PFAS Solution Moving Through Congress on Must-Pass Defense Bill

PFAS (perfluoroalkyl and polyfluoroalkyl substances) have been under scrutiny on both sides of the Capitol in recent months, and the Senate made significant headway in late June in reaching consensus on PFAS legislation. Following two hearings in the Senate Environment and Public Works (EPW) Committee this spring, a package was unveiled and quickly considered in Committee on June 19. Championed by EPW Chairman John Barrasso (R-WY), Ranking Member Tom Carper (D-DE), and Senator Shelley Moore Capito (R-WV), S. 1507, the PFAS Release Disclosure Act, was considered in Committee and simultaneously filed as an amendment to S. 1790, the must-pass National Defense Authorization Act (NDAA) that was headed to the Senate floor the following week.

To read the full GT Alert, click here.

˘ Not admitted to the practice of law.

Avoiding the Talismanic Effect of Unfounded Expert Testimony

By Greenberg Traurig, LLP on July 11, 2019 Posted in Articles, Litigation, Toxic Tort

Daubert decisions can be case-dispositive in complex cases. Accordingly, understanding how to discern and dismantle the foundations of expert testimony is a crucial skill for defense attorneys. Using lessons learned from a recent Eleventh Circuit toxic-tort case, Williams v. Mosaic Fertilizer LLC, Greenberg Traurig attorneys David B. Weinstein, Christopher Torres, and Ryan T. Hopper share strategies for exposing unreliable expert opinions and turning them to defendants’ advantage.

Read their article, Avoiding the Talismanic Effect of Unfounded Expert Testimony, in the June 2019 issue of For the Defense by clicking here.

Weathering the Storm: Mitigation of Environmental Risks Caused by Extreme Weather

By Jillian Kirn on June 20, 2019 Posted in Articles, Climate Change, Emergency Preparedness, Pennsylvania

Imagine that you are environmental, health, and safety (“EHS”) counsel or general counsel for a company dealing with a natural disaster. The company’s facilities are only partially functional, employees have lost their homes, and business unit functionality has been severely disrupted. You find yourself managing the myriad demands of the federal, state, and local environmental agencies, the company’s employees, and the public. Amidst all this, the media reports that a criminal investigation is forthcoming due to the company’s alleged failure to adequately prepare for the event. What could you have done to better prepare for disaster?

I discuss these issues in this month’s Legal Intelligencer/Pennsylvania Law Weekly column. Read Weathering the Storm: Mitigation of Environmental Risks Caused by Extreme Weather, 42 Pa. L. Weekly 25 (June 18, 2019), by clicking here.

Today is World Oceans Day – Here Are Five Things Business Owners Need to Know About Sea Level Rise

By Kerri Barsh on June 8, 2019 Posted in Climate Change, Insurance, Natural Resources, Real estate, Regulatory, Renewables, Water

With today being World Oceans Day, the future of our oceans and the effects of sea level rise are on our mind. Greenberg Traurig’s Kerri L. Barsh, co-chair of the Environmental Practice, recently published an article in South Florida Legal Guide Monthly titled “Five Things That Business Owners Need to Know About Sea Level Rise.” In this article, Barsh discusses how business can prepare themselves for impacts that may be caused by rising seas, including: (1) Knowing the nuances of your real property insurance coverage; (2) Being aware of the growing number of flood-related claims; (3) Taking note of regulatory changes; (4) Understanding the timing and requirements for vulnerable infrastructure; and (5) Knowing and complying with applicable disclosure requirements.

Read the full article here.

FDA Findings on PFAS Chemicals in U.S. Food and Drinking Water Supply

By Steven Barringer, Bernadette M. Rappold and Kaitlyn R Maxwell on June 6, 2019 Posted in CERCLA, Clean Water Act, Emerging Contaminants, Environment, EPA, Federal Drug Administration (FDA), New Jersey, PFAS, PFOA, PFOS

This week the U.S. Food and Drug Administration (FDA) confirmed it had conducted a study finding that certain types of per- and poly-fluoroalkyl substances (PFAS) have entered American food and drinking water supplies; however, “[c]urrent FDA testing has found that most foods have no or very low levels of PFAS.” The FDA’s efforts are ongoing and the FDA launched a new website to summarize its efforts concerning PFAS.

PFAS are a group of chemicals, widely used in commercial and industrial applications for their heat resistance and ability to repel oil and water, that may pose health risks to humans. The health effects (if any), exposure levels and duration of exposure are the subjects of numerous on-going state, federal and independent studies. The EPA has pledged to establish a “maximum contaminant level” (MCL) for two of the most common PFAS chemicals—PFOA and PFOS—but environmental groups, public health advocates and certain states have argued that the federal environmental agency is moving too slowly and have urged Congress and state legislatures to set statutory and regulatory limits for the chemicals. Others argue additional data and human health studies are necessary before establishing a federal MCL.

The news of FDA action first broke after environmental groups obtained FDA presentation slides concerning a study analyzing samples of produce, meat, dairy, and grain products in the Mid-Atlantic region; a significant number of samples contained no detectable concentrations of PFAS. Of the 91 samples collected in 2017, and analyzed in 2019, the FDA represented that 14 samples had detectable levels of PFAS, but the samples were not likely to be a human health concern. According to the FDA, “while PFAS in food occurs primarily through environmental contamination, contamination in areas where food is grown does not necessarily mean the food itself will contain detectable PFAS.”

Samples are currently being taken from a dairy farm, and so far, all samples had detectable levels of PFAS, which prompted the FDA to advise the farm to discard the milk. The FDA is preparing data tables for the dairy samples to post to the new website. Prior sampling of produce, cranberries, seafood, and raw milk taken from 2012 to 2018 showed either no detection of PFAS or that the detectable levels were not likely to be a human health concern. The studies can be reviewed here.

As we have previously reported, certain states (like New Jersey) have already set standards for PFAS, and multiple bills are currently wending their way through Congress. Senate and House committees held hearings in May to consider 20 bills (14 in the House Subcommittee on Environment and Climate Change, 6 in the full Senate Environment and Public Works Committee). The bills with the best shot at passage are those with bipartisan support. They include bills to establish federal enforceable drinking water standards (Maximum Contaminant Levels) for total PFAS (S. 1473 and H.R. 2377), and bills requiring EPA to list PFAS as CERCLA/Clean Water Act hazardous substances (S. 638 and H.R. 535). Other measures would require EPA:

• to list PFAS as toxic chemicals, making them subject to the Emergency Planning and Community Right to Know Act’s Toxics Release Inventory (TRI) reporting program (H.R. 2577);
• to list PFAS as hazardous air pollutants under the Clean Air Act (H.R. 2605);
• to require EPA to regulate PFAS comprehensively under Section 6 of the Toxic Substances Control Act (H.R. 2600).

At the Environment and Public Works Committee hearing on May 22, Chairman John Barrasso identified PFAS as a priority for the Committee in this Congress, but expressed caution about the breadth of some legislative proposals, and the potentially broad new liabilities they could create. He also expressed opposition to bills that would take away or limit EPA’s ability to assess risks and develop standards based on the Agency’s substantive expertise. Congress’ actions so far suggest a high level of interest, on both sides of the Capitol and on both sides of the aisle, but also point to legislation that is likely to grant EPA authority and set ambitious deadlines, rather than interfering with or overruling EPA’s regulatory processes.

Environmental Compliance and Land Use “Special Permits” in Massachusetts

By David Mandelbaum on May 29, 2019 Posted in Chemicals, Court Cases, Massachusetts

Does compliance with environmental regulations suffice to prove that an operation is safe? Maybe not, for purposes of land use approvals in Massachusetts.

Last week, the Massachusetts Appeals Court decided Fish v. Accidental Autobody, Inc., No. 18-P-345 (Mass. App. Ct. May 24, 2019), an appeal from the grant of a “special permit” for an autobody shop with a paint spray booth in Hyannis. The top coats of the paint would contain isocyanates, toxic chemicals. Some proportion of the isocyanates would escape the filter system on the spray booth’s exhaust and remain toxic for a time. The proposed operation would comply with regulations of the Massachusetts Department of Environmental Protection and of the U.S. Environmental Protection Agency, but none of those rules specify a set-back of the spray booth’s exhaust from neighboring property.

A neighbor challenged the “special permit.” A special permit is a site-specific land-use approval issued, in this case, only upon a showing that the use “will not adversely affect public health or safety . . . [and] will not significantly decrease . . . air quality.” The neighbor provided evidence of the toxicity of the isocyanates, but not their fate or transport from the exhaust to the property line. Accordingly, the lower court which heard the first appeal from the grant of the special permit affirmed the permit.

The Appeals Court reversed. The burden of proof under the language of the land use by-laws placed the burden of proving the absence of an impact on the applicant for the use. It too had no fate and transport expert. And, significantly, mere compliance with environmental regulations did not suffice.

This case is also interesting because it turns on the allocation of the burden of proof – both the burden of production and of persuasion. The applicant apparently sought to prove the safety of its proposed use by showing compliance with environmental regulations. The neighbor’s expert testified that compliance did not demonstrate safety. The court did not opine on whether a contrary opinion from the applicant would have sufficed to meet its burden or what else would have counted as proof of the negative (viz., that the use “will not significantly decrease . . . air quality).

Congress Is Gearing Up to Address PFAS

By Steven Barringer on May 24, 2019 Posted in Chemicals, Emerging Contaminants, Federal Regulation, PFAS

Lawmakers in Congress have their sights set on increased regulation of PFAS (per- and polyfluoroalkyl substances).

What are PFAS?

PFAS are a class of widely used chemicals, some of which have been common since the 1940s. They are used in non-stick coatings, stain- and water-repellant fabrics, firefighting foam, and many other applications. Over the past twenty years, evidence has accumulated that some PFAS might pose health risks. PFAS are widely dispersed in the environment, including in surface and groundwater, ambient air, and in the many consumer, commercial, and industrial products that contain them. Most toxicity studies focus on two PFAS – perfluorooctanaoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS) – both of which have been voluntarily phased out by U.S. producers and users, although they can still reach the U.S. in imported products. Some of their replacements – known as Gen X PFAS – also might pose health risks, although potential effects are not nearly as thoroughly studied, and may vary widely among the hundreds of Gen X PFAS currently in use.

EPA Actions

In addition to brokering the 2006 agreement that phased out PFOA and PFOS, EPA has conducted and sponsored research, issued health advisories and other guidance, modified and improved testing methods, conducted monitoring for PFAS in drinking water, and sponsored a 2018 national summit on PFAS. However, until recently, EPA has resisted calls to impose enforceable drinking water and other federal environmental standards. After an internal EPA document – leaked in January 2019 – revealed that EPA had no plan to promulgate drinking water standards for PFAS, EPA came under intense criticism from Congress and the public, and committed to publishing proposed Maximum Contaminant Levels for PFOA and PFOS by the end of the year as part of its PFAS Action Plan.

The 116^th Congress

Meanwhile, there are more than two dozen bills currently making their way through Congress that address PFAS in some way. Notable among these are bipartisan efforts:

Requiring EPA to list all PFAS as CERCLA hazardous substances (S. 638 and H.R. 535)
Requiring the U.S. Geological Survey to perform a nationwide survey of PFAS contamination in water and soils (S. 950 and H.R. 1976)
Requiring EPA to promulgate drinking water standards for PFAS (S. 1473)
Including PFAS in the Toxics Release Inventory program (S. 1507).

Environment and Public Works Committee Chair Senator John Barrasso (R-WY) has made PFAS a priority for his committee work in this Congress, increasing the chances that PFAS regulatory requirements will be enacted by the 116^th Congress.

Is Biomass-Derived Electricity Coming Soon to a Town Near You?

By Bernadette M. Rappold on May 23, 2019 Posted in Articles, Energy, Pennsylvania, Renewables

Fifteen years ago, Pennsylvania adopted its alternative energy portfolio standard (AEPS), setting modest goals for investor-owned utilities and retail suppliers to include renewable power sources in their power supply mix. The goals are so modest—just 18% renewables by 2020 to 2021 (compared, for example, to neighboring Maryland’s goal of 25% by 2020 and New Jersey’s goal of 50% by 2030)—that it seems Pennsylvania utilities may have little trouble meeting the AEPS standard.

But in Pennsylvania and elsewhere, consumer demand for renewable power—along with a recent uptick in crude oil prices, abundant natural gas and changing energy market dynamics—is driving a profound change in the nation’s electricity mix, with April marking the first time that the country derived more of its electric power from renewables than coal.

For now, hydropower and wind account for most of the nation’s renewables, with utility-scale solar in a distant third place. Biomass-derived electricity lags behind solar, but certain regulatory and marketplace changes may make it a bigger player in the future.

Read more from my article “Is Biomass-Derived Electricity Coming Soon to a Town Near You?,” 42 Pa. L. Weekly 21 (May 21, 2019) by clicking here.

Credits for Superfund Settlement Payments and What That Means for Settlement Strategy

By David Mandelbaum on May 9, 2019 Posted in CERCLA, Contamination, Pennsylvania, Superfund

When many parties are jointly and severally liable for the same contamination problem, not every one of those parties can pay more than its fair share of that joint liability in a settlement. Section 113(f)(2) of the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA” or “Superfund”) assures that the non-settling parties get the benefit of any over-payment, and at least one of them may therefore end up paying less than its share. But what if an overpayment goes to the state or to natural resource trustees, and the remaining claims belong to the Environmental Protection Agency or other response agency? How do you know whether there was an overpayment in an earlier settlement?

I consider these issues in this month’s Legal Intelligencer/Pennsylvania Law Weekly column. Read Credits for Superfund Settlement Payments and What That Means for Settlement Strategy, 42 Pa. L. Weekly 429 (May 7, 2019), by clicking here.

Only one court seems to have addressed the accounting under section 113(f)(2) across sovereigns and claims. However, when the non-settling party in that case itself settled, it agreed that the court’s interlocutory opinions on the accounting would be withdrawn as part of the settlement. Interlocutory opinions of district courts are binding, if at all, only on the parties, so the persuasive value of these opinions is whatever it was. They are both in United States v. NCR Corp., No. 1:10-cv-910-WCG (E.D. Wis.). The first denies the United States’ motion for summary judgment on its costs claim in part, and was issued February 5, 2018. The second denies the United States’ motion for reconsideration on July 13, 2018.

Refundable State Tax Credits: Maybe Don’t Take the Money and Run

By Glenn Newman on May 8, 2019 Posted in Brownfields, GT Alert, Tax

On April 25, 2019, the United States Court of Appeals for the Federal Circuit decided that refundable state tax brownfield credits are taxable income for federal purposes. The court held in Ginsburg v. United States, “The excess amount of the brownfield redevelopment tax credit received by the Ginsburgs in 2013 is taxable gross income because it is an undeniable accession to wealth over which the Ginsburgs have complete dominion and control.”

The case dealt with New York’s brownfield credits that may be used to reduce a taxpayer’s state tax obligations and, if there are excess credits beyond the state tax liabilities, can be refunded to the taxpayer. The court’s decision makes that refunded credit subject to federal tax. The taxpayers argued that the brownfield redevelopment tax credit “is a reimbursement of a portion of the capital costs,” i.e., costs relating to investments made by them for the cleanup and redevelopment of the property. Accordingly, the Ginsburgs claimed they “neither realized an undeniable accession to wealth nor an economic gain” because the payment was a reimbursement of expenses. They also argued they do not have complete dominion and control over the tax credits because there were many strings attached. The court was not persuaded and found that the Ginsburgs neither alleged a payment was made to New York nor explained why the payment of the excess amount of the brownfield redevelopment tax credit was a return of their basis to restore impaired capital.

While the holding in this case is not extraordinary, it has implications for taxpayers facing a choice to take the brownfield and similar credits as a reduction of state and local taxes or getting cash by electing the refundable credit. There are many tax credits providing for refundability in many states, including film tax credits, historic renovation credits, and various economic development incentives and tax credits. Even before the Ginsburg case, a taxpayer who sold state tax credits had income subject to federal tax.

Before the Tax Cuts and Jobs Act of 2017 (TCJA), the difference between taking the credit against state and local tax (SALT) liabilities or electing to make such a credit refundable was minimal. Taking the cash would make the cash subject to federal tax, and taking the credit to reduce the SALT obligation would reduce the SALT deduction on a federal tax return, making the result of the choice equivalent – get taxed on the income or reduce your deductions. However, the TCJA placed a limit of $10,000 on the deductibility of SALT for individual taxpayers. This alters the financial effect, making it more desirable for those subject to the federal SALT limitations to reduce their nondeductible SALT liabilities rather than take a refundable credit in cash that would be subject to federal tax.

For example, if a taxpayer has a refundable tax credit of $100,000 and takes the cash, there would be federal income tax due at the rate of 21% for a corporation or up to 37% for an individual for 2019. Using that same credit to reduce SALT obligations beyond the $10,000 annual limit eliminates the federal income tax on the refund and reduces the nondeductible SALT liabilities, providing a greater net tax benefit.

Of course, if the individual or entity expects to have little or no SALT liabilities over time due to losses or for other reasons, taking a credit would be worthless, and electing to take the refundable credit would make economic sense even if the credit is subject to federal tax. A careful and thorough examination of projections of income and forecasts of tax liability are essential to the effort of maximizing the benefits of these tax credit programs.

For more on brownfield redevelopment, click here.