Massachusetts Governor Orders Comprehensive Review of State Regulations

Posted in Massachusetts, State Regulation

On March 31, 2015, the Governor of Massachusetts signed an executive order initiating a comprehensive review of all regulations promulgated by the Executive Department and leaving in place the regulatory pause announced by the Administration earlier in the year. While short in length, this executive order has the potential to significantly affect a wide range of administrative regulatory programs in Massachusetts.

Executive Order No. 562, “To Reduce Unnecessary Regulatory Burden” (the Order) directs each secretariat, agency, department, board, commission, authority or other body within the Executive Department ( Agency) “to promptly undertake a review of each and every regulation currently published in the Code of Massachusetts regulations under its jurisdiction.” The Order also invites and encourages state governmental bodies not under the Governor’s supervision to do the same.

Agencies must review their regulations to determine whether they are mandated by law or essential to the health, safety, environment, or welfare of the Commonwealth’s residents – those that are not shall not be retained or must be modified. Regulations under review must meet the following criteria:

  • there is a clearly identified need for governmental intervention that is best addressed by the Agency and not another Agency or governmental body;
  • the costs of the regulation do not exceed the benefits that would result from the regulation;
  • the regulation does not exceed federal requirements or duplicate local requirements;
  • less restrictive and intrusive alternatives have been considered and found less desirable based on a sound evaluation of the alternatives;
  • the regulation does not unduly and adversely affect Massachusetts citizens and customers of the Commonwealth, or the competitive environment in Massachusetts;
  • the Agency has established a process and a schedule for measuring the effectiveness of the regulation; and
  • the regulation is time-limited or provides for regular review. Order, Section 2.

The review must also ensure that each regulation is clear, concise and written in plain and readily understandable language.

The Order bars the promulgation of new regulations unless they have been reviewed and found in conformance with the seven criteria. In addition, each Agency must prepare a business/competitive impact statement measuring the potential impact of all new regulatory proposals on businesses and other entities, including municipalities and non-profits.

Agencies will submit regulatory proposals and impact statements to their secretariat before review by the Secretary of Administration and Finance, who will establish a process for encouraging public input, standards and schedules. The Secretary of Administration and Finance may also provide for waivers or exceptions to regulations essential to public health, safety, environment, or welfare.

Significantly, all regulations that do not comply with the Order must be rescinded, revised, or simplified by March 31, 2016.

Executive orders are odd creatures on the legal landscape, as they are apply only to actions taken by administrative agencies and are not generally enforceable. As a result, the impact of any executive order is determined as much by how it is implemented as what it actually states. In this case, the Order articulates a bold vision of how administrative regulations should work in the Commonwealth – the question now becomes how far the Baker Administration can and will go in implementing that vision.

These potential changes to administrative regulations in the Commonwealth could affect the way companies do business and manage regulatory compliance. Businesses that understand the potential consequences of impending regulatory changes will be better positioned to find competitive advantage and manage business risk, and should confer with counsel regarding how the Order may affect their business.

The Proposed Pennsylvania Budget, New Oil and Gas Regs, and the Fear of Fracking

Posted in Environment, Hydrofracking, Oil & Gas, Pennsylvania

In early March, Pennsylvania Governor Wolf submitted his proposed budget.  The Department of Environmental Protection issued a new iteration of proposed revisions to the Pennsylvania Oil and Gas Regulations that has since appeared in the April 4 Pennsylvania Bulletin, 45 Pa. Bull. 1615.  Acting DEP Secretary John Quigley reportedly stated the Administration’s support for the Delaware River Basin Commission’s moratorium on natural gas development during a budget hearing.

Can one divine regulatory or enforcement priorities from these developments?

My Pennsylvania Law Weekly column for March tried.  Read The Budget, New Regulations and the Fear of Fracking, 38 Pa. L. Weekly 292 (Mar. 31, 2015), by clicking here.

Testing the Waters

Posted in Articles, Climate Change, Florida, Green Building

In 2005, Hurricane Wilma destroyed a pair of dilapidated marinas in North Bay Village where Fane Lozman, a former Marine pilot and software developer, kept a two-story floating home.  Kerri L. Barsh successfully represented Mr. Lozman in a landmark admiralty jurisdiction case before the U.S. Supreme Court. The Fane Lozman v. City of Riviera Beach, FL ruling had national implications for the growing number of floating homes, oil rigs, casinos, restaurants, and hotels, as well as state and local governments relative to their respective regulatory authority over floating structures. It also opened business opportunity for architect Koen Olthuis and hotel developer Paul van de Camp who founded Dutch Docklands, a global leader in floating infrastructure.  Their expansion into the United States includes multi-million dollar floating homes in Miami that are responsive to rising sea levels and climate change.

Read more and see project renderings in the March 2015 Florida Trend article “Testing the Waters”.

New York Lawmakers Agree on Brownfield Law Extension With Less Drastic Changes to Tax Credits

Posted in Brownfields, Legislation, New York

In a departure from his budget proposal, the Legislature negotiated changes with the Governor to extend the tax credits for New York’s Brownfield Cleanup Program (BCP) with relatively modest changes to BCP eligibility requirements.  The Governor’s budget proposal would have limited the lucrative “tangible property” tax credit, which is the credit based on a percentage of the cost of constructing a new development on a Brownfield site, to (i) properties located in an environmental zone, (ii) properties to be utilized for affordable housing, or (iii) “upside down” properties – where the remediation of the property is projected to cost more than the value of the remediated property.  Under the bill agreed to with the Legislature, however, those limits (with modifications) will apply only to properties located in New York City.  In other words, outside of New York City, eligibility for the tangible property tax credit will remain available to all developers that otherwise qualify under the BCP, as per existing law.

The news for New York City-based developments is also not all bad. The final bill adds a fourth category of properties eligible for the tangible property tax credit for “underutilized” properties – to be defined by regulation, and the criteria for upside down properties were loosened so that a property can qualify if the remediation is projected to cost over 75 percent – rather than 100 percent – of the value of the remediated property. Despite these revisions, the New York BCP will continue to provide significant tax incentives to developers seeking to clean up and redevelop contaminated sites and the extension will resolve the uncertainty over the future of the program that existed for several years.

Other changes include:

  • “Grandfathering” of Existing Tax Credits: Amendments to the law as they relate to all eligible tax credits are tied to the dates by which a Brownfield site is accepted into the BCP and obtains a Certificate of Completion (COC) from the Department of Environmental Conservation (DEC).
    • Existing provisions related to the tax credits would remain applicable to those sites that either (i) were admitted into BCP prior to June 23, 2008 and obtained their COC by December 31, 2017, or (ii) were admitted into the BCP between June 23, 2008 and July 1, 2015 (or the date by which DEC proposes regulations defining “underutilized,” whichever is later) and obtained a COC by December 31, 2019.
    • Amendments related to the tax credits are applicable to those sites that are accepted into the BCP between July 1, 2015 (or the date by which DEC proposes regulations defining “underutilized,” whichever is later) and December 31, 2022, so long as they obtain a COC on or before March 31, 2026.
  • Definition of “Brownfield Site”: The amendments redefine “Brownfield Site” to mean “any real property where a contaminant is present at levels exceeding the soil cleanup objectives or other health-based or environmental standards, criteria or guidance adopted by [DEC] that are applicable based on the reasonably anticipated use of the property.” This is a welcome change which ties eligibility to cleanup objectives and moves away from the prior vague definition that required the presence of contamination that “complicates” redevelopment.
  • Creation of a New EZ Program: The amendments empower DEC to adopt regulations to implement a program for “the expedited investigation and/or remediation” of brownfield sites (BCP-EZ program) provided the developer agrees to take no tax credits associated with the program. The EZ Program, however, appears to provide a minimal departure from existing remediation and public notice requirements, and thus may not actually provide for an expedited investigation as advertised. One area where a more expedited process may work is for Track 4 – restricted use – cleanups where the applicant the applicant would be allowed to use site-specific data to demonstrate that the concentration of the contaminant in the soils reflects background conditions and, in that case, a contaminant-specific action objective for such contaminant equal to such background concentration may be established.
  • Inclusion of Class 2 Sites: The amendments allow in class 2 Superfund sites that are being remediated by non-culpable volunteers.  Previously, such sites were deemed ineligible even if the party seeking to remediate the site had no role in the contamination.
  • Change In DEC Oversight Costs: The amendments eliminates the payment of DEC oversight costs for volunteers, and permits a flat fee charge to participants.
  • Related Service Fee: The amendments address a perceived problem related to the computation of service fees charged to the Brownfield applicant by a related party and the calculation of tax credits. The concern was that these service fees could be inflated as a way to increase the remediation or site preparation costs, and result in associated increases in the ceiling of eligible tangible property credits.  The amendments provide that such service fees cannot be claimed as eligible site preparation or remediation costs until they are earned and actually paid, and the portion of the tax credits related to such fees cannot be claimed until the taxable year when the subject property is placed into service. This limits the use of such fees as a way to inflate costs that are used to calculate the ceiling for tangible property credits. That ceiling is deemed to be the lesser of $35 million for residential/commercial projects ($45 million for industrial projects) or three times the amount of eligible site preparation and onsite groundwater remediation costs.
  • Definition of Eligible Site Preparation Costs and Groundwater Remediation Costs: The definition of eligible “site preparation” and “onsite groundwater remediation” costs is critical because these costs are eligible for tax credits that range from 28 to 50 percent of such actual costs, and, as noted, those costs are often used as the basis for calculating the ceiling for a project’s tangible property tax credits. The amendments provide a more specific and detailed description of eligible costs, requiring such costs to be necessary to implement a site investigation or remediation, or to qualify for a COC.  Eligible costs include those related to excavation, demolition, engineering and environmental consulting costs, legal costs, transportation and disposal of contaminated soil, physical support of excavation, and dewatering.
  • Increased Tangible Property Tax Credit Percentage and Changed Definition: The amendments limits the tangible property credit to only costs for tangible property with a useful life of at least fifteen years. Certain projects, however, will be eligible for a higher percentage tangible property credit, which in a general sense is a tax credit calculated based on a percentage of the cost of constructing the building on the Brownfield site.  Under existing law, that percentage is either 10 or 12 percent.  Under the amendments, that percentage can be increased in five percent increments, and total as much as 24 percent of the development costs, with five percent bonuses for sites that are cleaned up to Track 1 standards (highest level of cleanup), located in En-zones or a Brownfield Opportunity Area (BOA), or developed for manufacturing or affordable housing.

UN Releases Negotiating Text for December 2015 Paris Climate Agreement Meeting

Posted in Climate Change, International

On March 19, 2015, the Secretariat of the United Nations Framework Convention on Climate Change (UNFCCC) released negotiating text for a new climate change agreement that will be considered for adoption at the December 2015 meeting of the UNFCCC in Paris.

The negotiating text provides alternative language, addressing issues such as mitigation, adaptation, finance, and technology, which could be incorporated into the text of the final Paris agreement. (See the full negotiating text here.) The text proposed on March 19 will be further negotiated at the next UN climate change meeting to be held in Bonn from June 1 to 11, 2015. The goal of the agreement to be adopted at the Paris meeting is to commit all Parties to the Convention to actions that will prevent global temperatures from rising 2 degrees Celsius and that will assist societies in adapting to existing and future climate change. Per various options outlined in the negotiating text, this could require achieving reductions of greenhouse gases ranging from 40 to 70 percent below 2010 levels by 2050. The commitments expected from various Parties will vary depending upon their “national circumstances,” with developed countries likely taking a greater leadership role in actions to be implemented.

This global effort to reduce greenhouse gases is one of the factors driving the U.S. EPA to regulate CO2 emissions from power plants.   For example, under section 111(d) of the federal Clean Air Act, the U.S. EPA has proposed reducing CO2 emissions from existing power plants by 30 percent from 2005 levels by the year 2030. As part of its justification for the reductions, EPA has stated that it will keep the United States at the forefront of a global movement to produce and consume energy in a more sustainable way.

In releasing the UN negotiating text, Christiana Figueres, the UNFCCC Executive Secretary said that the December meeting in Paris needs to put the world “on a recognizable track to peak global emissions as soon as possible, achieve a deep de-carbonization of the global economy and reach a climate neutral world in the second half of this century at the latest.”

Federal Court Holds Land Deposition of Air Emissions Can Constitute “Disposal” of “Solid Waste”

Posted in Air, Court Cases, RCRA

A federal district court ruled on March 10 that citizens may bring a RCRA imminent and substantial endangerment case based on the ground deposition of material emitted from a facility’s smoke stacks.  The Little Hocking Water Assoc., Inc. v. E.I. du Pont Nemours & Co., 2015 BL 64422, S.D. Ohio, No. 09-cv-1081, 3/10/15.  Explicitly rejecting Ctr. for Cmty. Action & Envtl. Justice v. BNSF R. Co., 764 F.3d 1019 (9th Cir. 2014), in which the 9th Cir. refused to recognize a similar claim regarding particulate emissions from locomotives, the court held that the deposition on the ground of air emissions could constitute the “disposal” of “solid waste” under RCRA’s imminent and substantial endangerment provisions.

Cases such as these, as well as those holding that common law tort claims regarding air emissions are not preempted by the Clean Air Act (see, e.g., Bell v. Cheswick Generating Station, 734 F.3d 188 (3rd Cir. 2013), cert. denied sub nom. GenOn Power Midwest v. Bell, 134 S.Ct. (2014); Freeman v. Grain Processing Corp., 848 N.W.2d 58 (Iowa 2014), cert. denied, (U.S. Dec. 1, 2014)), could encourage more aggressive litigation based on allegations of harm associated with the land deposition of particles emitted into the air.

The court also held that the seepage of contaminants from non-point sources might also constitute the disposal of solid waste (after having concluded that discharges through an NPDES permitted outfall did not trigger RCRA imminent and substantial endangerment jurisdiction, even if the permit did not explicitly identify the material at issue).

Environmental Appeals Board Issues Major TSCA 8(e) Decision

Posted in EPA, TSCA

On March 13, EPA’s Environmental Appeals Board’s issued its long-awaited decision in the Elementis TSCA 8(e) case, reversing the ALJ’s decision imposing a multi-million dollar penalty on Elementis.  In Re Elementis Chromium, Inc., TSCA Appeal No. 13-03 (March 13, 2015).

Section 8(e) of TSCA requires the “immediate” reporting of information which “reasonably supports the conclusion” that a chemical “presents a substantial risk of injury to health or the environment.”  In this case, an EPA ALJ levied a $2,571,800 penalty against Elementis, alleging that an epidemiological study regarding hexavalent chromium completed in 2002 should have been reported to EPA under TSCA 8(e).

In perhaps the first reported decision that addresses the contours of TSCA 8(e) liability at such length, the EAB rejected Elementis’ statute of limitations and statutory interpretation arguments, but found that the disputed study was not reportable based on EPA guidance providing that information is not reportable when EPA is “adequately informed” of the information.   The key points are:

  • The EAB rejected Elementis’ statute of limitations argument, holding that the failure to submit TSCA 8(e) reports is a “continuing violation” and that the statute of limitations clock only begins to run when the disputed report is finally submitted.
    • In so doing, the EAB distinguished its own prior holdings that the failure to create annual PCB reports was not a continuing violation, and the Supreme Court’s recent decision regarding the applicability of the “discovery rule” to SEC fraud cases.  Gabelli v. Sec. & Exch. Comm’n, 586 U.S. __, 133 S. Ct. 1216, 1221 (2013)
  • The EAB rejected Elementis’ argument that TSCA 8(e) only applied to a single conclusory sentence in the disputed study, and not to the underlying data, methodological information, etc.
    • In so doing, the EAB went through a lengthy analysis of what is meant by “information” that “reasonably supports a conclusion” that there is a substantial risk.  The EAB noted that “information” is not limited to conclusions, and includes the underlying evidence, data, methodological information, etc. Such information reasonably support a conclusion if it “verifies, corroborates or substantiates” a substantial risk conclusion.  According to the EAB, the term “reasonable” mandates a “degree of certainty,” and should not be speculative in nature.  Commenting on the types of studies at issue in the case, the EAB observed that it can reasonably support a substantial risk conclusion if it is consistent with scientific principles for conducting such studies, is based on reliable data, and appropriate analytical and statistical tools are used to analyze the data.  One cautions against taking the “degree of certainty” language too far, given that TSCA 8(e) requires the reporting of information that “reasonably supports” a conclusion, not just information that “demonstrates” or “proves” a conclusion.
  • EAB nonetheless concluded that the study was not reportable because, pursuant to long-standing EPA guidance, the report corroborated a “well-established adverse effect” and therefore EPA was already “adequately informed.”
    • The EAB relied on EPA guidance stating that information was not corrobative when it newly identifies a serious toxic effect at a lower dose or confirms a serious effect that was only previously suspected.  After a long discussion of what constitutes a “well-established adverse effect” and corrobative information, the EAB concluded that the disputed study reported a well-established effect regarding exposure to hexavalent chromium at higher doses than reported in previous studies.  Therefore, though the study was reportable based on the statutory language, it was not when reviewed in the context of EPA guidance.  Importantly, the EAB rejected EPA’s claim that the study was otherwise reportable as new exposure information, noting EPA guidance’s is that new exposure information is reportable only if it is “previously unknown and significant human and/or environmental exposure,” and that reporting on this basis is triggered if the exposure was not only unknown, but “considered unlikely based on previously available data” and was “previously unsuspected.”  The EAB concluded that the epidemiological information in the disputed study did not meet those criteria.

This is probably the most important TSCA 8(e) decision to ever come out of the EAB, and provides a level of detailed analysis never before provided in any TSCA 8(e) decision.   So it bears close study by your TSCA 8(e) reporting team.

 

Actis Unveils $1.9 Billion Pan-African Renewable Energy Joint Venture

Posted in Energy, Green Building, International, Renewables

On Feb. 17, U.K. private equity firm Actis announced a $1.9 billion joint venture with energy developer Mainstream Renewable Power to build a series of wind and solar projects throughout Africa over the next three years.  Read more on Greenberg Traurig’s new “Doing Business in Africa” blog.

 

Government Access to Contaminated Sites

Posted in Articles, Court Cases, Pennsylvania

Regulators need access to environmentally contaminated sites.  They have to study them to determine whether the contamination requires a cleanup, they have to choose a cleanup, they have to conduct or direct implementation of that cleanup, and then they have to provide for its monitoring and maintenance.  But when the contaminated property is not the source of the release, that means that someone who has been dumped on has to allow an intrusion onto his or her property merely because of having been dumped on.  That has to be true, or else all cleanups would be optional.  Yet, the right of access has limits.

My February column in the Pennsylvania Law Weekly reviews the authorities for access provided in section 104(e) and 104(j) of the federal Comprehensive Environmental Response, Compensation and Liability Act and section 503 of the Pennsylvania Hazardous Sites Cleanup Act.  The Commonwealth Court has had occasion just recently to consider section 503 in Commonwealth v. Spangler, No. 1917 C.D. 2013 (Pa. Commw. Ct. Jan. 23, 2015).

Read When Can the Government Access Contaminated Sites?, 38 Pa. L. Weekly 148 (Feb. 17, 2015), by clicking here.

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