December 20, 2012
This year, Sive, Paget & Riesel is proud to celebrate its 50th anniversary. In the five decades since the birth of the modern environmental movement and the founding of the Firm, SPR has been at the forefront of environmental law and litigation.
During the 1960s and early 1970s, David Sive’s synthesis of litigation skills with the burgeoning environmental movement set important precedents in environmental law, just as major national and state environmental statutes and agencies were being forged. Critically, the Firm represented the Sierra Club in the landmark Scenic Hudson Preservation Conference v. Federal Power Commission case, which established that federal administrative proceedings must consider potential aesthetic and environmental impacts. During this period, the Firm brought one of the nation’s first NEPA lawsuits, which challenged the environmental review of a proposed factory adjacent to Hilton Head Island, South Carolina.
In the 1970s, David Paget and Daniel Riesel left the U.S. Attorney’s Office to join the Firm, which later was renamed Sive, Paget & Riesel. The 1970s and 1980s saw the concurrent expansion of environmental law and the Firm’s practice. New York State enacted its environmental review statute, SEQRA, and the federal government enacted additional environmental statutes such as CERCLA and RCRA, which govern hazardous substances and hazardous wastes. The Firm quickly gained expertise in shepherding major development projects through the environmental review and permitting processes. Beginning with Battery Park City in 1981, SPR has overseen the environmental review of projects such as Hudson River Park, Brooklyn BridgePark, Lincoln Center’s expansion, the new Yankee Stadium, and Columbia University’s new graduate campus in West Harlem.
Throughout the 1990s, SPR continued to litigate matters related to clean water, air and land. The Firm also set important precedents in the area of local government law. For example, in 1998, SPR successfully defended the Town of Cortlandt’s right to restrict mining.
With the turn of the century, SPR has remained at the cutting edge of environmental law and litigation. In 2003, New York State established its Brownfield Cleanup Program, which promotes the redevelopment of contaminated sites by offering liability protection and tax credits. SPR’s extensive experience in the areas of hazardous waste, administrative law, and litigation has made it a natural leader in guiding clients through the Brownfield Cleanup Program’s complex regulatory process. At the same time, SPR has protected natural areas in the Hudson Valley through the use of conservation easements and land use litigation.
Drawing on its founding principles of respect for nature and excellence in legal representation, SPR has developed expertise in the urgent task of upgrading aging infrastructure in an environmentally responsible manner. The firm presently counsels state entities concerning the environmental review and permitting of three major bridge updates in the New York metropolitan area, for the Tappan Zee, Goethals and Bayonne Bridges.
For more details on the Firm’s remarkable history, please visit SPR’s interactive 50-year timeline.
December 17, 2012
The availability of Superfund defenses to tenants of contaminated properties is often uncertain, raising the potential of lessee liability and impeding the redevelopment and reuse of contaminated lands. In an attempt to ameliorate this problem and provide assurances to responsible tenants, EPA recently revised and expanded its guidance clarifying when tenants can make use of one of the central liability protections under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), the Bona Fide Prospective Purchaser (“BFPP”) defense.
The BFPP defense provides that a party is not liable under CERCLA if it can demonstrate that it has made all appropriate inquiries into the possibility of contamination at the site, has acted in good faith, and has met various other requirements. As the definition of BFPP under CERCLA refers to both qualifying purchasers and “tenants of such [purchasers],” EPA has previously stated that where a landlord qualifies for BFPP status, the tenant automatically qualifies as well. If the landlord loses BFPP status through no fault of the tenant, EPA has indicated it will treat the tenant as a BFPP if the tenant himself meets all the requirements for BFPP status other than the requirement for all appropriate inquiries.
The new guidance goes on to provide that if the landlord does not qualify for the BFPP defense, a tenant can still qualify if he meets the requirements for BFPP status. However, it is important to note that the BFPP defense is only available to a tenant in these circumstances if the lease was executed after January 11, 2002. This date requirement is derived from the CERCLA statute, which provides that BFPP status is available to persons who “acquire[d] ownership” of a facility after January 11, 2002.
In addition, the guidance indicates that EPA will, in appropriate circumstances, issue comfort letters or prospective lessee agreements in order to clarify the nature of a tenant’s potential liability. EPA has explained that the guidance is intended to complement a broader EPA initiative to facilitate the development of renewable energy on contaminated lands, and has released se several sample comfort letters for renewable projects. However, this guidance is applicable much more broadly, as it provides useful direction for managing the environmental liability of tenants of contaminated lands in general.
December 5, 2012
On November 15, 2012, in Aukema v. Chesapeake Appalachia, a judge in the U.S. District Court for the Northern District of New York ruled that several leases to drill for gas in the Marcellus Shale had expired, despite the gas companies’ claim that the delay in permitting associated with New York’s environmental review process constituted a force majeure extending the lease. The court also ruled that “delay rental” payments by the companies did not extend the leases beyond their primary term. This decision could have significant repercussions for gas leases in New York State.
All of the leases considered in Aukema were originally signed between 2000 and 2006, and ran for a primary term of five to ten years. During that term, the lessees paid the landowners a “delay rental” payment. If the gas companies began producing gas from the land during the primary term, the lease would extend into a secondary term for as long as production continued, and the landowners would receive a percentage of the revenue from the gas as a royalty instead of receiving continued delay rental payments.
In 2008, Governor Patterson directed the Department of Environmental Conservation (“DEC”) not to issue any permits for gas wells that would involve high-volume horizontal fracturing (“HVHF”) until DEC had studied the environmental impacts of HVHF and issued a new Generic Environmental Impact Statement (“GEIS”). Although the primary term of the leases at issue had expired, the gas companies argued that the delay in permitting, and the de facto moratorium on permit issuance, triggered the leases’ “force majeure” clause.
The court ruled, however, that the “force majeure” clause did not apply because the gas companies could have used conventional drilling techniques – which had been analyzed in a 1992 GEIS and can be permitted under existing regulations – to explore for gas and thus did not need to await the new GEIS to begin producing gas from the leased property. Hence, the court concluded, performance under the contract was not impossible and the force majeure clauses did not come into effect.
The court also held that payment by the gas companies of delay rental payments pursuant to the lease terms could not extend the primary term of the leases. The gas companies contended that the continuing payment of delay rentals, by itself, extended the primary term of the leases. The court disagreed, noting that delay rental payments originally arose when courts began to infer that lessees had an obligation to begin production immediately. Delay rental payments serve only to defeat that assumption, by taking the place of the royalty payments that would be made if production began. Since delay rental payments therefore serve only to negate the implication that production will begin immediately, the Aukema court held that they do not extend the primary lease term.
This decision has important implications for gas leases in New York because many have nearly identical force majeure and delay rental payment provisions to the ones at issue in Aukema. The Aukema decision, if upheld on appeal, could mean that many gas leases in New York have expired. The continuing delays in DEC’s rule making process – including DEC’s recent request for a 90-day extension of its rule-making process on natural gas, the public comment period necessitated by that request, and the pending Department of Health review – could lead to the expiration of additional gas leases. This could open the door to new leases being negotiated at terms likely to be more favorable to lease owners.
For more information, contact Chris Amato or Steven Barshov.
December 3, 2012
Last week, the New York State Department of Environmental Conservation (“DEC”) finalized regulations requiring permits for surface water and groundwater withdrawals exceeding 100,000 gallons per day. Previously, water withdrawals exceeding that threshold had to be reported to DEC, but permits were only required for drinking water suppliers.
The new permitting regime is expected to cover a broad range of manufacturing, business, and industrial water users, as well as hydraulic fracturing operations that inject large volumes of water into shale formations to extract natural gas. Agricultural water withdrawals are subject to more flexible monthly, as opposed to daily, permitting thresholds, and groundwater pumping at inactive hazardous waste remedial sites under a consent order or agreement is exempt from state permitting requirements.
The first deadline for permit applications – beginning with systems that withdraw or capable of withdrawing 100 million gallons per day – is June 1, 2013. The full permitting system will be phased in over the next five years, although parties that previously reported water withdrawals to DEC under existing state law may be eligible for a streamlined “initial permit” process that incorporates their existing water withdrawal capacity.
The water withdrawal regulations were initially proposed a year ago, and they implement legislation signed by Gov. Cuomo in August 2011. For more information on water withdrawal permitting, contact Dan Riesel, Michael Lesser or Jonathan Kalmuss-Katz.