Congress Is Gearing Up to Address PFAS

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 116th 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 116th Congress.

 

 

 

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

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

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

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.

Enforcing the CERCLA Permit Bar . . . in State Court

Posted in CERCLA, Court Cases, Massachusetts

From David G. Mandelbaum, a member of the Massachusetts Bar:

As is familiar, section 121(e)(1) of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9621(e)(1), exempts Superfund cleanups from all federal, state, and local permits. In addition, section 113(b) grants the federal district courts exclusive jurisdiction “over all controversies arising under” CERCLA. Accordingly, you would think that all lawsuits to enforce the section 121 permit bar would be brought in federal court. However, sometimes the permit bar comes up in circumstances that places the dispute in state court.

The other week, the Massachusetts Appeals Court (the intermediate appellate court in the Commonwealth) issued an unreported opinion with that feature. City of Lawrence v. Lawrence Firefighters, No. 18-P-360 (Mass. App. Apr. 30, 2019), was an appeal from an arbitration award in favor of the firefighters union. The collective bargaining agreement required the city to require a demolition contractor to hire a “fire watch detail” during the project. The city did not arrange for such a detail during a remediation project conducted by the Environmental Protection Agency at a Superfund site. The firefighters sought the lost payments.

The city contended that it could not have required a fire watch detail at a CERCLA project because of section 121(e)(1). The court acknowledged that point, but suggested that the city should have hired the detail itself. That suggests two things. First, according to the Massachusetts court, a standby fire crew is the equivalent of a local permit, but only if EPA has to pay for it. If someone else pays, then the local firefighters presumably do not interfere with the remediation. And the arbitrators and state court had jurisdiction to decide this.

Pennsylvania Prospective Purchasers of Contaminated Property and Their Administrative Records

Posted in CERCLA, Environment, Pennsylvania, Prospective Purchaser Agreement, State & Local, Superfund

On April 26, 2019, the Pennsylvania Environmental Hearing Board (EHB) voided two amendments to a prospective purchaser agreement (PPA) for the Bishop Tube Site entered into in 2007 and 2010. Del. Riverkeeper Network v. Dep’t of Envt’l Prot’n, EHB Dkt. No. 2018-020-L (Constitution Drive Partners). The underlying PPA was dated 2005. The Department of Environmental Protection (DEP) failed to issue public notices of the amendments until 2017, and did not respond to comments received until 2018, by which point conditions had changed. DEP failed to make an administrative record that took adequate account of the delay and the changed circumstances.

Prospective purchaser agreements are tools used under the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund), 42 U.S.C. §§ 9601-75, and the Pennsylvania Hazardous Sites Cleanup Act (HSCA), 35 Pa. Code §§ 6020.101 to .1305, to enable parties looking to acquire a contaminated site to do so with known cleanup obligations. The EPA website addresses PPAs and other tools generally here.

In Constitution Drive Partners, the EHB reaffirmed the rule that a PPA under HSCA is a settlement agreement subject to the public notice requirements of section 1113. That section calls for the creation of an administrative record to support the PPA consisting of the agreement, the public notice, any comments received, and DEP’s responses to those comments. The PPA (or any other settlement) is not final until DEP has filed those responses to comments.

Section 1113 goes on to make the final PPA – that is, the agreement as supported by the administrative record – appealable to the EHB. That is conventional. All final actions of DEP are appealable to the EHB under the Environmental Hearing Board Act. However, unlike virtually all other actions by DEP, actions under HSCA are not reviewed after a de novo hearing. Instead, the EHB determines whether DEP acted arbitrarily or capriciously based on the administrative record only.

Constitution Drive Partners emphasizes that record review. The record presented on appeal in that case was deficient in that it did not address the delay either procedurally or substantively. For example, the PPA called for installation of a soil vapor extraction system that, apparently, had been installed but had not worked. The record did not deal with those changed conditions to the satisfaction of the EHB.

Constitution Drive Partners presented an extreme and an odd case. The lesson for more ordinary situations, however, is that parties entering into PPAs or subject to any other decision under HSCA must attend to the administrative record. Supplementation is hard. If one anticipates a favorable decision from DEP and opposition from a third party, one should attend to the quality of support in the record. If one anticipates an adverse decision from DEP, then one should get what one can in the record for a later EHB appeal. This is a deviation from conventional Pennsylvania practice, and a potential trap for the unwary.

For more on prospective purchaser agreements, click here.

New Risk Based Corrective Action Guidance for Miami-Dade Sites

Posted in Contamination, Florida, Risk management, State & Local

Securing risk-based closure of a contaminated site in Miami-Dade County, known as a “No Further Action with Conditions (NFAC),” typically requires the imposition of institutional controls in the form of a covenant running with the land, accompanied by an opinion of title (See Section 24-44 (2)(k)(ii) of Chapter 24, Code of Miami-Dade County, Fla.). Recently, Miami-Dade County Department of Regulatory and Economic Resources, Division of Environmental Resources Management (DERM), revised the 2013 Risk Based Corrective Action Provisions (RBCA) Guidance document to impose a new requirement as a condition of obtaining approval of the NFAC closure – namely, written notification of the proposed closure to encumbrance holders and those having a claim to or interest in the property subject to the closure (See 2018 RBCA Guidance No.7). Such notice recipients are provided a 30-day comment period (with opportunity to request an extension of another 30 days). In certain cases, as provided in the 2018 RBCA Guidance, joinder of an easement holder may be required.

Why should you care about the revised Guidance?

This change is significant for several reasons: 1) the additional time required to obtain NFAC approval, especially when securing such approval is a prerequisite to a property closing or is desired to market a property for sale; 2) the potential comments by notice recipients, and; 3) the possibility of needing to obtain joinder of an easement holder. The Guidance does not expressly recognize any claim of estoppel or grandfathering with respect to the applicability of the of the 2018 Guidance.

This can prove to be particularly problematic when you have a site that would otherwise be entitled to receive closure approval after several years of remedial effort, only to learn that additional steps are required.

In sum, when dealing with contaminated properties in unincorporated Miami-Dade County that will be undergoing a risk-based environmental closure, keep in mind the notice, timing, and potential joinder obligations under the 2018 RBCA Guidance and consult with an environmental attorney on the particular issues of significance with respect to the property in question.

For more Florida-related environmental content, click here.

Contradicting the Department of Justice, EPA Changes Stance on Groundwater Discharges

Posted in Clean Water Act, Court Cases, Environment, EPA, GT Alert, Water, Water quality, WOTUS

Contradicting the argument raised by the United States in a recent amicus brief in the U.S. Court of Appeals for the Ninth Circuit, the EPA finalized new guidance on April 12, 2019, concluding that the Clean Water Act “is best read as excluding all releases of pollutants from a point source to groundwater from NPDES program coverage and liability under Section 301 of the CWA, regardless of a hydrologic connection between the groundwater and a jurisdictional surface water.” A pre-publication Federal Register notice states the agency will be accepting comments on the new guidance for 45 days after publication.

The EPA’s new “interpretive statement” comes at a critical time, as the Supreme Court recently granted certiorari in a case raising this exact issue, County of Maui v. Hawai’i Wildlife Fund, et al. In County of Maui, the Ninth Circuit held the county liable for discharges into jurisdictional waters where those discharges were “fairly traceable” to point sources through groundwater. The United States’ amicus brief in that case suggested that the Clean Water Act applies only to those groundwater discharges with a direct hydrological connection to jurisdictional waters of the United States. The new guidance would exclude even those discharges from the Clean Water Act’s permitting requirements.

Click here to read the full GT Alert.

Can a State Provide Oversight Under a Federal CERCLA Order or Decree?

Posted in CERCLA, Environment, EPA, Federal Regulation, Superfund

Section 400(h) of the National Contingency Plan (NCP) contains an unremarked, yet problematic, last sentence. The NCP, of course, governs response actions under the federal Comprehensive Environmental, Response, Compensation and Liability Act (CERCLA or Superfund); the government cannot recover costs incurred inconsistently with that regulation. 42 U.S.C. § 9607(a)(1-4)(A).

Section 400(h) provides:

(h) Oversight. The lead agency may provide oversight for actions taken by potentially responsible parties to ensure that a response is conducted consistent with this part. The lead agency may also monitor the actions of third parties preauthorized under subpart H of this part. EPA will provide oversight when the response is pursuant to an EPA order or federal consent decree.

40 C.F.R. § 300.400(h). The “lead agency” can be any state or federal agency in charge of a response action, provided the state is operating under a cooperative agreement (essentially a Superfund grant) or a Superfund Memorandum of Agreement. Id. § 300.5. Indeed, the NCP encourages state involvement. Id. §§ 300.500 to .525.

So what does that last sentence mean? It was added in response to comments received on the proposed rule to the effect that “EPA will provide site oversight, and not that it ‘may’ provide oversight.” See 55 Fed. Reg. 8666, 8692 (Mar. 8, 1990). By calling out “EPA,” the language arguably distinguishes the specific obligations of “EPA” from the obligations of the “lead agency,” which could be any agency. That is, if the “lead agency” may provide oversight generally, why does EPA have to provide oversight specifically when the response is pursuant to an EPA order or federal consent decree?

Does that mean that oversight of work under an EPA order or a federal consent decree by an agency other than EPA cannot be consistent with the NCP? Would costs incurred by a state in providing oversight be unrecoverable?

One district court has ruled “the objection [to recovery of costs of state oversight] is without merit since there is nothing in the National Contingency Plan that suggests that EPA cannot use a state agency to meet its oversight responsibilities.” United States v. NCR Corp., No. 1:10-cv-910-WCG, slip op. at 12 (E.D. Wis. July 13, 2018). But as a condition to a consent decree entered March 14, 2019, that decision was vacated by agreement of the parties. United States v. NCR Corp., No. 1:10-cv-910-WCG (E.D. Wis. Mar. 14, 2019).

The U.S. v. NCR reading makes some sense, but if that were what EPA intended the third sentence to mean, the sentence is oddly drafted in context. Should it not use a verb other than “provide” or a subject more generic than “EPA”? When a state undertakes an oversight role, careful litigators should take this issue into account.

For more on CERCLA, click here.

In Honor of Earth Day…

Posted in Earth Day, Environment

April 22 is Earth Day! In honor of this day, here is a roundup of insights from our Environmental team highlighting best practices, trends, and recent regulations:

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