-1,

2-DCE”),

in

the

(Docket No. 101-3 at p. 23.)

are hazardous substances.

Id.

tap

water

of

its

TCE and cis-1, 2-DCE

In 2002, PRASA discovered that

groundwater from the Maunabo well contained TCE and cis-1, 2-DCE.

2

TCE is a chlorinated solvent that degrades into cis-1, 2-DCE upon disposal
into the environment. (Docket No. 101-6 at p. 12.)

Civil No. 15-2328 (FAB)

4

(Docket No. 101-6 at p. 12.)

PRASA installed a carbon filtration

system to treat the contaminated groundwater.
at p. 3.)

(Docket No. 101-2

In response to the contamination, PRASA commenced

sampling groundwater from the Maunabo well three times a year to
verify compliance with federal and local drinking water standards. 3
Id.
The United States Environmental Protection Agency (“EPA”) and
the

Puerto

Rico

Environmental

Quality

Board

(“EQB”)

responsible for decontamination of the groundwater. 4
No. 101-6 at pp. 12—13.)

are

(Docket

The EPA confirmed that the groundwater

from the Maunabo well is contaminated primarily with cis-1, 2-DCE.
Id. at p. 26.

After further investigation, the EPA discovered

three

of

plumes

contaminated

Municipality of Maunabo.

throughout

(Docket No. 101-5 at p. 171.)

plumes are referred to as:
1-DCE.

groundwater

the

The three

(1) cis-1, 2-DCE, (2) PCE, and (3) 1,

(Docket No. 101-5 at p. 171.)

The cis-1, 2-DCE plume is

3

The Puerto Rico Department of Health (“PRDOH”) ordered PRASA to discontinue
use of the Maunabo well in 2002. (Docket No. 101-3 at p. 11.) Rather than
close the Maunabo well, however, PRASA installed carbon filtration tanks. Id.
According to CMD Smith, a firm hired by the EPA to study the contaminated
groundwater, this system “was not always effective and [. . .] contaminated
drinking water was reaching the consumers.” Id.
4

CERCLA empowers the President of the United States to “remove or arrange the
removal of, and provide for remedial action relating to such hazardous
substance, pollutant, or contaminant at any time.”
42 U.S.C. § 9604(a)(1).
President Ronald Reagan first delegated primary authority to implement CERCLA
to the EPA pursuant to Executive Order 12580 (January 23, 1987). Section 1 of
Executive Order 12580 requires the National Contingency Plan (NCP) to provide
for national and regional response teams (NRTs and RRTs) to coordinate
preparedness and response actions.

Civil No. 15-2328 (FAB)

5

located below the property, “flow[ing] southwest toward [a] river,
but is intercepted by [the Maunabo well].”
p. 26; Docket No. 101-3 at p. 14.)

(Docket No. 101-6 at

The PCE plume is located south

of the PRIDCO property near a former sugar mill.
4 at p. 18.)
property.

(Docket No. 101-

The 1, 1-DCE plume is located northwest of the

(Docket No. 101-6 at p. 12.)

Together, the three plumes

comprise the Maunabo Area Groundwater Contamination Superfund Site
(hereinafter, “site”).

(Docket No. 101-6 at p. 12.).

In 2006,

the site was listed on the EPA’s National Priorities List, a
compilation of the most contaminated sites in the United States.
(Docket No. 101-6 at p. 15.)
PRIDCO

conducted

an

independent

investigation

contaminated groundwater beneath the property.

of

the

GeoEnviroTech, the

firm hired by PRIDCO to study the cis—1, 2-DCE plume, confirmed
that

the

groundwater

substances.

below

the

property

contained

hazardous

(Docket No. 101-14 at pp. 8, 19.)

The EPA incurred response costs related to decontamination
efforts regarding the cis-1, 2-DCE plume.

These efforts have

included an investigation and the issuance of a Record of Decision
(“ROD”).

(Docket No. 101-2 at p. 3.)

The ROD sets forth a remedy

for the site, including air sparging for the cis-1, 2-DCE plume
and monitored natural attenuation for the PCE and 1, 1-DCE plumes.
(Docket No. 101-6 at p. 75.) The United States seeks reimbursement

Civil No. 15-2328 (FAB)

6

from PRIDCO “for all response costs, including enforcement costs,
incurred by the EPA in connection” with efforts to decontaminate
the cis-1, 2-DCE plume located below the PRIDCO property.

(Docket

No. 8 at p. 9.)
II.

Motion to Defer Summary Judgment
PRIDCO moves for this Court to defer resolution of the summary

judgment motion pursuant to Rule 56(d). (Docket No. 116 at p. 40.)
Rule 56(d) “allows a summary judgment motion to be denied or the
hearing on the motion to be continued, if the nonmoving party has
not had an opportunity to make full discovery.”
Catrett, 477 U.S. 317, 326 (1986).

Celotex Corp. v.

Deferment of summary judgment

adjudication is appropriate if PRIDCO “shows by affidavit or
declaration that, for specified reasons, it cannot present facts
essential to justify its opposition.”

Fed. R. Civ. P. 56(d); see

In Re PHC Shareholder Litig., 762 F.3d 138, 144 (1st Cir. 2014)
(holding that Rule 56(d) motions should be granted freely early in
the litigation).
PRIDCO premises its Rule 56(d) motion on the contested source
of contamination at the property.

Outstanding discovery requests,

PRIDCO argues, are “extremely relevant to PRIDCO’s defense” and
“may hold the key to alternative theories as to why there is
contamination at the groundwater and not at the surface soil level,

Civil No. 15-2328 (FAB)

7

and what may be the source of the contamination.”

(Docket No. 116

at p. 45.)
The Court recognizes that PRDICO may have yet to receive
relevant discovery.

At this stage, however, the issue before the

Court is one of liability.

The Court granted the United States’

motion to trifurcate this matter into a Liability Phase (“Phase
I”), a Cost Phase (“Phase II”), and a Contribution Phase (“Phase
III”).

(Docket No. 85.)

As discussed below, identifying the

source of contamination is immaterial to the prima facie liability
analysis.

See Robertshaw Controls Co. v. Watts Regulator Co., 807

F. Supp. 144, 153 (D. Me. 1992) (“Congress specifically rejected
including

a

causation

requirement

in

Section

[107].”).

Consequently, the reason provided by PRIDCO to defer summary
judgment as to liability is inapposite.

The parties will exchange

discovery pertaining to the source of contamination during Phase
II and Phase III.

Accordingly, PRIDCO’s Rule 56(d) motion is

DENIED.
III. Summary Judgment Motion
A.

Standard of Review
Summary

judgment

serves

to

assess

the

determine if there is a genuine need for trial.
Drug, Inc., 895 F.2d 46, 50 (1st Cir. 1990).

evidence

and

Garside v. Osco

The Court may grant

a motion for summary judgment “if the movant shows that there is

Civil No. 15-2328 (FAB)

8

no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(a).

A fact is “material” if it has the potential to “affect the outcome
of the suit under the governing law.”

Id.

A dispute is “genuine”

when it “could be resolved in favor of either party.”

Calero-

Cerezo v. U.S. Dep’t. of Justice, 355 F.3d 6, 19 (1st Cir. 2004).
The party moving for summary judgment has the initial burden of
“demonstrat[ing] the absence of a genuine issue of material fact”
with definite and competent evidence.

Celotex, 477 U.S. at 323;

Maldonado-Denis v. Castillo-Rodriguez, 23 F.3d 576, 581 (1st Cir.
1994).

The movant must identify “portions of ‘the pleadings,

depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any’” which support its motion.
Id. (citing Fed. R. Civ. P. 56(c)).

Once a properly supported

motion has been presented, the burden shifts to the non-moving
party “to demonstrate that a trier of fact reasonably could find
in [its] favor.” Santiago-Ramos v. Centennial P.R. Wireless Corp.,
217 F.3d 46, 52 (1st Cir. 2000) (internal citation omitted).
It is well-settled that “[t]he mere existence of a
scintilla

of

evidence”

is

insufficient

supported motion for summary judgment.
Inc., 477 U.S. 242, 252 (1986).

to

defeat

a

properly

Anderson v. Liberty Lobby,

Consequently, “a party opposing

summary judgment must ‘present definite, competent evidence to

Civil No. 15-2328 (FAB)
rebut the motion.’”
citation omitted).

9

Maldonado-Denis, 23 F.3d at 581 (internal
In making this assessment, the Court must

examine the entire record in the light most favorable to the
nonmoving party and draw all reasonable inferences in its favor.
Farmers Ins. Exch. v. RNK, Inc., 632 F.3d 777, 779-80 (1st Cir.
2011).
The sole issue before the Court is whether PRIDCO is
liable pursuant to CERCLA.

(Docket No. 101.)

Namely, the motion

for summary judgment requests only that the Court find PRIDCO
“liable for the cleanup costs related to the remedy selected to
address the area of contaminated groundwater at, and extending
from, the Property.”

(Docket No. 101 at p. 7.)

The cleanup costs

associated with the cis-1, 2-DCE plume and allocation of these
costs will be determined in Phase II and Phase III, respectively.
Summary judgment is particularly suitable in the CERCLA
context because dispositive decisions “may be rendered as to
liability even if there is a genuine issue as to [. . .] damages.”
United States v. Domenic Lombardi Realty, Inc., Case No. 98-591,
2001

U.S.

Dist.

LEXIS

24645,

at

*14

(D.R.I.

Jan.

25,

2001)

(citation omitted); see United States v. Barkman, Case No. 966395, 1998 U.S. Dist. LEXIS, at *32-33 (E.D. Pa. Dec. 17, 1998)
(granting summary judgment because the United States “satisfied
all elements to establish a prima facie case of liability under

Civil No. 15-2328 (FAB)

10

[CERCLA] and the Defendants have failed to establish any defense
to liability”).

An assignment of liability, the purpose of Phase

I in this case, is an appropriate precursor to determining the
amount and allocation of cleanup costs among responsible parties.
See United States v. Alcan Aluminum Corp., 990 F. 2d 711, 720 (3d
Cir. 1992); Acushnet Co. v. Mohasco, 191 F. 3d 69, 82 (1st Cir.
1999) (“district courts have considerable latitude to deal with
issues of liability and apportionment in the order they see fit to
bring the proceedings to a just and speedy conclusion.”).
B.

Legislative Background
Congress

drafted

CERCLA

to

address

the

release

or

threatened release of hazardous substances into the environment. 5
42 U.S.C. § 9601 et seq.

CERCLA permits the United States to

allocate funds from a “Hazardous Substance Superfund” to finance
cleanup efforts.

26 U.S.C. § 9507.

The United States may seek to

replenish the funds of the Hazardous Substance Superfund pursuant
to section 107 of CERCLA by bringing suit against, among others,
“any person who at the time of disposal of any hazardous substances
owned or operated any facility at which hazardous substances were
disposed of.”

42 U.S.C. § 9607(a); United States v. Bestfoods,

524 U.S. 51, 55 (1998).

5

The statutory scheme set forth in CERCLA

Jurisdiction exists in this case pursuant to 28 U.S.C. § 1331 because the
United States seeks relief pursuant to CERCLA, 42 U.S.C. § 9607, a federal
statute.

Civil No. 15-2328 (FAB)
promotes

the

11

expeditious

remediation

at

contaminated

sites,

adequate compensation to public coffers, and the imposition of
accountability.
Cir. 2001).

United States v. Davis, 261 F.3d 1, 26-27 (1st

Indeed, the essential purpose of CERCLA is to ensure

that “those responsible for problems caused by the disposal of
chemical

poisons

shoulder

the

costs

and

responsibility

remedying the harmful conditions they created.”

for

John S. Boyd Co.

v. Boston Gas Co., 992 F.2d 402, 405 (1st Cir. 1993) (quoting
Dedham Water Co. v. Cumberland Farms Dairy, Inc., 805 F.2d 1074,
1081 (1st Cir. 1986)).
Courts

apply

and

interpret

CERCLA

expansively

accordance with these “beneficial legislative purposes.”
Water Co., 805 F. 2d. at 1081 (citation omitted).

in

Dedham

Consistent with

the expansive scope of CERCLA, the statute “sketches the contours
of a strict liability regime.”

Acushnet Co., 191 F.3d at 74 (1st

Cir. 1999); see United States v. Monsanto, 858 F. 2d. 160, 161
(4th Cir. 1988) (“We agree with the overwhelming body of precedent
that has interpreted [CERCLA] as establishing a strict liability
scheme.”).

CERCLA contains no causation element.

Prisco v. A &

D Carting Corp., 168 F. 3d 593, 606 (2d Cir. 1999) (“No causation
is

needed,

however,

to

establish

(internal citation omitted).

liability

under

CERCLA.”)

Consequently, “CERCLA appears to

impose liability on every generator of hazardous waste, although

Civil No. 15-2328 (FAB)

12

that generator could not, on its own, have caused any environmental
harm.”

United States v. Rohm & Hass Co., 939 F. Supp. 1142, 1155

(D.N.J. 1996) (holding defendants liable pursuant to CERCLA as
generators of hazardous substances).
With this framework in mind, the Court will address
whether PRIDCO is prima facie liable for the cleanup costs in
connection with the cis-1, 2-DCE plume before deciding whether the
affirmative defenses and exemptions to liability raised by PRIDCO
survive the United States’ summary judgment motion.
C.

The United States Has Established Prima Facie Liability
Pursuant to Section 107 of CERCLA
The

United

section 107 of CERCLA.

States

predicates

(Docket No. 8.)

its

complaint

on

To prevail on its summary

judgment motion, the United States must establish that there is no
genuine issue of material fact that:

(1) the property is a

facility pursuant to section 107(b) of CERCLA, (2) PRIDCO falls
within one of four categories of covered persons pursuant to
section 107(a); (3) a release or threatened release occurred on
the property; and (4) the release or threatened release caused the
United States to incur response costs that are not inconsistent

Civil No. 15-2328 (FAB)

13

with the National Contingency Plan. 6

42 U.S.C. § 107; Acushnet

Co., 191 F.3d at 75 (“By and large, a person who falls within one
of the four categories defined in [section 107] is exposed to
CERCLA liability.”).

Accordingly, the United States need only

satisfy four elements to establish prima facie liability.

See

Dedham Water Co. v. Cumberland Farms Diary, 889 F. 2d 1146, 1150
(1st Cir. 1989) (“There are four elements necessary for a prima
facie case in a private-party lawsuit under CERCLA.”); O’Neil, 682
F. Supp. at 718 n.2 (“[I]f the plaintiff is able to prove at trial
the statutory elements of section 107(a)(3), [defendant] may be
held liable without proof of knowledge or intent.”).
Liability pursuant to CERCLA “may be inferred from the
totality of the circumstances [and] it need not be proven by direct
evidence.”

Members of the Beede Site Group v. Fed. Home Loan

Mortg. Corp., 968 F. Supp. 2d 455, 460 (D.N.H. 2013); see also PCS
Nitrogen Inc. v. Ashley II of Charleston Co., 768 F. 3d 161, 177
(4th Cir. 2013) (“To be sure, PCS presented no direct evidence
that Holcombe and Fair moved or dispersed any contaminated soils.

6

The National Contingency Plan provides that cleanup measures must be cost
effective, O’Neil, 682 F. Supp. 706, 728 (D.R.I. 1988), are prescribed by
section 105 of CERCLA, 42 U.S.C. § 9605, and are published at 40 C.F.R. 300
(1987).
The burden to show that the United States’ response costs are
inconsistent with the National Contingency Plan rests with PRIDCO. See United
States v. Mottolo, 695 F. Supp. 615, 630 (D.N.H. 1988) (“Defendants have the
burden to show that governmental response costs are inconsistent with the
[National Contingency Plan].”).

Civil No. 15-2328 (FAB)

14

However, CERCLA does not require a smoking gun.”).

The Court is

satisfied that there is no genuine issue of material fact that
PRIDCO is prima facie liable pursuant to section 107 of CERCLA.
1.

The Property is a Facility
The first element of a prima facie case pursuant to

section 107 requires that the United States demonstrate that the
property is a facility.
hazardous

substance

A facility is “any site or area where a

has

been

deposited,

placed, or otherwise come to be located.”

stored,

disposed

42 U.S.C. § 101.

of,
Cis-

1, 2-DCE and TCE, the two compounds located on the property, are
classified as “hazardous substances” pursuant to section 101(4) of
CERCLA.

See Davis, 31 F. Supp. 2d at 45 (holding defendant liable

pursuant to CERCLA for the cleanup of groundwater contaminated
with

TCE).

facility,

Indeed,
stating

PRIDCO

that

“[the

concedes

that

property]

the

does

property

comply

with

is

a

the

facility definition inasmuch as the hazardous substance has ‘come
to be located’ in the groundwater beneath the property surface.”
(Docket No. 116 at p. 19.)

Consequently, the Court concludes, and

the parties concur, that no genuine issue of material fact exists
regarding the status of the property as a facility.
2.

PRIDCO is a Potentially Responsible Party
CERCLA identifies four classes of covered persons,

or potentially responsible parties (“PRP”)s: (1) the current owner

Civil No. 15-2328 (FAB)

15

or operator of a facility; (2) the owner or operator of a facility
at the time it became contaminated; (3) any person who arranges
for transport or disposal of hazardous substances; and (4) any
person

who

accepts

hazardous

transport or disposal.

substances

42 U.S.C.

for

the

purpose

of

107(a); see John S. Boyd Co.

992 F. 2d at 101 (1st Cir. 1993) (“Under CERCLA, four parties may
be responsible for the costs of an environmental cleanup.”).

In

essence, the extent to which a party is a PRP depends on its
relationship to a facility.

United States v. Bestfoods, 524

U.S. 51, 68 (1998).
PRIDCO denies that it falls within any of the four
categories of PRPs.

The United States, on the contrary, argues

that because PRIDCO is an “owner,” PRIDCO is a PRP as a matter of
law.

(Docket No. 101 at p. 11.)

Congress defined, rather

ambiguously, the term “owner” within the context of CERCLA as “any
person

owning

or

operating”

a

facility.

42

U.S.C.

§ 101(20)(A)(ii); Exxon Corp. v. Hunt, 475 U.S. 355, 363 (CERCLA
“unfortunately is not a model of legislative draftsmanship”).
PRIDCO admits that it is the “titular owner” of the property, but
denies that it is an “owner” within the meaning of CERCLA.
No. 117-9 at p. 1.)

(Docket

According to PRIDCO, the United States failed

to establish that PRDICO participated in the management of the

Civil No. 15-2328 (FAB)
property. 7
owner.

16

This failure, PRIDCO asserts, negates its status as an

(Docket No. 116 at p. 24.)

PRIDCO’s understanding of

ownership is, however, misguided.
In Chevron Mining Inc. v. United States, the Tenth
Circuit Court of Appeals rejected contentions identical to those
presented by PRIDCO.

863 F.3d 1261 (10th Cir. 2017).

In Chevron

Mining, the United States owned national forest lands in New
Mexico.
mined

Id.

the

substances.

For over a century, Chevron Mining Inc. (“Chevron”)

land,

generating

Id. at 1256-66.

significant

amounts

of

hazardous

After accepting liability for the

release of hazardous substances, Chevron sued the United States
pursuant to section 107 of CERCLA.

Id.

Chevron asserted that the

United States, as owner of the property, was required to contribute
to the cleanup costs associated with the CERCLA action.

Id.

The

United States, nonetheless, argued that “bare legal title is
insufficient to trigger owner liability.” Id. at 1275.

The Tenth

Circuit Court of Appeals disagreed, holding that “CERCLA contains
neither an express nor an implied exception to owner liability for
holders of bare title.”

7

Id.

Before filing for summary judgment, PRIDCO requested leave to file an amended
third party complaint. (Docket No. 77.) In denying PRIDCO’s request, the Court
held that “it is uncontested that defendant PRIDCO is the owner of the facility.”
(Docket No. 85 at p. 2.) PRIDCO contends that this order has no bearing on
whether PRIDCO is liable pursuant to CERCLA. (Docket No. 116 at p. 23.) The
Court need not rely on past orders in concluding that PRIDCO is the owner of
the property within the meaning of CERCLA.

Civil No. 15-2328 (FAB)

17

Just as the United States argued in Chevron Mining
Inc., PRIDCO asserts that it is immune from liability pursuant to
CERCLA because it “merely holds bare title” to the property.
(Docket No. 116 at p. 49.)

PRIDCO’s argument is unconvincing

because it cites no authority to support the proposition that bare
legal title, without more, is insufficient to trigger liability
pursuant to section 107.

Indeed, control or management of the

property is not a prerequisite for prima facie liability.

See

United States v. 175 Inwood Assocs. LLP, 330 F. Supp. 2d 213, 222
(E.D.N.Y. 2004) (“[A]n individual may be held liable as an ‘owner
or operator’ even if he did not actually participate in the
management of the site or contribute to the release of hazardous
substances.”) (citing New York v. Shore Realty Corp., 759 F.2d
1032, 1044-5 (2d Cir. 1985)).

Because the record makes clear that

there is no genuine issue of material fact that PRIDCO owns the
property, the Court holds that PRIDCO is a PRP as a matter of law.
3.

A Release of Hazardous Substances Occurred on the
Property
The third element of a prima facie case pursuant to

CERCLA concerns the release or threatened release of hazardous
substances.
pumping,

CERCLA defines “release” as “any spilling, leaking,

pouring,

emitting,

emptying,

discharging,

injecting,

escaping, leaching, dumping, or disposing into the environment

Civil No. 15-2328 (FAB)

18

(including the abandonment or discarding of barrels, containers,
and other closed receptacles containing any hazardous substance or
pollutant or contamination).”
construe

the

term

“release”

42 U.S.C. § 9601(22).
broadly.

Dedham

Courts

Water

Co.

v.

Cumberland Farms Dairy, 889 F.2d 1146, 1152 (1st Cir. 1989).
PRIDCO argues that “[i]f the Defendant’s property
is not the source of contamination, then the hazardous substances
were not ‘released.’”

(Docket No. 116 at p. 3.)

Indeed, PRIDCO

raises this argument repeatedly throughout its opposition to the
United States’ motion for summary judgment.
pp. 6–16, 27-34.)

(Docket No. 116 at

PRIDCO postulates that because “contamination

was not detected in the surface soils at the Property,” the
groundwater containing hazardous substances below the property
cannot serve as the basis for liability pursuant to CERCLA.”
at p. 7.
of

Id.

At bottom, PRIDCO places on the United States the burden

establishing

that

PRIDCO

caused

the

release

of

hazardous

substances on the property.
CERCLA is a strict liability statute, holding PRPs
responsible for the release or threatened release of hazardous
substances regardless of fault.

Courts universally recognize that

causation is not an element of a prima facie case pursuant to
section 107 of CERCLA.

See United States v. Atl. Research Corp.,

551 U.S. 128, 136 (2007) (“But even parties not responsible for

Civil No. 15-2328 (FAB)

19

contamination may fall within the broad definitions of [PRP’s] in
[section 107]”); United States v. JG-24, Inc., 331 F. Supp. 2d.
14, 62 (D.P.R. 2004) (Acosta, J.) (“[S]ince CERCLA is a strict
liability

statute,

Section

107(a)(1)

of

CERCLA,

42

U.S.C.

§

9607(a)(1), imposes liability on current owners of a facility
regardless

of

when

disposal

occurred

and

regardless

of

causation.”); Gen. Elec. Co. v. Litton Indus. Automation Sys., 920
F. 2d 1415, 1417-18 (8th Cir. 1990) (holding that in determining
liability, courts only inquire whether there has been a release or
threatened release of hazardous substances); Ascon Properties,
Inc. v. Mobil Oil Co., 866 F. 2d 1149, 1153 (9th Cir. 1998) (“We
hold that a plaintiff need not allege the particular manner in
which a release or threatened release has occurred in order to
make out a prima facie claim under section 107(a) of CERCLA.”);
City of Wichita v. Trs. of the Apco Oil Corp. Liquidating Trust,
306. F. Supp. 2d. 1040, 1049 (D. Kan. 2003) (“Because § 107 imposes
strict liability upon [potentially responsible parties] regardless
of fault, causation is not part of the liability inquiry.”).
Whether PRIDCO caused the release if hazardous substances at the
property,

thus,

is

irrelevant

to

the

prima

facie

liability

analysis.
The
hazardous

United

substances

in

States
the

argues

that

groundwater

the

below

presence
the

of

property

Civil No. 15-2328 (FAB)

20

satisfies the release or threatened release element.
101 at pp. 12-14.)

The Court agrees.

(Docket No.

The mere presence of cis-

1, 2-DCE on the PRIDCO property suffices to establish the release
element of a CERCLA claim.

See United States v. Lombardi Realty

Inc., 204 F. Supp. 2d 318, 330 (D.R.I. 2002) (holding that “the
presence

of

PCB-contaminated

soil

at

the

Site

constitutes

a

‘release.’”); see also Gould Elecs. Inc. v. Livingston County Rd.
Comm’n., Case No. 09-12633, 2012 U.S. Dist. LEXIS 167347 (E.D.
Mich., May 25, 2012) (“[T]he very presence of TCE on [defendant’s]
property, which is undisputed, illustrates that a release of that
substance has occurred because the presence of TCE in the soils
and/or

groundwater

under

[defendant’s]

‘leaching’ of that substance.”).

property

indicates

a

Furthermore, the United States

has no obligation to prove that the hazardous wastes emanated from
the property in order to establish prima facie liability.

See

Asarco LLC v. NL Indus., 105 F. Supp. 3d 1015, 1031 (E.D. Mo. 2015)
(rejecting requirement of “tracing” or “fingerprinting” hazardous
substances to establish prima facie liability).
PRIDCO attempts to distinguish the facts of City of
Wichita from those of this case.

Docket No. 116 at p. 12; 306 F.

Supp. 2d 1040. In City of Wichita, hazardous substances such as
TCE, DCE, and perchloroethylene (“PCE”) were discovered in the
groundwater throughout Wichita.

306 F. Supp. 2d at 1046.

At

Civil No. 15-2328 (FAB)
trial,

the

parties

21

submitted

regarding the groundwater.

detailed

Id.

and

complex

testimony

Ultimately, the court concluded

that because the contaminants “are not found naturally in the soil
or groundwater, and because they were found at each facility, the
inevitable conclusion is that releases occurred.”

Id.

According to PRIDCO, City of Wichita is inapposite
because that case involved an extensive level of contamination.
(Docket No. 116 at p. 12.)

PRIDCO fails to cite any statute or

precedent requiring a minimum level of contamination, or degree of
culpability, before prima facie liability attaches to responsible
parties.

In

proposition.

fact,

courts

have

expressly

rejected

such

a

See United States v. DiBiase Salem Realty Trust,

1993 U.S. Dist. LEXIS 20031 (D. Mass. Nov. 19, 1993) (“For the
purposes of liability, the statute does not generally require any
threshold
regardless

quantity
of

how

or
low

concentration
the

percentage

of
may

hazardous
be.”)

substance,

(citing

B.F.

Goodrich Co. v. Murtha, 958 F. 2d 1191, 1200 (2d Cir. 1992)).
PRDICO concedes that the cis-1, 2-DCE plume is
located below the property.

(Docket No. 11 at p. 2.)

PRIDCO,

contends, however, that “by Law, [the groundwater] does not and
cannot belong to PRIDCO.”

(Docket No. 11 at p. 2.)

PRIDCO cites

no authority to support this legal conclusion, which is contrary
to the overwhelming weight of authority.

Contaminated groundwater

Civil No. 15-2328 (FAB)

22

may serve, and has frequently served, as the basis for liability
pursuant to CERCLA.

See S. Cal. Water Co. v. Aeroject-General

Corp., Case No. 02-6340, 2003 U.S. Dist. LEXIS 26534, at *21 (C.D.
Cal. Apr. 1, 2003) (rejecting argument that plaintiff “cannot be
the ‘owner’ because it does not own the groundwater beneath its
property,” and finding that allegations that plaintiff owned wells
where hazardous substances found could support a finding that it
is a PRP) (internal citation omitted); JG-24, Inc., 331 F. Supp.
2d. at 14 ((holding defendants liable pursuant to CERCLA for
contaminated groundwater); One Wheeler Rd. Assocs. V. Foxboro Co.,
843 F. Supp. 792 (D. Mass. 1994) (finding former property owner
liable

for

response

and

contaminated groundwater).

remediation

costs

associated

with

Furthermore, Congress specifically

included “groundwater” as within the scope of CERCLA.

42 U.S.C.

§ 9601(12) (including “groundwater [. . .] within the United
States” within the definition of “environment.”).
In sum, based on the undisputed presence of cis-1,
2-DCE on the property, there is no genuine issue of material fact
as to whether the United States may satisfy the release element of
its prima facie claim.
4.

The United States Incurred Response Costs
The final element of a prima facie claim pursuant

to section 107 requires the United States to establish that a

Civil No. 15-2328 (FAB)

23

release or threatened release of hazardous substances “cause[d]
the incurrence of response costs” that are “not inconsistent with
the national contingency plan.” 42 U.S.C. § 9607(a)(4). To satisfy
this element, the “United States need only show that it has
incurred some costs.” United States v. Amtreco, Inc., 809 F. Supp.
959, 965 (M.D. Ga. 1992); United States v. Dominic Lombardi Realty
Inc., Case No. 98-5912001, 2001 U.S. Dist. LEXIS 24645, at *66
(D.R.I.

Jan.

25,

2001)

(“[A]

determination

of

the

amount

of

recoverable costs is not an element of liability.”).
Luis Santos, a Remedial Project Manager for the
Caribbean Environmental Protection Division for the EPA, declared
under penalty of perjury that the “EPA has incurred response costs
associated with its investigation of the contaminated groundwater
at the Property.”

(Docket No. 101-2 at p. 3.)

PRIDCO

failed

to “admit, deny, or qualify the facts supporting [the United
States] motion for summary judgment” regarding response costs in

Civil No. 15-2328 (FAB)
contravention of Local Rule 56(c). 8

24
According to PRIDCO, because

“the remedy of deferral is sought under Rule 56(d), no counter
statement is made as to [the response costs].”

The assertion

that the United States incurred response costs is supported by
record citations, and is not “properly controverted” by PRIDCO. 9
Accordingly, the Court deems the United States’ assertion as to
response costs to be admitted by PRIDCO, and consequently concludes
that there is no genuine issue of material fact as to the final
element of the prima facie CERCLA claim.

8 The First Circuit Court of Appeals has “repeatedly [. . .] emphasized the
importance of local rules similar to Local Rule 56 [of the District of Puerto
Rico].” Hernandez v. Philip Morris USA, Inc., 486 F.3d 1, 7 (1st Cir. 2007).
Rules such as Local Rule 56 “are designed to function as a means of ‘focusing
a district court’s attention on what is—and what is not—genuinely
controverted.’” Id. (quoting Calvi v. Knox County, 470 F.3d 422, 427 (1st Cir.
2006)). Local Rule 56 sets out the requirements for both the movant and the
party opposing summary judgment; it “relieve[s] the district court of any
responsibility to ferret through the record to discern whether any material
fact is genuinely in dispute.” CMI Capital Market Inv. v. Gonzalez-Toro, 520
F.3d 58, 62 (1st Cir. 2008); Loc. Rule 56. A party moving for summary judgment
must submit factual assertions in “a separate, short, and concise statement of
material facts, set forth in numbered paragraphs.” Loc. Rule 56(b). A party
opposing a motion for summary judgment, such as PRIDCO, must “admit, deny, or
qualify the facts supporting the motion for summary judgment by reference to
each numbered paragraph of the moving party's statement of facts.” Loc. Rule
56(c). The moving party may reply and admit, deny, or qualify the opponent's
newly-stated facts, again in a separate statement and by reference to each
numbered paragraph. Loc. Rule 56(d). Facts which are properly supported “shall
be deemed admitted unless properly controverted.” Loc. Rule 56(e); P.R. Am.
Ins. Co. v. Rivera-Vazquez, 603 F.3d 125, 130 (1st Cir. 2010). Due to the
importance of this function to the summary judgment process, “litigants ignore
[these rules] at their peril.” Hernandez, 486 F.3d at 7.

9 According to the ROD, the total estimated remedy cost for the site, including
two plumes of groundwater not in controversy, is $4,995,273. (Docket No. 1016 at p. 45.)

Civil No. 15-2328 (FAB)

25

Because there are no genuine issues of material
fact regarding the four elements of a prima facie CERCLA claim,
summary judgment as to PRIDCO’s liability for the response costs
associated with the cis-1, 2-DCE plume is GRANTED.
IV.

Affirmative Defenses and Exemptions to CERCLA Liability
CERCLA recognizes only the following statutory affirmative
“(1) an act of God; 10 (2) an act of war; (3) an act or

defenses:

omission of a third party other than an employee or agent of the
defendant, or than one whose act or omission occurred in connection
with a contractual relationship, existing directly or indirectly,
with the defendant . . .
(4)

any

combination

§ 9607(b).
§ 9607(b),
establish

of

(the “innocent landowner defense”); or
[these

three

defenses].”

42

U.S.C.

In addition to the defenses set forth at 42 U.S.C.
CERCLA
that:

also
(1)

exempts
hazardous

from

liability

substances

defendants

migrated

to

who

their

property from a contiguous property (hereinafter, the “contiguous
property defense”), 42 U.S.C. § 9607(q), or (2) they are secured
creditors

who

hold

indicia

of

ownership

merely

to

protect

a

security interest in the contaminated property (hereinafter, the
“secured creditor exemption”). 42 U.S.C. § 9601(20)(E).

10

An act of God is an “unanticipated grave natural disaster or other natural
phenomenon of an exceptional, inevitable, and irresistible character, the
effects of which could not have been prevented or avoided by the exercise of
due care or foresight.” 42 U.S.C. 9601(1).

Civil No. 15-2328 (FAB)

26

In this case, PRIDCO raised twelve affirmative defenses in
its answer to the amended complaint.

(Docket No. 11.)

The United

States moved to strike six of the twelve affirmative defenses.
(Docket No. 22.)

The Court granted the motion to strike, in part,

because PRIDCO failed to oppose the motion within the allocated
time to do so. 11

(Docket No. 25.)

Accordingly, the affirmative

defenses that remain are: (1) the secured creditor exemption, (2)
the contiguous property defense, (3) a third party caused the
contamination, (4) an act of God caused the contamination, (5) the
innocent

landowner

defense,

and

(6)

what

PRIDCO

calls

the

“divisibility of harm defense” in its effort to disclaim liability
for two of the three contaminated plumes of groundwater located
beyond its property. 12

(Docket Nos. 11 and 25.)

Nothing in the record suggests that an act of God caused the
contamination giving rise to this litigation.

Furthermore, PRIDCO

11

The following affirmative defenses were stricken: (1) the complaint failed
to state a cause of action upon which relief may be granted, (2) an indispensable
party is absent from the litigation, (3) PRIDCO does not own the plumes of
contaminated groundwater, (4) the de micromis defense shields PRIDCO from
liability, (5) the re-allegation of all defenses previously alleged and (6) the
right to supplement or amend the answer to raise additional affirmative
defenses. (Docket Nos. 11, 22 and 25.)

12

The divisibility of harm defense is immaterial because the United States
seeks only reimbursement “for costs related to the remedy selected to address
the area of contaminated groundwater at, and extending from, the Property.”
(Docket No. 101 at p. 7.) The United States is not requesting reimbursement
for costs in connection with the decontamination of the two plumes of
groundwater located beyond the property.
Accordingly, the Court deems that
PRIDCO’s “divisibility of harm” defense is irrelevant.

Civil No. 15-2328 (FAB)

27

makes no reference to an “act of God” defense in opposing the
United States’ motion for summary judgment. Accordingly, the Court
deems that PRIDCO has waived this defense, and GRANTS summary
judgment in favor of the United States as to the act of God defense.
See United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990)
(finding

that

unaccompanied

“issues
by

some

adverted
effort

to

at

in

a

perfunctory

developed

manner,

argumentation,

are

deemed waived”).
Having determined that PRIDCO’s act of God defense is waived,
and that its divisibility of harm defense is immaterial, the Court
will first address the propriety of granting summary judgment as
to

the

remaining

causation-based

defenses:

the

third

party,

innocent landowner, and contiguous property owner defenses.

The

Court will then determine whether summary judgment is warranted as
to the secured creditor exemption.
A.

PRIDCO’S Causation-Based Defenses
PRIDCO’s causation-based defenses each impose on PRIDCO

the burden of proving by a preponderance of the evidence that an
unrelated party was the sole cause of the release of hazardous
substances.

See e.g., Mottolo, 695 F. Supp. At 626 (“Therefore,

government agencies could not be the sole cause of the release,
and the third party defense is unavailable to [defendant].”);
United States v. 150 Acres of Land, 204 F.3d 698, 704-705 (6th

Civil No. 15-2328 (FAB)

28

Cir. 2000) (holding that proof regarding whether a third party was
the

sole

cause

of

the

release

is

dispositive

concerning

the

innocent landowner defense); Diamond X Ranch LLC v. Alt Richfield
Co., 2017 Dist. LEXIS 160845 (D. Nev. Spr. 29, 2017) (holding that
the “third party and contiguous owner defenses are not available
to Diamond X or Park Livestock” because “this defense also relies
on Diamond X not causing or contributing to the release of the
hazardous substances into the Property”).
1.

PRIDCO’s
Defenses

Third

Party

and

Innocent

Landowner

To invoke the third party defense, PRIDCO must
establish by a preponderance of the evidence that the release of
hazardous substances was due “solely” to “an act or omission of a
third party other than an employee or agent of [PRIDCO], or than
one whose act or omission occurs in connection with a contractual
relationship” and that: (1) the contamination occurred prior to
PRIDCO’s purchase of the property, (2) PRIDCO had “no reason to
know” that the property was contaminated, (3) PRIDCO “took all
appropriate inquiry into the previous ownership and uses of the
property consistent with good commercial or customary practice” in
an effort to minimize liability, and (4) once the contamination
was discovered, PRIDCO exercised due care regarding the hazardous
substances.

42 U.S.C. § 9607(b)(3); 42 U.S.C. § 9601(35)(A)-(B).

Civil No. 15-2328 (FAB)

29

The innocent landowner defense is an iteration of
the third party defense. See Diamond X Ranch, 2017 U.S. Dist. LEXIS
160845, at *55 (observing that “the third party defense” is

“also

known as the innocent landowner defense”); United States v. A & N
Cleaners & Launderers, 854 F. Supp. 229, 238 (S.D.N.Y. 1994)
(holding that “the Innocent Landowner Defense” is a “special case
of the Third Party Defense”).

This defense shields from liability

landowners who “innocently and in good faith, purchase property
without knowledge that a predecessor in the chain of title had
allowed hazardous substances to be disposed on the property.”
Domenic

Lombardi

Reality,

290

F.

Supp.

2d

ar

208

(citation

omitted); United States v. Serafini, 706 F. Supp 346, 353 (M.D.
Pa. 1988) (“Landowners cannot avail themselves of the innocent
purchaser

defense

by

closing

their

eyes

to

hazardous

waste

problems.”); United States v. 150 Acres of Land, 204 F.3d 698,
704-705 (6th Cir. 2000) (rejecting defendant’s innocent landowner
defense because third party’s contamination was not the sole cause
of the release).
PRIDCO asserts that the third party and innocent
landowner defenses are applicable because the United States “does
not have any physical or hard evidence to demonstrate that the
contamination in the cis-1, 2-DCE plume was caused by none other
than [PRIDCO].”

(Docket No. 116 at p. 36.)

It is apparent to the

Civil No. 15-2328 (FAB)

30

Court that questions regarding the source and the date of the
contamination remain.
hazardous

substances

The United States acknowledges that no
were

(Docket No. 101 at p. 8.)
Puerto

Rico

may

have

detected

within

the

surface

soil.

It posits that tropical conditions of

caused

hazardous

substances

to

“either

volatize in the high temperatures or dissolve into percolating
rain water and be carried into the groundwater, essentially washing
the oil of residual contaminants.”

Id. at p. 13.

of

P.H.

the

EPA,

Raúl

Colón,

P.E.,

At the behest

(“Colón”),

of

Caribe

Environmental Services, prepared a Final Remedial Investigation
Report and Final Feasibility Study Report concerning the Maunabo
groundwater contamination in 2012.

(Docket No. 101-16 a p. 2.)

Colón concluded that “the data collected by the EPA during the
RI/FS process . . . is not sufficient to make a determination that
the former Puerto Rico Beverage (PRB) site is a source area of the
detected chlorinated solvents.”

Id.

Concerning the date of the

contamination, Colón further stated that “the PRB parcel does not
appear to have been a former source of groundwater contamination
detected at the area.”

Id. at p. 3.

Based on the record before the Court, it would be
inappropriate at this juncture to foreclose PRIDCO from asserting
the

third

party

and

innocent

landowner

defenses.

This

is

particularly so because discovery is not yet complete, and further

Civil No. 15-2328 (FAB)

31

factual development as to the cause of the release is necessary
before

the

Court

may

determine

justified as to these defenses. 13

whether

summary

judgment

is

The Court will allow experts

from both parties to present additional information as to how the
hazardous substances came to be on the property.

Once discovery

is complete, the United States may renew its motion for summary
judgment as to these defenses.

At this time, however, the Court

DENIES the United States’ motion for summary judgment as to the
third party and innocent landowner defenses.

See Cal. Dep’t. of

Toxic Substances Control v. Farley, No. C 05-3150 PJH, 2006 U.S.
Dist. LEXIS 78607, at *21-22 (N.D. Cal. Oct. 17, 2006) (granting
plaintiff’s motion for summary judgment regarding prima facie
liability

pursuant

to

CERCLA,

but

denying

summary

judgment

concerning the innocent landowner defense).
2.

PRIDCO’s Contiguous Property Owner Defense
The contiguous property owner defense insulates

from liability landowners who “did not cause, contribute, or
consent

to

the

release

or

threatened

release”

of

hazardous

substances that have spilled onto their property from contiguous
property with which the landowner is unaffiliated. 14

13

42 U.S.C.

The Court granted the parties’ joint motion to stay discovery pending
disposition of the summary judgment motion. (Docket No. 129.)
14
Aside from requiring that PRIDCO demonstrate that liable parties are
unaffiliated with PRIDCO, the contiguous property owner defense requires that
PRIDCO establish that it took remedial measures after discovery of the

Civil No. 15-2328 (FAB)

32

9607(q)(1)(A)(i); Wilson Rd. Dev. Corp. v. Fronabarger Concreters,
Inc., 971 F. Supp. 2d 896, 913 (E.D. Mo. 2013).

PRIDCO sets forth

the same causation-based arguments regarding the applicability of
the contiguous property owner defense, asserting the need for
further

inquiry

contamination.
discussed

with

respect

to

the

source

(Docket No. 116 at p. 36.)

above,

the

Court

agrees

that

and

date

of

the

For the reasons
additional

factual

development is necessary before ruling on the propriety of granting
summary judgment as to the contiguous property owner defense.
supra Part IV(A).

See

After the completion of discovery, the United

States may renew its motion seeking summary judgment as to the
contiguous property owner defense.

At this time, however, the

Court cannot conclude that there are no genuine issues of material
fact as to the whether PRIDCO may assert this defense validly.
Accordingly, to the extent that the United States has moved for
summary judgment as to the contiguous property owner defense, the
motion is DENIED.
B.

Secured Creditor Exemption
The secured creditor exemption cannot shield PRIDCO from

liability because there is no genuine dispute that PRIDCO acquired
and

maintained

the

Maunabo

property

to

promote

economic

contaminated groundwater, such as not “imped[ing] the effectiveness or integrity
of any institutional control employed in connection with a response action.”
42 U.S.C. § 9607(q)(A)(v)(II).

Civil No. 15-2328 (FAB)
development

in

Puerto

33
Rico

rather

than

to

secure

a

property

interest. Section 101(20)(E)(i) of CERCLA (“Section 101”) excludes
from the definition of owner “a person that is a lender that,
without participating in the management of a vessel or facility,
holds indicia of ownership primarily to protect his security
interest of the person in the vessel or facility.” 43 U.S.C.
§ 9607(20)((E).

The purpose of this exclusion from liability

(known as the “secured creditor exemption”) to the otherwise strict
liability regime of CERCLA is “to shield from lability those
‘owners’ who are in essence lenders holding title to the property
as security for the debt.” 15

Waterville Indus., Inc. v. Finance

Auth. of Me., 984 F.2d 549, 552 (1st Cir. 1993).

Banks possessing

mortgages only to secure loan payments, for example, represent the
entities that Congress intended to exempt from liability.

Id. at

552 (citing In re Bergose Metal Corp., 910 F.2d 668 (9th Cir. 1990)
(finding that a municipal corporation issuing revenue bonds to
provide

funds

for

land

acquisition

in

a

sale-and-lease

back

arrangement qualified for the secured interest exception); see
e.g., United States v. Maryland Bank & Trust, 632 F. Supp. 573 (D.

15

Security interests include “a right under a mortgage, deed of trust,
assignment, judgment lien, pledge, security agreement, or lease and any other
right accruing to a person to secure the repayment of money, the performance of
a duty, or any other obligation to a nonaffiliated person.”
42 U.S.C.
§ 9601(20)(G)(vi).

Civil No. 15-2328 (FAB)

34

Md. 1986) (holding that a security interest existing solely as the
result of a loan vesting the interest holder with an indicia of
ownership was not a basis for CERCLA liability); Guidice v. BFK
Electroplating & Mtg. Co., 732 F. Supp. 556 (D. Nev. 2017)(Not
holding a mortgagee bank liable for contamination occurring before
its

purchase

of

metal

polishing

facility

through

foreclosure

pursuant to the secured creditor exemption); Ashland Oil, Inc. v.
Sonford Prods. Corp., 810 F. Supp. 36 (D. Minn. 1993) (finding no
liability where industrial lender provided loan to manufacturer
that

subsequently

declared

bankruptcy,

holding

title

to

manufacturer’s abandoned assets for less than a month).
PRIDCO invokes the secured creditor exemption on the
basis that it holds only an “indicia of ownership.”
shoulders

the

applicable.

burden

of

establishing

that

this

Id.

PRIDCO

exemption

is

United States v. Fleet Factors Corp., 901 F.2d 1550l,

1556 (11th Cir. 1990).

Fundamentally, two inquiries govern the

secured creditor exemption analysis: (1) whether PRIDCO “holds
indicia of ownership primarily to protect its security interest in
the

[property]”

and

(2)

whether

management of the {property].”

PRIDCO

participated

“in

the

In re Bergose Metal Corp., 910

F.2d 668, 671 (9th Cir. 1990).
PRIDCO

cites

Waterville

Industries,

Inc.

v.

Finance

Authority of Maine to support its status as a exempted secured

Civil No. 15-2328 (FAB)
creditor.
1993).
that

35

Docket No. 116 at p. 26; citing 984 F.2d 549 (1st Cir.

In Waterville, the First Circuit Court of Appeals held
the

Finance

Authority

of

Maine

(“FAME”),

a

state

instrumentality, qualified for the secured creditor exemption.
Id.

The court held that FAME received only “nominal title” to

contaminated property for the purpose of securing payments from a
debtor that had defaulted on loan obligations. Id. at 552 (granting
secured creditor exemption to government entity that held a “title
typical

of

the

Additionally,
ownership”

lender

FAME

once

a

promptly

its

arrangement ended.

in

lease

financing

divested

relationship

with

itself
the

transaction”).
of

“unwelcome

controlling

lease

Id. at 553.

The circumstances of this case differ substantially from
those of Waterville.

Whereas FAME held title to secure loan

payments, PRIDCO owns the property to “secure the money it has
advanced to purchase and develop the facilities it leases to its
industrial tenants” and “to protect its interest in advancing
industrial development.”

(Docket No. 117-3 at p. 2.)

PRIDCO

financed the 1964 acquisition of the Maunabo property pursuant to
a sinking fund arrangement 16 with First National City Bank in which

16

A sinking fund is “derived from particular taxes, imposts or duties, which
is to be apportioned toward the payment of the interest due on a public loan
and for the payment of the principal.” Sidney Spitzer & Co. Commissioners of
Franklin County, 188 N.C. 30, 35 (1924).

Civil No. 15-2328 (FAB)

36

PRIDCO issued a series of bonds.

(Docket No. 117-4 at p. 52.)

PRIDCO pledged to deposit revenues generated from the property
into an account exclusively to service its debt, and allocated the
remaining income into a separate account “for any proper corporate
purposes of [PRIDCO].”
That

PRIDCO

(Docket No. 117-4 at p. 52.)
held

a

separate

account

for

corporate

purposes demonstrates that ownership of the property served to
further

economic

primarily

to

development

secure

repayment

(one
of

of
a

PRIDCO’s
debt,

purposes),

which

is

the

statutory basis for invoking the secured creditor exemption.
U.S.C. § 9601(20)(E).

not
sole
42

Furthermore, PRIDCO has owned the property

for more than 60 years, and unlike FAME, has never undertaken
“prompt effort[s] to divest itself” of the property.

Indeed,

exempting PRIDCO from liability would betray the underlying policy
of the secured creditor exemption: “to protect bona fide lenders
and to avoid imposing liability on ‘owners’ who are in fact seeking
to protect from the interest opportunity normally presented by
prolonged ownership.”

Waterville, 984 F.2d at 553.

In an effort to persuade the Court to apply the secured
creditor exemption, PRIDCO also cites Monarch Tile, Inc. v. City
of Florence for the proposition that “governments often hold title
or other indicia of ownership during the duration of a long term
lease so that it can ensure that its investment is repaid.”

212

Civil No. 15-2328 (FAB)

37

F.3d 1219 (11th Cir. 2000).

In Monarch Tile, the Eleventh Circuit

Court of Appeals held that the City of Florence, which acquired
property to foster economic development, qualified for the secured
creditor

exemption.

distinguishable

from

Id.
those

The
of

facts

Monarch

of

Tile,

this

case

however,

are

because

unlike PRIDCO, the City of Florence pledged “all rents, revenues,
and income to the payment of the principal and interest on the
bonds”

Monarch Tile, Inc. v. City of Florence, Case No. 86-1511,

1999 U.S. Dist. LEXIS 9695 (N.D. Ala. Apr. 23, 1999) (emphasis
added).

Here, by contrast, PRIDCO and First National City Bank

created two accounts: one to service the bonds and the other for
“proper corporate purposes of PRIDCO.”

(Docket No. 117-4 at

p. 53.)
The

secured

creditor

exemption

is

reserved

for

government entities that hold property “primarily to ensure that
[debtors] meet their] obligations.”
910 F.2d 668, 671 (9th Cir. 1990).

In re Bergsoe Metal Corp.,

If PRIDCO held title primarily

to finance the bonds, it would have no need to maintain a separate
account for “proper corporate purposes.”

(Docket No. 117-4 at

p. 52.)

Florence,

Moreover,

unlike

the

City

of

which

was

prohibited from using the property to which it held title, Monarch
Tile, 1999 U.S. Dist. LEXIS 9695, at *4, PRIDCO freely used the
Maunabo

property.

For

instance,

PRIDCO

commissioned

Caribe

Civil No. 15-2328 (FAB)

38

Environmental Services to review available information regarding
the property prior to the publication of the ROD. (Docket No. 10115 at p. 4.)

The files reviewed by Caribe Environmental Services

demonstrate that PRIDCO: requested the Puerto Rico Electric Power
Authority

to

remove

three

discarded

transformers

from

the

property, permitted the Municipality of Maunabo to park waste
collection trucks at the property, evicted the Puerto Rico Beverage
Company from the property in 2010, compensated contractors for
work performed at the property, repeatedly visited the property,
and prohibited Aqua Pura from using groundwater at the property.
Id. at pp. 1-9.
Additional

evidence

demonstrates

that

PRIDCO

is

ineligible for the secured creditor exemption because owners that
possess

more

than

mere

“indicia

or

ownership”

generally

are

responsible “for the payment of taxes and for the purchase of
insurance.”

In

re

Bergsoe

Metal

Corp.,

910

F.2d

at

671

(“[S]ignificantly, the leases assign to [the PRP] the risk of loss
from the destruction or damage to the property.”).
its

agreement

with

First

National

City

Pursuant to

Bank,

PRIDCO

“covenant[][ed] that it will at all times carry or cause to be
carried [. . .] all risk insurance covering all building and
machinery

and

equipment

including fire insurance.”

included

in

the

Trusted

Properties,

(Docket No. 117-4 at pp. 62-63.)

The

Civil No. 15-2328 (FAB)
record

before

the

Court

39
compels

the

conclusion

that

PRIDCO

functioned as an owner and landlord, not a passive government
institution

in

possession

of

property

primarily

to

guarantee

repayment of a loan.
In addition to the factual distinctions between this
case and Monarch Tile, the Eleventh Circuit Court of Appeals set
forth a form of governmental immunity in Monarch Tile that is not
contained in the statutory language of CERCLA.

In holding that

the secured creditor exemption applied to the City of Florence,
the Monarch Tile court reasoned that:
Plainly, governments will never acquire property for the
purpose of protecting a security interest in that same
property. Governments acquire property to further some
public
purpose,
be
it
economic
development,
environmental protection, or flood control. Once those
public purposes are met, however, as it was in this case
when a tile manufacturing factory began operating on the
property, the government often holds title or other
indicia of ownership during the duration of a long-term
lease so that it can ensure that its investment is
repaid.
Monarch Tile, 212 F.3d at 1223.

This rationale places government

entities that acquire and lease property beyond the scope of CERCLA
liability, broadening the secured creditor exemption.

This Court

cannot adopt such an expansive application of the secured creditor
exemption.
Court

of

provisions

Instead, this Court will adhere to the First Circuit
Appeals’
liberally

imperative
to

avoid

that

“we

frustration

construe
of

the

[CERCLA’s]
beneficial

Civil No. 15-2328 (FAB)

40

legislative purpose [of CERCLA.]

[W]e will not interpret [section

107] in any way that apparently frustrates the statute’s goals.”
Dedham Water Co., 805 F. 2d 1074, 1081 (1st Cir. 1986).
If Congress had intended to create a blanket exemption
from liability for government instrumentalities that own property
to advance economic development, it could have done so.

For

example, Congress excluded from the definition of owner “a unit of
State or local government which acquired ownership or control
involuntarily through bankruptcy, tax delinquency, abandonment, or
other circumstances in which the government involuntarily acquires
title by virtue of its function as a sovereign.”
§ 9601(20)(D).

Also

exempted

from

liability

are

42 U.S.C.
“government

entit[ies] which acquired the facility by escheat, or through any
other involuntary transfer or acquisition, or through the exercise
of eminent domain authority by purchase or condemnation.”

42

U.S.C. 9601(35)(ii).
Tellingly, no exemption exists for government entities
that acquire property to further economic development.

See id.

On the contrary, CERCLA explicitly includes municipalities, states
and other political subdivisions within the definition of persons
potentially subject to liability.

42 U.S.C. § 9601(21); United

States v. Iron Mt. Mines, 881 F. Supp. 1432 (E.D. Cal. 1995)

Civil No. 15-2328 (FAB)

41

(holding the United States liable as an owner of contaminated site
pursuant to CERCLA). 17
The secured creditor exemption applies in this case.
Accordingly, the Court GRANTS summary judgment in favor of the
United States as to this defense.
V.

Third Party Complaint
PRIDCO filed a third party complaint against tenants that

leased

the

property

contamination.

from

PRIDCO

(Docket No. 46.)

as

possible

generators

of

Third party defendants Juan

Orozco Ltd., Inc., the Puerto Rico Housing Department, and Beckman
Coulter, Inc. filed answers to the third party complaint.
Nos. 51, 53 and 68.)
party complaint.

(Docket

Subsequently, PRIDCO moved to amend the third

(Docket No. 77.)

The Court denied PRIDCO’s

motion to amend the third party complaint, following Congress’s
directive that courts “should carefully manage cases pursuant to
this section to ensure that the [CERCLA] litigation is conducted
in an expeditious manner and it is not unduly delayed by concurrent
maintenance of third party actions.”

H.R. Rep. No. 253, 99th

Cong., 1st Sess. at 88 (1985).

17

CERCLA defines “person” as “an individual, firm, corporation, association,
partnership, consortium, joint venture, commercial entity, United States
Government, State, municipality, commission, political subdivision of a state,
or interstate body.” 42 U.S.C. § 9601(21) (emphasis added).

Civil No. 15-2328 (FAB)

42

PRIDCO seeks contribution from tenants that occupied the
property pursuant to section 9613(f)(1) of CERCLA.
at p. 10; 42 U.S.C. § 9613(f)(1).)

(Docket No. 46

PRIDCO may do so, but not in

a manner that hinders the expeditious resolution of this action.
Finding that PRDICO is prima facie liable pursuant to section
107(a)

of

CERCLA

alters

the

course

of

this

litigation.

Accordingly, the Court ORDERS the United States and PRIDCO to meet
and

confer

regarding

the

third

party

complaint

before

the

January 16, 2018 pretrial conference, at which point the parties
will set forth their respective positions regarding the third party
complaint.
VI.

CONCLUSION
For the reasons set forth above, the Rule 56(d) motion to

defer disposition of the United States’ motion for summary judgment
is DENIED.

The United States’ motion for summary judgment is

GRANTED IN PART, and DENIED IN PART.

The Court finds that PRIDCO

is prima facie liable pursuant to section 107 CERCLA, and that
PRIDCO is ineligible for the secured creditor exemption.

PRIDCO

is free to reassert the third party, innocent landowner, and
contiguous landowner defenses during Phase II and Phase III of
this litigation.
The stay (docket no. 129) is VACATED.

Consistent with the

joint case management order, the Court ORDERS the parties to confer

Civil No. 15-2328 (FAB)

43

and file proposed discovery plans for Phase II and Phase III no
later than 20 days after the filing of this opinion and order.
(Docket Nos. 24 at p. 13; Docket No. 32.)

The Court further ORDERS

the United States and PRIDCO to meet and confer with each other
regarding the third party complaint, which will be addressed at
the January 16, 2018 pretrial conference.

The trial scheduled to

commence on February 5, 2018 (docket no. 114) is continued.
will be scheduled by separate order.
IT IS SO ORDERED.
San Juan, Puerto Rico, December 7, 2017.

s/ Francisco A. Besosa
FRANCISCO A. BESOSA
UNITED STATES DISTRICT JUDGE

It