Brexit & REACH: Potential Changes to UK Chemical Regulation

29 March 2019, the date currently fixed in United Kingdom (UK) and European Union (EU) law as when the UK will leave the EU, is now just two weeks away. At this late stage, the terms of the UK’s withdrawal from the EU remain unsettled. The Withdrawal Agreement agreed in draft with the EU at the end of 2018 (see GT Alert Brexit Brinkmanship) has now been twice rejected by the UK Parliament.

A “no-deal” Brexit would mean an abrupt end to the UK’s membership of the EU, with the immediate cessation of UK participation in various EU institutions and regimes, including the EU’s Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) regime.

EU REACH Continues Under the Withdrawal Agreement

Under the Withdrawal Agreement (were it to be eventually ratified), the post-Brexit regulatory framework in the UK would stay broadly the same for a transitional period.

Under the Withdrawal Agreement, the UK would continue to participate in REACH, and:

the process for registering new chemicals under REACH during the transitional period would remain the same;
the UK would recognise all new registrations, approvals, authorisations and classifications granted by the EU during the transitional period; and
registrations, approvals, authorisations, and classifications in place before the UK leaves the EU would continue to be valid during the transitional period.

This GT Alert discusses the new UK REACH under a “no-deal” Brexit and the obligations of non-UK businesses under UK REACH.

Click here to continue reading.

Shifting Costs and Incentives: Changes to State, Federal Air Pollution Regulations

By Kathleen M. Kline on March 13, 2019 Posted in Air, Pennsylvania, Regulatory

Last January, the U.S. Environmental Protection Agency (EPA) issued a memorandum withdrawing the “once in always in” (OIAI) policy that had provided interpretation of the Clean Air Act since 1995. Under the Clean Air Act, the regulations air pollution sources must comply with, depend on whether the source counts as “major” or “nonmajor”; the OIAI policy dictated that once a source qualified as major, subsequent changes in its emission levels would not enable the source to downgrade to nonmajor.

In making its decision to withdraw the policy, the EPA found that imposing a permanent categorization on emitting sources was contrary to the plain language of the Clean Air Act. Permanently categorizing facilities as major sources disincentivized sources implementing voluntary improvements or achieving greater efficiencies. Rescinding the OIAI policy, the EPA determined, could remove this barrier and lead to increased voluntary technological or operational improvements at facilities.

Roughly a year later, with California’s challenge to the OIAI withdrawal still pending in court, the EPA sent a proposed rulemaking to the Office of Management and Budget at the end of February 2019, intending to enshrine in regulation this change of policy. Meanwhile, Pennsylvania has proposed a change to its own air quality permitting program at the state level.

Read more on this topic from Kathleen M. Kline’s article from The Legal Intelligencer supplement Pa. Law Weekly, 42 Pa. L. Weekly 11 (Mar. 12, 2019), by clicking here.

Making Lemonade Out of Lemons: Opportunity Zones, Brownfields Redevelopment, and Environmental Considerations in Real Estate Deals

By Jillian Kirn and Laura Bottaro on February 27, 2019 Posted in Brownfields, Events, Real estate

From vapor intrusion systems to rooftop solar; green building to pollution legal liability insurance, environmental and real estate go hand-in-hand. Environmental issues are routine in all types of real estate transactions, no matter the size, location, or nature of the property and can potentially impact the land (including subsurface), the building, or both. Many of these impacts are captured within the due diligence period, but as a precaution it is important for real estate attorneys and practitioners to lend a keen eye to the intricacies of environmental issues, and take the time to evaluate the site and formulate a plan for any necessary remediation or alternative long-term solutions. In the Delaware River Valley, most parcels present some site contamination risk, but these properties have always presented unique opportunities for developers. Over the past two years, the potential of these properties has been further incentivized through Federal and state programs, increasing the ability of communities and investors to make “lemonade” out of real estate “lemons.”

One such federal program, the Opportunity Zone Program, was created and enacted by Congress through the Tax Cuts and Jobs Act in 2017. The program aims to address nationally imbalanced economic recovery in low income areas by offering tax incentives for investment to simulate long-term private sector investment. By offering these incentives to private investors to develop within a designated “Opportunity Zone,” the program is designed to facilitate improved infrastructure while spurring job and economic growth in hopes that it will lead to long-term investment and development in economically-depressed areas. These incentives are given with the expectation that growth stimulation in economically distressed communities will be targeted using private investment rather than taxpayer money. Since the first Opportunity Zone was designated in April 2018, the program has grown to over 8,700 sites within the United States and its territories. Pennsylvania, Delaware, and New Jersey account for 486 of those sites with 82 sites designated in Philadelphia

According to the PIDC, Philadelphia’s public-private economic development corporation, when an investor or developer chooses a project located in one of Philadelphia’s Opportunity Zones, they can also access existing local incentives to support business growth and development including a 10-year real estate tax abatement for new construction and renovations of residential and commercial property zones known as the Keystone Opportunity Zone. This incentive provides substantial relief from state and local taxes for qualified businesses located on Commonwealth-designated parcels of land, and flexible financing from the PIDC.

While Opportunity Zones are not designated based on contamination, environmental risk is certainly worth evaluating when considering investment and development within an Opportunity Zone. These sites often present elevated risk due to historic use, limited enforcement of environmental regulations, and/or the prohibitive financial investment required to maintain infrastructure. As investors and developers begin to explore the value of investing in Opportunity Zones thorough environmental diligence is essential.

Environmental due diligence is the process of assessing environmental conditions at a property to identify potential environmental liabilities prior to acquisition. The process can include Phase I and Phase II Environmental Site Assessments as well as a review of any number of relevant documents including, but certainly not limited to, permits, sampling data, and tank testing results. Completing sufficient due diligence serves several purposes including establishing statutory defenses under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), enabling the mitigation of risks through contract or insurance, developing a more fulsome understanding of the condition of the property before redevelopment, and satisfying lenders in order to obtain commercial loans. If the diligence process reveals a contamination issue, the property may also be eligible for certain benefits and incentives under the state or Federal brownfields programs.

For those who are unfamiliar, a “brownfield” is a property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant. It is estimated that there are more than 450,000 sites in the United States. Last year, in March 2018, the Brownfields Utilization, Investment, and Local Development (BUILD) Act was enacted as part of the Consolidated Appropriations Act of 2018. The BUILD Act provides additional protections and incentives for brownfield redevelopment while prioritizing the development of renewable energy and energy-efficient projects. The BUILD Act did not significantly alter the landscape for brownfields purchasing or leasing but it did provide a handful of helpful updates. Those include a petroleum brownfield enhancement, the expansion of the definition of a bona fide prospective purchaser to include lessees of property, the expansion of eligibility for nonprofit organizations, increased funding for remediation grants and multipurpose grants, brownfields funding and technical assistance grants, and several new ranking criteria focusing on renewable energy, energy efficient projects, and revitalization of waterfront property, all of which will now be considered in grant applications.

Many investors and developers are reluctant to emphasize environmental due diligence due to concerns that any identified contamination could be a deal killer. Join us for a happy hour discussion of real estate, environmental law, and how to make a lemon of a property into lemonade, on March 14 at Greenberg Traurig’s Philadelphia office, 1717 Arch Street. We will host The Pipeline, a professional development group that connects women in retail real estate.

From Cans to Labels: Effects of Government Activity on the Craft Beer Industry

By Kathleen M. Kline on February 27, 2019 Posted in Alcohol and Tobacco Tax and Trade Bureau, brewing, Farm Bill, government shutdown, homebrew, Small Business Administration, trade policy

Resiliency and innovation are hallmarks of the craft brewing industry. From experimenting with new ingredients to finding ways to survive in the face of prohibition, developing creative solutions to challenges is something we’ve come to expect from our favorite craft brewers. 2018 tested that resiliency, both politically and economically. Trade policy has created a shifting playing field, with tariffs threatened and enacted, and trade agreements proposed and dismantled. 2018 ended, and this year began, amidst the longest federal government shutdown in history. These unique conditions have affected—and continue to affect—most industries, and the craft beer industry is no exception. As part of an already constantly changing industry, breweries offer an informative glimpse into possible developments we might see in coming years.

Read Kathleen Kline’s article, “From Cans to Labels: Effects of Government Activity on the Craft Beer Industry,” published in The Legal Intelligencer Feb. 23, 2019.

Limits on Administrative Orders to Clean Up in Delaware

By David Mandelbaum and Samuel L. Moultrie on February 25, 2019 Posted in Court Cases, Environment, Solid waste, Waste

On Feb. 21, 2019, the Delaware Superior Court decided that the state’s Department of Natural Resources and Environmental Control (DNREC) cannot order an environmental violator to remedy its violation under the department’s general enforcement statute. That is, under that statute, DNREC can order a person illegally disposing of solid waste to stop adding to the waste pile, but it may not be able to order that person to remove what is already there.

Delaware Dept. of Nat. Res. & Envt’l Control v. McGinnis Auto & Mobile Home Salvage, LLC involved an automobile scrap yard operating in violation of Chapter 60 of Title 7 of the Delaware Code, the general obligation to have a permit for, among other things, solid waste disposal, and the need to operate in compliance with that permit. DNREC issued an order under Section 6018 requiring McGinnis not only to cease receiving any further automobiles or mobile homes to dismantle, but also to take affirmative steps to remove cars and parts already on the property and to dispose of them properly.

Section 6018 of Title 7 provides:

The Secretary shall have the power to issue an order to any person violating any rule, regulation or order or permit condition or provision of this chapter to cease and desist from such violation; provided, that any cease and desist order issued pursuant to this section shall expire (1) after 30 days of its issuance, or (2) upon withdrawal of said order by the Secretary, or (3) when the order is suspended by an injunction, whichever occurs first.

First the Environmental Appeals Board, then the Superior Court, agreed with McGinnis that DNREC overreached. Section 6018 only authorizes administrative orders to “cease and desist,” and those orders expire after 30 days. A mandatory injunction, or even a permanent prohibitory injunction, reasoned the court, exceeds DNREC’s authority under Section 6018 and requires a lawsuit in the Chancery Court.

The McGinnis court does note that DNREC has authority to require corrective action for hazardous waste releases causing imminent and substantial hazard. 7 Del. Code §§ 6308, 6309. We know from this decision that DNREC may not require affirmative steps to remove illegally disposed solid waste. Whether DNREC could require affirmative steps to address water or air pollution (such as notifying downstream users or downwind residents, cleaning up beds and banks, etc.) remains to be seen.

Further, what counts as “ceasing and desisting” and what counts as corrective action is not always apparent. If the presence of the automobile waste violates, for example, the permit requirement of Section 6003, how can one “cease and desist” from that violation without either removing the waste or obtaining a permit?

For more on waste disposal, click here.

Mexico’s National Registry for Greenhouse Gases and Compound Emissions

By Erick Hernández Gallego and Nancy Guillén Espinosa on February 21, 2019 Posted in Climate Change, Energy, Environment, Greenhouse Gas, GT Alert

Mexico’s General Climate Change Law (Ley General de Cambio Climático) published in the Federal Official Gazette (Diario Oficial de la Federación “DOF”) on June 6, 2012, and the Regulations to the General Climate Change Law of the National Emissions Registry (Ley General de Cambio Climático en Materia del Registro Nacional de Emisiones) published in the DOF on October 28, 2014, set forth the creation of several public policy instruments, which include the National Emissions Registry (the Registry).

Purpose of the Registry

The Registry compiles the required information on greenhouse gas and compound emissions with respect to the energy, transport, industrial, agricultural and livestock, waste, commerce and service sectors, which must submit mandatory reports (the Report) on direct and indirect emissions produced from their facilities, either from fixed or mobile sources, whenever they exceed 25,000 tons of carbon dioxide equivalent.

To read the full GT Alert, click here.

EPA Announces “Most Comprehensive Cross-Agency Action Plan for a Chemical of Concern” in History of EPA for PFAS

By Kaitlyn R Maxwell on February 14, 2019 Posted in Emerging Contaminants, EPA, PFAS, PFOA, PFOS, Safe Drinking Water Act, Toxic Tort

Today, U.S. Environmental Protection Agency (EPA) Acting Administrator Andrew Wheeler announced from Region 3 in Philadelphia, what EPA is describing as the most comprehensive cross-agency action plan for a chemical of concern in the history of EPA – the Action Plan for per- and polyfluoroalkyl substances (PFAS). The PFAS Action Plan has five primary components:

EPA is moving forward with the process to establish a federal Maximum Contaminant Level (MCL) under the Safe Drinking Water Act for perfluorooctane sulfonate (PFOS) and perfluorooctanoic acid (PFOA), which will include examination of other types of PFAS. If EPA does in fact adopt an MCL – a lengthy process – that MCL may become an applicable or relevant and appropriate requirement (ARAR) under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Remedy selection under CERCLA requires consideration of protectiveness and ARARs. For groundwater, the ARARs are the Maximum Contaminant Level Goals or the Maximum Contaminant Levels. That means, if EPA adopts a federal MCL, it might turn into a de facto cleanup standard for groundwater.
Continuing enforcement actions – EPA is currently involved in eight direct enforcement actions. EPA initiated the regulatory development process for listing PFOA and PFOS as hazardous substances under CERCLA. EPA plans to release interim groundwater cleanup recommendations.
Expanding monitoring by including PFOA/PFOS for the second time on the list of chemical contaminants for the next Unregulated Contaminant Monitoring Rule (UCMR) and considering PFOA/PFOS data for the Toxic Release Inventory.
Expanding research efforts, including fate and transport pathways.
Risk communications.

According to Wheeler, EPA has not set a new MCL since the Safe Drinking Water Act was amended in 1996 and timing remains unclear.

Significant Environmental Cases in Pa. Courts During 2018 (Part 2)

By Greenberg Traurig on January 24, 2019 Posted in Court Cases, DEP, Environment, Litigation, Oil & Gas, Pennsylvania, Permitting

Part 2 of this series on the large number of environmental cases decided by the Pennsylvania appellate courts in 2018 discusses enforcement, the Oil and Gas Act, valuation, and a few other cases of note.

Read David G. Mandelbaum’s article from The Legal Intelligencer supplement Pa. Law Weekly, “Significant Environmental Cases in Pa. Courts During 2018 (Part 2).”

Martinez v. Colorado Oil and Gas Conservation Commission Update

By Casey A. Shpall on January 22, 2019 Posted in Colorado, Court Cases, GT Alert, Legislation, Oil & Gas

On Jan. 14, 2019, the Colorado Supreme Court held in Martinez v. Colo. Oil & Gas Conservation Comm’n, that the Colorado Oil and Gas Conservation Commission (Commission) properly denied a petition requesting that it adopt a rule that would halt the drilling of oil and gas wells for the foreseeable future.

The Supreme Court’s decision reinforces the Commission’s authority to regulate public health and environmental concerns, but not to the detriment of its charge to foster responsible, balanced development of the resource. A likely outcome of the decision will be proposed legislation seeking to alter the balance of current law, and further requests to the Commission for rulemaking to give local governments and other stakeholders more opportunities to address the issues raised in this case.

To read the full alert, click here.

Significant Environmental Cases in Pa. Courts During 2018 (Part 1)

By Greenberg Traurig on January 22, 2019 Posted in Court Cases, Environment, Environmental Rights Amendment, Pennsylvania, Pennsylvania, State & Local, Stormwater, Uncategorized, Waste

The Pennsylvania appellate courts decided a relatively large number of environmental cases during 2018. This survey briefly characterizes those cases under the following categories: Environmental Rights Amendment; pre-emption of local regulation; other local land use regulation issues; Sewage Facilities Act (Act 537); and stormwater, earth disturbance, and stream encroachment.

Read David G. Mandelbaum’s 42 Pa. L. Weekly 74 (Jan. 22, 2019), “Significant Environmental Cases in Pa. Courts During 2018 (Part 1).”