February 14, 2012
On December 31, 2011, one of the biggest federal tax incentives for contaminated site remediation lapsed, leaving in doubt its application to remedial expenses incurred in the current calendar year. If the incentive is not retroactively extended by Congress, then such remedial expenditures would have to be capitalized and deducted over a period of years or decades, as opposed to being fully deducible in the year they are incurred.
The “Brownfield Expensing Tax Incentive” had provided for the accelerated deduction of remedial costs at “qualified contamination sites,” which are: (a) held by the taxpayer for trade, business, or income generation purposes, (b) contaminated by a hazardous substance or petroleum, and (c) neither listed nor proposed for listing on the Superfund National Priorities List. Taxpayers also require a certificate of eligibility from the state environmental agency in which the property at issue is located (in New York, the Department of Environmental Conservation), though New York sites need not be enrolled in the state’s Brownfield Cleanup Program (“BCP”) or Spill Response Program to be certified as eligible.
The incentive previously lapsed due to legislative inaction three times since its 1997 enactment, but following each expiration Congress retroactively extended it during the next calendar year, leaving no gap in the coverage of eligible expenses. It remains to be seen whether the current Congress will do the same.
On a state level, the tax credits available under for New York’s BCP are also in danger of expiring in the absence of a legislative extension. Brownfield Tax Credits are only available for cleanups that receive a Certificate of Completion (“COC”) by March 31, 2015; obtaining a COC often takes three or more years from a site’s admission into the BCP. Pending legislation in the New York State Senate would remove this sunset date, in addition to enacting other BCP amendments.
For more information on tax incentives for Brownfield remediation, contact David Yudelson or Christine Leas.
February 3, 2012
In a significant blow to New York’s stormwater pollution control program, last month a state court invalidated the Clean Water Act general permit covering discharges from urban and suburban municipalities’ separate storm sewer systems.
The January 10, 2012 decision from Judge Joan Lefkowitz of the Supreme Court, Westchester County held that the 2010 General Permit for Stormwater Discharges from Municipal Separate Storm Sewer Systems (“MS4 General Permit”) violated the Clean Water Act (“CWA”) and the provisions of New York law that implement it.
The MS4 General Permit replaces individual State Pollutant Discharge Elimination System (“SPDES”) permits for hundreds of municipal storm sewer outfalls outside of New York City. Because these outfalls share common characteristics, the Department of Environmental Conservation (“DEC”) issued a general permit that governs the discharge of stormwater by municipalities across the state.
To obtain coverage under the MS4 General Permit, municipalities must submit a Notice of Intent (“NOI”) to DEC and comply with the General Permit terms. NOIs must propose an initial Stormwater Management Plan (“SWMP”) to effectuate pollution reductions, which must be developed and implemented within three years of gaining permit coverage.
Judge Lefkowitz struck down the MS4 General Permit on three grounds.
First, the Court held that the MS4 General Permit fails to require a reduction of pollutant discharge to the “maximum extent practicable”, as required by the Clean Water Act and its New York equivalent, because it “creates an impermissible self-regulatory system.” Relying heavily on a 9th Circuit decision which declared NOIs to be “functionally equivalent to detailed applications for individual NPDES permits,” the Court emphasized that the MS4 General Permit does not require DEC to review a municipality’s SWMP prior to approving coverage. Thus, “the initial determination of what particular control measures would be implemented and whether those measures would in fact reduce pollutant discharge to the level mandated by the applicable statute or regulation were left to each operator to make after it had already been authorized to discharge.”
Applying the same “functional equivalent” rationale, the Court also held that the NOI is effectively a permit application without an opportunity for a “public hearing,” as required for CWA permit applications. The Court acknowledged that the MS4 General Permit itself was subject to extensive public review prior to issuance, but this was insufficient because, under the permit, neither the public nor DEC is able to review the specific pollution reduction measures contained in a municipality’s SWMP until after the municipality obtains coverage allowing it to discharge.
Finally, the Court held that the MS4 General Permit is unlawful because, while it requires MS4s to reduce pollutant loads to water bodies that violate State water quality standards, the permit does not mandate compliance within the nine month timeframe required by law.
While the plaintiff environmental groups in this case have proclaimed a victory, DEC’s time to appeal has not yet expired. If it is ultimately upheld, Judge Lefkowitz’s decision may have repercussions not only for municipalities, but also for construction sites and industrial activities covered by DEC’s Construction Stormwater General Permit and Multi-Sector General Permit. SPR will be tracking developments related to this decision and will provide updates as applicable.
For more information about stormwater permitting, please contact Michael Bogin.
January 26, 2012
Last week, DEC proposed two new regulations affecting power plants in New York State. Both implement provisions of the Power NY Act of 2011, and both apply to proposals to construct or modify power plants with the capacity to generate at least 25 megawatts.
First, DEC proposed carbon dioxide emissions limits for new and expanded power plants (so long as the expansion adds at least 25 megawatts of capacity). These limits are measured on the basis of a 12-month rolling average by dividing the total emissions of CO2 by the total megawatts generated or fuel input into the plant.
The limits are:
- 925 pounds of CO2 per megawatt-hour of electrical output, or 120 pounds of CO2 per million Btu of input for combined cycle combustion turbines, stationary internal combustion engines firing only gaseous fuel, or boilers firing over 70% fossil fuel, and
- 1450 pounds of CO2 per megawatt-hour, or 160 pounds of CO2 per million Btu of input for simple cycle combustion turbines or stationary internal combustion engines firing either liquid fuel or a combination of liquid and gaseous fuel.
Second, DEC proposed regulations governing analysis of environmental justice issues when power plants are sited under the reauthorized Article X of the Public Service Law. According to DEC Commissioner Joe Martens, these are the first such regulations in the country.
The proposed environmental justice regulations require an initial analysis of the area immediately surrounding the proposed facility to determine whether that area includes an “environmental justice area” containing a minority or low-income community that may already bear a disproportionate share of environmental impacts. If so, an application to site a power plant must include an analysis of any significant adverse environmental impacts to the environmental justice area resulting from the plant’s operation or construction. Such an assessment must include:
- An analysis of the plant’s cumulative impact on air quality,
- A comprehensive analysis of the environmental justice area, and
- A comparison of that area to the county or other adjacent communities (for facilities proposed within New York City, this includes the entire city) to determine if the impacts to the environmental justice area are disproportionate.
The regulations also require the applicant to identify, analyze, and implement mitigation measures that will avoid any disproportionate significant adverse environmental impacts to the maximum extent possible. If the impacts cannot be avoided or minimized, the applicant must offset the impacts.
The proposed environmental justice regulations state that they are “not intended to … create any right to judicial review involving the compliance or noncompliance of any person with this Part.” DEC also acknowledges, however, that the Power NY Act “expressly provides for judicial review” of power plant siting determinations. Thus, it is unclear to what extent, if any, the proposed regulations’ disclaimer precludes judicial review of the Act’s mandatory environmental justice analysis, or whether such limitation would be deemed consistent with the underlying statute.
Comments on both sets of proposed regulations are due by 5 p.m. on March 15, 2012. Information on filing comments is available here.
For more information, contact Jeffrey Gracer.
January 25, 2012
The New York City Department of City Planning (“DCP”) has proposed amendments to the New York City Zoning Resolution, expanding the environmental (E) designation program that identifies sites of potential environmental concern. The Mayor’s Office of Environmental Remediation (“OER”), which administers the E designation program, is anticipated to publish draft rules to implement the proposed changes in coming weeks.
During area-wide rezonings, the Zoning Resolution authorizes the placement of E designations on affected lots with potential significant adverse air quality, noise or hazardous materials impacts. Before undertaking any land use or property changes that require a building permit from the Department of Buildings (“DOB”), owners of designated lots must first receive approval from OER that E designation requirements have been satisfied, which may involve additional environmental analysis or remediation.
DCP has summarized the proposed changes to the E designation and related sections of the Zoning Resolution, broadly characterizing the revisions in six categories: environmental restrictive declarations; applicability; enforcement; post-approval modifications; ongoing monitoring; and duplicative and outdated text updates.
Most importantly, the amended text makes the E designation program applicable to environmental restrictive declaration (“RD”) properties, the first step in doing away with the practice of using environmental RDs. Currently, DCP uses RDs to ensure investigation and any necessary environmental remediation on applicant-controlled properties in connection with zone changes, variances, special permits and other DCP-issued authorizations. The E-designation program currently only applies to zoning map amendments; typically, area-wide rezoning. The proposed amendments would merge both into an expanded E designation program.
The City Planning Commission held a public hearing on the Zoning Resolution amendment on January 4, 2012 and will continue its review through February 29, 2012. The City Council will then have 50 days to review the amendment. OER has also indicated that it will be publishing its draft rules implementing the E designation program in the coming weeks. Sive, Paget & Riesel is tracking these developments, and will continue to provide updates as the zoning amendment is finalized and the OER rules become available for review and comment.
For more information on E designations, contact Christine Leas or David Yudelson.
January 18, 2012
New York City developers now have a new factor to consider in project design. On January 4, 2012, the Department of Environmental Protection (“DEP”) adopted a new stormwater performance standard (the “performance standard”), requiring large and medium-scale development projects in combined sewer areas to incorporate larger detention basins or install relatively expensive green or blue roof systems. The performance standard also imposes stormwater reduction requirements on certain building alterations that increase impervious surfaces.
The DEP rules amend Chapter 31 of Title 15 of the Rules of the City of New York, which regulates the construction, permitting, and inspection of sewer connections. For a new development, the performance standard establishes a “stormwater release rate” equal to the greater of 0.25 cubic feet per second (“cfs”) or 10% of the new development’s “allowable flow,” the stormwater flow that can be released into a storm or combined sewer based on existing sewer design criteria. In no case, however, will the new release rate exceed allowable flow.
For medium and large sized lots, these changes would effectively require a significant increase in stormwater detention on site. Lots smaller than 5,000 square feet are not likely to have a release rate that exceeds 0.25 cfs, so they will probably only need to comply with existing sewer availability and connection application process requirements.
Redevelopment projects in combined sewer areas may also need to meet new performance requirements. If a redevelopment requires an alteration permit from the Department of Buildings (“DOB”) and will increase existing impervious surfaces (including building footprints) by more than 20%, the release rate for the altered area must be proportional to the ratio of the altered area to the total site area. Moreover, on such projects, no new points of stormwater discharge are permitted. Proposed redevelopments that increase impervious surfaces or building footprints by 20% or less are exempt from the stormwater performance standard unless an additional sewer connection is proposed.
In addition to the new performance standard, the DEP and DOB have developed new “Guidelines for the Design and Construction of Stormwater Management Systems” (the “Design Manual”) which the City hopes “will ease the development community’s transition to stricter stormwater release rates when connecting to the City’s combined sewer system.” The stormwater performance standard and Design Manual are key elements of the broader New York City “Green Infrastructure Plan” unveiled by Mayor Bloomberg on September 28, 2010, which aims to reduce combined sewer overflows (“CSOs”) into the City’s waterways by 40% by 2030.
Finally, because the City expects more stringent federal and state Municipal Separate Storm Sewer Systems (MS4) requirements to be published within the next year, the City expects to revisit the stormwater performance standard and the Design Manual to add stormwater management requirements in separately sewered areas. The City will then also revisit the adequacy of the stormwater management program in combined sewer areas.
For more information on the new stormwater performance standard, contact Michael Bogin.
January 17, 2012
SPR principals Daniel Rieseland Pamela Esterman will serve as co-chairs of the upcoming 42nd annual Environmental Law Course of Study, to be held on February 1-3, 2012 in Washington, DC, co-sponsored by ALI-ABA and the Environmental Law Institute. The course features advanced-level presentations by a diverse faculty from government, universities, private practice and advocacy organizations on legislative initiatives, regulatory changes, and recent judicial precedent concerning air, water, hazardous materials, endangered species, public lands, environmental permitting and review, international environmental law, and environmental justice. This year, the course will also feature panels on setting environmental standards, environmental enforcement, the environmental regulation of energy, and ethics for environmental lawyers. If you are unable to attend in person, this CLE is also available via video webcast. For more detailed information, please visit the course website.
January 11, 2012
On January 3, 2012, the Environmental Protection Agency (“EPA”) released its Draft Feasibility Study for the Gowanus Canal, proposing a series of options for remediating the 1.8-mile long Brooklyn Superfund site. All of the remedial options, aside from a mandatory “no action” alternative, involve a combination of dredging the Canal’s sediment and reducing external sources of contamination, including sewage discharges from Combined Sewer Overflows (“CSOs”).
The EPA listed the Gowanus Canal on the Superfund National Priorities List in March 2010 and released a Remedial Investigation (“RI”) in early 2011 that reported elevated levels of polycyclic aromatic hydrocarbons (“PAHs”), polychlorinated biphenyls (“PCBs”) and metals. Parts of the environmental investigation of the areas surrounding the Canal were performed by National Grid and New York City under Administrative Orders on Consent with EPA.
The Draft Feasibility Study proposes dredging, treating and disposing approximately 588,000 cubic yards from the Canal, at a projected cost of $351 million to $456 million. EPA expects to release a Proposed Plan for its preferred remedy sometime in 2012.
In addition to assessing the dredging of the Canal, the Draft Feasibility Study states that “upland source controls,” including controls on CSOs and stormwater discharges, “need to be coordinated and implemented in concert with the selected sediment remedy[.]” According to press reports, the New York City Department of Environmental Protection (“DEP”) expressed concerns about EPA’s CSO control plans, stating that the “primary sources [of canal contamination] are the former industrial plants on the canal, and not ongoing sewer overflows.”
EPA is accepting public comment on the Draft Feasibility Study and has tentatively scheduled a meeting for January 24, 2012, 7:00 p.m., at 330 Smith St., Brooklyn, to discuss the EPA’s plans. For more information on the Gowanus Canal Superfund Site, contact David Yudelson or Michael Bogin.
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