Maryland Proposes Contamination Reporting Rules Triggered by Concentration (not Quantity): Routine Transactional Due Diligence Could Pose a Problem

Posted in Brownfields

On October 31, the Maryland Department of the Environment (“MDE”) published a proposed regulation calling for reporting of hazardous substances found in the environment — that is, site contamination.  A routine investigation of real estate could trigger this obligation because the reporting thresholds would be concentrations of hazardous substances, not quantities.

Section 103 of the federal Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9603, requires a person in charge of a facility to report a release of more than a reportable quantity of a hazardous substance.  A “reportable quantity” is just that — a quantity.  40 C.F.R. pt. 302 sets out a reportable quantity for each listed hazardous substance in pounds and kilograms.  Thus, if one observes a release of a knowable or calculable mass of material, one may have a duty to report.  Just finding a few parts per million in a small sample of soil or a few parts per billion in a sample of groundwater, however, does not necessarily result in knowledge of (a) a release at any particular time or (b) the quantity released.

MDE would set reporting thresholds in concentrations.  So, a soil sample containing more milligrams per kilogram or a groundwater sample containing more micrograms per liter of the hazardous substance would trigger the requirement to report the analytical result to MDE.

“Responsible persons” would have the reporting obligation.  “Responsible persons” under section 7-201 of the Environment Article are essentially the familiar four categories of responsible persons under CERCLA:  current owners and operators, owners and operators at the time of disposal, arrangers, and transporters.  A seller of real estate who learned of a test result might have to report it.  The purchaser probably would not if the purchaser did not close the transaction; after the closing, of course, the purchaser would be a “responsible person.”

The rule proposal appears at 41 Md. Reg. 1337 (Oct. 31, 2014), and would amend COMAR 26.14.02.  You can read a copy here.

The proposed reporting thresholds are not published in the Maryland Register, but appear in a June 2014 guidance document posted on the MDE website here.

The comment period on this proposal closes on December 1, 2014.

Environmental Regulation and Investor State Dispute Settlement Clauses – OceanaGold and El Salvador

Posted in Environment, International

Investor state dispute settlement (“ISDS”) clauses in bilateral and regional investment treaties enable foreign corporations to sue a host country regarding regulations, policies, or court decisions. ISDS clauses were originally included in trade agreements and investment treaties in order to protect businesses that invest in foreign jurisdictions where legal and political systems are not robust. The clauses were included so that investors would have international redress in the event of an unforeseen adverse impact on their business due to political instability.

However, ISDS clauses have been utilized for a wider variety of disputes than anticipated. Most recently, ISDS clauses are being called upon by investors facing environmental regulation. One dispute, between OceanaGold and El Salvador, is currently before the International Court of Settlement of Investment Disputes (“ICSID”) and brings up interesting environmental and jurisdictional issues. Pac Rim Cayman LLC v. Republic of El Salvador (ICSID Case No. ARB/09/12).

Pacific Rim, a Canadian company, originally discovered a gold mine site (“El Dorado”) along the Lempa River in 2002. The investor-friendly Salvadoran government (since voted out of power) allegedly encouraged the company to apply for a permit. However, public concern regarding El Dorado’s impact on El Salvador’s compromised water supply slowed the process. Pacific Rim filed a complaint in 2009 against El Salvador under the ISDS clause of the Dominican Republic-Central American Free Trade Agreement (“CAFTA”). While Canada is not a member of CAFTA, Pacific Rim created a United States subsidiary in 2009. The United States is a member of CAFTA.

In 2012, ICSID ruled that the arbitration could continue due to a provision in El Salvador’s investment law. That provision has since been amended to prevent future disputes of this kind. In November 2013, the Australian company OceanaGold purchased Pacific Rim. As of today, the El Dorado mine project is banned by the Salvadoran government. Salvadoran officials state that Pacific Rim failed to get government approval for its Environmental Impact Study, did not submit a required feasibility study, and did not meet land title and permission-to-mine requirements. From September 15-22, 2014, ICSID held a hearing regarding whether El Salvador must issue a gold mining license to OceanaGold. OceanaGold seeks either a green light for the El Dorado mine project or approximately US$300 million in compensation from the Salvadoran government. An ICSID decision is anticipated in early 2015.

For more on international arbitration and environmental damages, see my colleague Thomas Snider’s article “Chad and China’s CNPC Reach Settlement on Alleged Environmental Damages.”

 

TCEQ Becomes Sole Permitting Authority for Greenhouse Gases in Texas

Posted in EPA, Greenhouse Gas, Permitting, Texas

On November 10, 2014, the federal Environmental Protection Agency (EPA) published two actions in the Federal Register that gave the Texas Commission on Environmental Quality (TCEQ) sole authority over greenhouse-gas permitting in Texas:

Previously, permitting for emissions in Texas had followed a two-step system in which the TCEQ issued PSD permits for traditional pollutants, and the EPA issued PSD permits for greenhouse-gas emissions.  Industry groups had found the two-step emission application process to be inefficient, time-consuming, and costly with the major complaint involving the slow response to GHG applications by the EPA.   The State of Texas undertook to remedy the problem on two fronts – (1) challenging the EPA’s GHG permitting program in the court system and (2) working to become the GHG permitting authority in Texas.  As TCEQ Chairman  Bryan Shaw explained, “While the State of Texas continues to disagree with the EPA program to regulate greenhouse-gas emissions, the TCEQ has a system in place to ensure timely permitting that provides stability and predictability to our State’s regulatory framework.”  In June 2013, Section 382.0621 of the Texas Health and Safety Code was amended to regulate GHGs and specifically authorized TCEQ to “adopt rules to implement this section, including rules specifying the procedures to transition to review by the commission any applications pending with the United States Environmental Protection Agency for approval under 40 C.F.R. Section 52.2305.” In October 2013, the TCEQ released draft rules to set up a state permitting system based on federal requirements, which appear in the Texas Administrative Code,  Chapters 39, 55, 101, 106, 116, and 122.  As a result of these efforts, the TCEQ has now become the sole permitting authority for GHGs in Texas.

Industry groups in Texas have been following these regulatory developments closely and will likely be pleased with the outcome.  However, a question of immediate concern is how this change will affect GHG applications already pending before the EPA.   TCEQ and EPA have reportedly been coordinating efforts with respect to the transfer of GHG permitting authority, and both agencies are expected to work together to ensure a smooth transition process for all pending applications. To assist with the process, TCEQ has indicated that it will likely perform the Best Available Control Technology (BACT) reviews for EPA for some of the permits now pending before the EPA. However, it is noteworthy that in recent months some, including TCEQ, have advised industry applicants to submit GHG permit applications to both TCEQ and EPA to expedite issuance.  In the meantime, the EPA has now made available a website showing the status of PSD GHG Permit Applications Transitioning to TCEQ, which can be found at http://yosemite.epa.gov/r6/Apermit.nsf/AirP#A.

 

 

 

CERCLA Preemption of State Law Contribution Claims under Pennsylvania HSCA

Posted in Articles, Environment, Litigation, Pennsylvania

The federal Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) allows private parties that incur cleanup costs to reallocate those costs to others through a cost recovery claim under section 107(a)(1-4)(B) or a contribution claim under section 113(f)(1) or (3)(B).  So do some state statutes and state common law.  There can only be one allocation — one list of numbers that adds up to the whole liability.  Which law governs?

The federal courts have fairly uniformly said that CERCLA preempts state law contribution or cost recovery claims, other than contract claims.  That seems obvious when the claim is among parties liable under federal law and state law to reallocate costs that are recoverable under both federal and state law.  The shares determined under CERCLA should govern.

What about claims to reallocate costs that are recoverable under state law, but not under federal law?  In Pennsylvania, think about remedies selected and implemented under the Land Recycling and Environmental Remediation Standards Act (“Act 2″); Act 2 was explicitly constructed so that the cumbersome process under the National Contingency Plan (“NCP”) would not impede prompt cleanups, so those costs are often not incurred consistently with the NCP and therefore not recoverable under CERCLA.  Typically, those costs would be recoverable under the Pennsylvania Hazardous Sites Cleanup Act (“HSCA”).  Yet, the federal courts seem to hold that costs that could be recoverable under CERCLA but that are not recoverable by reason of inconsistency with the NCP are also not recoverable under state law.

What about claims to reallocate costs under state law to parties liable under state law, but not liable under federal law?  An example in Pennsylvania would be an interim owner of real property between the time when hazardous substances were disposed and when a release occurred.  Under CERCLA, that person is not liable.  Under HSCA, that person probably is liable.  The federal courts — to be sure not considering HSCA — have held state law to be preempted in this circumstance as well.

Is anything left, then, of contribution claims under laws like Pennsylvania HSCA?  I consider the question in my column this month in the Pennsylvania Law Weekly.  Read Does CERCLA Preempt Contribution Under the HSCA?, 37 Pa. L. Weekly 1072 (Nov. 11, 2014), by clicking here.

For those specifically interested in HSCA, click here to request a reasonably comprehensive list of reported HSCA decisions.

Stepping Off the Gas Pedal: New York Adds Upper Limit to Proposed LNG Rules

Posted in New York, Oil & Gas

Despite the abundance of natural gas within the state and region, and the reputation of natural gas as the cleanest burning of fossil fuels, New York remains a treacherous political environment for companies seeking to expand the use or extraction of gas. The anti-fracking movement maintains a strong base of support in the state and a de facto moratorium on exploration remains in place at the state level. Pipelines, storage fields, compressor station projects, and the highly controversial offshore Port Ambrose liquefied natural gas (LNG) facility continue to meet with public opposition.

Add to the list of obstacles the fact that New York State has yet to establish an effective regulatory regime for in-state liquefied natural gas (LNG) facilities. LNG, produced by cooling natural gas to -260°F, is easier to contain and to move than methane in its gaseous form, making both trucking and shipping much easier. LNG also can be used as a fuel for heavy trucking, providing a cleaner burning alternative to diesel. However, under the Liquefied Natural and Petroleum Gas Act (ECL §§ 23-1701 et seq.), enacted in response to a large LNG facility explosion in Staten Island in 1973, new LNG facilities cannot be constructed in the absence of DEC regulations.  Up to now, new LNG regulations have not moved forward due to the stringent, if not unworkable, requirements of the statute. Indeed, New York State is the only state in the country that has not adopted standards for the construction of new LNG storage facilities of any kind within the state.

As discussed in our September 18, 2013 blog post, the New York State Department of Environmental Conservation took the first steps toward allowing the state to take advantage of the numerous environmental and economic benefits of LNG by proposing new rules for the regulation and siting of natural gas facilities last year. After receiving public comments, DEC submitted a revised proposal for the rule, addressing concerns over the safety and size of these facilities. See Revised 6 NYCRR 570 (Proposed). These regulations would cover any storage vessel within the state, with exemptions provided for on-board fuel tanks used to power vehicles and facilities in operation before the passage of Liquefied Natural and Petroleum Gas Act in 1976.

Much of the original and proposed rule remains unchanged. Intrastate transportation of natural gas would still be prohibited unless the route has been authorized, applicants would still have to meet all necessary permitting requirements like demonstrating need and a description of possible environmental impacts, and the NFPA standards are still incorporated into the law by reference. The only substantive change to the proposed rule would be the addition of a 70,000 gallon upper limit on the size of a new facility. Under the originally proposed rules, there was no upper limit on the size of a proposed facility, granting DEC discretion in whether or not to approve a given design. The limit comports with a threshold provided by NFPA 59A, over which the necessary siting offsets change dramatically.

The limit is not surprising, as the principal focus of this regulatory effort was to permit installation of smaller LNG filling stations to service long haul trucking.  The concern, whether reasonable or not, over much larger LNG facilities and the overall difficult political terrain for natural gas projects makes the permitting of larger LNG in the state much more unlikely.  The revised regulations take these much larger storage facilities off the table and likely will make the proposed regulations less controversial.  The revised proposed rule provides a clear limit on the future construction of LNG facilities in state that should not materially impact the development of natural gas filling stations in New York State. According to the 2011 NYSERDA Promulgation Support Study, the upper limit of 70,000 gallon will be consistent with the vast majority of anticipated projects within the first years of the regulatory scheme.

The Notice of Revised Rule was published today in the State Register. As this is a revision to an already proposed rule, no public hearings will be provided. However, DEC is accepting written public comments through December 12, 2014.

US-China Joint Announcement on Climate Change

Posted in Environment, Greenhouse Gas, International, Policy

from the GT Climate Change Group

You may have read in the press that President Obama and Chinese President Xi Jinping jointly announced an agreement on greenhouse gas emission reduction goals and other climate change measures.  The U.S.-China Joint Announcement on Climate Change and an accompanying fact sheet have been released by the White House.  This perhaps breaks the rhetorical logjam of discomfort among some in the United States to commit to reduce greenhouse gas emissions before China commits to reduce its own.

Some have observed that this development also reinforces Administration efforts to induce manufacturing to “on-shore” to the United States.  Chris Bell of GT Houston points out that “that the U.S. has effectively outsourced a lot of its GHG emissions to Asia/China by outsourcing its manufacturing and then just importing the finished goods back into the U.S.”  A Chinese commitment to reduce emissions makes the GHG playing field somewhat more level when it comes to location decisions for that manufacturing.

 

 

Florida Passed Amendment One. Do you Have Swamp Land to Sell?

Posted in Florida

The overwhelming approval of the Florida Water and Land Conservation Initiative, Amendment 1, by Floridians on the November 4 ballot is a reminder that environmental conservation in Florida is a nonpartisan issue.

As explained in my post of October 24, Amendment 1 will establish a Land Acquisition Trust Fund funded by the document tax to be used for acquisition and protection of a variety of environmentally sensitive areas.  Some estimates show that approval of Amendment 1 could mean maybe $600 million to $1 billion dollars next year for environmental conservation allowing for the purchase of lands to protect wetlands, natural springs, beaches, forests, river beds, and even farms and ranches. The money could also be used for park and trail management.

From a regulatory perspective, land acquisition programs in Florida have a long and successful history dating back to the Land Acquisition Trust Fund in 1963 designed to purchase land for parks and recreational areas.  The Environmentally Endangered Lands (“EEL”) Program of 1972 followed next and it was designed to protect environmentally unique and irreplaceable lands, not necessarily parks.  The EEL program was replaced by the Conservation and Recreation Lands program from 1979-1990. In 1990, the Florid Legislature adopted legislation to create Preservation 2000.  These collective land acquisition programs have been perceived by the public as incredibly successful.  Therefore, the reminder by Floridians that environmental conservation in Florida is a nonpartisan issue is not a surprise for most environmental professionals.

How this money will be spent, and specifically what process will be implemented to choose lands for purchase is the question at hand.  Again with a rich history of land acquisition programs and their accompanying processes to choose from, the State is not starting from scratch in structuring a process by which lands are chosen for purchase under Amendment 1.  Today, the question for land owners to consider is, “Do you have some swamp land to sell?”

2014 Voters Address State, Local Infrastructure Funding Proposals

Posted in Environment, Legislation, Oil & Gas, Policy

Written by Robert S. Brams, Alais L. M. Griffin, Jennifer R. McEwan˘, Jamey L. Tesler and David Veator.

On Nov. 4, 2014, voters across the country addressed a series of state and local infrastructure funding proposals that will have substantial ramifications for transportation and infrastructure finance in many major states. As these results will impact the ability to advance major infrastructure projects in a variety of places in the United States, this Greenberg Traurig Alert provides a brief summary of election day’s ballot questions.

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˘Not admitted to the practice of law.
Not admitted in Washington, D.C. Admitted in Illinois and New York.

First Litigation Challenge to EPA’s Greenhouse Gas Rule

Posted in EPA, Greenhouse Gas, Litigation

The First Litigation Challenge to EPA’s Greenhouse Gas (GHG) Rule is likely to be decided fairly soon after the December 1, 2014 deadline for comments on the rule.  Two separate suits brought by Murray Coal Corp. ask the D.C. Circuit to bar EPA from proceeding with the rulemaking, on the ground that EPA has no legal authority to regulate GHG emissions from existing fossil-fuel fired electricity generating plants.  Murray claims that section 111(d) of the Clean Air Act “expressly prohibits” EPA from regulating such those GHG emissions.  Murray’s final brief is due November 17., and given the importance of the issue and the close of the comment period on December 1 – after which EPA will begin addressing the comments — many  expect to the D.C. Circuit to issue a ruling reasonably promptly.

To recap, on June 2 EPA proposed its Clean Power Plan to require states to meet emission budgets for GHG pollution from existing power plants.  On October 28, issued a notice of data availability and issued a supplemental proposal shifting in some respects how those budgets would be calculated and how compliance would be demonstrated.  Comments on the main rule proposal close on December 1 and on the supplemental proposal on December 19.  Thus, the rulemaking schedule and the court’s briefing schedule roughly coincide.  After December 19, EPA is likely to begin considering comments and is free to issue the final rule whenever it has completed that task.

Murray brought one suit under a Clean Air Act provision authorizing judicial review of “final action” by EPA; the other suit seeks an “extraordinary writ” to prohibit EPA from proceeding with the rulemaking.  EPA responded to both suits by claiming they are premature, because the court has no jurisdiction to address the merits of what section 111(d) allows until the conclusion of the EPA’s rulemaking process.  It is well-established in federal administrative law that generally, regulations can be challenged only when issued in final form.  That principle allows agencies to address comments they receive during the rulemaking process (including comments addressed to the agency’s legal authority), and to make adjustments to proposed rules based on comments received.  Murray claims, however, that EPA’s decision to issue the GHG rule represents “final action” that is reviewable now, and nothing that happens during the rulemaking will change the nature of the “pure legal question” concerning EPA’s statutory authority that both of its suits present.

The steps necessary to achieve the significant GHG reductions called for bythat will result from EPA’s regulation will would have a severe adverse impact on Murray’s coal business, which has led Murray to make legal arguments supporting the current reviewability of the proposed rule that are both aggressive and creative.  Nonetheless, most observers expect the D.C. Circuit to apply the general rule that regulations can only be challenged when issued in final form, and thus dismiss both of Murray’s suits as premature.  Regardless of the outcome, however, we doubt that the court will let EPA get very far into the process of analyzing and responding to comments before issuing a ruling in the two Murray cases.  What is even more clear is that this is only the first of what is likely to be a large number of lawsuits challenging all or part of the EPA GHG rule and/or one or more of the GHG reduction plans that the rule when finalized will require each of the 50 states to prepare.

Florida’s Land and Water Legacy Proposed Constitutional Amendment

Posted in Florida, State Regulation, Water

Florida’s Water and Land Legacy was founded in July 2012 by approximately thirteen environmental groups, including 1000 Friends of Florida, the Sierra Club and Audubon Florida, who with the support primarily of other environmental groups, citizens and civic organizations gathered sufficient signatures from Florida voters to place Amendment 1: the Water and Land Conservation Amendment on the November 2014 ballot.

This amendment would create a funding guarantee for environmental conservation.  The availability of these monies for land acquisition could have the effect of limiting growth and land development in the State where, for example, these funds are used to purchase ocean front property for a State park or to purchase lands to expand existing, sufficient wildlife management areas.  It states:

SECTION 28. Land Acquisition Trust Fund.—

a) Effective on July 1 of the year following passage of this amendment by the voters, and for a period of 20 years after that effective date, the Land Acquisition Trust Fund shall receive no less than 33 percent of net revenues derived from the existing excise tax on documents, as defined in the statutes in effect on January 1, 2012, as amended from time to time, or any successor or replacement tax, after the Department of Revenue first deducts a service charge to pay the costs of the collection and enforcement of the excise tax on documents.

b) Funds in the Land Acquisition Trust Fund shall be expended only for the following purposes:

  1. As provided by law, to finance or refinance: the acquisition and improvement of land, water areas, and related property interests, including conservation easements, and resources for conservation lands including wetlands, forests, and fish and wildlife habitat; wildlife management areas; lands that protect water resources and drinking water sources, including lands protecting the water quality and quantity of rivers, lakes, streams, springsheds, and lands providing recharge for groundwater and aquifer systems; lands in the Everglades Agricultural Area and the Everglades Protection Area, as defined in Article II, Section 7(b); beaches and shores; outdoor recreation lands, including recreational trails, parks, and urban open space; rural landscapes; working farms and ranches; historic or geologic sites; together with management, restoration of natural systems, and the enhancement of public access or recreational enjoyment of conservation lands.
  2. To pay the debt service on bonds issued pursuant to Article VII, Section 11(e).

c) The moneys deposited into the Land Acquisition Trust Fund, as defined by the statutes in effect on January 1, 2012, shall not be or become commingled with the General Revenue Fund of the state.

The complete document can be found here.

Amendment 1 proposes to direct 33% “doc stamps” or excise tax revenues collected from real estate transactions to finance (or refinance) the acquisition and improvement of land, water areas, and related property and resources for conservation.  Amendment 1 would set aside funds in the Land Acquisition Trust Fund to conserve and restore certain lands including wildlife management areas and rural areas; outdoor recreational lands; working farms and ranches; lands that protect water resources including drinking water, groundwater, and the aquifer system together with lands in the Everglades; as well as historic or geologic sites, and beaches and shores. These funds can also be used to enhance public access to conservation lands or recreational enjoyment of conservation lands.

If approved by 60% of those voting on November 4, 2014, Amendment 1 would become effective July 1, 2015 for a period of 20 years or until July 1, 2035.  A similar effort in 2012 failed.

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