Articles on Contaminated Property

 

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.

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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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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Settling Party Barred from Bringing a CERCLA Section 107(a) Claim

Contaminated Property

This week, in the case of Solutia, Inc. and Pharmacia Corp. v. McWane, Inc. (Solutia), the Eleventh Circuit held that a party that performs a cleanup in compliance with a consent decree has no right under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) section 107(a) to recover its cleanup costs.  This case represents a continuance of the courts’ clarification of when claims can be brought under CERCLA sections 107(a) and 113(f).  To understand the significance of this case, it is best to start by examining the United States Supreme Court cases that proceeded it, beginning with the Supreme Court’s decision in Cooper Indus., Inc. v. Aviall Servs., Inc., 543 U.S. 157 (2004).

In Cooper v. Aviall, the Supreme Court turned decades of CERCLA jurisprudence on its head.  Relying on the plain language of CERCLA section 113(f), the court held that a potentially responsible party (“PRP”) can only seek contribution under section 113(f) from other parties “during or following” a civil action under CERCLA section 106 or 107.  Therefore, a party that had not been sued and had not entered into a settlement could not seek contribution under CERCLA section 113(f).  The court did not address when a party could bring an action under section 107. 

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PERC-ED UP: EPA HAS RELEASED FINAL HEALTH ASSESSMENT

Contaminated Property

Okay, so it will probably come as no surprise to those readers that know anything about perc (also known as PCE, short for perchloroethylene, another name for tetrachloroethylene – whew!) that, when the U.S. Environmental Protection Agency (EPA) released it’s final health assessment for the chemical this week, EPA essentially concluded “yep, it’s still bad stuff.”  More specifically (and much more scientifically), the assessment characterized it as a “likely human carcinogen.”  In addition, the assessment cited non-cancer long-term health effects including harm to the nervous system, kidney, liver, immune and hematologic systems. 

Perc is best known for being the chemical solvent widely used in the dry-cleaning industry.  Discharges of perc (mainly from dry-cleaning facilities) have contributed to contamination at many properties.  According to EPA, hundreds of Superfund sites in the country have perc as a contaminant. 

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State Water Board May Soon Adopt the Low-Threat UST Case Closure Policy

Contaminated Property

Last week, the California State Water Resources Control Board (SWRCB) gave notice of public opportunity to comment on its proposed April adoption of the Water Quality Control Policy for Low-Threat Underground Storage Tank Case Closure (Low-Threat Closure Policy). This should come as welcome news for the thousands of underground storage tank (UST) sites in California because the Low-Threat Closure Policy will hopefully make it easier to obtain 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.

The general criteria are as follows:

  • Site must be in a service area of a public water system:  The policy recognizes that while new water supply wells are unlikely to be installed in the shallow groundwater near former UST release sites, it is difficult to predict whether this will always be the case, particularly in rural areas that are undergoing new development. Therefore, the policy is limited to areas with available public drinking water supplies. Continue reading →

Happy 30th Superfund

Contaminated Property

Contaminated Land30 years ago tomorrow, Congress passed the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), which is commonly known as the Superfund law. CERCLA, which Congress amended in 1986, was created to address the most contaminated properties in the United States and to provide federal authority to respond to releases or threatened releases of hazardous substances. Congress passed CERCLA in response to public outcry from a series of environmental disasters such as Love Canal – where in 1978, carcinogens from long-ago abandoned chemical operations began percolating from the ground, causing residents of the New York town to experience miscarriages, birth defects and countless other health problems.

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In a Troubled Economy, They Can’t Leave Well Enough Alone

Contaminated Property

Gas StationSince 1989, one bright spot for owners of property in California contaminated by petroleum releases from underground storage tanks has been monies available from the State of California Petroleum Underground Storage Tank (“UST”) Cleanup Fund (the “Fund”). Monies in the Fund are provided by a storage fee paid by petroleum UST owners through the permit process based upon the volume of throughput.

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Making Lemonade Out of Lemons: EPA’s Recent Step Toward The Development of Renewable Energy on Contaminated Properties

Contaminated Property

In September of 2008 EPA launched its RE-Powering America’s Land initiative with the objective of developing renewable energy on current and formerly contaminated properties. As a result of its 2009 meetings with stakeholders from the renewable energy industry, landowners, state and local governments and others, EPA recently took a significant step toward implementing this initiative with the release of its two-year draft management plan.Wind Turbines

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