Contaminated Property

April 29, 2019

Even Your Parking Structure Violates Prop 65

by Sherry E. Jackman and Sedina L. Banks

The Prop 65 “Clear and Reasonable Warnings” updates that became effective in August 2018 contain lots of traps for the unwary, including one that you might not have noticed: tailored Prop 65 warnings are required at each of the public entrances to your enclosed parking facilities.

To avail your regulated business to the “safe harbor” content and method provisions of the “enclosed parking” provisions of Prop 65, you must comply with specific signage requirements such as the size, placement, font and warning symbol, as well as include the following warning language: “Breathing the air in this parking garage can expose you to chemicals including carbon monoxide and gasoline or diesel engine exhaust, which are known to the State of California to cause cancer and birth defects or other reproductive harm. Do not stay in this area longer than necessary. For more information go to www.P65Warnings.ca.gov/parking.”

Businesses have pointed out that Prop 65 signage at enclosed parking facilities does absolutely nothing to change human behavior. People still need to go to work, and if they live in many parts of California, they still need to drive to work and park. Despite this, prudent business owners should still comply with the warning requirements as penalties for failure to comply with Prop 65 can be steep – up to $2,500 per day for each violation. Businesses that do not comply with Prop 65’s warning requirements are often targeted by plaintiffs’ attorneys and consumer groups and may be held responsible for plaintiffs’ attorneys’ fees.

May 22, 2017

Superior Court Invalidates Hexavalent Chromium Drinking Water Standard

by Brian E. Moskal

Earlier this month, Judge Christopher E. Krueger of the Sacramento Superior Court issued an order invalidating the Maximum Contaminant Level (MCL) for hexavalent chromium. The California Department of Public Health (“DPH”) established an MCL of 10 μg/L, or parts per billion (ppb), pursuant to a rulemaking effort that concluded in 2014. (This rulemaking function has since been legislatively transferred to the State Water Resources Control Board (“State Board”), Division of Drinking Water as of July 1, 2014.) Hexavalent chromium is the chemical made famous by the movie Erin Brockovich.

MCLs are promulgated for specific chemicals under the federal and California Safe Drinking Water Acts. Although established for drinking water programs, the MCLs are also often used as screening levels and cleanup standards at properties where potential environmental impacts are being investigated and remediated. California MCLs are required under the state Safe Drinking Water Act to be at least as stringent as the federal MCL for a given chemical and as close to the California Public Health Goal (“PHG”) for the chemical as technically and economically feasible. The PHG, which is set by the California Office of Environmental Health and Hazard Assessment, is the level of a chemical at which it ostensibly poses no health risk. PHGs are not enforceable standards. They are, as the name implies, simply goals. The PHG for hexavalent chromium is 0.02 μg/L, or 20 parts per trillion, which is an extremely low number.

In 2014, the California Manufacturers and Technology Association and Solano County Taxpayers Association filed a petition for writ of mandate in the Sacramento Superior Court challenging the 10 ppb hexavalent chromium MCL on several grounds. Petitioners’ primary arguments were that DPH failed to consider the economic feasibility of this standard and whether the standard is, in fact, economically infeasible. They contended these defects violated both the California Administrative Procedure Act and the California Safe Drinking Water Act, with the costs of compliance prohibitively expensive for water utilities and their ratepayers, especially for small utilities.

September 28, 2016

Shell Pays Big for Double Dipping with the UST Fund

by Sedina L. Banks

Last week, the California State Water Resources Control Board (State Water Board) announced that it permanently banned 100 of Shell Oil Company’s underground storage tank (UST) claims from the California UST Cleanup Fund (Fund) for allegedly claiming reimbursement through false or misleading statements on its claim forms. The State Board estimates that disqualifying Shell from pursuing these claims could save the Fund up to $150 million.

The Fund was created by the Barry Keene Underground Storage Tank Cleanup Fund Trust Act of 1989 and is administered by the State Water Board. Among other things, the Fund provides reimbursement of up to $1.5 million for expenses related to the cleanup of leaking underground storage tanks (USTs) that impact the soil and groundwater. However, the Fund prohibits claimants from obtaining “double recovery.” Double recovery occurs when a claimant seeks reimbursement of costs that it already has been reimbursed through other sources such as through insurance claims, litigation and settlements. Claimants must disclose all payments from other sources on a Non-Recovery from Other Sources Disclosure Certification.

According to the State Water Board, in 2010 a whistleblower filed a complaint against Shell alleging fraud under the California False Claims Act. The complaint alleged that Shell failed to disclose it previously had received reimbursement from other sources when it sought reimbursement of costs associated with UST sites. The State Water Board joined in settlement negotiations based on its independent administrative and litigation claims that it could pursue against Shell. The parties settled the action earlier this year. The settlement requires Shell to pay a total of $20 million (including $11 million to the State Water Board) and permanently bans 100 of Shell’s UST claims, which could result in a savings to the UST Fund of up to $150 million ($1.5 million per claim).

November 26, 2014

THE SUNSET WILL LAST A LITTLE LONGER — UST FUND EXTENDED

by Sedina L. Banks

On September 25, 2014, Governor Brown signed SB 445 (Hill) Underground storage tanks; hazardous substances: petroleum: groundwater and surface water contamination into law (UST Law). The UST Law was an urgency measure that took effect immediately.

The UST Law makes changes to the Underground Storage Cleanup Fund (UST Fund). The UST Fund provides a mechanism to reimburse owners and operators of USTs the cost to remediate contaminated sites as the result of leaking USTs. Most importantly, the UST Law extended the program’s sunset date by ten years to January 1, 2026. Under the prior law, the UST Fund was set to expire in 2016, leaving many UST sites without access to state funds.

January 6, 2014

ASTM Issues New Standard For Phase I Environmental Site Assessments

by Sedina L. Banks and Brian E. Moskal

On 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.

November 30, 2012

EPA ISSUES NEW SUPERFUND GUIDANCE

by Natalie Reed

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.

September 12, 2012

Is Your Vehicle a CERCLA Facility?

by Natalie Reed

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.

August 28, 2012

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

by Sedina L. Banks

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.

March 8, 2012

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

by Sedina L. Banks

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.

February 10, 2012

PERC-ED UP: EPA HAS RELEASED FINAL HEALTH ASSESSMENT

by Jenna Guggenheim

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.