Case Title: Sultan Corporation v. Department of Environmental Protection

Citation: 

Docket Number: 2022 ME 21

State: maine

Court: Maine Supreme Court

Date: 2022-04-05T00:00:00Z

Document:
MAINE SUPREME JUDICIAL COURT 
Reporter of Decisions 
Decision: 
2022 ME 21 
Docket: 
And-21-262 
 
Argued: 
March 9, 2022 
 
Decided: 
April 5, 2022 
 
Panel: 
STANFILL, C.J., and MEAD, JABAR, HUMPHREY, HORTON, and CONNORS, JJ.* 
 
 
SULTAN CORPORATION 
 
v. 
 
DEPARTMENT OF ENVIRONMENTAL PROTECTION et al. 
 
MEAD, J. 
[¶1]  Sultan Corporation appeals from a decision of the Superior Court 
(Androscoggin County, Stewart, J.) affirming a decision of the Board of 
Environmental Protection that upheld a cleanup order issued pursuant to 
38 M.R.S. § 1365 (2021) by the Commissioner of the Department of 
Environmental Protection against Sultan for hazardous substances located on 
its property.  Because the Board did not determine the threshold issue of 
whether the third-party defense afforded by 38 M.R.S. § 1367(3) (2021) is 
available to a party seeking to invalidate a Commissioner’s order issued 
pursuant to 38 M.R.S. § 1365, we vacate and remand to the Board to make that 
determination. 
 
*  Justice Gorman sat at oral argument and participated in the initial conference but retired before 
this opinion was certified. 
 
 
2 
I.  BACKGROUND 
[¶2]  The following facts are derived from the Board’s findings, which are 
supported by competent evidence in the record.  See Angell Family 2012 Prouts 
Neck Tr. v. Town of Scarborough, 2016 ME 152, ¶ 3, 149 A.3d 271.  Sultan 
purchased the site on June 25, 2003, which contained a fifteen-unit residential 
apartment building.  Beal’s Laundry had operated a dry cleaning facility on the 
site from approximately 1950 to 1986.  In 2013, as part of its evaluation of 
former dry cleaning operations, the Department of Environmental Protection 
conducted testing at the site and discovered perchloroethylene and 
trichloroethylene—volatile and potentially hazardous organic compounds 
associated with dry cleaning operations—contaminating the soil and 
groundwater.  Subsequent testing identified these compounds and their 
breakdown products beneath the pavement in front of the site, in soil gas 
beneath the site building, in the indoor air of the site building, in the soil along 
subsurface utility lines, and in the indoor air of buildings on several 
surrounding properties. 
[¶3]  Following an assessment and recommendation from the state 
toxicologist, the Commissioner concluded that these chemicals posed a health 
risk to people living on the site because vapors were found in dangerous 
 
 
3 
concentrations inside the site’s residential units.  To mitigate the effects of the 
vapors and associated hazards on the occupants of the site building, the 
Department installed and operates a sub-slab depressurization system (SSDS) 
on the site.  The SSDS redirects emanating vapors away from occupied spaces 
in the building but does nothing to remove the source of the contaminants or 
prevent their migration to other properties.  According to the Department’s 
lead engineer, if the source of the contaminants is not addressed, the high levels 
of contamination in the soil and groundwater will remain for “generations to 
come” and the SSDS will need to be maintained indefinitely for the protection 
of the site’s residents.  The Commissioner hired a consultant to analyze 
long-term solutions available for the site.  The consultant’s report presented 
seven possible alternatives, each assigned a letter from A through G. 
[¶4]  On May 10, 2018, the Commissioner issued an order designating the 
site an uncontrolled hazardous substance site pursuant to 38 M.R.S. § 1365(1).  
The order identified Sultan as the owner of the site and a responsible party.  See 
38 M.R.S. § 1362(2)(A) (2021).  Sultan does not contest that (1) there are 
hazardous substances on the site; (2) the site is an uncontrolled hazardous 
substance site; (3) the hazardous substances on the site pose a threat to the 
 
 
4 
health of humans; or (4) as the owner of the site, it is a responsible party as that 
term is used in 38 M.R.S. § 1362(2)(A). 
[¶5]  The designation of the site as an uncontrolled hazardous substance 
site provides the Commissioner the statutory authority to “[o]rder any 
responsible party dealing with the hazardous substances to cease immediately 
or to prevent that activity and to take an action necessary to terminate or 
mitigate the danger or likelihood of danger.”  38 M.R.S. § 1365(1)(B).  Pursuant 
to this authority, the Commissioner ordered Sultan to submit a plan for 
remediation of the site that would implement Alternative E of the consultant’s 
report.  Sultan was served with the Commissioner’s order on May 24, 2018, and 
timely appealed to the Board on June 7, 2018.  See 38 M.R.S. § 1365(4). 
[¶6]  The Board held a public evidentiary hearing on Sultan’s appeal on 
October 18, 2018.1  At the hearing, both parties were represented by counsel, 
presented witnesses, and offered exhibits.  In its post-hearing brief, Sultan 
asserted that it was entitled to the third-party defense2 found within 
 
1  Both parties waived the hearing deadline prescribed by 38 M.R.S. § 1365(4) (2021). 
 
2  In its order, the Board referred to the defense afforded by 38 M.R.S. § 1367(3) (2021) as the 
“third-party defense,” although Sultan consistently refers to it as “the innocent landowner defense.”  
We express no opinion as to which moniker is appropriate but adopt the Board’s reference for 
consistency with the judgment before us on appeal. 
 
 
 
5 
38 M.R.S. § 1367(3)3 because Sultan did not cause the hazardous material to 
arrive on the site but merely purchased the site without knowledge that 
hazardous materials were present.  In its reply brief, the Commissioner argued 
that the defense was inapplicable because the May 10, 2018, order Sultan 
appealed from was issued pursuant to section 1365 and the third-party defense 
 
3  Title 38 M.R.S. § 1367 is titled, “Liability; recovery by the State for abatement, clean up or 
mitigation costs and for damages.”  The portions of the statute that provide the defense state, in 
relevant part: 
 
A person who would otherwise be a responsible party shall not be subject to 
liability under this section, if he can establish by a preponderance of the evidence that 
threats or hazards posed or potentially posed by an uncontrolled site, for which 
threats or hazards he would otherwise be responsible, were caused solely by: 
. . . . 
. . . An act or omission of a 3rd party who is not that person’s employee or agent.  
A person seeking relief from liability for the acts or omissions of a 3rd party shall also 
demonstrate by a preponderance of the evidence that that person exercised due care 
with respect to the hazardous substance and uncontrolled site concerned, taking into 
consideration the characteristics of that substance and site, in light of all relevant 
facts and circumstances and that that person took precautions against foreseeable 
acts or omissions of any such 3rd party and the consequences that could foreseeably 
result from such acts or omissions. 
 
A.  For purposes of this subsection, a person may demonstrate the exercise of due 
care with respect to any uncontrolled site that that person has acquired after 
hazardous substances were located on that uncontrolled site, if that person shows 
that at the time that person acquired the uncontrolled site the person did not 
know and had no reason to know that any hazardous substance that is the subject 
of the release or threatened release was disposed on, in or at the uncontrolled 
site.  
 
B.  To establish that a person meets the criteria of paragraph A, a person must 
have undertaken, at the time of acquisition, 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. . . . 
 
38 M.R.S. § 1367(3). 
 
 
6 
is only available as a shield from liability for costs that the State seeks to recoup 
from a responsible party pursuant to section 1367.  The Commissioner also 
argued that, even if the defense were available, Sultan had still failed to prove 
by a preponderance of the evidence that it met the elements of the defense.  See 
38 M.R.S. § 1367. 
[¶7]  On January 17, 2019, the Board denied Sultan’s appeal and upheld 
the Commissioner’s remediation order with modifications.  The Board 
expressly declined to reach the issue of whether, “as a matter of law,” the 
third-party defense was available to Sultan in an appeal of a section 1365 order 
because the Board concluded that even if the defense were available, Sultan had 
failed to meet its burden to prove the elements of the defense by a 
preponderance of the evidence.  On February 14, 2019, Sultan timely appealed 
the Board’s decision to the Superior Court.  See M.R. Civ. P. 80C(b); 5 M.R.S. 
§ 11002(3) (2021).  On July 30, 2021, the court (Stewart, J.) affirmed the 
Board’s decision.  Sultan timely appealed.  See 5 M.R.S. § 11008(1) (2021); 
M.R. App. P. 2B(c)(1). 
II.  DISCUSSION 
[¶8]  Sultan argues that the Board erred in failing to hold that the 
third-party defense was available in the present action.  As noted above, the 
 
 
7 
Board declined to determine whether the third-party defense was available to 
a responsible party subject to a section 1365 order from the Commissioner.  
Rather, it stated that it had “considered the arguments of the parties but [found] 
that it did not need to decide, as a matter of law, whether the third-party 
defense is available to Sultan . . . because . . . even if [the defense was] available, 
Sultan ha[d] not met its burden to prove all the elements of the third-party 
defense.” 
[¶9]  “Where the Superior Court acts as an intermediate appellate court, 
we review directly the Board’s decision for abuse of discretion, error of law, or 
findings unsupported by substantial evidence in the record.”  City of Old Town 
v. Expera Old Town, LLC, 2021 ME 23, ¶ 13, 249 A.3d 141 (alteration and 
quotation marks omitted).  “‘[I]n dealing with a determination or judgment 
[that] an administrative agency alone is authorized to make, a court must judge 
the propriety of such action solely by the grounds invoked by the agency.  If 
those grounds are inadequate or improper, the court is powerless to affirm the 
administrative action by substituting what it considers to be a more adequate 
or proper basis.’”  Me. Motor Rate Bureau, 357 A.2d 518, 527 (Me. 1976) 
(alteration omitted) (quoting SEC v. Chenery Corp., 332 U.S. 194 (1947)).  
“Courts need to know what an agency has really determined in order to know 
 
 
8 
even what to review.”  Gashgai v. Bd. of Registration in Med., 390 A.2d 1080, 
1085 (Me. 1978).  “[W]e will not substitute our judgment for the Board’s.”  
Rossignol v. Me. Pub. Emps. Ret. Sys., 2016 ME 115, ¶ 6, 144 A.3d 1175. 
[¶10]  An affirmative defense is an “assertion of facts and arguments that, 
if true, will defeat the plaintiff’s or prosecution’s claim, even if all the allegations 
in the complaint are true.”  Affirmative Defense, Black’s Law Dictionary 
(11th ed. 2019).  If the section 1367(3) third-party defense is available in 
Department proceedings under section 1365, and if Sultan both affirmatively 
asserts it and satisfies its burden of proof, Sultan could seek relief from the 
Commissioner’s order to remediate the hazardous substances located on the 
site.  Alternatively, if the third-party defense is unavailable in Department 
proceedings under section 1365, the Board need not and should not consider 
evidence relating to those issues.  The question of whether the defense is 
available is thus a threshold issue that must be determined before the Board or 
the court can proceed to consider the merits of the defense. 
[¶11]  Because the Board failed to determine the availability of the 
third-party defense against a Commissioner’s order issued pursuant to a 
different section of Title 38, chapter 13-B, we are “powerless to affirm the 
administrative action.”  Me. Motor Rate Bureau, 357 A.2d at 527 (quotation 
 
 
9 
marks omitted).  We vacate the portion of the Board’s order in which the Board 
declined to address the availability of the third-party defense and do not reach 
the remainder of the issues presented on this appeal.  We remand for the Board 
to address the threshold question of whether the section 1367(3) third-party 
defense is available in proceedings under section 1365.  Once the Board 
addresses the availability of the defense and adequately sets forth the basis for 
its decision, see Palian v. Dep’t. of Health & Hum. Servs., 2020 ME 131, ¶ 41, 
242 A.3d 164, it need go no further.4 
The entry is: 
 
Judgment vacated in part.  Remanded to the 
Superior Court for remand to the Board of 
Environmental 
Protection 
for 
further 
proceedings limited to the issue of the 
availability of the defense afforded by 38 M.R.S. 
§ 1367(3) to other subsections within Title 38, 
chapter 13-B. 
 
 
 
 
 
 
 
 
 
 
 
 
4  If the Board concludes that the third-party defense afforded by section 1367(3) is available to 
Sultan, it’s original conclusion that Sultan had not met its burden of proving the defense would then 
become ripe for review.  See Avangrid Networks, Inc. v. Sec'y of State, 2020 ME 109, ¶ 37 n.11, 237 
A.3d 882. 
 
 
10 
 
Theodore A. Small, Esq. (orally), Skelton, Taintor & Abbott, Lewiston, for 
appellant Sultan Corp. 
 
Aaron M. Frey, Attorney General, Margaret A. Bensinger, Asst. Atty. Gen. 
(orally), and Jeffrey M. Skakalski, Asst. Atty. Gen., Office of the Attorney General, 
Augusta, for appellees Department of Environmental Protection at el. 
 
 
Androscoggin County Superior Court docket number AP-2019-03 
FOR CLERK REFERENCE ONLY