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Environmental Groups Notify EPA of Planned Coal Ash Suit

On January 18, 2012, Earthjustice notified the EPA of its intent to sue the agency over an alleged failure to properly regulate coal ash under the Resource Conservation and Recovery Act (“RCRA”).   Earthjustice sent the notice on behalf of eleven different environmental groups, including the Sierra Club, Kentuckians for the Commonwealth and Appalachian Voices. 

In the written notice, Earthjustice alleges that EPA is required to review and revise RCRA regulations relating to coal ash every three years (note: RCRA actually requires only that regulations be reviewed and revised every three years “where necessary”).  Earthjustice alleges that EPA has failed to fulfill this responsibility, noting that the agency has failed to follow through on proposed rulemaking aimed at coal ash.  EPA is currently in the process of reviewing and evaluating more than 450,000 comments it has received regarding potential coal ash regulation by the agency.  

On a related front, the US House of Representatives passed a bill in October 2011 that would prevent EPA from regulating coal ash as a hazardous waste.  Supporters of that legislation note that coal ash has long been used beneficially in products such as concrete and wallboard.  The coal industry often uses coal ash with alkaline properties in the reclamation process. Currently, the bill – which has been criticized by the Obama Administration -- remains stuck in committee in the US Senate.    

According to Earthjustice, the EPA has failed to move forward on the regulation of coal ash due to “politics and pressure from corporate lobbyists.”  Earthjustice did not comment on the lobbying efforts of the Sierra Club or other affiliated organizations opposed to coal or coal ash.  In 2011, New York City Mayor Michael Bloomberg donated $50 million to the Sierra Club to be used for its anti-coal campaign. 

RCRA requires citizens to provide 60 days’ notice of their intent to file suit.  The letter from Earthjustice was issued to comply with RCRA’s notice requirement.    

This article was authored by M. Shane Harvey, Jackson Kelly PLLC. For more information on the author see here.

EPA Issues Guidance on Non-Affiliation Requirement for CERCLA Landowner Defenses

EPA has issued new guidance addressing the non-affiliation requirement for the landowner liability protections available under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) for bona fide prospective purchasers (BFPPs) and contiguous property owners (CPOs).  The statute provides that landowners seeking to avoid CERCLA liability cannot be “affiliated with” another party who is potentially liable under CERCLA.  The new guidance, titled “Enforcement Discretion Guidance regarding the Affiliation Language of CERCLA’s Bona Fide Prospective Purchase and Contiguous Property Owner Liability Protections,” addresses the “affiliated with” language of CERCLA and complements EPA’s previously issued Tenants Guidance.  The new guidance should be of interest to owners of contaminated property and entities interested in buying and developing brownfields as well as neighboring landowners. 

The new guidance discusses prohibited affiliations identified in CERCLA, the burden of proof, initial considerations in determining whether a disqualifying affiliation exists, two statutory exceptions, and four additional relationships that generally should not be considered to be disqualifying affiliations.  EPA emphasizes that the analysis is fact-intensive   Affiliation Guidance at 2. The crux of the analysis is whether the relationship was created to avoid CERCLA liability.  Id. at 7.  If so, the affiliation will disqualify a purchaser of property or owner from BFPP or CPO liability protection. 

Affiliations expressly prohibited by CERCLA include:  (1) direct or indirect familial relationships; (2) contractual, corporate, or financial relationships; and (3) business reorganizations of a business entity that was potentially liable.  Id. at 2-3.  The entity seeking the liability protection has the burden of proof to establish the non-affiliation requirement and all of the other elements of the BFPP or CPO defense.  Under CERCLA, CPOs may request from EPA a “no action assurance letter” or settlement that provides protection against cost recovery or contribution.  BFPPs may seek comfort/status letters, BFPP-doing-work-agreements, or prospective purchaser agreements in limited circumstances.  Id. at 3.  

The new guidance directs EPA personnel to consider following four issues before exploring whether there is a prohibited affiliation: (1) whether the person seeking liability protection under the BFPP or CPO provisions is otherwise a potentially responsible party (PRP) i.e., an owner/operator at the time of disposal, a transporter, or an arranger for the disposal of hazardous substances; (2) whether the entity is in fact the same entity as a PRP or is potentially liable under other principles of corporate law, such as successor liability; (3) whether a business entity asserting BFPP or CPO status is the result of a reorganization of a liable party through bankruptcy or other corporate restructuring.; and (4) whether the party with whom a person may have an affiliation is actually a PRP at the facility.   Id. at 4-5. 

Next, the new guidance discusses the two statutory exceptions to contractual, corporate, and financial relationships that do not disqualify a purchaser of property or owner from BFPP or CPO liability protection.  The first statutory exception applies only to BFPPs and is for contractual, corporate, or financial relationships that are “created by the instruments by which title to the facility is conveyed or financed.”  Deeds, title insurance, agreements with a third-party lender, or other agreement that makes transfer of title possible would fall within this exception.   Id. at 6.  The second statutory exception applies to bothBFPPs and CPOs and is for contractual, corporate, or financial relationships that are “created by a contract for the sale of goods or services.”  EPA states that it will adopt a plain language definition of goods and services and gives a contract for snow removal as an example of a contract for a service that would not be considered to be a disqualifying affiliation.  Id. at 6-7. 

Additionally, EPA examines “special considerations” in applying the non-affiliation requirement and identifies the following four relationships that “it generally intends not to treat as disqualifying affiliations”:  (1) relationships at other properties: (2) post-acquisition relationships; (3) documents that typically accompany title transfer; and (4) tenants seeking to purchase property they lease.  Id. at 7.  

Relationships at Other Properties: EPA intends to focus on only those affiliations that may be related to the contaminated property or the source property.  For example, if the buyer and seller have existing lease agreements at other properties unrelated to the contaminated property, EPA will likely treat the buyer as if it were a BFPP so long as the buyer has complied with all of the other BFPP requirements.  Id. at 8-9. 

Post-Acquisition Relationships:  A BFPP or a CPO that enters into a familial, contractual, corporate, or financial relationship with a PRP after the acquisition of the property will generally not be considered to have a disqualifying affiliation with the PRP.  For example, if a buyer acquires a contaminated industrial park from a seller who was an owner during the time of the disposal at the industrial park and the seller later leases a warehouse within the industrial park to the buyer, EPA will generally treat the buyer as a BFPP.  Id. at 9.   

Documents that Typically Accompany Title Transfer:  Generally, EPA does not intend to treat indemnification, insurance, and other agreements that are typically created as part of the transfer of title as disqualifying affiliations.  Id. at 9.  EPA clarifies that it means indemnification agreements that allocate responsibility for cleanup costs between a purchaser and seller and do not relieve a party of its CERCLA liability.  The guidance in a footnote distinguishes the indemnification agreement that was at issue in the Ashley II decision.  Ashley II of Charleston, LLC v. PCS Nitrogen, Inc., 746 F. Supp. 692 (D.S.C. 2010), motion to certify appeal granted, 2011 WL 5827786 (D.S.C. Nov. 17, 2011).  See article titled “Bona Fide Prospective Purchaser Requirements Interpreted by Federal District Court,” posted on the Jackson Kelly PLLC Energy and Environment Monitor on December 29, 2010.  EPA describes the agreement in Ashley II as a “liability release agreement” and emphasizes that the purchaser failed to satisfy the “no affiliation” requirement due to a release agreement, in which the purchaser agreed to release the seller as to environmental liability at the site…, and the purchaser’s subsequent efforts to dissuade EPA from taking an enforcement action against the seller.”  Id. at 9 n. 17.  

Tenants Seeking to Purchase Property They Lease:  The non-affiliation analysis in the case of a lease involves examining the potential liability of both the tenant and the landlord.  If neither the tenant/purchaser nor the landlord is liable as a PRP, then the lease would not be a prohibited affiliation.  If the tenant/purchaser is a PRP, then the tenant/purchaser cannot qualify as a BFPP or CPO.  If the landlord is a PRP, then an analysis of the site-specific facts will be required.  EPA recommends that before purchasing the property, the tenant contact the appropriate EPA Regional office to resolve the tenant’s liability concerns.  The Affiliation Guidance does not change EPA’s previously issued Tenants Guidance.  Id. at 10.         

This article was authored by Gale Lea Rubrecht, Jackson Kelly PLLC. For more information on the author, see here.

Proposed Emergency and Hazardous Chemical Inventory Forms (Tier I and Tier II) Changes

On Monday August 8, 2011 the United States Environmental Protection Agency proposed to revise the Emergency and Hazardous Chemical Inventory Forms (Tier I and Tier II) under Section 312 of the Emergency Planning and Community Right-to-Know Act (EPCRA) to add new data elements and revise some existing data elements.  Comments must be received on or before October 7, 2011.  

EPA is proposing the following changes to the Tier I and Tier II forms.   

Facility Identification

Under facility identification EPA is proposing to add new data elements for facility phone number, latitude and longitude and number of full-time employees.  In addition EPA is proposing the addition of facility identification numbers used in the Risk Management Program (Chemical Accident Prevention under section 112(r) of the Clean Air Act and the Toxic Release Inventory (TRI) program under section 313 of EPCRA.  

In addition to the number of full-time employees local emergency responders requested that EPA require facilities such as hotels, colleges, universities and convention centers to report the total number of people that may occupy a building at any given time.  US EPA is not including this in proposed changes but is accepting comments on this data element. 

Name of the Facility’s Parent Company and Owner or Operator of the Facility

States and LEPCs have informed EPA that some facilities have sites in remote locations and do not have operators present at all times.  EPA is proposing to require facilities to provide information on the facility’s parent company and the owner or operator of the facility, such as name, address and phone number, as well as the Dun and Bradstreet number of the facility’s parent company.  EPA is also proposing that the facility owner or operator provide their e-mail address.   

Facility Emergency Coordinator

Currently a facility must inform the LEPC of any changes to the facility emergency coordinator within 30 days after changes have occurred. EPA is proposing that the facility emergency coordinator be identified on the Tier I and Tier II forms, since LEPCs and other emergency response coordinators may need this information during an emergency. 

Tier I and Tier II Information Contacts

Since the information reported under EPCRA section 312 is used by LEPCs to improve emergency response plans, these entities may need to contact the facility regarding information that is reported on the Tier I and Tier II reporting forms.  EPA is proposing to require the name, title, phone number and e-mail address of the person knowledgeable or responsible for completing the information on the Tier I and Tier II forms.

Subject to Emergency Planning Under Section 302 of EPCRA 

LEPCs requested that EPA require facilities to report if they are subject to emergency planning notification under EPCRA section 302 to improve the emergency response plans in their community.  EPA is proposing to add a new data element to indicate if facilities are subject to the emergency planning notification under EPCRA section 302. 

Subject to Chemical Accident Prevention Under Section 112(r) of the Clean Air Act

In addition to the information reported under EPCRA section 312, LEPCs and States use the information reported in RMPs to improve the emergency response plans in each community.  In order to better serve this purpose, EPA is proposing to add a new data element to both the Tier I and Tier II forms to indicate whether the facility is subject to chemical accident prevention under section 112(r) of the CAA. 

Range Codes and Ranges for Reporting Maximum Amount and Average Daily Amount

In order for the States, local agencies and emergency response officials to have information on the maximum amount and average daily amount that are closer to the actual amounts present at the facility, EPA is proposing to narrow the ranges that are in the existing regulations.  The existing and proposed range codes are presented in the table below.  

Range Codes	Current Range (in lbs)	Proposed Range (in lbs)
01	0 – 99	0 – 99
02	100 – 999	100 – 499
03	1,000 – 9,999	500 – 999
04	10,000 – 99,999	1,000 – 4,999
05	100,000 – 999,999	5,000 – 9,999
06	1,000,000 – 9,999,999	10,000 – 24,999
07	10,000,000 – 49,999,999	25,000 – 49,999
08	50,000,000 – 99,999,999	50,000 – 74,999
09	100,000,000 – 499,999,999	75,000 – 99,999
10	500,000,000 – 999,999,999	100,000 – 499,999
11	1 billion – higher than 1 billion	500,000 – 999,999
12	--	1,000,000 – 9,999,999
13	--	10,000,000 – Greater than 10 million

Specific Tier II form proposed revisions

 EPA is proposing to revise some existing data elements on the Tier II federal inventory form.  

Chemical Information

EPA is proposing to modify the chemical information reporting section of the Tier II inventory form to make it more user-friendly for States and local agencies, as well as the emergency response officials. This revision will also benefit facilities by clarifying how to report mixtures on the Tier II form.  In order clarify the reporting of pure chemicals vs. mixtures, the proposed Tier II form has separate entries for mixtures and pure chemicals.  The entry for mixtures includes a separate line for mixture name, amount of mixture present, the ESH(s) name, and amount of EHS(s) present.  Facilities still have the option to report the mixture or the hazardous chemical component.  

Storage Types and Conditions

The Tier II form currently requires facilities to report the codes for types of storage and storage conditions.  In order to make the form more user-friendly and also to have information readily available to emergency response officials in an emergency, EPA proposes that facilities list the types of storage and storage conditions on the Tier II form rather than noting the reporting the codes.   

This article was excerpted from publically available information, and was authored by Joyce Gentry, Acacia Environmental Group LLC.  For more information on the author see here.

EPA Releases Company Confidential Information

In a highly unusual and precedent setting action June 8, 2011, U.S. EPA made public the identities of more than 150 chemicals contained in 104 health and safety studies required by the Toxic Substances Control Act (TSCA).  A few companies had voluntarily declassified information, but most chemical identities were unilaterally made public by EPA.  Apparently all of the companies had made appropriate confidentiality claims which were fully accepted by U.S. EPA;  there is no mention of a claim by EPA that the claims of confidential business information were unwarranted (see 3/24/11 action described below).  EPA’s rationale for releasing this confidential data was the need to provide the public has as much information as possible about the health and the environmental impacts of chemicals, the U.S. Environmental Protection.

The chemical identity composition data for these 104 TSCA studies will no longer be redacted from the public report.  The chemicals involved are used in dispersant formulations and consumer products such as air fresheners, non-stick and stain resistant materials, fire resistant materials, nonylphenol compounds, perfluorinated compounds, and lead. 

Under the Obama Administration, EPA has taken a series of unprecedented actions to provide the public with greater access to information on the chemicals that are manufactured and used in the United States. In 2010, EPA challenged industry to voluntarily declassify allegedly “unwarranted” claims of confidential business information (CBI). The agency also issued new guidance (Jan. 21, 2010, 75 FR 3462) outlining plans to deny confidentiality claims for chemical identity in health and safety studies under the TSCA. Based on this guidance, EPA notified a number of companies in February, 2011, that the agency had determined that their CBI claim was not eligible for confidential treatment under TSCA and that EPA intended to make the information public. On March 24, 2011, EPA made 42 health and safety studies that had been claimed and treated as confidential available to the public.  EPA is committed to posting new declassified materials under TSCA on the agency website on a regular basis. 

The release of this confidential data submitted by companies pursuant to TSCA is of significant concern because of all of the environmental programs, the most detailed information regarding product composition is submitted pursuant to TSCA. This type of information makes reverse engineering of the product possible and when TSCA was implemented, industries’ greatest concern was the probability for product infringement. EPA assuaged these concerns via the mechanism of “confidential business information” (CBI), with the assurance that CBI would be maintained and the information would not be disclosed to the public. 

It is certainly possible that EPA will be taking similar actions in regard to the claims for CBI made pursuant to the Clean Air Act, the Clean Water Act and RCRA. The most important of these is the Clean Air Act since the type of information required by EPA often requires submittal of detailed process information. 

Over the past several months EPA has taken a number of other steps to make chemical information more readily available.  December 22, 2010, EPA made available the new Chemical Data Access Tool available on Data.gov to find health and safety data that has been submitted to the Agency, under authorities in sections 4, 5, and 8 of TSCA.  On May 17, 2010, EPA added more than 6,300 chemicals and 3,800 chemical facilities regulated under TSCA to EPA's public Envirofacts database. The Envirofacts database is EPA's single point of access on the Internet for information about environmental activities that may affect air, water and land, and provides tools for analyzing the data. It includes facility name and address information, aerial image of the facility and surrounding area, and the map location of the facility. Envirofacts links to other EPA information on the facility, such as EPA's inspection and compliance reports that are available through the Enforcement Compliance History Online (ECHO) database, which includes historic information.   

This article was authored by Barbara D. Little, Jackson Kelly PLLC. For more information on the author see here.

USEPA Study Finds All Appropriate Inquiries Fail to Meet Federal Requirements

The USEPA Office of Inspector General (OIG) recently completed a review of 35 All Appropriate Inquiry (AAI) reports that were submitted to USEPA Regions 1, 5, and 9 as part of the Regions’ Brownfields Grant programs to answer the question “Are Brownfields grantees meeting EPA’s AAI Rule requirements to investigate and disclose environmental conditions and are purchasers/owners maintaining continuing obligations at brownfields properties?”  The results of the OIG review were released on February 14, 2011 in a report titled “EPA Must Implement Controls to Ensure Proper Investigations Are Conducted at Brownfields Sites.”  Due to “priority issues” the OIG identified during their review, the question of continuing obligations was not addressed during this review by the OIG. 

The AAI regulations under CERCLA (“Superfund”) are found in 40 C.F.R. §§ 312.1 through 312.31, and became effective on November 1, 2006.  An AAI investigation, which is also often referred to as a Phase I Environmental Site Assessment (ESA), is one of eight elements of the Bone Fide Prospective Purchaser (BFPP) liability defense available under CERCLA.  An AAI investigation is also a requirement for CERCLA Contiguous Property Owner and Innocent Land Owner liability defenses.  The purpose of an AAI investigation is to identify “conditions indicative of releases or threatened releases of hazardous substances.”  Certain components of the AAI investigation must be performed or updated within 180 days of the acquisition of the commercial or industrial property.  

Although it may appear that the applicability of the OIG review is narrowly focused and only applies to USEPA Brownfields Grant sites, it should be noted that the CERCLA All Appropriate Inquiries Regulations are the same for both USEPA Brownfields grant sites and for private sector properties where a Phase I ESA using American Society of Testing and Materials (ASTM) Standards is being performed to obtain the liability limitations available under CERCLA.  As noted by USEPA on its Brownfields and Land Revitalization web page (http://www.epa.gov/brownfields/aai/): 

“EPA now recognizes both ASTM International's E1527-05 "Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process" and ASTM E2247-08 "Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process for Forestland and Rural Property" as compliant with the All Appropriate Inquiries Regulation. Either of these ASTM International Phase I standards may be used to satisfy the statutory requirements for conducting all appropriate inquiries under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).” 

All 35 AAI reports reviewed by the OIG had been prepared using the ASTM E1527-05 Standard.  Based on its review, OIG concluded that none of the 35 AAI reports “contained all the required elements to document that AAI was done in compliance with federal requirements.”  Specifically, the OIG stated the reports lacked one or more of the following AAI elements: 

• Environmental Professional (EP) Statement of Qualifications.  All of the 35 reports failed to include the required statement to certify the qualifications of the EP.  16 of the 35 reports included deviations from the required qualifications statement, which consisted of either no statement or the statement was abbreviated or modified.  The remaining 19 reports generally contained the three required sentences, but included inconsistent wording.  For example, use of the terms “we” or “our” when only one EP signed the qualifications statement.   
• EP Signature(s).  Nine of the 35 reports were not signed by the responsible EP.
• EP Statement on Data Gaps.  Seven of the 35 reports did not include a statement of data gaps.
• EP Opinion Statement (in Conclusion section).  All of the 35 reports failed to include the required EP opinion statement in the Conclusion section.  While most of the reports included these statements, the statements deviated from the required wording in the ASTM Standard.

The OIG is concerned that modifications or departures from the use of the required language might be indicative that the EP did not actually perform of oversaw the AAI investigation.  Furthermore, discrepancies in the opinion statements and missing statements for data gaps suggest that the work was not performed adequately to identify recognized environmental conditions (RECs).  Hence, potential threats to human health and the environment might not be recognized. 

While the OIG’s report only reviewed AAI reports prepared for the USEPA under its Brownfields program, the conclusion that 100% of the AAI reports were deficient and did not meet the requirements of the CERCLA All Appropriate Inquiries Regulations is troubling.  In particular, it calls into question whether private sector AAI reports being prepared using ASTM E1527-05 are being prepared in full compliance with the requirements of ASTM E1527-05 and the CERCLA All Appropriate Inquiries Regulations.  If for nothing else, the OIG report should serve as a warning to both those entities using and those preparing AAI reports to take a greater degree of care in ensuring that AAI reports are prepared in compliance with the ASTM Standards and the CERCLA All Appropriate Inquiries Regulations.   

The OIG report is very brief and is only 25 pages long.  The report can be downloaded from http://www.epa.gov/oig/reports/2011/20110214-11-P-0107.pdf.  

This article was authored by Greg Tieman, Acacia Environmental Group LLC. For more information on the author see here. 

Federal Court Denies Cost Recovery, Finding Purchaser Acted With Willful Blindness

A federal district court sitting in Kentucky recently considered the “due care” obligations of a party seeking protection under the “innocent landowner” defense in the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. §§9601 et seq., in 500 Associates, Inc. v. Vermont American Corporation, Civil Action No. 3:96cv-847-S, 2011 WL 482881 (W.D. Ky., Feb. 7, 2011).  The case is important for purchasers and developers of distressed properties, licensed remediation specialists, environmental consultants preparing Phase I reports, lending institutions requesting or relying upon Phase I reports, and anyone involved in brownfields transactions and illustrates lessons to be learned from a developer’s failure to exercise due care.  While the case involved the “innocent landowner” defense which pre-dates the bona fide prospective purchaser (BFPP) and contiguous property owner defenses made available in the Small Business Liability Relief and Brownfields Revitalization Act of 2002, Pub. L. No. 107-118, commonly known as the 2002 Brownfields Amendments to CERCLA, U.S. EPA has stated in its Common Elements Guidance that CERCLA “due care” cases are a “reference point” for determining what constitutes “reasonable steps” as part of the continuing obligations of a BFPP and a contiguous property owner.  Id. at 11.  To learn what happened to the developer who relied upon a cursory environmental audit, failed to review available public records, declined to investigate further by undertaking sampling despite its knowledge of contamination, failed to take precautions when demolishing buildings on a former manufacturing site, failed to report the results of three environmental audits to the state environmental agency, and repeatedly failed to take any remedial action, continue reading this article. 

500 Associates involved the cleanup of a former saw-and-tool manufacturing facility that had generated various hazardous wastes associated with its electroplating and heat treatment operations.  A group of commercial real estate developers entered into a contract to purchase the property.  The developers hired an environmental consultant who performed an environmental audit.  The audit consisted of an on-site inspection, a review of records of operations and permits, and a discussion with the defendant-manufacturer’s health and safety inspector.  The audit found chromium contamination and confirmed that the manufacturer was registered with the Kentucky environmental agency as a large quantity hazardous waste generator producing an average of 65,470 gallons of waste water per day.  The manufacturer’s safety inspector acknowledged only one spill of 100 gallons of nickel but denied any other releases of hazardous substances. The audit concluded that the manufacturer had adequately decontaminated the plating and waste treatment areas.  Although the developer knew that chromium contamination was present and that the manufacturer had used other hazardous materials at the site, soil samples were not taken and the auditor did not recommend further testing.  Nor did the auditor review available public records concerning the property.  A review of available public records would have revealed that the manufacturer had in fact released untreated waste water and hazardous substances on numerous occasions during its ownership.    

Relying upon this “cursory” environmental “audit,” the developer purchased the manufacturing site.  The developer then demolished a portion of a building in the area of the former electroplating and waste treatment operations and, in demolishing the building, moved concrete and exposed soil.  The developer “took no precautions” in removing the floor, roof, and walls of the building and left the material under the concrete floor and pits formerly associated with manufacturing operations exposed to the elements although the developer knew that “there was at least one hazardous substance, chromium, on the property.”  

That same year, the developer entered into an agreement to sell the property to an advertising agency.  The advertising agency hired its own consultant to conduct an environmental audit which included a review of public records and sampling of soil and groundwater.  This audit disclosed the presence of various contaminants in the soil and groundwater, and the advertising agency’s consultant recommended further investigation.  Analytic results from further investigation by the advertising agency’s consultant confirmed the presence of hazardous substances and included soil samples revealing contamination below the concrete floors that the developer had demolished.  

The advertising agency provided the results of its environmental audit to the developer.  The developer retained yet another environmental consultant to conduct soil samples.  The results of those soil and gas samples confirmed hazardous substances, but this environmental consultant concluded that the source was another property.  

The developer failed to report the results of any of any of the three audits to the Kentucky environmental agency and failed to take any remedial action.  The advertising agency withdrew from the purchase agreement.  

The Kentucky environmental agency began a four-year investigation and subsequently filed an enforcement action against both the manufacturer and the developer.  While the state environmental enforcement action was proceeding, the developer filed a cost-recovery action under CERCLA against the manufacturer in federal district court in Kentucky.  The manufacturer moved for dismissal. Meanwhile, the Kentucky environmental agency adopted the hearing officer’s report in the enforcement action finding both the manufacturer and the developer jointly and severally liable for the releases and imposed civil penalties against both.  The hearing officer did find that the developer was less culpable than the manufacturer, noting that the developer made a minimal effort to secure the property from further harm or release by installing fencing and a security system and had cooperated during the state investigation.  Various appeals in the Kentucky state courts followed.  

Nearly twenty years after the developer contracted to purchase the site, the Kentucky Court of Appeals issued a final decision in the enforcement action, finding substantial evidence to uphold the hearing officer’s determination that the developer failed to exercise “due care” in the management of its property.  500 Associates, Inc. v. Natural Resources and Environmental Protection Cabinet, 204 S.W.3d 121 (Ky. App. 2006).  The Kentucky Court of Appeals found that the developer was not entitled to the benefit of an “innocent purchaser” defense because there was evidence that its initial investigation of the property had been inadequate, that it failed to exercise due care when it demolished structures on the site, and that it took no action to abate the problem once it knew of contamination on the property.  The Kentucky Court of Appeals affirmed the hearing officer’s determination that “[t]o reward [the developer’s] lack of diligence with a liability exemption would be directly contrary to the policy of CERCLA, which ‘does not sanction willful or negligent blindness.’”  Id. at 138.  Two years later, the Kentucky environmental agency issued a final cleanup order determining that the manufacturer was 100% responsible for characterizing and remediating the release of contaminants.  

In the cost-recovery action pending in the federal district court in Kentucky, the court held that the developer could not recover its costs from the manufacturer because the costs could not be shown to have furthered the cleanup of the property.  The court held that the developer could not identify a “release” or “threatened release” by the manufacturer which created an imminent threat to which the developer responded.  Relying on the record in the state environmental enforcement proceedings, the district court said that the developer was a contributor to the contamination by its “(1) failure to exercise due care in evaluating the risks of contamination on this industrial property; (2) careless demolition of structures on the property; (3) exposure of materials and structures to the elements; (4) and failure to report or otherwise address the need for cleanup when contamination became known.”  2011 WL 482881 *5 (citing 500 Associates, 204 S.W.2d at 139).  The court said that the developer’s costs for fencing, installation of the security system, and investigation of environmental contamination were not incurred to further the cleanup of the property but instead were incurred for the developer’s own business purposes or for the purpose of attempting to convince the state environmental agency that it had no liability for the releases.  

In concluding that the developer could not recover its costs, the district court agreed with the hearing officer that CERCLA “does not sanction willful or negligent blindness.”  2011 Westlaw 482881 *6 (quoting United States v. Monsanto Co. 858 F.2d 160, 169 (4^th Cir. 1988)).  The district court summarized the evidence supporting the hearing officer’s conclusion that despite its knowledge of the contamination, the developer did nothing to respond or remediate the problem: 

The hearing officer’s report reflects [the developer’s] unreasonable reliance upon a cursory environmental audit when it purchased the property.  This audit did, in fact, inform [the developer] that hazardous materials had been handled on the site by [the manufacturer] and that there was at least one hazardous substance, chromium, on the property.  [The developer] chose, unwisely, to rely on its auditor and do nothing further to investigate.  It claims to have had no knowledge of any spills and therefore took no precautions when demolishing buildings in the area of [the manufacturer’s] former electroplating and waste water treatment operations.  When preparing to sell the property, it learned from the potential buyer’s auditor that there was contamination found in samples taken from the area where [the developer] had removed concrete floors.  [The developer] claims to have contacted [the manufacturer] who again denied that there had been any spills or releases, and [the developer] performed no further investigation nor did it report the discovery to the [Kentucky environmental agency].  In light of its findings, the auditor performed a second assessment of the property.  When [the developer] was informed that the tests confirmed the presence of various inorganic constituents and volatile organic compounds, [the developer’s] response was to hire another consulting firm to conduct soil samples.  When this analysis also confirmed the findings, the potential buyer withdrew from the purchase agreement.  Again, [the developer] did not remediate nor did it report on the contamination.  The hearing officer found that from 1994 to 1998 both [the manufacturer and the developer] steadfastly refused to conduct remedial work, necessitating the commencement of the environmental enforcement. 500 Associates, 2011 WL 482881 *6. 

Because the developer’s costs did nothing to further the cleanup, the district court granted the manufacturer’s motion for dismissal and denied the developer’s motion for summary judgment.  Id. *7.  While the developer escaped responsibility for characterizing and remediating the site, the developer was civilly fined and denied recovery of its costs associated with its environmental investigation of the site.  Further, the developer incurred environmental consulting fees and/or attorney fees from the time it contracted to purchase the site in 1986 until the district court rendered its decision twenty-five years later in 2011.  The developer also suffered inconvenience in defending an enforcement action and prosecuting a cost-recovery action during this lengthy period.  The developer’s failure to exercise due care on the front end probably ended up costing the developer more in the end.  

This article was authored by Gale Lea Rubrecht, Jackson Kelly PLLC. For more information on the author, see here.

West Virginia Operators of Regulated Underground Storage Tanks to Have Required Training by August 2012

If your company has an underground storage tank (UST) or multiple USTs, the personnel responsible for operation and maintenance of the USTs and those individuals on-site who would be responsible for responding to emergencies are required to complete required training on or before August 8, 2012, in accordance with West Virginia Legislative Rules Title 33 CSR 30-7.  The state regulations are federally mandated for states that regulate USTs.  This requirement applies to those companies that may have one UST to fuel an emergency generator to large service station chains and everyone in between. 

The regulations identify three types of individuals that require training: 

Class A Operator.  Responsibilities include management of the UST system in order to achieve and maintain regulatory compliance.  These responsibilities are to be performed by the own/operator. 

Class B Operator.  Responsibilities include implementation of daily on-site operations and maintenance of the UST systems.  This individual performs record keeping and reporting. 

Class C Operator.  These individuals control or monitor the dispensing of regulated substances and are responsible for the initial response to releases or alarms.  The Class C Operator must be onsite during all hours of operation.  For facilities that are not manned, the West Virginia Department of Environmental Protection (WVDEP) has provided a guidance document policy that requires at least one Class C Operator to be available to respond immediately to calls from the facility and who is able to reach the site within 60 minutes. 

According to the WVDEP guidance document regarding this training, Class A Operator responsibilities must be performed by the own/operator and cannot be assigned to an outside party.  The Class B Operator  responsibilities could be assigned to an outside party, upon request and approval by the WVDEP.  The provisions for prohibiting contracting out these services to an outside party are not addressed in the Legislative Rules and appear to be a policy developed by the WVDEP.   A copy of the guidance document is available on the WVDEP website at http://www.dep.wv.gov/WWE/ee/ust/Documents/oper_trng_guidance_doc.pdf.   The guidance document identifies the contents of the training and further defines the duties of UST system operators. 

A list of vendors providing training for each of the three classifications is available on the WVDEP website at http://www.dep.wv.gov/WWE/ee/ust/Pages/USTOperatorTraining.aspx.  

Training will include testing to measure all aspects of the individual’s knowledge and skills to competently operate UST systems.  

This article was authored by William Chambers, Acacia Environmental Group LLC. For more information on the author see here.

EPA Considers Adding Vapor Intrusion Component for Superfund Sites

The U.S. Environmental Protection Agency (EPA) is soliciting stakeholder input (76 Fed. Reg. 5370; January 31, 2011) regarding the possible inclusion of a vapor intrusion component when considering sites to be entered on the National Priorities List (NPL). The NPL guides EPA in determining which contaminated sites warrant further investigation. The NPL is a subset of the Comprehensive Environmental Response, Compensation, and Liability Information System (CERCLIS) and has identified over 1,600 sites for priority cleanup under the Superfund Program.  

 

Vapor intrusion is the migration of volatile or semi-volatile chemical compounds from contaminated soil and/or groundwater through the subsurface into overlying or nearby buildings. The impacts from vapor intrusion are considered to result in hazards due to inhalation; however, dermal contact, ingestion, and accumulation of vapors to present an explosion or fire hazard are other potential hazards.    

 

Vapor intrusion would be evaluated as a component of the Hazard Ranking System (HRS) to determine if a site is to be placed on the NPL. The HRS uses a limited site investigation evaluating the release of contaminants from the following pathways: surface water, groundwater, air and soil. This site investigation translates site information into a numerical finding that represents the human health and ecological threats due to contamination present at a site. The current HRS evaluation does not consider vapor intrusion into buildings. Sites that are placed on the NPL undergo additional investigation to determine the extent of the environmental impacts and whether the site will undergo remediation under the EPA Superfund program.

 

According to the EPA stakeholder solicitation notice, the issue of including vapor intrusion as a factor for listing sites on the NPL was raised in a General Accountability Office (GAO), May 2010 report. The GAO report states that if sites with vapor intrusion are not assessed, there is a potential that contaminated sites with unacceptable human exposure may not undergo remediation. EPA recognizes in the Federal Register notice that there is a potential that a number of sites that did not score high enough to be placed on the NPL, may qualify for NPL listing, if the threat of vapor intrusion were included in the evaluation.   The GAO report is available is available at: http://www.epa.gov/superfund/sites/npl/hrsaddition.htm. 

 

Input regarding the possible inclusion of a vapor intrusion component within the HRS will be received until April 16, 2011.   EPA has announced three public listening sessions regarding this matter. The first session was held at EPA’s Arlington, Va. office on February 11, 2011. Two additional listening sessions will be scheduled for the EPA offices in San Francisco, Calif. and Albuquerque, N.M. The dates and times for the remaining two listening sessions will be placed on the EPA Superfund webpage.   Further information regarding the addition of vapor intrusion to the HRS is available at: http://www.epa.gov/superfund/sites/npl/hrsaddition.htm.

 

This article was authored by William Chambers, Acacia Environmental Group LLC. For more information on the author see here.

USEPA Institutional Controls Interim Final Guidance Issued

On December 2, 2010, the USEPA released an Interim Final Guidance document entitled Institutional Controls: A Guide to Planning, Implementing, Maintaining, and Enforcing Institutional Controls at Contaminated Sites.  The USEPA is accepting comments on this document until January 14, 2011.  Comments can be submitted through www.regulations.gov using Docket ID EPA-HQ-SFUND-2010-0894.  The Interim Final Guidance is available at www.regulations.gov or at www.epa.gov/superfund/policy/ic/guide/index.htm.  

As I have discussed in several previous blog articles, the WVDEP received a $100,000 grant from USEPA Region III to assist the WVDEP to develop a State-lead Voluntary Land Stewardship Program (VLSP).  One of the primary goals of a VLSP would be to provide a voluntary program that land-owners and/or potentially responsible parties (PRPs) can enter into for the operation, maintenance, and monitoring of both Engineering Controls (ECs) and Institutional Controls (ICs) at cleanup sites in West Virginia.  As part of the effort to develop a VLSP, in February 2009 the WVDEP established a WV IC Focus Group made up of various stakeholders from industry, government, academia, and trade associations to assist in developing the program.  On September 9, 2010, the Focus Group issued a report entitled WV Institutional Controls Focus Group Interim Report, which outlined the approach and components of a VLSP in West Virginia.  Copies of this report can be obtained from the author of this blog article.  During 2011, the Focus Group intends to move forward and to establish a nonprofit to administer the VLSP and to implement pilot program activities at both private and State-lead cleanup sites to evaluate the VLSP concept. 

The USEPA states that this Interim Final Guidance is intended to provide Superfund Remedial, Removal, Brownfields, Federal Facilities, Enforcement, Underground Storage Tank (UST), and RCRA Corrective Action site managers and site attorneys an overview of USEPA policies regarding roles and responsibilities of the parties involved in various aspects of the IC life cycle: planning, implementing, maintaining, and enforcement activities.  USEPA defines ICs as “non-engineered instruments, such as administrative and legal controls, that help to minimize the potential for human exposure to contamination and/or protect the integrity of a response action.” Under the Interim Final Guidance, the USEPA groups ICs into four categories, as follows: 

• Proprietary Controls.  Generally created pursuant to State or Tribal law and prohibit activities that might compromise the effectives of a cleanup action.  Examples of Proprietary Controls include property easements and covenants.  A statutory example is the Uniform Environmental Covenant Act (UECA), which has been adopted by West Virginia and has been incorporated into the Voluntary Remediation Program (VRP).
• Governmental Controls.  Uses governmental authority to impose restrictions on land or resource use.  Examples include zoning; building codes; State, Tribal or local ground water use regulations; and commercial fishing bans and sports/recreational fishing limits. 
• Enforcement and Permit Tools with IC Components.  Legal tools that limit certain activities or require performance of specific activities (e.g., monitoring and reporting).  Examples include Administrative Orders, Permits, Federal Facility Agreements (FFAs), and Consent Decrees (CDs).
• Informational Devices.  Provide information or notification to local communities that residual contamination is present.  Examples include state registries of contaminated sites, notices in deeds, tracking systems, and fish advisories. 

USEPA’s Interim Final Guidance discusses in detail issues associated with the IC life-cycle: planning, implementing, maintaining, and enforcing ICs relative to the four categories of ICs listed above.  Furthermore, the Interim Final Guidance provides quite a bit of useful information relative to these topics.  It would be anticipated that as the WV IC Focus Group moves forward in the development of a VLSP for West Virginia, the Focus Group will be taking into consideration the information provided by USEPA in the Interim Final Guidance.  

Finally, it should be noted that the USEPA has a list of useful guidance documents and fact sheets on their Mid-Atlantic Corrective Action web page that provide a broad range of information regarding ICs at http://www.epa.gov/reg3wcmd/ca/ca_resources.htm. 

This article was authored by Greg Tieman, Acacia Environmental Group LLC. For more information on the author see here. 

EPA Extends Date by Which SOME Facilities with Oil Storage Capacity Need to Implement Spill Prevention, Control, and Countermeasure Plans

On October 14, 2010, the U.S. Environmental Protection Agency published a final rule that extends the deadline by which many facilities that store or handle large amounts of oil need to complete a Spill Prevention, Control, and Countermeasure (SPCC) plan. The new compliance date for many facilities will now be November 10, 2011.  

 

Oil Pollution Prevention regulations promulgated by EPA are wide in scope. Gas stations, oil production facilities, mining operations, and many types of manufacturing plants are generally required to have SPCC plans. Under the regulations, “oil” ranges from petroleum to cooking oil, while “facility” is defined to encompass everything from storage tanks to pipelines to buildings.

 

Which Facilities are Affected and What are the New Deadlines?

           

            Facilities that have aboveground oil storage capacity greater than 1,320 gallons or underground oil storage capacity greater than 42,000 gallons are required to implement a SPCC plan.    Depending on a facility’s characteristics, however, the date by which a facility must fully implement a SPCC plan varies.  

 

·        Offshore drilling, production, or workover facilities have not received a deadline extension and must implement a SPCC plan by November 10, 2010.

 

·         Onshore facilities that are required to have a Facility Response Plan (FRP) must implement a SPCC plan by November 10, 2010. 

 

o       A FRP is needed if a facility:

 

1)      transfers oil across water or to or from vessels and has over 42,000 gallons of oil capacity; or

 

2)      has total oil storage capacity of 1 million gallons or greater, and one of the following is true:

 

a)      facility does not have secondary containment for each above-ground storage area sufficiently large to contain the capacity of the largest above-ground storage tank within each area; or

 

b)      facility is located in an area where a discharge could cause damage to fish and wildlife and sensitive environments; or

 

c)       facility is located in an area where a discharge could shut down a public drinking water intake; or

 

d)      facility has reported a spill of 10,000 gallons of oil or more in the past five years.

 

·        Facilities that have been in operation since August 16, 2002 must already have a SPCC plan. These facilities should keep their existing plan in place and implement an updated SPCC plan by November 11, 2011.

 

·        Facilities that opened between August 16, 2002 and November 10, 2011 must complete a SPCC plan by November 10, 2011.

 

·        Facilities opening after November 10, 2011 must prepare a SPCC plan before they begin operations. New oil production facilities, however, will have six months after starting operations to develop a SPCC plan.

 

What is an SPCC Plan?

             

SPCC plans require facilities with the greatest chance to spill oil into U.S. waters to develop containment systems and protocols to prevent oil from reaching waters of the U.S. Each facility’s plan must be customized to the facility, although EPA regulations have numerous standardized requirements for each general type of facility. 

 

            EPA officials evaluate a facility’s SPCC plan when they conducting on-site visits. EPA officials are allowed to interview facility employees about their familiarity with the plan and their role in its implementation. If a facility has more than two spills in a twelve-month period, EPA will officially review a facility’s plan. In the event a facility fails to develop an SPCC plan or is not properly implementing one, EPA has authority to issue administrative penalties.

 

SPCC plans must be approved by the managers of a facility and must be allocated sufficient resources to be fully implemented. The plans generally need to be reviewed and certified by a licensed professional engineer, although an exception allows a facility to self-certify its SPCC plan if: 1) the facility has aboveground oil storage capacity of 10,000 gallons or less; 2) the facility has never had a spill exceeding 1,000 gallons; and 3) the facility has not had two spills over forty-two gallons in any twelve month period in the three years prior to self-certification.

 

This article was authored by Aaron S. Heishman, Jackson Kelly PLLC.  For more information on the author see here.