Substantive Dispute over Land Application of Biosolids Remains Unresolved

Environmental Litigation

LandfillForm over substance continues to obscure the substantive issue presented in the case of the City of Los Angeles (City) vs. Kern County (County). At its core, the dispute involves the land application of biosolids. Biosolids are organic material produced during the processing and treatment of wastewater. Historically, waste by-products like biosolids were disposed of in a landfill or were incinerated. With environmental concerns on the rise, more sustainable practices have been identified to dispose of biosolids, one of which includes land application.

The dispute between the City and County over the land application of biosolids began in the early 1990s when the City began working with County farmers to utilize biosolids in land application as fertilizer for crops. After several years of successful land application, residents of the County passed a measure banning the practice. The practice was successfully portrayed as the City disposing of its waste in the County rather than keeping the waste in the City. Residents of the County overwhelmingly passed the measure and the City sued to block implementation of the measure. Years of protracted litigation between the City and County culminated in the most recent decision by the California Supreme Court (Court).

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ASTM Issues New Standard For Phase I Environmental Site Assessments

Contaminated Property

OLYMPUS DIGITAL CAMERAOn November 6, 2013, ASTM revised its standard for conducting Phase I environmental site assessments, known as Standard E1527-13 (entitled “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process”).  ASTM E1527-13 is the first revision to the ASTM Phase I standard since its 2005 revision of the standard (known as ASTM E1527-05).

The ASTM standards are a helpful tool for parties seeking to avoid, or at least minimize, potential liability pursuant to the federal Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA,” also known as “Superfund”).  CERCLA imposes liability without regard to fault or negligence on present facility owners and certain past owners, as well as certain other parties, for any environmental contamination found on the property.  This means that a purchaser and current owner of land contaminated by the actions of others could be held liable under CERCLA for the cleanup of the property.  Fortunately, CERCLA has a few defenses for these situations for so-called “innocent landowners,” “bona fide prospective purchasers,” and “contiguous property owners.”  However, to qualify for these defenses, CERCLA requires a property owner to conduct “all appropriate inquiries” on or before the date of acquiring the contaminated property, among other requirements.

Prior to November 2005, there was no federally approved statute or regulation defining the procedure that a prospective purchaser must follow in conducting all appropriate inquiries.  However, on November 1, 2005, the United States Environmental Protection Agency (“EPA”), issued a final rule entitled the “Standards and Practices for All Appropriate Inquiries.”  Effective on November 1, 2006, the All Appropriate Inquiries Rule for the first time established federal standards and practices for conducting all appropriate inquiries, as a first step to qualifying for one of the elusive CERCLA defenses.

While establishing its own standards for how all appropriate inquiries should be conducted, the most important aspect of the All Appropriate Inquiries Rule from a practical standpoint was the rule’s endorsement of the ASTM E1527-05 standard for conducting Phase I assessments.  Issued the same date as EPA’s All Appropriate Inquiries Rule, the ASTM E1527-05 standard provided a blueprint for environmental consultants to follow to ensure compliance with CERCLA’s all appropriate inquiries requirements.

However, because ASTM has recently revised (and replaced) its Phase I standard, there is some ambiguity regarding the applicable standard to follow to ensure compliance with CERCLA’s all appropriate inquiries requirement.

On August 15, 2013, EPA issued a direct final rule amending the All Appropriate Inquiries Rule, effective on November 15, 2013, to approve use of the ASTM E1527-13 standard to satisfy the all appropriate inquiries requirement.  The rule also continued to allow use of the 2005 standard for that purpose.  That same day, EPA also issued a proposed rule that contemplated amending the All Appropriate Inquiries Rule to approve use of the ASTM E1527-13 standard to satisfy the all appropriate inquiries requirement.  The proposed rule sought public comments on the rule amendment.  If you are confused about EPA issuing a direct final rule and proposed rule on the same day to accomplish the same goal, you are not alone.  EPA did this to allow comments, via the proposed rule, on the amendment, because it did not expect any adverse comments.

However, EPA did receive subsequent adverse public comments.  Several commenters raised concerns about EPA’s decision to continue to recognize the 2005 standard as compliant with the All Appropriate Inquiries Rule.  In particular, some commenters indicated that referencing two standards with different requirements, as discussed below, makes it unclear what parties such as potential real estate purchasers seeking to benefit from the All Appropriate Inquiries Rule must do.  Accordingly, EPA withdrew the direct final rule on October 29, 2013, before its effective date.

On December 30, 2013, in what feels like déjà vu, EPA issued a new final rule, effective immediately, amending the All Appropriate Inquiries Rule to approve use of the 2013 standard and to continue allowing use of the 2005 standard.  However, perhaps in response to the public comments described above, EPA indicated that it intends to publish a proposed rule “in the near future” that will propose amending the All Appropriate Inquiry Rule to remove the reference to the ASTM 1527-05 standard.  EPA will accept public comments on that forthcoming proposed rule.

There are a few important differences between the 2005 and 2013 ASTM standards:

  • Vapor intrusion pathway must be considered.  ASTM added a definition of “migrate/migration,” which refers to the movement of hazardous substances or petroleum products in any form, including “vapor in the subsurface.”  This definition means vapor intrusion risk, which is a quickly evolving area of environmental law, must be considered in the environmental site assessment process.
  • Simplified definition of “recognized environmental condition” (“REC”).  ASTM simplified its definition of REC in the 2013 standard to encompass conditions that suggest a release or threatened release of a hazardous substance at the property.  The term is now defined as “the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property: (1) due to release to the environment; (2) under conditions indicative of a release to the environment; or (3) under conditions that pose a material threat of a future release to the environment.  De minimis conditions are not recognized environmental conditions.”
  • “Historical recognized environmental condition” (“HREC”) definition limited.  ASTM now defines HREC to mean a past release of hazardous substances or petroleum products that has been addressed to the satisfaction of the applicable regulatory authority or meets unrestricted use criteria without institutional or engineering controls (i.e., property suitable for residential use).  However, a past release that may have previously constituted only an HREC could constitute a REC at the time of the report if, for example, regulatory cleanup criteria have been made stricter.
  • “Controlled recognized environmental condition” (“CREC”) added as a new term.  ASTM has added a definition for CREC, which means “a recognized environmental condition resulting from a past release of hazardous substances or petroleum products that has been addressed to the satisfaction of the applicable regulatory authority (for example, as evidenced by the issuance of a no further action letter or equivalent, or meeting risk-based criteria established by regulatory authority), with hazardous substances or petroleum products allowed to remain in place subject to the implementation of required controls.”
  • Stricter regulatory file review requirement.  The 2013 standard imposes a stricter standard for conducting regulatory file reviews.  If the subject property or an adjoining property is listed on one or more of the standard environmental record sources that must be searched (e.g., the CERCLA National Priorities List of contaminated sites, the federal Resource Conservation and Recovery Act hazardous waste generator list, etc.), then the environmental professional should review “pertinent regulatory files and/or records associated with the listing.”  If the environmental professional chooses not to conduct this review, he or she must explain why in the Phase I report.  As an alternative to this file review, the environmental professional can review files and records from alternative sources, such as on-site records, user-provided records, etc., and include that information in the report along with a statement that the environmental professional believes this information is sufficient to evaluate RECs, HRECs, CRECs, and de minimis conditions.

What should a practitioner do?  For the time being, compliance with either the 2005 or 2013 standard will technically satisfy the All Appropriate Inquiries Rule and potentially allow parties to reap the benefits of CERCLA’s landowner liability protections.  However, ASTM indicated its 2005 standard has been superseded and replaced.  In addition, EPA stated in its new rule that the 2013 standard includes improvements to the previous standard and recommends that environmental professionals and prospective purchasers use the 2013 standard.  So it would be wise for those parties to begin complying with the 2013 standard now to ensure maximum potential protection from CERCLA’s onerous liability scheme.

City’s Decision to Not Prepare an EIR Upheld Under Substantial Evidence Standard

Environmental Litigation

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Earlier this month, in Latinos Unidos De Napa v. City of Napa, the California Court of Appeals upheld the city of Napa’s determination that it did not have to prepare an environmental impact report (EIR) under the California Environmental Quality Act (CEQA) when enacting minor changes to its general plan and zoning ordinances.

Napa prepared a program EIR prior to adopting its comprehensive update of its general plan in 1998.  The general plan set forth Napa’s future plans for development through the year 2020.  The program EIR analyzed the impacts of future projected growth within the city through the same time period.  Although the future housing element was not updated at that time, the program EIR analyzed the impacts of the existing housing elements.

In 2009, Napa began the process of updating its housing element and prepared an initial study under CEQA.  Among other things, the initial study analyzed the extent to which the changes contemplated by the adoption of the housing element could result in new or different environmental impacts not already analyzed with respect to the general plan.  Based on this review, the city determined that the project was within the scope of the program EIR and required no further environmental review.

Petitioner, Latinos Unidos de Napa, brought a challenge contending that the city did not comply with CEQA because a new EIR was needed in connection with its adoption of the housing element.  The court applied the substantial evidence test and determined only whether the administrative record as a whole provided substantial evidence to support the city’s determination that the changes in the project or its circumstances were not so substantial as to require major modifications to the EIR.  The court found that Napa’s determination was supported by substantial evidence because no aspect of the project involved approval of any actual development or other activity.  The project merely consisted of limited amendments to the housing element and land use element of the general plan and minor amendments to the city’s zoning ordinance.  In finding that Napa’s decisions were supported by substantial evidence, the court reiterated that it is the petitioner that bears the burden and must cite to all relevant evidence.

Given the expense that an EIR can be for a city to conduct, this case helps define instances in which such an expense can be saved.  The case also highlights the importance for cities to support its decisions not to prepare an EIR in the administrative record, since that will be the focus of the court’s analysis.

EPA ISSUES NEW SUPERFUND GUIDANCE

Contaminated Property

Settlement plays a fundamental role in the Environmental Protection Agency’s (“EPA”) Superfund enforcement program. Potentially Responsible Parties (“PRPs”) seeking to resolve their liability through the settlement process should take note that EPA recently issued two new guidance memoranda on its settlement procedures.  One memorandum sets forth revised procedures for managing the duration of remedial design/remedial action negotiations and notably encourages the use of orders known as Unilateral Administrative Orders (“UAOs”) in the face of unsuccessful negotiations.

The recent memorandum, entitled Revised Policy on Managing the Duration of Remedial Design/Remedial Action Negotiations, and dated September 21, 2012, is aimed at strengthening EPA’s negotiation practice, shortening the duration of negotiations, and achieving timely settlements.  Of note to PRPs is that EPA’s new guidance strongly endorses use of UAOs, stating: “We encourage use of EPA’s UAO authority in appropriate cases as a key component to expediting the RD/RA negotiation process.”  The Guidance further cautions that “Potentially Responsible Parties (PRPs) should know during negotiations that EPA is willing and ready to issue a UAO if they unreasonably delay settlement.”  The memorandum is available here for further review.

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Is Your Vehicle a CERCLA Facility?

Contaminated Property

While we tend to think of a CERCLA “facility” as the real property where environmental contaminants have come to be located, it is important to remember that CERCLA’s definition of “facility” is actually much broader than that and can serve to open the door to “Potentially Responsible Parties” not considered in your initial cost recovery analysis.

Pursuant to CERCLA, the owner of a facility from which hazardous substances have been released is liable for the costs of responding to the release.  Two recent CERCLA cases  involving motor vehicles illustrate how CERCLA’s broad definition of “facility” expands CERCLA “owner” liability beyond ownership of contaminated real property to ownership of equipment and vehicles from which contaminates have been released.  These cases also provide us with an answer to the question:  Is your vehicle a CERCLA facility?  And the answer is:  It depends.

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CEQA EXCEPTION FOR BIKE LANES NEARING THE FINISH LINE

Green Building

While most attempts to push-through last-minute CEQA reform were parked until next year, one bill, AB 2245, glided through the legislature and now heads to the finish line on Governor Brown’s desk for signature.  The bill, which provides streamlined environmental review for certain bike lane projects, was unanimously passed by the State Assembly on August 24th after receiving only one dissenting vote in the Senate.

AB 2245 exempts from the California Environmental Quality Act (CEQA) bike lane projects in urbanized areas that require repainting of streets and highways, as opposed to widening, when the restriping is consistent with a prepared bicycle transportation plan.  CEQA is the state’s landmark environmental law that requires a public agency to identify significant environmental impacts of projects it proposes to carry out or approve.  CEQA’s procedural and substantive requirements aim to prevent damage to the environment and encourage informed-decision-making.  Recently, the law has come under increasing fire for its potential to be misused for non-environmental purposes.  The law frequently results in extended project delays, and when the project being delayed is considered “green” or one that will reduce emissions of greenhouse gases, the law can seem counterproductive.

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California State Water Board’s Low-Threat UST Case Closure Policy Is Now Effective

Contaminated Property

On May 1, 2012, the California State Water Resources Control Board (SWRCB) adopted via Resolution No. 2012-0016 the Water Quality Control Policy for Low-Threat Underground Storage Tank Case Closure (Low-Threat Closure Policy).  The Low-Threat Closure Policy finally became effective on August 17th.  This should be good news for the thousands of UST sites in California because the Low-Threat Closure Policy will hopefully make it easier to obtain closure.  At a minimum it defines more clearer criteria for obtaining closure.

The Low-Threat Closure Policy recognizes that many petroleum release cases pose a low-threat to human health and the environment. The policy’s purpose is to establish consistent California statewide case closure criteria for low-threat petroleum UST sites. To potentially qualify for closure, the site must satisfy eight general criteria (applicable to all sites), as well as media-specific criteria as it pertains to groundwater, vapor intrusion to indoor air and direct contact, and outdoor air exposure.  Below is a brief description of each of these criteria.

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LITIGATION UPDATE: Writ of Certiorari filed in Solutia, Inc. v. McWane, Inc.

Environmental Litigation

Recently, Solutia Inc. and Pharmacia Corporation filed a petition for writ of certiorari with the U.S. Supreme Court seeking to overturn the Eleventh Circuit’s ruling that a Potentially Responsible Party (“PRP”) conducting a cleanup pursuant to a consent decree is foreclosed from bringing a cost recovery action against other PRPs under CERCLA Section 107, and may only seek contribution from other parties under CERCLA section 113.  This ruling is significant because 1) unlike CERCLA section 107, section113 does not provide for joint and several liability against other PRPs, 2) under CERCLA section 113, PRPs that settle with the government are given contribution protection, and 3) the statute of limitations under section 107 and section 113 differs.

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LITIGATION UPDATE: CALIFORNIA SUPREME COURT GRANTS REVIEW OF L.A. LIGHT RAIL CASE

Environmental Litigation

On August 8th, the California Supreme Court granted review of the Second District Court of Appeal’s decision in Neighbors for Smart Rail v. Exposition Metro Line Construction Authority.  As previously blogged in April, the Second District found that a lead agency’s use of projected future conditions to measure the environmental impacts that a long-term infrastructure project would have on traffic and air quality did not violate the California Environmental Quality Act (CEQA).  The Second District’s decision put it at odds with holdings of the Fifth and Sixth District Court of Appeals, making the issue of whether CEQA prohibits the use of projected future baselines ripe for review.

Public agencies have long argued that using current-conditions to measure the impacts of major infrastructure projects that will not be completed for many years to come is not helpful in determining the true traffic and air quality impacts the project will have once operational.  The California Supreme Court will now decide whether CEQA allows public agencies to have the discretion to select a future baseline for long-term projects.  Our blog will keep you updated on the court’s decision.

CALIFORNIA SUPREME COURT EXPANDS AVAILABLE POLICY LIMITS TO COVER ENVIRONMENTAL CLAIMS

On August 9, 2012, the California Supreme Court handed down its much anticipated decision in State of California v. Continental Ins. Co. The California Supreme Court held that the “all sums” method of allocation applies in California and that an insured can horizontally stack all successively triggered policies in an environmental property damage case involving a single occurrence causing continuous and progressive contamination throughout multiple policy years.

Therefore, a liability insurer is obligated to pay all sums the insured become obligated to pay for property damage attributable to a contaminated site up to policy limits as long as some of the continuous property damage occurred while that particular insurer’s policy was on the loss.  An insurer cannot limit its liability to just the amount of loss that occurred during its particular policy period.  The Supreme Court also concluded that absent specific “anti-stacking” policy language, an insured is entitled to “stack” the consecutive policy limits of each successively triggered policy to recover the limits of all policies on the risk for the loss.

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