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 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 17, 2013
Earlier this month, the New York State Department of Health (NYSDOH) issued new guidance for assessing perchloroethylene (PCE) in indoor and outdoor air. According to the new guidance, the maximum recommended concentration of PCE in air was revised down from 100 mcg/m3 to 30 mcg/m3. According to NYSDOH, this move was prompted by a recent EPA study which found greater health risks from PCE than previously understood.
PCE, also known as PERC or tetrachloroethylene, is used to dry clean fabrics, to degrease metal parts, and to manufacture other chemicals. It enters indoor and outdoor air through evaporation.
This change in guidance will have a number of important ramifications. First and most directly, it expands the applicability of New York’s tenant notification law. Under New York law, landlords must notify tenants where PCE in the air exceeds NYSDOH’s guideline. The new, lowered guideline will increase the likelihood that notice will be required where PCE vapor is detected. Additionally, NYSDOH has prepared a new fact sheet, which must be provided to tenants in such situations.
Second, the new guidelines can be expected to drive more stringent cleanup standards related to preventing soil vapor intrusion from PCE contamination, since cleanup standards typically take account of NYSDOH standards for health protection and soil vapor intrusion issues have been a focus of regulatory action in New York in recent years.
Finally, the new guidelines may affect real estate transactions, as they may complicate Phase I and Phase II analyses of site contamination and expand the scope of conditions recognized as problematic.
For further information, please contact Christine Leas.
June 28, 2013
In a speech at Georgetown University on June 25, 2013, President Barack Obama unveiled his administration’s climate change agenda for its second term, featuring a series of rules and initiatives that can implemented by the United States Environmental Protection Agency (“EPA”) and other federal agencies without congressional action. While the details of these proposals will be determined through subsequent rulemaking, the plans and timeframes set forth in the speech signal a major expansion of federal climate change mitigation and adaptation efforts, with potentially significant impacts upon electric utilities and other regulated entities as well as units of state and local government most affected by the impacts of global warming.
The centerpiece of President Obama’s speech is a new Presidential Memorandum directing EPA to revise proposed greenhouse gas (“GHG”) emissions standards for new and significantly modified power plants by September 2013, to propose the nation’s first GHG emissions guidelines for existing power plants by June 2014, and to finalize those guidelines by June 2015. States would then have one year to submit plans implementing the guidelines for power plants within their borders, and President Obama directed EPA to work with states, industry, and other stakeholders in developing GHG controls for existing power plants. In the past, EPA has allowed emissions trading as a means of complying with existing source guidelines for non-GHG pollutants, an approach that could provide more flexibility for states and regulated sources than a conventional, technology-based emissions standard.
President Obama also called for increased fuel efficiency standards for heavy-duty vehicles, expanded federal support for energy efficiency savings in commercial and residential buildings, and U.S. leadership on international climate negotiations.
To promote climate change adaptation, President Obama directed federal agencies – such as the Department of Housing and Urban Development and USEPA – to take sea-level rise and other climate impacts into account in issuing grants or making infrastructure-related decisions in coastal areas. He also proposed the creation of a state, local and tribal task force on climate preparedness, and announced that the National Institute of Standards and Technology (“NIST”) will convene a panel to develop guidelines for climate-resilient buildings and infrastructure. As insurance and reinsurance companies have been increasingly affected by extreme climate events, the White House planned a meeting of insurance industry representatives and other stakeholders to “explore best practices for private and public insurers to manage their own processes and investments to account for climate change risks and incentivize policy holders to take steps to reduce their exposure to these risks.”
The ultimate impact of the President’s speech will depend upon his administration’s follow through, potential actions by Congress to constrain these efforts, as well as the results of litigation that are likely to follow the finalization of many of the rules that the Obama Administration has planned. With Congress unlikely to take up comprehensive global warming legislation in the near future, however, EPA and other federal agencies have become the primary drivers of federal climate policy, and, under the President’s new climate plans, will continue to serve that role. For more information about the President’s announcement on climate change issues, contact Jeff Gracer or Jon Kalmuss-Katz.
June 21, 2013
Last week Mayor Bloomberg released a Report titled “A Stronger, More Resilient New York,” providing over 250 specific recommendations to make the City more resilient in the face of the rising sea levels and increased storm activity associated with climate change. The product of a Special Initiative formed in December 2012 in response to Superstorm Sandy, the Report covers a wide variety of measures ranging from beach nourishment and wetlands restoration to increasing the resiliency of the City’s transportation and healthcare systems and responding to insurance concerns.
Adaptation to protect residents and infrastructure from extreme storm activity is a critical issue for the City. With a 520-mile coastline, longer than those of Miami, Boston, Los Angeles, and San Francisco combined, the City’s population includes nearly 400,000 residents living in the newly revised FEMA Preliminary Work Maps Special Flood Hazard Area (SFHA) (the area that will be inundated by a flood event having a 1-percent chance of being equaled or exceeded in any given year, also sometimes called the base flood elevation or 100-year floodplain).
Notable proposals provided throughout the Report include:
- Providing bonus grants to accelerate cleanup of brownfields in the SFHA ;
- Identifying cost-effective measures to safeguard exposed hazardous substances in the SFHA and creating a catalogue of best practices;
- Installing cogeneration equipment at wastewater treatment plants around the City, which will generate backup electricity from the methane produced by the treatment process itself;
- Protecting the city’s 14 wastewater treatment facilities, all of which are located along the waterfront and are at risk in the event of a coastal storm;
- Increasing the capacity of parks to absorb floodwaters and the driving impact of surge-related wave action by restoring beaches and redesigning bulkheads in coastal parks;
- Creating a local storm surge barrier at Newtown Creek and at the mouth of the Gowanus Canal, both Superfund sites; and
- Constructing a multi-purpose levee with raised edge elevations to protect much of the East River shoreline below the Brooklyn Bridge and create a new area for commercial and residential development (called “Seaport City” and based off of Battery Park City along the Hudson River).
The report estimates that, should only the 37 highest priority “Phase 1 initiatives” be implemented, expected losses from a future storm like Sandy could be reduced by up to 25 percent, or $22 billion. These Phase 1 initiatives include such measures as: studying storm surge barriers at Newtown Creek to reduce “back door flooding”; launching a global design competition for integrated flood protection systems; and developing a one-stop website for all City and State waterfront permitting information.
For more information about climate change adaptation, please contact Michael Bogin.
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