April 2, 2014
This week, New York State enacted an approximately $140 billion budget for 2014-2015 fiscal year without the sweeping Brownfield Cleanup Program (“BCP”) reforms recommended in Gov. Andrew Cuomo’s initial budget proposal last January. The final budget agreement, signed by Gov. Cuomo on April 1, 2014, includes no changes to the BCP, leaving in place the existing December 31, 2015 deadline for BCP sites to complete remediation and receive a Certificate of Completion (“COC”) from the New York State Department of Environmental Conservation (“NYSDEC”) in order to qualify for Brownfield-related tax credits.
The BCP provides certain liability protections and tax credits for the remediation and redevelopment of eligible brownfield sites. Gov. Cuomo’s proposed budget – first released in January 2014 – would have created separate eligibility criteria for BCP acceptance and brownfield tax credits, limited the time period for brownfield developers to claim certain tax credits, and extended the December 31, 2015 deadline for sites accepted into the BCP on or after June 23, 2008. The New York State Senate set forth its own package of BCP reforms in its proposed budget legislation, including an extension of the current sunset date for tax credit eligibility. The State Assembly, however, did not include significant BCP amendments in its budget proposal. Under pressure to finalize a budget agreement before the April 1 expiration of the 2013-2014 fiscal year, the Senate and Assembly passed the budget shortly before midnight on March 31, 2014 without either the Governor’s or the Senate’s proposed BCP changes.
Now that the budget has been completed, the legislature is expected to take up the issue of BCP reform in its regular legislative session, although the contents of such proposals have yet to be seen. In the absence of legislative action, all parties seeking BCP-related tax credits will be required to obtain a COC by December 31, 2015, a target that is becoming increasingly difficult for new BCP applicants and recently-admitted sites. For more information on the BCP and the proposed legislative reforms, contact Christine Leas or Jennifer Coghlan.
January 24, 2014
Governor Cuomo has proposed substantial revisions to New York’s Brownfields Cleanup Program (“BCP”) as part of the proposed state executive budget released earlier this week. The proposed budget, prepared for the 2014-2015 state fiscal year, would alter many aspects of the program, including site eligibility criteria and availability of tax credits. Note that budget proposals are subject to change based on negotiations between the governor and both houses of the state legislature and one can expect revisions and clarifications throughout that process. The drafting of various sections of the current bill is somewhat ambiguous, particularly with respect to the retroactivity of certain provisions, and future revisions may clarify these provisions.
If passed by the state legislature as proposed, the new BCP would take effect on July 1, 2014, and its new provisions would govern sites for which the applicant receives notice that its request for participation in the program is accepted on or after the effective date. The principal change is to separate the eligibility criteria for admission to the BCP from the eligibility to receive tangible property component tax credits. Thus, under the new Program a site may qualify for the BCP, but not be eligible for tangible property component tax credits. Sites admitted into the program after December 31, 2022, however, would not be eligible for either site preparation or tangible property component tax credits.
The proposed new BCP would impose a limitation on the ability of a COC recipient to claim tangible property component tax credits to only five years, commencing with either the year in which the COC was issued or the year in which redevelopment of the site is commenced (provided that, with respect to the latter, such redevelopment is commenced within 10 years of the issuance of the COC). The proposal clarifies the definition of Site Preparation Costs for purposes of claiming site preparation tax credits, and allows developers who expense remediation costs to use the expensed amount to calculate the maximum tangible property component tax credit for a site. It also introduces additional tax credits for the inclusion of affordable housing or for sites located in a Brownfield Opportunity Area.
A new sunset date of 2025 (i.e., the date by which a Certificate of Completion (“COC”) must be obtained in order to receive tax credits) would be established for sites accepted into the program on or after July 1, 2014. For sites that were admitted into the BCP between June 23, 2008 and July 1, 2014, the bill would require the issuance of a COC by December 31, 2017. However, sites admitted into the program before June 23, 2008 that do not yet have a COC must obtain a COC by the current sunset date of December 31, 2015. For the latter two categories of sites, if the COC is not obtained by the applicable deadline, the BCA would be terminated and the applicant(s) would need to reapply under the new program.
The bill also includes a clarification that a COC can be transferred by the original recipient, as well as subsequent holders of the COC, upon transfer of all or part of the brownfield site, provided that a COC transferred to a responsible party will not provide relief from liability.
Further updates will be posted here as the proposed budget moves through the approval process.
For more information about SPR’s brownfields practice and the implications of the proposed changes, please contact Christine Leas or Jennifer Coghlan.
January 3, 2014
As anticipated, EPA finalized a rule on Monday adopting the revised ASTM E1527-13 “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process” as a standard by which parties may comply with the “All Appropriate Inquiries” Rule, 40 CFR Part 312. ASTM released the revised E1527-13 standard on November 6, 2013. Curiously, the newly revised EPA rule does not delete reference to the previous ASTM standard, E1527-05. In the Federal Register notice finalizing the rule, EPA indicated that it intends to propose, in the near future, an amendment to 40 CFR Part 312 removing reference to the E1527-05 standard. In its response to comments received on the new rule, EPA noted that it “…agrees with commenters that the revised ASTM E1527-13 standard includes improvements to the previous standard and its use will result in greater clarity for prospective purchases with regard to potential contamination at a property. Therefore, EPA recommends that environmental professionals and prospective purchasers use the ASTM E1527-13 standard.”
For more information on the ASTM standard, AAI, Phase I reports, or environmental due diligence, please contact Christine Leas
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 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.
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