This is an update to a 2019 post.

Section 1113 of the Pennsylvania Hazardous Sites Cleanup Act (“HSCA”), 35 Pa. Stat. Ann. § 6020.1113, authorizes settlements of responsible parties’ obligations. The Department of Environmental Protection has used it to enter into prospective purchaser agreements under which a prospective new owner fixes its liability for pre-existing contamination at a site that the new owner wishes to develop.

Two years ago we noted the Environmental Hearing Board’s decision in Delaware RiverkeeperNetwork v. Dep’t of Envt’l Prot’n, EHB Dkt. No. 2018-20-L (Apr. 26, 2019), that held invalid amendments to a PPA between Constitution Drive Partners and DEP. At the time, the lesson of the EHB’s opinion was that prospective purchasers had to attend to the administrative record supporting their PPA, lest a challenge to the agreement succeed based on a sloppy or incomplete record.

Constitution Drive Partners appealed. On March 5, the Commonwealth Court affirmed the EHB’s invalidation of the PPA amendments, but for a subtly different reason with a potentially different (and more concerning) implication. Constitution Drive Partners, LP v. Dep’t of Envt’l Prot’n, No. 643 CD 2019 (Pa. Commw. Ct. Mar. 5, 2021).

The case involved two amendments to a 2005 PPA calling for a defined cleanup of the Bishop Tube site and the grant of liability protection to the prospective purchaser in exchange. The agreement was amended in 2007 and again in 2010. The owner (by then) substantially performed, although the remedy had difficulties. The DEP neglected to publish the proposed amendments until 2017. The Riverkeeper submitted adverse comments, but DEP nevertheless finalized the amendments in 2018 and the Riverkeeper appealed.

Challenges to section 1113 agreements are on the administrative record, rather than de novo as is typical in the EHB. The long delay, failure of one of the remedial systems, rezoning of the property, a lot of remedial work, and other changes were not properly reflected in the record because of the long delay. Accordingly, the EHB held that the finalization of the amendments was arbitrary and capricious in 2018.

The Commonwealth Court reasoned somewhat differently. It held that section 1113 requires notice to all responsible parties and the public before DEP enters into a settlement. The notice must come after the agreement is reduced to writing and before it takes effect. The public must then have 60 days to comment, and DEP must respond to the comments. The notice in this case came after the deal closed and the work was done, so the agreement could not convey liability protection.

In the context of a transaction, publication, a 60-day comment period, and time to respond to comments can be a material delay. But treating the settlement as concluded before that delay can put the prospective purchaser’s protection into question. Prudent parties will be careful with this mechanism.

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Photo of David Mandelbaum David Mandelbaum

David G. Mandelbaum represents clients facing problems under environmental laws. He regularly represents clients in lawsuits and also has helped clients achieve satisfactory outcomes through regulatory negotiation or private transactions. A Fellow of the American College of Environmental Lawyers, David teaches Superfund, and…

David G. Mandelbaum represents clients facing problems under environmental laws. He regularly represents clients in lawsuits and also has helped clients achieve satisfactory outcomes through regulatory negotiation or private transactions. A Fellow of the American College of Environmental Lawyers, David teaches Superfund, and Oil and Gas Law in rotation at the Temple University Beasley School of Law as well as an environmental litigation course at Suffolk (Boston) Law School.

Since United States v. Atlas Minerals, the first multi-generator Superfund contribution case to go to trial in 1993, Mr. Mandelbaum has been engaged in matters involving allocation of costs among responsible parties, especially under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).  He has tried large cases and resolved others as lead counsel.  He has written, spoken, and taught extensively on the subject.  More recently he also has been engaged to assist lead counsel from this firm and others:

  • to develop cost allocation methodologies;
  • to craft expert testimony in support of a favored methodology (given a definition of “fairness,” why one methodology better tracks it than another);
  • to develop efficient case management approaches; and to assist private allocation as part of the neutral team.

Concentrations

  • Air, water and waste regulation
  • Superfund and contamination
  • Climate change
  • Oil and gas development
  • Water rights