United States v. Gurley

• Court: Court of Appeals for the Sixth Circuit
• Decided: September 21, 2004
• Docket: 03-5132
• Status: Published

Opinion

RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 2 United States v. Gurley No. 03-5132 ELECTRONIC CITATION: 2004 FED App. 0320P (6th Cir.) File Name: 04a0320p.06 Gladstein, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee. ON BRIEF: Kent J. Rubens, RIEVES, RUBENS & MAYTON, West Memphis, UNITED STATES COURT OF APPEALS Arizona, James W. Gentry, Jr., SPEARS, MOORE, REBMAN & WILLIAMS, Chattanooga, Tennessee, for FOR THE SIXTH CIRCUIT Appellant. Richard Gladstein, UNITED STATES _________________ DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee. UNITED STATES OF AMERICA , X Plaintiff-Appellee, - _________________ - - No. 03-5132 OPINION v. - _________________ > , RONALD LEE GILMAN, Circuit Judge. The WILLIAM M. GURLEY, - Defendant-Appellant. - Environmental Protection Agency (EPA) issued an information request to William M. Gurley on February 6, N 1992 pursuant to § 104(e) of the Comprehensive Appeal from the United States District Court Environmental Response, Compensation, and Liability Act for the Western District of Tennessee at Memphis. (CERCLA), codified at 42 U.S.C. §§ 9604(e) and 9613(b). No. 93-02755—Bernice B. Donald, District Judge. Gurley was directed to respond to the request within 15 days. He was warned that the failure to do so could result in an Argued: August 4, 2004 enforcement action by the EPA and civil penalties of up to $25,000 per day of noncompliance. Decided and Filed: September 21, 2004 The EPA filed a complaint on August 8, 1993, alleging that Before: CLAY and GILMAN, Circuit Judges; MATIA, Gurley had failed to adequately respond to the agency’s Chief District Judge.* request. Gurley answered that he had previously disclosed the requested information on January 4, 1989 in a deposition _________________ taken by the EPA in a companion case. See United States v. Gurley Refining Co., 788 F.Supp. 1473 (E.D. Ark. 1992), COUNSEL aff’d in part and rev’d in part, 43 F.3d 1188 (8th Cir. 1994). Summary judgment was granted in favor of the United States ARGUED: Kent J. Rubens, RIEVES, RUBENS & on December 30, 1998, and its petition for the imposition of MAYTON, West Memphis, Arizona, for Appellant. Richard civil penalties was granted on November 26, 2002. Gurley appeals both the grant of summary judgment and * the consequent imposition of approximately $1.9 million in The Honorable Paul R. Matia, Chief United States District Judge for civil penalties. He argues that (1) the information request was the Northern District of Ohio, sitting by designation.

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invalid, (2) he is exempt from compliance with the agency’s disposed of this waste by dumping it at, among other request, (3) the EPA’s action is barred by the doctrine of res locations, the South Eighth Street landfill. judicata, and (4) the agency’s motivation remains a disputed issue of material fact. Gurley also challenges the imposition On February 6, 1992, the EPA, pursuant to its authority of the penalty against him on the grounds that (1) a portion of under 42 U.S.C. § 9604(e)(2), issued a general notice the fine was based upon a nonexistent cause of action, (2) the letter and information request to the defendant. After fine levied was in violation of the Excessive Fines and Due several unsuccessful attempts to deliver that request, the Process Clauses of the United States Constitution, and (3) the United States Marshals Service served it on the district court abused its discretion by imposing the penalty. defendant’s wife. The information request sought Finally, Gurley argues that the statutory scheme that provides Gurley’s individual knowledge of, among other things, for the issuance of information requests violates the Due Gurley’s assets, generators of material that [was] Process Clause of the Fifth Amendment to the United States disposed of at the site, site operations, and the structure Constitution. For the reasons set forth below, we AFFIRM of GRC. the judgment of the district court. On September 15, 1992, the defendant sent a letter to the I. BACKGROUND EPA stating his position that GRC was the entity that the EPA should contact for information related to the site. The relevant facts are set forth in the district court’s two The EPA responded on January 7, 1993, by indicating opinions, the first of which granted the EPA’s motion for that the February 6, 1992 information request was summary judgment and the second of which granted the addressed to the defendant individually and must be agency’s petition to impose a civil penalty. In its summary answered in that capacity. The EPA also posed six judgment order, the court summarized the factual background additional questions to Gurley. On January 18, 1993, the as follows: defendant again sent a letter refusing to respond individually and suggesting that any information requests This case arises from EPA investigative actions be directed to GRC. surrounding a former landfill near South Eighth Street in West Memphis, Arkansas. As early as 1982, the EPA The United States then filed [its] action. Gurley detected various hazardous chemicals at the site. Later subsequently provided the EPA with an individual investigations led the EPA on October 14, 1992, to place response; however, he refused to answer the questions the site on the CERCLA National Priorities list. The regarding his financial condition and he ignored the six United States is presently engaged in several cases additional questions added to the EPA’s original request surrounding the attempt to clean up that site. for information. The United States also believes that Gurley’s responses to the other questions were From 1962 until the present, the plaintiff was the incomplete. president and majority stockholder in Gurley Refining Company (“GRC”). GRC bought used oil and treated it, A significant delay in the proceedings was caused by thereby allowing it to resell that oil. The refining process Gurley’s filing for personal bankruptcy in July of 1995. His created a by-product residue of oily waste. GRC bankruptcy petition was finally dismissed in August of 1997, allowing the district court to move forward on the EPA’s No. 03-5132 United States v. Gurley 5 6 United States v. Gurley No. 03-5132

motion for summary judgment. The motion was granted on district court must construe the evidence and draw all December 30, 1998, with the order providing that “the USA reasonable inferences in favor of the nonmoving party. remains free to petition the court for the imposition of a civil Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. penalty under 42 U.S.C. [§] 9604(e)(5)(B).” Such a petition 574, 587 (1986). The central issue is “whether the evidence was filed by the EPA in June of 1999. The petition was presents a sufficient disagreement to require submission to a granted in November of 2002, with penalties imposed in the jury or whether it is so one-sided that one party must prevail amount of $1,908,000 based upon the following calculation: as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986). In the present case, the parties had First, the Court fines Gurley $402,000 for the period agreed in their joint pretrial order that no issues of material from February 28, 1992 until September 15, 1992, the fact remained. date Gurley finally responded ($2,000/day x 201 days = $402,000). Second, the Court fines Gurley $682,000 for 2. Statutory framework the period from September 16, 1992, until July 29, 1994, the date Gurley provided deposition testimony regarding The EPA is authorized to issue information requests other PRPs [Potentially Responsible Parties] and Site pursuant to § 104(e) of CERCLA, a provision that is codified operations ($1,000/day x 682 days = $682,000). Finally, at 42 U.S.C. § 9604(e)(2) and reads as follows: the Court fines Gurley $824,000 for the period from July 30, 1994, until February 2, 1999, when Gurley answered Access to information the Section 104(e) request under Court order ($500/day x 1,648 days = $824,000). The Court bases this three- Any officer, employee, or representative described in tiered penalty structure on the varying levels of paragraph (1) may require any person who has or may egregiousness Gurley demonstrated in failing to comply have information relevant to any of the following to fully with the EPA’s information requests. furnish, upon reasonable notice, information or documents relating to such matter: This timely appeal followed. (A) The identification, nature, and quantity of II. ANALYSIS materials which have been or are generated, treated, stored, or disposed of at a vessel or facility or transported A. Whether Gurley is liable for failing to respond to the to a vessel or facility. EPA’s information request (B) The nature or extent of a release or threatened 1. Standard of review release of a hazardous substance or pollutant or contaminant at or from a vessel or facility. The district court’s grant of summary judgment is reviewed de novo. Therma-Scan, Inc. v. Thermoscan, Inc., 295 F.3d (C) Information relating to the ability of a person to 623, 629 (6th Cir. 2002). Summary judgment is proper where pay for or to perform a cleanup. there exists no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. In addition, upon reasonable notice, such person either (i) P. 56(c). In considering a motion for summary judgment, the shall grant any such officer, employee, or representative access at all reasonable times to any vessel, facility, No. 03-5132 United States v. Gurley 7 8 United States v. Gurley No. 03-5132

establishment, place, property, or location to inspect and is not too indefinite; and (3) the information requested is copy all documents or records relating to such matters or relevant to legislative purposes.” United States v. Pretty (ii) shall copy and furnish to the officer, employee, or Products, Inc., 780 F.Supp 1488, 1506 (S.D. Ohio 1991). representative all such documents or records, at the option and expense of such person. The district court below observed that the three elements from Pretty Products were satisfied in this case because: Liability for unreasonably failing to satisfy a properly (1) “The EPA was authorized by Congress, pursuant to issued request for information is set forth in 42 U.S.C. 42 U.S.C. § 9604(e)(2), to require any person with § 9604(e)(5)(B), which reads in pertinent part as follows: information relevant to the EPA’s environmental investigation to furnish requested information or documents In the case of information or document requests or upon reasonable notice”; (2) “the scope of the request . . . was orders, the court shall enjoin interference with such narrowly tailored to conform to the specific areas of inquiry information or document requests or orders or direct within § 9604(e)(2)”; and (3) “the requests were consonant compliance with the requests or orders to provide such with the legislative purpose of CERCLA because the answers information or documents unless under the circumstances provided to the requests would facilitate the EPA’s of the case the demand for information or documents is investigation and subsequent cleanup of the Site.” arbitrary and capricious, an abuse of discretion, or otherwise not in accordance with law. Gurley does not appear to dispute the first two elements. He argues, however, that because he gave his deposition The court may assess a civil penalty not to exceed testimony to the EPA on January 4, 1989, in which he $25,000 for each day of noncompliance against any allegedly provided all of the relevant information, the person who unreasonably fails to comply with th[is] subsequent information request must not have been “truly for provision[.] the purpose of determining a need for response or choosing a response action at the Site.” Gurley thus contends that “the 3. Whether the EPA’s information request was valid EPA sought information . . . (which it had already received from him) without having a statutorily justifiable purpose for The validity of an administrative request for information making the information request.” generally turns on the reasonableness of the request. See United States v. Morton Salt Co., 338 U.S. 632, 652-53 But the government points out in its brief that “the 1989 (1950) (quotation marks omitted) (“The gist of the protection deposition concerned the Gurley Pit, not the South 8th Street, is . . . that the disclosure sought shall not be unreasonable.”). litigation. At the deposition, counsel for Gurley objected to Although “a governmental investigation . . . may be of such any questions specifically related to the South 8th Street a sweeping nature and so unrelated to the matter properly Site.” The government cites the following example from the under inquiry as to exceed the investigatory power,” id. at deposition as illustrative of this point: 652, “it is sufficient if the inquiry is within the authority of the agency, the demand is not too indefinite and the Q. [Counsel for the EPA] Why did you stop placing information sought is reasonably relevant.” Id. An EPA waste in the City of West Memphis dump in the 1960s? information request, therefore, “will be enforced where: (1) the investigation is within EPA’s authority; (2) the request No. 03-5132 United States v. Gurley 9 10 United States v. Gurley No. 03-5132

Mr. Rieves [counsel for Gurley]: I would object to that station dealer for any response costs or damages resulting question, Craig. I don’t see what relevance the City of from a release or threatened release of recycled oil, or use the West Memphis dump has to this lawsuit with regard to authority of section 9606 of this title against a service station Gurley Pit at a separate location. dealer . . . .”). Gurley cites no authority for the proposition that, despite its limited scope, § 9614(c) also operates to In addition, Gurley refused at his deposition to disclose exempt service station dealers from compliance with personal financial data or to provide information about other information requests. Nor does Gurley’s argument find PRPs. support in the text of § 9604(e)(2), which states that the EPA may issue an information request to “any person who has or Gurley also argues that even if the information request was may have information . . . .” (emphasis added). valid at the time it was issued, he was no longer obligated to respond because the purposes that his disclosures would have The government’s alternative contention is that Gurley is served “had, for all intents and purposes, been accomplished not a service station dealer as defined in § 9601(37)(A)(ii) prior to the time [when he] was required . . . to respond to the because, among other reasons, he allegedly did not comply information request.” But Gurley fails to cite any authority with the Solid Waste Disposal Act. Because the obligation to for the proposition that a party may escape liability for failure respond to an EPA information request is not affected by to respond to an information request by delaying until a one’s status as service station dealer, however, the question of response is no longer of use to the agency. Furthermore, the whether Gurley would so qualify under § 9601(37)(A)(ii) is need for a response and the usefulness of the information, irrelevant and therefore need not be decided. which was requested on February 6, 1992, continued until at least November of 1998, a time before which the cleanup at 5. Whether the district court erred in upholding the the site in question had not yet begun. The information EPA’s request for information sought by the EPA in the request was also relevant to the agency’s ability to recover its incurred response costs, a valid Gurley contends that the EPA abused its discretion and purpose that would continue even after the completion of acted in an arbitrary and capricious manner by requesting cleanup. information from Gurley that he had already provided in his 1989 deposition. Because the 1989 deposition testimony 4. Whether Gurley was exempt from compliance concerned only the Gurley Pit, however, it did not exhaust inquiry relevant to the cleanup and cost recovery relating to Gurley argues that he is simply a service station dealer the South Eighth Street Site. The EPA’s subsequent issuance under 42 U.S.C. § 9601(37)(A)(ii) (defining a “service station of an information request relating to the latter site was dealer”) and, as such, is exempt from compliance with the therefore not “a burdensome repetition” as Gurley protests. information request by virtue of 42 U.S.C. § 9614(c) (exempting service station dealers from certain abatement 6. Whether the EPA issued its information request with actions brought under 42 U.S.C. §§ 9606 and 9607). But the an improper motive or intent service-station-dealer exception pertains to liability only under §§ 9606 and 9607. See 42 U.S.C. § 9614(c) (“No Gurley alleges that the district court failed to comprehend person . . . may recover, under the authority of subsection that it was “granting a summary judgment on a matter that (a)(3) or (a)(4) of section 9607 of this title, from a service relied upon, among other matters, motivation and intent.” No. 03-5132 United States v. Gurley 11 12 United States v. Gurley No. 03-5132

The government responds by pointing out that Gurley raises Gurley alleges that the district court committed reversible this argument for the first time on appeal. Indeed, the parties error when it “improperly assumed that the Eighth Circuit had previously agreed in their joint pretrial order that no decision was law of the case as to Gurley and he could not issues of material fact remain. We will hold Gurley to his rely upon the doctrine of res judicata.” We find no suggestion pretrial stipulation. See United States v. Ninety-Three (93) in the district court’s order, however, that it rejected the res Firearms, 330 F.3d 414, 424 (6th Cir. 2003) (“This court has judicata argument on the ground that the Eighth Circuit’s repeatedly held that it will not consider arguments raised for decision precluded the court below from considering the the first time on appeal unless our failure to consider the issue argument. Rather, the district court rejected the argument will result in a plain miscarriage of justice.”) (quotation marks based upon the same reasoning as the Eighth Circuit had omitted). We perceive no such miscarriage of justice to exist articulated. The district court further concluded that the res with regard to the EPA’s information request. judicata argument had been abandoned by Gurley in his supplemental response to the motion for summary judgment. 7. Whether the doctrine of res judicata bars the EPA’s We find no error in the district court’s analysis of this issue. claim B. Whether the district court erred by imposing civil Gurley argues that a criminal action brought under the 1970 penalties on Gurley Rivers and Harbors Act against GRC for allegedly dumping waste in the Mississippi River bars the EPA from bringing the 1. Standard of review current CERCLA § 104(e) action against him. The district court concluded that Gurley’s res judicata argument was We will uphold the district court’s imposition of a civil without merit, reasoning as following: penalty unless it has abused its discretion. See Bartling v. Fruehauf Corp., 29 F.3d 1062, 1068 (6th Cir. 1994) Gurley’s original response to summary judgment also (“Because the statute [ERISA] expressly grants a district argued that the United States’ CERCLA claim was court discretion in imposing penalties for an employer’s barred by res judicata. . . . An almost identical failure to disclose, we review only for abuse of discretion.”); contention was subsequently rejected by the Eighth see also Tull v. United States, 481 U.S. 412, 425 (1987) Circuit in United States v. Gurley, 43 F.3d 1188 (8th Cir. (referring to the district court’s imposition of civil penalties 1994). That case involved a separate CERCLA for violation of the Clean Water Act as “highly superfund site, but as in this case, GRC had been discretionary”). previously prosecuted under the Clean Water Act. The Eighth Circuit held that because Gurley had not been a An abuse of discretion will be found where the reviewing named party in the previous suit, he could be sued in his court is “firmly convinced that a mistake has been made.” individual capacity in a subsequent action. This court Adcock-Ladd v. Sec’y of Treasury, 227 F.3d 343, 349 (6th adopts the Eighth Circuit’s reasoning. Regardless of this Cir. 2000) (quotation marks omitted) (defining the term finding, it appears from his supplemental response to “abuse of discretion” to mean that “the lower court relie[d] on summary judgment that Gurley has abandoned his res clearly erroneous findings of fact, . . . improperly applie[d] judicata argument. the law[,] or use[d] an erroneous legal standard.” Id. (quotation marks omitted). Legal conclusions regarding the violation of constitutional rights are reviewed de novo. See No. 03-5132 United States v. Gurley 13 14 United States v. Gurley No. 03-5132

United States v. Bajakajian, 524 U.S. 321, 337 n.10 (1998) defendant was shown. Id. at 371-72. In addition, although (“[T]he question whether a fine is constitutionally excessive the government’s complaint originally sought penalties only calls for the application of a constitutional standard to the for the period of time after September 11, 1992, its June 15, facts of a particular case, and in this context de novo review 1999 petition for civil penalties discusses Gurley’s avoidance of that question is appropriate.”). scheme as beginning in February of 1992. In light of the government’s petition that put Gurley on notice that it was 2. Statutory framework going to present evidence of his avoidance that began in February of 1992, and Gurley’s failure to object to the “The court may assess a civil penalty not to exceed $25,000 admission of such evidence, we conclude that the district for each day of noncompliance against any person who court properly exercised its discretion by fining Gurley for his unreasonably fails to comply with th[is] provision[.]” noncompliance during this earlier period of time. 42 U.S.C. § 9604(e)(5)(B); see also United States v. Ponderosa Fibres of America, Inc., 178 F. Supp.2d 157, 161 4. Whether the district court’s imposition of civil (N.D.N.Y. 2001) (“[W]hether the assessment of civil penalties violated the Excessive Fines and Due penalties for non-compliance is appropriate turns on the Process Clauses of the United States Constitution question of the reasonableness of the failure to comply with an Information Request.”). With a statutory maximum of $25,000 per day in potential civil penalties, an imposition of tens of millions of dollars 3. Whether the district court imposed a fine based upon could have been assessed in this case, but only a fraction of a nonexistent cause of action that amount was ultimately levied: $1,908,000. Gurley nevertheless argues that the penalty imposed on him is Gurley contends that because the complaint sought unconstitutionally excessive, citing United States v. penalties only for the period of time from September 11, 1992 Bajakajian, 524 U.S. 321, 334 (1998) (“[A] punitive forward, the district court erred by imposing a fine in the forfeiture violates the Excessive Fines Clause if it is grossly amount of $402,000 for the period of time from February 28, disproportional to the gravity of a defendant’s offense.”). In 1992 through September 15, 1992. The government responds light of Gurley’s wilful noncompliance for a period of seven that Gurley consented to the consideration of these dates by years, however, we are not persuaded that the fine is “grossly failing to object at trial to the introduction of evidence disproportional to the gravity of [the] defendant’s offense.” regarding his bad faith avoidance of the EPA’s letters during Id. at 334. the time in question. (The history of the EPA’s repeated attempts to get Gurley to acknowledge receipt of the Gurley’s assertion of a due process violation is likewise information request is detailed in the district court’s opinion.) without merit because a rational basis exists for penalizing those who, like Gurley, purposefully ignore the EPA’s In support of its “implied consent” theory, the government information requests over long periods of time. Penalties cites Craft v. United States, 233 F.3d 358, 371-73 (6th Cir. such as those imposed here will encourage other PRPs to 2000), rev’d on other grounds by 535 U.S. 274 (2002). The share information that might be helpful in the cleanup of Craft decision held, among other things, that the IRS could Superfund sites. pursue a theory that it had not pled because the issue was tried with the implied consent of the parties and no prejudice to the No. 03-5132 United States v. Gurley 15 16 United States v. Gurley No. 03-5132

5. Whether the district court abused its discretion by C. Whether CERCLA § 104(e) violates the Due Process ordering Gurley to pay a $1,908,000 civil penalty Clause of the Fifth Amendment to the United States Constitution Gurley acknowledges that the “trial judge’s analysis of the factors to be considered in assessing the civil penalty was Gurley “invite[s] this Court to visit the question of whether correct.” He nevertheless argues that the district court abused the applicable portion of 104(e) (information requests), its discretion by imposing the penalty. We disagree. The particularly as it was interpreted and enforced by the district district court properly addressed each of the factors that court, violates the Due Process Clause of the Fifth district courts routinely consider before arriving at its penalty. Amendment” in light of the Eleventh Circuit’s decision in See United States v. Taylor, 8 F.3d 1074, 1078 (6th Cir. 1993) Tennessee Valley Authority v. Whitman, 336 F.3d 1236 (11th (“[C]ourts have identified the following factors, among Cir. 2003) (holding that the penalty provisions of the Clean others, as bearing on the amount of a penalty: (1) the good or Air Act are unconstitutional because they can be assessed as bad faith of the defendant, (2) the injury to the public, (3) the part of an administrative compliance order). That decision, defendant’s ability to pay, (4) the desire to eliminate the however, is easily distinguishable. The Tennessee Valley benefits derived by a violation, and (5) the necessity of Authority case concerned the issuance of an administrative vindicating the authority of the enforcing party.”) (quotation compliance order imposing a penalty based upon the agency’s marks omitted); United States v. Barkman, 784 F. Supp. own determination that the Clean Air Act had been violated. 1181, 1189 (E.D. Pa. 1992) (holding that the same five factors Id. at 1258. In the present case, by contrast, Gurley was should be considered in assessing civil penalties against an afforded all of the process that he was due because a judicial operator of a landfill for failure to comply with information determination that CERCLA had been violated followed a full requests issued to him pursuant to CERCLA). Most of the and fair hearing before a federal judge. Id. (“Before the factors’ application to Gurley are self-evident. As for Government can impose severe civil and criminal penalties, Gurley’s ability to pay the civil penalty, the district court the defendant is entitled to a full and fair hearing before an found as follows: impartial tribunal at a meaningful time and in a meaningful manner.”) (quotation marks omitted). The assessment of Gurley’s ability to pay a civil penalty has been complicated by Gurley’s bankruptcy III. CONCLUSION proceedings over the past few years. Nevertheless, as of November 9, 2001, the record clearly indicates that For all of the reasons set forth above, we AFFIRM the Gurley’s estate has nearly $23,000,000 available for judgment of the district court. distribution. . . . After subtracting $16,500,000 for the United States’ response costs and $2,300,000 for the counsel for the bankruptcy trustee, $4,200,000 remain available to pay the bankruptcy trustee and any civil penalty against Gurley. . . . Gurley has the ability to pay the substantial penalty levied[.] In sum, we find no abuse of discretion in the district court’s analysis and therefore uphold the civil penalty as imposed.