November 27, 2013
Last week, the Global Alliance on Health and Pollution (“GAHP”) released a report examining laws governing the remediation of contaminated properties in seven Latin America countries, as well as the United States, and identifying best practices. The report, entitled “Regulatory Best Practices for Remediation of Legacy Toxic Contamination,” was produced by the Cyrus R. Vance Center for International Justice. The Blacksmith Institute, a nonprofit focused on global toxic pollution issues which serves as the secretariat for the GAHP, also assisted in the production of the report.
SPR attorneys Jeff Gracer and Devin McDougall served as United States Coordinating Counsel for the report.
The six recommendations identified in the report are:
1. Create clear numeric guidelines for establishing whether a site is contaminated. Although contaminated sites are often defined as sites where pollution is present at levels that may present a threat to human health and the environment, it is useful to enact regulations that specifically define what those levels are, so that sites can be readily identified as candidates for further investigation and remediation.
2. Use commercial events to identify contaminated sites. Evaluation of historic contamination can be required when project proponents are applying for permits, and when industrial facilities are being bought and sold or decommissioned. These triggers will result in the identification of contaminated sites at a time when funding for investigation and remediation is most likely to be available.
3. Create incentives for voluntary remediation. Laws and regulations should make it easy for private parties to come forward on a voluntary basis to address legacy contamination. These incentives can include resolution of existing liability for site owners, liability exemptions for prospective purchasers, tax exemptions and tax credits, remediation funding grants, and other governmental incentives.
4. Create a clear and efficient remediation process. One of the most significant barriers to environmental cleanup is the uncertainty surrounding applicable cleanup standards, the complexity of the process, and the involvement of multiple governmental agencies with overlapping jurisdiction. Experience has shown that published cleanup standards, a simple process for engagement with the government, and clear delineations of which agency has jurisdiction over a particular cleanup will encourage increased private sector participation.
5. Provide meaningful opportunities for public review and comment. Environmental remediation regulations and practices often benefit from input from members of the business community who will be called upon to effectuate cleanups and also by members of communities who live in close proximity to contaminated sites. Site remediation plans may also be more pragmatic and tailored to actual risk if they are subject to prior public review and comment.
6. Develop effective mechanisms to address abandoned sites. Sites that are not subject to commercial activity or voluntary remediation can be the most troublesome from a governmental perspective. Governments should consider creating a registry of such sites so that they can be identified for investigation and evaluated as candidates for future remediation. Sites should be prioritized for clean-up based on a clear methodology established by the government to address those that pose the greatest risk first. Government funding can be made available to remediate such sites through a combination of lawsuits against former owners and operators or, if no responsible party can be reached, through other mechanism for funding in appropriate cases. Future “orphan” sites can be avoided by requiring environmentally sensitive operations to purchase environmental insurance policies.
For more information about the development of remediation policies in Latin America, please contact Jeff Gracer.
November 26, 2013
On November 13, 2013, a New York State appellate court ordered the reinstatement of the New York State Department of Environmental Conservation’s (“DEC’s”) general permit covering municipal separate storm sewer systems (“MS4s”), almost two years after a lower court rejected the general permit as an “impermissible self-regulatory system.” The latest decision will allow “small MS4s” (covering populations of less than 100,000) to seek or resume coverage for their stormwater outfalls under the statewide general permit, as opposed to submitting individual permit applications for each outfall. The decision also means that, in all likelihood, the Industrial Stormwater (Multi-Sector) General Permit and Construction Stormwater General Permit are safe from any similar challenge.
Prior to discharging stormwater to surface waters within New York State, an MS4 must be covered by a State Pollutant Discharge Elimination System (“SDPES”) permit, which may be issued either on an individual basis or, for eligible municipalities, pursuant to DEC’s MS4 General Permit. To obtain coverage under the General Permit, a MS4 must submit to DEC a Notice of Intent (“NOI”) to be subject to the General Permit and must subsequently comply with the permit’s terms. The NOI also proposes an MS4-specific Stormwater Management Plan (“SWMP”) to effectuate pollution reductions, which must be developed and implemented within three years of gaining permit coverage.
In a January 2012 decision, Justice Joan Lefkowitz of the New York State Supreme Court, Westchester County annulled the MS4 General Permit as inconsistent with the Environmental Conservation Law (“ECL”). As detailed in an earlier blog post, the Court held that the DEC’s review of an NOI for “completeness” does not ensure that the MS4 will reduce pollutant discharges to the “maximum extent practicable,” as required by law. The Court also held that NOI submissions are the “functional equivalent” of individual permit applications, and must be therefore be subject to the same procedures, including an opportunity for a public hearing. The Court’s interpretation of the ECL had potential impacts upon construction site operators and other entities subject to general permits, as public hearings are not currently required under any of DEC’s general permits.
With this month’s decision, the Second Department of the Appellate Division reversed the Supreme Court and reinstated the MS4 General Permit. The appellate court held “the General Permit does include a variety of enforcement measures that are sufficient to comply with the maximum extent practicable standard,” such as DEC’s review of the best management practices set forth in an NOI and DEC’s authority to revoke or amend the General Permit. The Court also found “it was not arbitrary and capricious for the DEC to limit the opportunity for public hearings to those situations in which a new general permit is proposed or an existing general permit is renewed,” as opposed to requiring a hearing on each individual NOI.
For more information on the Court’s decision and the permitting of stormwater discharges in New York State, contact Michael Bogin.
November 15, 2013
The Division of Environmental Remediation of the New York State Department of Environmental Conservation (DEC) has released its 2012-2013 Annual Report, noting key developments of the past State Fiscal Year (April 1, 2012 – March 31, 2013).
As reflected in the Annual Report, DEC’s environmental remediation programs affect many businesses across the state. For example, in the 2012-2013 State Fiscal Year, there were more than 18,000 actions that required intervention by the Division of Environmental Remediation; additionally, DEC had jurisdiction over 109,000 petroleum bulk storage tanks and 4,600 chemical bulk storage tanks.
Key developments discussed in the annual report include the following:
Brownfield Cleanup Program:
The past year saw an uptick in the number of projects approved to enter the state Brownfield Cleanup Program (BCP). In the past State Fiscal Year, 45 projects were approved, with 29% of these projects located in New York City. In prior reporting cycles since 2007, that number has ranged from 28-34. The increase in approved applications likely reflects the race to qualify for tax credits under the BCP, which are being phased out and will not be available for parties that do not receive their BCP Certificate of Completion by the end of 2015.
State Superfund Program
DEC’s authorization to bond new funds for the State Superfund Program has expired. DEC can use appropriations from prior years and cost recoveries to support the program. DEC received $12.1 million in cost recovery revenue in the past State Fiscal Year.
In the past State Fiscal Year, 13 “Class 2” sites, which are deemed to pose a significant threat to human health and/or the environment and require action, were added to State’s Inactive Hazardous Waste Site Registry. This number represents a decline from prior years; there had been at least 19 new Class 2 listings annually from the 2006-2007 through 2011-2012 State Fiscal Years.
Environmental Restoration Program
Funding for DEC’s Environmental Restoration Program, which reimburses municipalities for brownfield cleanup and redevelopment, has been revived: “Under the Cuomo administration’s New York Works capital infrastructure program, the 2013/2014 New York State Budget included $12 million which DER will use to complete cleanup of projects where funding had previously not been available.” New applicants to the program had not been approved since 2008 due to lack of funding.
Bulk Storage Program:
Revisions to the state’s Petroleum Bulk Storage and Chemical Bulk Storage regulations are under way, pursuant to a two-phase public participation process. In Phase One, initial informal draft revisions reflecting changes in federal law were released for public comment. Phase Two comprises the release of formal drafts and the acceptance of public comments thereon; the formal drafts would account for further changes in state and federal law and are expected to be issued in the 2014-2015 State Fiscal Year.
Liquefied Natural Gas:
DEC has proposed new regulations for the siting, storage and transport of liquefied natural gas in New York State. The agency expects to finalize and promulgate the regulations in the present State Fiscal Year. Public comments on the proposed regulations are being accepted until December 4, 2013.
Draft revisions to DEC’s regulations on the prevention and control of radioactive material are expected to be released in the present State Fiscal Year. New regulations establishing cleanup criteria for remediation of radioactive contaminated sites are also expected in the present State Fiscal Year.
Vapor Intrusion Initiative:
DEC identified 421 sites to be evaluated for vapor intrusion, where a remedial plan had been approved before vapor intrusion was recognized as a major concern. As of March 2013, 318 of these sites have been evaluated and 108 sites are undergoing such evaluation.
Former Manufactured Gas Plants Initiative:
As of March 2013, DEC has issued or entered into cleanup orders or agreements for 213 of 221 identified former manufactured gas plant facilities.
For more information on the Division of Environmental Remediation’s programs, please contact Michael Lesser.
November 8, 2013
On November 6, 2013, ASTM released its updated E1527-13 Standard for Environmental Site Assessments: Phase I Environmental Site Assessment Process, a standard that EPA has identified in a proposed rule as a means of satisfying the definition of “all appropriate inquiries” (AAI) under CERCLA, as needed to establish certain defenses to liability. According to ASTM, the standard was revised to clarify language where there was previously inconsistency in interpretation of the prior version of the standard (ASTM E1527-05) and to strengthen Phase I reports prepared by environmental professionals. Major changes from the previous version of the standard, released in 2005, include:
- Changes in the definition of Recognized Environmental Condition (REC): The new standard includes a simplified definition of REC, a revised definition of historic recognized environmental condition (HREC) and a new term, controlled recognized environmental condition (CREC)
- Additional requirements for review of public agency records, including the requirement that additional information sources (such as Sanborn maps and tax files) be reviewed for properties with historical industrial or manufacturing uses
- Vapor intrusion: the new standard adds a definition of “migrate/migration” which includes the movement of vapor in the subsurface, and clarifies that vapor migration/intrusion does not fall under the rubric of indoor air quality (which, like asbestos and radon, is outside the scope of a Phase I assessment).
The new standard does not resolve certain state- and locality- specific questions raised by record review requirements, including whether certain types of environmental records are considered “readily ascertainable” and thus part of a Phase I review. For instance, in New Jersey and Connecticut, records related to the environmental remediation of a property were previously publicly available but are now held by private consultants (“licensed site remediation professionals” (LSRPs) in New Jersey and “licensed environmental professionals” (LEPs) in Connecticut).
In contrast, the New York State Department of Environmental Conservation announced this week that it would post online its information related to 1,950 remedial sites with non-registry “P,” “PR,” and “N” designations, making it easier for New York environmental consultants conducting Phase I assessments to quickly access these records. (More information about those types of site designations can be found here.) Such state-to-state variations in agency record review highlight the importance of having AAI review conducted by an environmental professional with a detailed understanding of the local environmental regulatory regime for a given property.
The new E1527-13 standard is part of a continuum of evolving environmental due diligence practice. The new standard is an important milestone, but there are likely to be important changes and interpretations as the standard begins to be implemented in practice. For more information on the ASTM standard, AAI, Phase I reports or environmental due diligence, please contact Christine Leas.
November 6, 2013
On October 24, 2013, the Occupational Safety and Health Administration (“OSHA”) announced the availability of a new annotated table of Permissible Exposure Limits (“PELs”) for chemicals in the workplace, along with alternative standards that “may serve to better protect workers” than the existing federal limits. OSHA has, in the past, issued regulations establishing mandatory PELs for various chemicals, but most of these regulatory standards have not been updated since they were first issued decades ago. According to its October 24 press release, OSHA now believes that many of the regulatory PELs are out of date and do not sufficiently protect employee health.
Rather than issue new regulations, OSHA is recommending that employers consider using the alternative PELs presented in the new annotated PEL tables. These tables present, side by side, OSHA’s existing regulatory PEL, the PEL established by the California Division of Occupational Safety and Health (“Cal/OSHA“), the Recommended Exposure Limits (“RELs”) established by the National Institute for Occupational Safety and Health (“NIOSH“), and the Threshold Limit Values (“TLVs”) and Biological Exposure Indices (“BEIs”) established by the American Conference of Governmental Industrial Hygienists (“ACGIH“).
The alternative standards are generally more stringent than OSHA’s PELs. For example, the OSHA PEL for perchloroethylene (PCE) is 100 parts per million, while the Cal/OSHA PEL and the ACGIH TLV for PCE are both 25 parts per million.
Even though the alternative PELs are not federally enforceable, they may encourage state regulators to adopt the stricter exposure limits. Even without official state adoption of the stricter exposure limits, OSHA’s endorsement of those limits could encourage regulators to press for more stringent cleanup standards at contaminated sites, and could broaden the scope of conditions recognized as problematic in Phase I and Phase II due diligence reviews. OSHA’s recognition of the stricter exposure limits could also increase pressure on employers to adopt stricter voluntary standards for chemical exposure in the workplace. As recently discussed on our blog, similar consequences could follow from other agencies’ actions with respect to chemical exposure, such as the New York State Department of Health’s recently-issued guidance revising the maximum recommended concentration of PCE in indoor air to 30 mcg/m3, or 4.4 parts per billion.
OSHA’s new annotated PEL tables are accessible here. For more information, contact Christine Leas.
November 1, 2013
In a recent Advisory Opinion, the State Department of Taxation and Finance (DTF) opined that a taxpayer may not claim tax credits under the site preparation credit component of the Brownfield Redevelopment Tax Credit more than five years after the site received a Certificate of Completion (COC) under the Brownfield Cleanup Program (BCP). This interpretation is consistent with statutory language. However, its implications may cause difficulties for property developers who intend to build multiple buildings on remediated property on a staged timeline, and raises questions about the availability of tax credits for post-COC costs.
The taxpayer who requested the Advisory Opinion was considering purchasing property which had already been remediated to the satisfaction of the Department of Environmental Conservation and for which a COC had been issued, but for which additional environmental cleanup would be necessary to prepare the property for its intended use as an industrial manufacturing facility. The additional cleanup would occur more than five years after the issuance of the COC.
Section 21(b)(2) of the Tax Law defines “site preparation costs” to include remediation, excavation, demolition, and other costs related to preparing a site for future development. The statute divides such costs into two categories:
(i) costs incurred in connection with a site’s qualification for a COC, and
(ii) all other costs incurred in connection with preparing the site for a building or other improvement or otherwise to establish the site as usable for its intended purpose.
Section 21(a)(2) provides that category (i) costs may be claimed in the tax year in which the COC is issued, whereas category (ii) costs may be claimed in the tax year in which the improvement to which the costs apply is placed in service, for up to five taxable years after the issuance of the COC. The post-COC remediation expenditures at issue in the advisory opinion appear to fit the definition of category (ii) site preparation costs.
The advisory opinion concludes, “[m]ore than five years have passed since the COC was issued, so the taxpayer is not allowed to claim the site preparation credit component.”
The advisory opinion does not address why the taxpayer claimed the costs at issue under the site preparation component in the first place. It is unclear why the taxpayer could not include those costs in determining its cost basis for the industrial facility and claim them under the qualified tangible property (QTP) component of the Brownfield Redevelopment Tax Credit set forth in Section 21(a)(3) of the Tax Law. QTP credits apply to qualified tangible property such as personal property, buildings, and structural building components, and may be claimed for the years in which such property is placed in service on the site, for up to ten years after the issuance of the COC.
Although this issue is not addressed in the Advisory Opinion, the statute is not entirely clear as to how to treat costs that may be characterized as either site preparation costs or QTP costs. Tax Law section 21(b)(2) states that site preparation costs cannot be qualified tangible property costs. Clearly, this provision prevents double counting under both credit components. But it does not specify whether costs that meet the statutory definition of either component must be claimed as one or the other.
One reasonable interpretation is that the statute’s provisions regarding category (ii) site preparation costs are primarily directed at remediation that is conducted prior to the COC. Post-COC costs that are directly related to an improvement would be claimed under the QTP Component, even if the time to claim the site preparation component has passed.
For more information on this Advisory Opinion or about the Brownfield Redevelopment Tax Credit, please contact Paul Casowitz.
October 25, 2013
The New York State Department of Environmental Conservation (“NYSDEC”) announced last week that the agency has finalized its new Environmental Audit Incentive Policy. This policy, which was proposed last March, will reward businesses that implement good environmental self-management by, under certain circumstances, waiving some civil penalties for violations that are discovered while self-auditing. It will come into effect on November 18, 2013.
The new audit policy marks the first change in NYSDEC’s penalty and compliance policies in over ten years and suggests greater flexibility for regulated parties and the potential for leadership in environmental compliance from within the business community.
Many members of the regulated community already use environmental management systems and pollution prevention. The new policy supports those efforts and encourages widespread use. It also encourages new owners of regulated entities to disclose, correct, and prevent the recurrence of violations, and implement pollution prevention. It does so in several ways, including:
- Lengthening the disclosure period for new owners and provides a penalty waiver for disclosure of violations discovered within 60 days of acquiring a new property;
- Waiving a component of civil penalties for existing owners who voluntary disclose and timely correct violations;
- Providing financial and technical incentives for the use of environmental management systems and pollution prevention
The policy is not a total departure from NYSDEC enforcement norms. It states that it will not reward entities with a history of non-compliance. Certain violations are also excluded from the policy, including recurring violations and those involving criminal activity or serious harm to human health or the environment.
For more information about DEC’s Environmental Audit Incentive Policy, please contact Michael Lesser.
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