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AES Puerto Rico, L.P. v. Trujillo-Panisse

United States Court of Appeals, First Circuit

May 16, 2017

AES PUERTO RICO, L.P., Plaintiff, Appellant,
MARCELO TRUJILLO-PANISSE, in his Official Capacity as Mayor of the Municipality of Humacao; MUNICIPALITY OF HUMACAO; WALTER TORRES-MALDONADO, in his Official Capacity as Mayor of the Municipality of Peñuelas; MUNICIPALITY OF PEÑUELAS, Defendants, Appellees.


          Peter D. Keisler, with whom Ricardo L. Ortiz-Colón, Fiddler González & Rodríguez, P.S.C., David T. Buente, Samuel B. Boxerman, Paul J. Zidlicky, Christopher A. Eiswerth, and Sidley Austin LLP were on brief, for appellant.

          Francisco José Medina-Medina, with whom Pedro E. Ortiz-Álvarez, LLC was on brief, for appellees.

          John F. Cooney, Douglas H. Green, Margaret K. Fawal, and Venable LLP on brief for amici curiae the Utility Solid Waste Activities Group and the American Coal Ash Association.

          Before Torruella, Lipez, and Barron, Circuit Judges.

          LIPEZ, Circuit Judge.

         This case requires us to decide whether two Puerto Rico municipalities may prohibit the beneficial use and disposal of coal ash at landfills within their borders even though a state agency has authorized such activities at those particular landfills. Appellant AES Puerto Rico, L.P. ("AES-PR"), a coal-fired power plant owner, claims that the two municipal ordinances banning the approved handling of "coal combustion residuals" ("CCRs") are preempted by federal and Commonwealth law and also violate various provisions of the United States and Puerto Rico constitutions. The district court granted summary judgment for the municipalities on AES's federal claims and declined to exercise jurisdiction over the Commonwealth claims.

         After careful review, we conclude that the local ordinances may not be enforced to the extent they directly conflict with Commonwealth law as promulgated by the Puerto Rico Environmental Quality Board ("EQB"). Hence, we reverse the summary judgment in favor of the municipalities and remand with directions to the district court to enter judgment for AES-PR based on its claim of Commonwealth law preemption.


         We begin by examining the legal framework that governs the disposal of CCRs in Puerto Rico. That multi-tiered scheme consists of (1) federal law, specifically, the Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. §§ 6901-6992k; (2) the Commonwealth's Environmental Public Policy Act, P.R. Laws Ann. tit. 12, §§ 8001-8007f, the source of the EQB's authority; and (3) the Autonomous Municipalities Act, P.R. Laws Ann. tit. 21, §§ 4001-4008, 4051-4058, the source of the municipalities' authority. We briefly describe each in turn, as pertinent to our analysis.

         A. Federal Law: RCRA

         Congress enacted RCRA, "a comprehensive environmental statute that governs the treatment, storage, and disposal of solid and hazardous waste, " based, inter alia, on its finding that waste disposal had become a national problem requiring federal involvement. Meghrig v. KFC W., Inc., 516 U.S. 479, 483 (1996); see 42 U.S.C. § 6901(a)(4); 42 U.S.C. § 6901(a)(2) (noting the "rising tide of scrap, discarded, and waste materials"). Despite the perceived need for federal action, however, Congress affirmed in RCRA that "the collection and disposal of solid wastes should continue to be primarily the function of State, regional, and local agencies." Id. § 6901(a)(4). Hence, RCRA anticipates that federal, state, and local governments will work cooperatively to ensure the safe and environmentally appropriate management of solid waste, and the statute's objectives expressly include establishment of "a viable Federal-State partnership" to "promote the protection of health and the environment and to conserve valuable material and energy resources." Id. § 6902(a)(7), (a).

          This cooperative approach applies both to "hazardous wastes" under RCRA subtitle C, id. §§ 6921-6939g, and to nonhazardous solid waste under RCRA subtitle D, id. §§ 6941-6949a. See City of Chicago v. Envtl. Def. Fund, 511 U.S. 328, 331 (1994). The federal Environmental Protection Agency ("EPA") has classified CCRs as nonhazardous waste, see 40 C.F.R. § 261.4(b)(4)(i), and, accordingly, they are regulated under subtitle D.[1] With respect to such materials, Congress sought to promote methods of disposal that are "environmentally sound" and maximize the reuse of recoverable resources. 42 U.S.C. § 6941. To advance those objectives, states and regional authorities are provided technical and financial assistance to develop and implement solid waste disposal plans, consistent with federal guidelines, to be submitted for EPA approval. Id. §§ 6941, 6943, 6946-47. Among other requirements, the state plans must "prohibit the establishment of new open dumps within the State, " and require that solid waste either be used for resource recovery, disposed of in sanitary landfills, "or otherwise disposed of in an environmentally sound manner." Id. § 6943(a)(2). Congress directed the EPA to adopt "regulations containing criteria for determining which facilities shall be classified as sanitary landfills, " and, under those criteria, "a facility may be classified as a sanitary landfill . . . only if there is no reasonable probability of adverse effects on health or the environment from disposal of solid waste at such facility." Id. § 6944(a).

         The Commonwealth's plan to regulate the disposal of non-hazardous solid waste at landfills, approved by the EPA in 1994, gives the EQB "authority and responsibility for implementing and enforcing solid waste management regulations, including a permit program, inspection authority and enforcement activities." 59 Fed. Reg. 44, 144, 44, 145-46 (Aug. 26, 1994), 1994 WL 460341. The EPA notice approving Puerto Rico's program stated that the EQB had adopted comprehensive regulations governing waste disposal "intended to bring Puerto Rico into full conformity" with federal specifications, id. at 44, 145, and that Puerto Rico's application showed compliance with "all of the statutory and regulatory requirements established by RCRA, " id. at 44, 146. The Commonwealth was thus "granted a determination of adequacy for all portions of its municipal solid waste permit program." Id.[2]

         B. Commonwealth Law: Environmental Public Policy Act

         The Environmental Public Policy Act of 2004 designates the EQB as the agency charged with managing Puerto Rico's response to federal laws pertaining to "environmental conservation, natural resources, solid waste, and other matters" related to environmental quality. P.R. Laws Ann. tit. 12, § 8002g. Among other functions, the statute authorizes the EQB to (1) "adopt, promulgate, amend and repeal rules and regulations for solid waste disposal and establish the sites and methods to dispose of such solid waste, " id. § 8002c(b)(4)(A); (2) "adopt rules and regulations to establish a permit-awarding and licensing mechanism that regulates the control of the pollution in the air and water and by solid waste and noise, " id. § 8002c(b)(3)(E); and (3) issue orders "that, in its judgment, are necessary to achieve the purposes of [the Act] and the regulations promulgated thereunder, " id. § 8002c(a)(8).

         Under its statutory authority, the EQB adopted State Regulation No. 5717, which consists of a series of rules governing the management of non-hazardous solid waste. See P.R. Envtl. Laws & Regs. No. 5717 ("the 1997 Regulation"). The 1997 Regulation's purposes include "[t]o establish a program for the design, construction, operation, closure and post-closure maintenance of [sanitary landfills] for non-hazardous solid waste." The Rules specify, for example, where such facilities may be located (Rule 540), design criteria (Rule 541), the minimum personnel and their training (Rules 543, 544), and the need for a system of ground water protection and monitoring (Rules 551-558).

         A "final resolution or decision" of the EQB is reviewable "in the manner provided for in the Puerto Rico Uniform Administrative Procedures Act, " and EQB decisions may not be "stayed, unless so ordered by the Circuit Court of Appeals of Puerto Rico or by the Governing Board [of the EQB] itself." P.R. Laws Ann. tit. 12, § 8002c(a)(8); see also id. § 8002f(a)(4) (providing that "[a]ny person adversely affected by a resolution, order or decision of the Governing Board [of the EQB] may request the latter to reconsider its determination or request a review by the Court of Appeals of Puerto Rico"). Individuals who fail to comply with EQB resolutions or orders "shall be guilty of a misdemeanor, " id. § 8002j(a), and may be subject to criminal or administrative fines, damages, and sanctions, id. §§ 8002j(a)-(c).

         C. Local Authority: Autonomous Municipalities Act

         Puerto Rico's Autonomous Municipalities Act gives local governments authority to exercise their "legislative and executive powers in any matter of a municipal nature" to promote "the welfare of the community and its economic, social and cultural development" and to protect "the health and safety of the people." P.R. Laws Ann. tit. 21, § 4051(o). A separate provision vests municipalities with "the powers that are necessary and convenient to carry out" some twenty-odd functions, id. § 4054, including to "[e]stablish solid waste collection services and programs and public sanitation programs in general, and adopt the standards and measures that are necessary for the improvement and adequate control and disposal of waste, " id. § 4054(a). This municipal authority is "subject to applicable legislation, " id. § 4051(o), and "subordinate[] to the Constitution of the Commonwealth of Puerto Rico and to its laws, " id. § 4003. The required compatibility of local and commonwealth law also is recognized in a provision that authorizes municipalities to adopt ordinances regulating "solid waste collection management, " stating that such measures must be "in harmony with the environmental public policy of the Commonwealth of Puerto Rico." Id. § 4055.


         We now sketch the background of the dispute before us, drawing liberally from the district court's well-crafted summary. The facts set forth here are undisputed.

         A. Factual Background

         1. AES-PR and the Placement of CCRs

         AES-PR's coal-fired power plant, located in Guayama, produces approximately fifteen percent of the electricity used in Puerto Rico. The Guayama facility imports the coal from Colombia and, pursuant to a long-term contract, AES-PR sells the electricity generated at the plant to the Puerto Rico Electric Power Authority ("PREPA").

         The combustion of coal produces two types of ash: bottom ash and fly ash, which are collectively labeled coal combustion residuals, and referred to as CCRs. AES-PR produces approximately 200, 000 to 250, 000 tons of CCRs each year, some of which it uses in a manufactured aggregate product marketed in Puerto Rico under the trade name AGREMAX ("Agremax").[3] According to AES-PR, Agremax has various beneficial uses, including as "structural fill" for building construction and as "subbase material in road construction." Agremax also has waste treatment applications; it can be used to solidify liquid waste, [4] or be placed each day on top of solid waste in a landfill -- a use known as "daily cover" -- to prevent the waste materials from spreading. In the latter role, Agremax substitutes for soil and other natural materials. See 40 C.F.R. ยง 258.21(a) (stating that sanitary landfills "must cover disposed solid waste with six inches of earthen material at the end of each operating day, or at more frequent intervals if ...

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