Can We Really Expect An Administrator Not To Administrate?

Posted on May 19, 2017 by Jeffrey Porter

This month EPA Administrator Scott Pruitt announced that he will personally pass judgment on any Superfund remedy estimated to cost more than $50 million.  Revisions to CERCLA Delegations of Authority 14-2 Responses and 14-21A Consultations, Determinations, Reviews and Selection of Remedial Actions at Federal Facilities, May 9, 2017.

Administrator Pruitt’s announcement begins with his unequivocal assurances that the “Superfund program is a vital function” of EPA, and that he is taking this action “to facilitate the more-rapid remediation and revitalization of contaminated sites and to promote accountability and consistency in remedy selection.”

Skeptics fear that Administrator Pruitt has some other secret objective.   But no one can seriously argue that this isn’t Administrator Pruitt’s decision to make.  The Superfund statute unequivocally says “[t]he President shall select appropriate remedial actions determined to be necessary” in accordance with the statute and the implementing regulations, and “which provide for cost-effective response.”  42 U.S.C. §9621(a).  The implementing regulations unequivocally delegate that responsibility to Administrator Pruitt  (well, to be precise, it is theoretically possible that another federal agency or a state can be a “lead agency” under the regulations but, in that unlikely case, the Administrator’s May 9th decision presumably wouldn’t apply).  

After all, it was a perceived need for prompt federal action to clean up the most complex contaminated sites in our country that drove the enactment of the Superfund statute over thirty-five years ago.  Because Congress perceived that need, the statute limits the ability of anyone, including state and local governments, to interfere with the selection and implementation of a Superfund remedy.

Over the decades, the contaminated sites posing the most immediate concern have been addressed, sites that would never have been prospects for Superfund listing thirty years ago have found their way into the program, and the Superfund statute has been interpreted, and reinterpreted, in regulations, countless judicial decisions, and EPA guidance documents.   If those regulations, judicial decisions and guidance documents have one thing in common, it is that they vest in EPA the maximum decision-making discretion permitted by the statute.

Because the sites posing the most immediate concern have been addressed, and what was once new is now the subject of thousands of pages of regulations, judicial decisions and guidance documents, anyone familiar with the Superfund program has to agree that regional program staff have, over the decades, been increasingly left mostly alone to make remedial decisions costing hundreds of millions of dollars.

And, as someone who has practiced in this area of environmental law for almost thirty years, I think it is equally clear that regional decision-making has attempted to soften the effect of Congress’s unambiguous statement of its intention that no one, including state and local governments, stands in the way of Superfund remedies by local consensus building, and that what Administrator Pruitt calls “consistency” has suffered as a result.

As a life-long Democrat, I have plenty of concerns about the Trump Administration’s environmental agenda.  But Administrator Pruitt has been anything but obtuse about his support of aspects of that agenda that concern me so I’m going to take him at his word regarding his intentions for the Superfund program, including because increased accountability and consistency in the Superfund program would be a very good thing.

Connecticut Adopts Municipal Brownfield Liability Relief Program

Posted on March 13, 2015 by Gregory Sharp

Many states and the federal government have struggled with the challenge of how to adapt statutory strict liability schemes imposing clean up obligations on property owners in such a way that will enable new investors to redevelop brownfields sites without fear of litigation over previous releases.

The Connecticut General Assembly has recently provided liability relief to municipal entities to encourage them to redevelop brownfield sites by removing potential liability concerns which might otherwise arise from acquiring title to previously contaminated property.

The Connecticut legislation defines brownfields as “any abandoned or underutilized site where redevelopment, reuse or expansion has not occurred due to the presence or potential presence of pollution in the buildings, soil or groundwater that requires investigation or remediation before or in conjunction with the redevelopment, reuse or expansion of the property.”

Historically, municipalities and their affiliates, such as redevelopment agencies, were reluctant to acquire brownfields properties by foreclosing tax liens, or through arms- length transactions, because the State’s Clean Water Act imposes joint and several liability on owners of contaminated property, even if they did not own the property at the time of the releases.  As such, if a municipal entity took title to contaminated property, it would run the risk of receiving an abatement order from the Department of Energy and Environmental Protection (“DEEP”) or being sued by third parties.

Under the new Municipal Brownfield Liability Relief Program, a municipality, or a qualified municipal affiliate, which qualifies for the program may take title to a brownfield property free of claims by the State or third parties for contamination existing on the property prior to the acquisition.

Assuming the property meets the definition of a brownfield under the statute, the municipality must meet four conditions to enter the program: a) that it intends to redevelop or facilitate redevelopment of the property, b) that it did not contribute to the contamination at the site, c) that it has no legal affiliation with a party responsible for the contamination, and d) that it is not under a previous obligation to remediate the property.

Another significant benefit of the new program is that it exempts a participating municipal entity from having to comply with the Connecticut Transfer Act.  That Act requires a seller of certain classes of property defined as an “establishment” under the Act to make a filing with the Department of Energy and Environmental Protection.  The filing requires that if there has been a release of hazardous waste at the property which has not been remediated, a party to the transaction must provide a certification that it will accept responsibility to conduct a full investigation and remediation under prevailing standards and guidelines.

Another benefit of the program is that a municipal entity is not required to fully investigate and remediate the property under the State’s Remediation Standard Regulations.  However, it must make good-faith efforts to minimize the risk to public health and the environment.  It also must submit a plan and schedule to facilitate both redevelopment and remediation, and it must also notify DEEP of any exceedances of Significant Environmental Hazard thresholds.

The legislature authorized the program in 2013, and DEEP provided application forms for the program in September of 2013.  So far the response has been discouraging, with only two municipalities entering a total of three sites in the program to date.  The lack of a robust response is likely attributed to the difficulty an underfunded DEEP faces in reaching out to the state’s 169 towns.

Whether the new liability relief program will eventually encourage more municipalities to participate in redeveloping and remediating brownfield properties remains to be seen.  However, along with a recently announced round of grants from the Department of Economic and Community Development of up to $7.5 million, it should at least open the door for  municipalities to take a second look at unproductive properties.

Superfund Rant For a New Congress

Posted on November 13, 2014 by Seth Jaffe

So the new Congress will be controlled by the GOP.  The House and Senate will consider various bills to rein in EPA authority.  Here’s one relatively modest suggestion for congressional consideration:  amend CERCLA to limit EPA’s authority to recover oversight costs.

How many of us in the private sector have been in meetings with EPA where EPA had more technical people in attendance than the PRPs who were performing the remedy?  How many of us have had clients receive oversight cost bills where the total amount of the oversight costs approached the amount spent on actually performing the remedy?  How many us have had oversight requests that have turned response actions into research projects?  All of this for a program that EPA’s own analyses always show to be at the bottom of the barrel when it comes to actual risks to the public.

Here’s the proposal.  I’m not suggesting that EPA have no authority to recover oversight costs.  Just limit it to 10% of the response costs incurred to actually design and implement the remedy.  Make it 15% if you want to be generous.

Mitch McConnell, are you listening? 

Minefields (Still) Ahead: EPA’s Improved Good Samaritan Policy for Abandoned Mines Doesn’t Pan Out

Posted on April 7, 2014 by Zach C. Miller

For over forty years, the risk of incurring major liability under the Clean Water Act (CWA) has effectively discouraged “Good Samaritan” volunteers from cleaning up abandoned hardrock mine sites throughout the U.S. Past efforts to amend the CWA to remove this disincentive have been blocked, based in part on the assumption that EPA policies alone should be sufficient to remove the threat of CWA liability and effectively encourage such cleanups. 

In the words of the Gold Rush prospectors, that assumption and related agency policies have simply not panned out. A Good Samaritan Initiative adopted by EPA in 2007 and clarified and “improved” in 2012 has had virtually no effect on removing this threat of CWA liability or causing actual cleanups involving water impacts to occur. Meanwhile, willing Good Samaritans continue to be discouraged from conducting useful remedial actions, and these problem sites remain untouched.

During this same period, flexible state and federal “brownfield” and voluntary cleanup programs have cleaned up hundreds of former industrial sites and revitalized key urban areas, including in lower downtown Denver. But some members of Congress have rigidly refused to apply similar common-sense approaches to abandoned mine sites.

The time has come to recognize that informal agency policies encouraging these voluntary mine cleanups have not fixed and legally cannot solve this long-standing problem and to embrace the practical types of legislative approaches that have worked in the urban brownfield programs. The Good Samaritan CWA amendments introduced in 2013 by Senator Udall and others offer just such a practical solution. Past opponents of such legislation should acknowledge that agency efforts alone cannot remove the existing disincentive for cleaning up these sites and should support this modest, practical step to facilitate these mine cleanups.  

The Problem. According to the GAO, there are over 160,000 abandoned hardrock mines, mainly in the western U.S., that can leach heavy metals such as lead, mercury and arsenic into the environment. EPA’s estimate is over three times higher. EPA further estimates that historic mines have contaminated over 40 percent of the watersheds in the west and would cost more than $35 billion to clean up. These former mines are considered “orphan” sites, because their owners and operators are either dead, defunct or insolvent.

Remediating these sites has proven to be an intractable problem for several reasons. One is the technical difficulties and enormous costs of remediating such sites in full compliance with applicable environmental laws. Another is the risk of incurring substantial liabilities or obligations under those laws for a non-compliant or partial clean up.

The Disincentive. While CERCLA contains a “Good Samaritan” provision that shields qualified non-liable volunteers from incurring liability under that law when they conduct voluntary remedial actions, the Clean Water Act (CWA) currently contains no such exemption. Because the most serious of these abandoned mine sites involve impacts to water quality, this threat of CWA liability has severely inhibited both private Good Samaritans and state and local governments from conducting common-sense, voluntary cleanups that would significantly improve the affected watersheds.

Beginning in 1995 and continuing to the present, Senator Baucus and others have introduced various “Good Samaritan” amendments to the CWA aimed at removing this major legal disincentive. However, because the amendments would have allowed less than full compliance with otherwise applicable water quality standards and discharge permit requirements, certain NGOs and members of Congress to date have strongly opposed and defeated such efforts.

This well-intentioned opposition has been misguided and a classic instance of the perfect being the enemy of the good. By demanding that remediation of these orphan sites be fully compliant and permitted without exception, only a handful of minor abandoned mine cleanups involving water have occurred during the last four decades.

Ineffective EPA Initiative. To address this Congressional logjam and currently discouraged Good Samaritans, EPA has laudably attempted to address this disincentive by adopting in 2007 an administrative “Good Samaritan Initiative”. The Initiative consisted of an EPA statement of Interim Principles and a “Comfort Letter” and model settlement agreement offered to non-liable entities that volunteer to remediate abandoned hardrock mines. This initial guidance focused primarily on the fact that, under the CERCLA 121(e) “permit shield,” no permit would be required under the CWA or other laws while an on-site CERCLA “removal” action was occurring. However, that guidance did not address the fundamental question troubling Good Samaritans about what happens once the removal is completed but some discharge unavoidably continues. As a result, that Initiative did little to allay those concerns and had no appreciable effect on increasing efforts to remediate abandoned mines with water impacts.

In recognition of that ineffectiveness, EPA in December 2012 attempted to bolster its 2007 Initiative by issuing a guidance Memorandum describing two clarifications to the 2007 Guidance. The first was that a CERCLA removal action could be extended through periodic monitoring or other activities, which would lengthen the period when the CERCLA permit shield would apply. However, the prospect of being engaged in a very-long-term CERCLA action has neither enthused Good Samaritans nor addressed their root concern about CWA liability once the CERCLA action is done.

To address that key issue, EPA further clarified that, based on the application of five listed factors, a Good Samaritan cleaning up an abandoned mine “might” not be considered by EPA to be a liable “operator” required to obtain an NPDES discharge permit. All of those factors relate to whether the volunteer has the “power or responsibility” to access the site and control the ongoing discharge after its remedial action is finished.

While issued with much fanfare in 2012, this “improved” Good Samaritan Initiative has again had virtually no effect on addressing the concerns of potential volunteers or increasing cleanups of these sites, for several reasons. First, EPA has emphasized that this Initiative merely explains its current interpretation but is not binding on EPA, third party NGOs, or the courts and “may not be relied on to create a right or benefit … by any person.” Not exactly the assurance that Good Samaritans want and need. Second, EPA stresses that this guidance applies only to Good Samaritans at orphan mine sites, but the factors for determining whether an entity is a CWA-liable “operator” cannot be unique to those parties. As a result, potential Good Samaritans have rightly been skeptical whether they can make any potential CWA liability vanish simply by arranging that their right to access and conduct operations on the affected site terminates upon completion of some defined task. If a mining lessee or contractor attempted such an arrangement, EPA and the courts no doubt would reject any claim it was not a CWA-liable operator. There currently is no legal basis to treat volunteers any differently. This point also offers no comfort to a governmental volunteer, who likely will always have the power of access and thus trigger operator liability.

The 2012 memo also repeatedly indicates that, if a Good Samaritan is not deemed a responsible operator, then the site owner would be required to comply with NPDES permitting requirements. But EPA ignores the fact that, at these orphan sites, there simply is no owner (unless it is the U.S., which to date has largely ignored its own liability).

Over a year after issuance of this “improved” Good Samaritan Initiative, it is clear that this EPA policy has been ineffective in increasing mine cleanups or addressing the CWA legal disincentive for such actions. To the contrary, several groups dedicated to these voluntary efforts have made clear that these nonbinding agency guidance documents have had little to no impact, and the groups’ efforts continue to be stymied in the absence of effective legislative reform.

The Proposed Legislative Fix. To address this problem, Colorado Senators Udall and Bennett have introduced S. 1443, the Good Samaritan Cleanup of Abandoned Hardrock Mines Act of 2013. The bill creates a new Good Samaritan Permit under the CWA, to be issued by EPA or an approved State or Tribe, that would authorize a Good Samaritan volunteer to conduct a specified remedial action at an abandoned mine site. Those actions could include relocating waste rock, re-routing drainages, establishing wetlands, and similar measures that would greatly improve watershed conditions, but they would not need to result in complete compliance with otherwise applicable water quality standards or require a long-term discharge permit. Compliance with that special permit would then shield the volunteer from liability under the CWA and cure the current disincentive for volunteers willing to address these sites.

This huge, languishing problem of abandoned hardrock mine sites needs a solution. This bill isn’t perfect. But it’s a good start. Let’s get started.

Brownfields Redevelopment – a New Trust Mechanism to the Rescue?

Posted on March 5, 2014 by Elliott Laws

Environmental response trusts created as a result of corporate bankruptcies demonstrate that workable mechanisms exist to protect against future environmental liability. This prompts the question: Can this concept be expanded and become an official amendment to CERCLA, or a separate Brownfields law?

The Revitalizing Auto Communities Environmental Response Trust (“RACER Trust”), the largest response trust every created, owns, manages and remediates the former holdings of General Motors. It includes 89 properties, 60 of which needed environmental remediation, with over $640 million provided to RACER Trust, nearly $500 million of that designated to address environmental liability. The RACER Trust holds the liability for onsite contamination when it sells a property as long as the new owner allows the remediation work to continue. This liability shield also travels with the land, providing security to future purchasers with regard to unexpected contamination that could otherwise cost thousands or millions of dollars. What is unique about this and other trusts, is the cooperative nature which the Trustees and the regulatory agencies have displayed in addressing contamination and remedial activities, very different than the standard contentious approach which routinely exist at sites today.

There have been several legislative proposals in the 113th Congress to provide fixes to CERCLA, the cornerstone law of environmental remediation. The proposed legislation, however, is more focused on transferring authority over clean-up of sites to the states and implementing credit for state contributions to the remediation. In its testimony to the House Energy and Commerce Committee last May, EPA’s Office of Solid Waste and Emergency Response laid out the reasons for its opposition to many of the legislative proposals. The main points of concern are over the potential delays, increased administrative and litigation costs, and conflicting clean-up authority at sites.

But instead of legislation that could result in further slowing down an already protracted process, what about creating opportunities and enticements for development of contaminated properties? Whether under the CERCLA regime, or through the Brownfields program, there are ways to create environmental liability shields that would restore these properties to useful status, providing industry and jobs for the surrounding communities.  In 2007, a nascent proposal to address this issue was developed. The draft legislation called for the creation of the Recovered Property Protection and Assurance Trust or R-PAT for transfer of contaminated properties and their associated environmental liabilities to a quasi-governmental trust. The R-PAT concept would have required a current property owner to pay a significant fee in order to place the land in the trust, and then cleaned up and conveyed, liability-free, to a purchaser. For various reasons, including the quasi-governmental nature of the trust and the floundering economy, the proposal was a non-starter.

However, given the dearth of other viable proposals, perhaps it is time to re-examine the trust concept and how contaminated properties can be best put back to profitable use. If we really want to streamline CERCLA or improve the Brownfields program, then let’s talk about how to get the land back into use, how to remove the time consuming and wasteful antagonism surrounding remediation and how to provide bullet-proof shields for bona fide purchasers now and in the future.

Some Thoughts On Phase I Reliance Letters and CERCLA All Appropriate Inquiry

Posted on January 23, 2012 by Charles Efflandt

Phase I report “reliance letters” issued by an Environmental Professional (EP) may be misunderstood and misused in the context of conducting CERCLA All Appropriate Inquiry (AAI). The term “reliance letter,” in fact, is nowhere to be found in either the Federal All Appropriate Inquiry Regulations or the related ASTM Standard E 1527-05.

Consider the following common AAI situation: A client has contracted to buy property for which a Phase I Environmental Site Assessment (Phase I ESA) report was recently prepared for the seller. To avoid the costs of obtaining a new Phase I report, the client asks whether it can use the Phase I provided by the seller to satisfy its environmental diligence obligations. The Phase I report explicitly states that it can be used and relied upon only by the contracting user for which it was prepared. The EP may be willing to issue a reliance letter to the client for a fee or occasionally at no cost. But what exactly is a reliance letter and how does it relate to the objective of compliance with AAI requirements?

Unauthorized use prohibitions and reliance letters are intended to protect EPs from potential claims by third-parties who may rely on a Phase I report prepared for another. Nevertheless, an unsophisticated third-party recipient of a reliance letter may construe such a letter as documentation of compliance with AAI requirements. A reliance letter establishes the recipient’s status as an authorized “user” primarily for purposes of the party’s legal relationship with the EP. Requesting a reliance letter to establish authorized user status is only one of several AAI issues that should be considered by third-party users of Phase I reports.

Other important questions to be considered include whether the one year/180 day regulatory shelf-life of the report has expired. Also, what independent inquiries must a third-party undertake to satisfy the AAI regulations? Third-party recipients of reliance letters may easily overlook conducting the “user” inquiries required by the AAI regulations.

The ASTM Standard further contemplates that the results of the user’s separate inquiries be provided to the EP prior to completion of the EP’s Phase I tasks (the AAI regulations are less clear). How do those provisions of the ASTM Standard apply to the third-party reliance situation? Is the third-party user obligated to accumulate the necessary user information and provide it to the EP after-the-fact? If so, how should the EP deal with any new substantive information? Also, if the results of the user inquiry are not referenced in the Phase I report, how does the third-party document that it has satisfied those obligations?

Of course, the EP may decline to issue a reliance letter or may impose costs or terms that are unacceptable. The EP may even suggest that, absent such use and reliance authorization, a new Phase I ESA must be conducted. But is that correct? The regulations set out conditions for third-party use of information contained in a Phase I report prepared for another. No requirement that the EP preparing the report issue a reliance letter is included among those conditions. The ASTM Standard specifically provides that no particular legal relationship between the EP and the user is necessary for the user to satisfy AAI obligations. With or without a reliance letter, the AAI regulations and ASTM Standard contemplate that the third-party may use the results of a report prepared for another person to partially satisfy its AAI obligations.

These questions, and perhaps others, suggest that a third-party user of a Phase I report prepared for another should be aware of the limitations of a reliance letter, if issued, and carefully consider all pertinent regulations in conducting its AAI.

Assessing the Assessor: Are We Headed to Heightened Scrutiny of the Phase I Environmental Site Assessment?

Posted on July 19, 2011 by Charles Efflandt

Phase I Environmental Site Assessments (Phase I ESAs) are conducted: (1) to assess environmental and health risks related to the acquisition and development of real property and (2) as a critical component of establishing the Bona Fide Prospective Purchaser (BFPP) or related defenses to “owner” liability under CERCLA. A recent ACOEL posting discussed the importance of compliance with post-closing BFPP obligations. What about the adequacy of the Phase I ESA process itself?

 

 

A Phase I ESA must satisfy the requirements of “All Appropriate Inquiry” (AAI), which have been incorporated in the ASTM E 1527-05 Standard. Phase I ESAs are not, however, typically examined by environmental agencies and there is a dearth of judicial interpretation of the AAI requirements. To date, the determination of AAI compliance and BFPP status has been the province of the regulated and not the regulators.

 

The scenario is familiar. A transaction includes the acquisition of commercial property. The client has a general notion of AAI and the importance of the Phase I ESA to achieve BFPP status. The client usually does not know, or care to know, the specific elements of AAI. The Phase I ESA often becomes a transactional commodity to be purchased from the lowest bidder. Lawyers are content to accept the results of the bidding war, relying on the self-certification of the Environmental Professional (EP) that the assessment is compliant with the ASTM Standard. The ESA is conducted, the report issued and the transaction closed with everyone satisfied that environmental risk management has been adequately addressed. This process appears appropriate, at least when agencies or courts are not called upon to perform a more rigorous evaluation.

A February 14, 2011 report issued by the EPA Office of Inspector General (OIG) may serve as the impetus for a more cautious approach to selecting the EP in transactional and Brownfield grant matters and for more carefully evaluating Phase I reports. The OIG report documents the results of its evaluation of 35 AAI/Phase I reports generated by EPs for Brownfields Program grantees. The OIG concluded that none of the Phase I reports satisfied all of EPA’s AAI rule requirements. OIG criticized EPA for its complete reliance on EP self-certifications of compliance, its failure to establish accountability for compliant reports and the lack of procedures for reviewing reports to determine compliance with AAI requirements.

 

Although many of the AAI deficiencies cited by OIG were arguably very minor, the message sent was clear: Noncompliant Phase I ESAs introduce risk that the environmental conditions of a property have not been adequately assessed for the purpose of making informed property use and redevelopment decisions or for identifying risks to human health and the environment. OIG’s recommendations were equally clear - stop relying on EP self-certifications and develop a process for more careful scrutiny of AAI reports to determine actual compliance. The issues raised by the OIG report can, of course, be easily transformed into legal arguments in court where BFPP status may be in issue.

 

I suspect that many of us have been lulled to sleep by the self-certifications of the EP. Has the time arrived to more carefully assess the assessor and treat the Phase I ESA as a site-specific professional evaluation and not a low-bidder commodity required simply to seal the deal?

And Now There Are Two

Posted on March 11, 2011 by Thomas Lavender, Jr.

In cases of first and second impression, federal district courts in South Carolina and California have now ruled on the bona fide prospective purchase (“BFPP”) defense following its enactment in 2002 and EPA’s subsequent “all appropriate inquiries” (“AAI”) implementing regulations in 2006. In Ashley II of Charleston, L.L.C. v. PCS Nitrogen, Inc., Judge Seymour of the District of South Carolina undertook an exhaustive 55-page examination of the facts surrounding the purchase by Ashley II of several parcels from various owners. In the more succinct decision of 3000 E. Imperial, LLC, v. Robertshaw Controls Co., et al., Judge Anderson of the Central District of California addressed the divisibility of harm in connection with a purchaser’s cost recovery action against the seller under CERCLA §107(a) and also addressed the plaintiff’s BFPP status.

 

Ashley II

 

In a lengthy discussion of the history of the site, the Court examined the involvement of each of the prior owners as well as the actions of Ashley II in determining whether the harm was divisible. Ultimately, the Court determined that the harm was not divisible; however, the Court did construct a basis for allocating liability. Of particular note was the Court’s extensive analysis of the bona fide prospective purchaser status of Ashley II; but also of interest were the Court’s holdings on the issue of contractual indemnifications and release agreements.

One thing that the Court failed to give any attention to was the Consent Agreement entered into between the State of South Carolina and Ashley II. This document bears some resemblance to the State’s Brownfield non-responsible party contracts. This document attempted to establish Ashley II as a non-responsible party and afforded it contribution protection.  

 

Ultimately, the Court set forth an allocation of the response costs by percentage attributable to each party, with Ashley II bearing its allocation along with those for which it had indemnified.

 

3000 E. Imperial

 

The California District Court’s decision came on the heels of the Ashley II decision. Obviously, the history of the 3000 E. Imperial site was less complex. There, the Court discussed at some length the testimony of two competing experts on when the USTs in questions were likely to have resulted in a release. The Court then examined divisibility of harm in conjunction with the Burlington decision and considering the elements of § 433A of the Restatement (Second) of Torts. Ultimately, the Court concluded that the defendant’s claim for divisibility was insufficient. The Court then turned to the defendant’s counterclaim for § 107 cost recovery as a PRP. Obviously, the plaintiff had claimed that it was not a PRP by virtue of its status as a BFPP. Following a brief examination of the plaintiff’s actions following closing and a fleeting reference to “appropriate care,” the Court concluded that the plaintiff did take “reasonable steps” to prevent further releases and was entitled to BFPP status. 

Just What We Need: More Community Engagement in Superfund Sites

Posted on May 26, 2010 by Seth Jaffe

Last week, EPA’s Office of Solid Waste and Emergency Response announced release of its Community Engagement Implementation Plan. Who could be against community engagement? It’s as American as apple pie. It’s environmental justice. It’s community input into decisions that affect the community. It’s transparency and open decision-making.

 

Call me a curmudgeon, but I’m against it. Study after study shows that, in terms of the actual risks posed by Superfund sites, we devote too many of our environmental protection dollars to Superfund sites, when we should be focusing on air and water. Why do we keep doing this? Because the community demands it. As Peter Sandman has noted, perceptions of risk are driven only partly by the actual hazard posed. To a significant degree, those perceptions are more driven by outrage over the situation. In some circumstances, what Sandman calls outrage management makes sense, but I’m skeptical that EPA’s community engagement initiative is really about outrage management.

 

In any case, here’s the public policy question of the day. Does it really make sense to spend scarce environmental protection resources, not to reduce risk, but to reduce outrage?

Energizing Brownfields

Posted on May 7, 2010 by George von Stamwitz

It has always amused me how many people are involved with Brownfields work as compared to how few projects have been completed. It is tough to make the economics work on a Brownfield development in the best of times. Thanks to clean energy rules and incentives this may be changing.

 

Brownfields and clean energy have several synergies. Brownfields are often in industrial corridors, with great infrastructure and proximity to electrical grids. Biomass projects in particular need access to efficient transportation networks in order to move large volumes of material. Clean energy projects such as solar, wind and biomass plants work well with risk based remediation and institutional controls required for cost effective risk management at a Brownfields sites.



Add to these synergies a vast array of incentives, mandatory quotas and grants for clean energy and we just may have a path to economic viability for some Brownfields projects. EPA has a task force known as ER3 to help facilitate such projects. Keep your eye on a project in Charlotte, North Carolina known as ReVenture Park which seems destined to put wind energy, wastewater treatment and a biomass plant on a large, complex CERCLA/RCRA site.

Tenant Liability Under CERCLA: Is It time To Move Beyond Enforcement Discretion Guidance?

Posted on December 18, 2009 by Charles Efflandt

Arguably the most significant moderation of CERCLA’s harsh “owner” liability scheme occurred in 2002 through the enactment of the “Brownfields Amendments.” Included in those amendments was the creation of new liability protection for “Bona Fide Prospective Purchasers” (“BFPP”) who acquire ownership of a facility after January 11, 2002.

 

A relatively straightforward roadmap for prospective purchasers to achieve BFPP status is set out in the Brownfields Amendments and the subsequently-promulgated All Appropriate Inquiry rule. The extent to which tenants might obtain protection from possible “owner” liability has, however, always been far less certain.

 

The potential applicability of this liability defense to tenants is currently limited to a short parenthetical in CERCLA §101(40). Specifically, a “tenant of a person” that achieves BFPP status shares the liability protections of the property purchaser. Although this “derivative” BFPP status established by the Brownfields Amendments helped clarify the reach of the liability defense with respect to tenants, a number of questions remained unanswered. For example, what happens if the property owner loses its BFPP status through non-compliance with the statutory requirements? Also, does the language of the amendment as it relates to tenants preclude a tenant from independently achieving BFPP status?

 

Earlier this year, EPA’s Office of Enforcement and Compliance Assurance issued an Enforcement Discretion Guidance (“Guidance”) that addresses the applicability of the BFPP definition to tenants. That Guidance clarifies how EPA intends to exercise its enforcement discretion with respect to tenants “on a site-by-site” basis. In essence, the Guidance provides:

 

 

  • Tenants with “derivative” BFPP status will lose that status if the property owner ceases to be a BFPP for non-compliance with one or more of the statutory requirements. Nevertheless, EPA may exercise its enforcement discretion and not pursue the tenant under an owner liability theory if the tenant satisfies certain conditions, including not having disposed of hazardous substances on the property and fully cooperating with EPA in its response actions.
  • Tenants whose lease documents establish sufficient “indicia of ownership” and who satisfy all requirements of CERCLA §101(40)(A)-(H) and 107(r) may be deemed to have independently achieved BFPP status and thus possibly avoid an enforcement action under CERCLA’s owner liability provisions. Indicia of ownership include the term of the lease, the range of permitted property uses by the tenant, reserved rights on the property by the owner, etc.

 

EPA’s Guidance is a welcome clarification of how the agency intends to enforce CERCLA’s owner liability provisions in these situations. However, the Guidance goes beyond the derivative status language in the Brownfields Amendments in its discussion of potential limitations on tenant “owner” liability. The problem is that a guidance is just that. It offers none of the statutory certainty that prospective purchasers now enjoy under CERCLA.

 

Because of the importance of tenant-operated properties to the economy in general and to the development of Brownfields property in particular, I would submit that tenants should be afforded the same clarity and certainty with respect to potential liability under CERCLA as those who acquire title to the property. As the Brownfield Amendments are largely self-implementing, that clarity and certainty is likely to be achieved only through further amendments to the liability provisions of CERCLA.

EPA Issues a New Policy on Superfund Negotiations: Time For Another Rant?

Posted on October 19, 2009 by Seth Jaffe

Late last week, Elliott Gilberg, Acting Director of EPA’s Office of Site Remediation Enforcement (OSRE) issued an Interim Policy on Managing the Duration of Remedial Design/Remedial Action Negotiations. Members of the regulated community may not be surprised by the contents of the memo, but they certainly will not be pleased. In brief, the memorandum fundamentally makes two points:

EPA wants to shorten the duration of RD/RA negotiation

EPA is going to use the heavy hammer of unilateral administrative orders, or UAOs, to keep PRPs’ feet to the fire and ensure that negotiations move quickly.

PRPs will likely agree that shortening the duration of negotiations would be a good outcome in the abstract – but achieving it by greater use of UAOs? I don’t think so.

I can only wonder if EPA has even considered the impact of the Burlington Northern decision here. Is this a perverse reaction from EPA? A metaphorical throwing down the gauntlet to PRPs? It certainly feels that way.

I have a different suggestion, if EPA truly wants to shorten negotiations. First, acknowledge Burlington Northern and compromise on the merits in those great majority of cases where there are legitimate divisibility arguments. Second, stop acting like the last bastion of command and control regulation. Set cleanup standards and then, to the maximum extent permitted by existing law, let PRPs clean up to those standards, without micromanaging every detail of the cleanup process.

PENNSYLVANIA CLEAN WATER AND BROWNFIELDS INVESTMENT OF STIMULUS FUNDS

Posted on February 27, 2009 by Joseph Manko

Among the priorities under the $787.5 billion American Recovery and Reinvestment Act of 2009 is repairing, rebuilding, and constructing the nation’s water infrastructure. Approximately $6 billion will augment the EPA’s clean water and drinking water state revolving funds, of which approximately $221 million will be disbursed to the Commonwealth of Pennsylvania’s Infrastructure Investment Authority (PennVest). The governing board of PennVest is appointed by Governor Rendell, and I have been serving as its chair for the past six years.

 

PennVest administers the approximately $300 million annual allotment of Clean Water and Drinking Water funds previously supplied by EPA on a matching basis with Pennsylvania. These funds will now be augmented by the $212 million in stimulus funds. The Clean Water Fund addresses waste water infrastructure. The fund also addresses brownfields (with its protection of water quality) and storm water, whereas the Drinking Water Fund is strictly for water supply and distribution. At least 50 percent of the funding must be in the form of grants.

 

With the current emphasis on sustainability, alternative energy, greenhouse gas emission reduction and the need for more stringent control over stormwater run-off, the allocation of stimulus funds by PennVest will focus on innovative green technology, including particularly, controlling stormwater and remediating brownfields (at least 20 percent of the stimulus funding must be used for “green infrastructure”.)

 

Although the final disbursement of the economic stimulus funding will be affected by various regulations, the awarding of grants and loans will likely be on the same timetable as in the past with an emphasis on “shovel ready” projects. Funding agreements must be entered into and contracts for the full amount signed within a year.  The ultimate goal is to immediately increase the amount of jobs needed to construct the infrastructural repair, rebuilding and construction. 

PENNSYLVANIA CLEAN WATER AND BROWNFIELDS INVESTMENT OF STIMULUS FUNDS

Posted on February 27, 2009 by Joseph Manko

Among the priorities under the $787.5 billion American Recovery and Reinvestment Act of 2009 is repairing, rebuilding, and constructing the nation’s water infrastructure. Approximately $6 billion will augment the EPA’s clean water and drinking water state revolving funds, of which approximately $221 million will be disbursed to the Commonwealth of Pennsylvania’s Infrastructure Investment Authority (PennVest). The governing board of PennVest is appointed by Governor Rendell, and I have been serving as its chair for the past six years.

 

PennVest administers the approximately $300 million annual allotment of Clean Water and Drinking Water funds previously supplied by EPA on a matching basis with Pennsylvania. These funds will now be augmented by the $212 million in stimulus funds. The Clean Water Fund addresses waste water infrastructure. The fund also addresses brownfields (with its protection of water quality) and storm water, whereas the Drinking Water Fund is strictly for water supply and distribution. At least 50 percent of the funding must be in the form of grants.

 

With the current emphasis on sustainability, alternative energy, greenhouse gas emission reduction and the need for more stringent control over stormwater run-off, the allocation of stimulus funds by PennVest will focus on innovative green technology, including particularly, controlling stormwater and remediating brownfields (at least 20 percent of the stimulus funding must be used for “green infrastructure”.)

 

Although the final disbursement of the economic stimulus funding will be affected by various regulations, the awarding of grants and loans will likely be on the same timetable as in the past with an emphasis on “shovel ready” projects. Funding agreements must be entered into and contracts for the full amount signed within a year.  The ultimate goal is to immediately increase the amount of jobs needed to construct the infrastructural repair, rebuilding and construction.