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:

A Busy Time for the New Jersey Department of Environmental Protection – More PFAS Action and NRD Lawsuits

Posted in Emerging Contaminants, Environment, New Jersey, PFAS, PFOA, PFOS, State & Local, Water

On April 1, 2019, the New Jersey Department of Environmental Protection (NJDEP) proposed drinking water standards for perfluorooctanoic acid (PFOA) and perfluorooctane sulfonate (PFOS) that are significantly more stringent than the federal health advisory of 70 ppt. DEP proposed a maximum contaminant level (MCL) of 14 ppt for PFOA and 13 ppt for PFOS.

PFOA and PFOS – two chemicals in a larger chemical family known as “per- and poly-fluoroalkyl substances” (PFAS) – were widely used for decades in a variety of industrial and consumer applications due to their resistance to heat, water, and oil. In recent years, as detection methods have improved, the chemicals have been found in an increasing number of sites across the country. Due to voluntary phase-outs, the two compounds subject to the most regulatory interest — PFOA and PFOS — are no longer manufactured in the United States, with limited exceptions.

NJDEP’s proposed rulemaking also seeks to add PFOA and PFOS to NJDEP’s List of Hazardous Substances and to set limits for groundwater quality criteria standards to be used in site remediation activities. In the meantime, the interim specific groundwater quality criteria for PFOA and PFOS are currently set at 10 ppt.

Click here to read the full GT Alert.

EPA Announces New Owner Audit Program Agreement for Oil & Natural Gas Exploration and Production Facilities

Posted in Air, Clean Air Act, Environment, EPA, GT Alert, Oil & Gas

On March 29, 2019, the Environmental Protection Agency issued its final Oil & Natural Gas Exploration and Production Facilities New Owner Audit Program Agreement (Oil & Gas New Owner Audit Policy, or Policy). This voluntary program provides total civil penalty mitigation for qualified new owners of upstream oil and natural gas well sites (including associated storage tanks and air pollution control equipment) who agree to identify and correct Clean Air Act noncompliance at their newly acquired facilities.

The Policy marks a departure from the Obama-era EPA’s reduced emphasis on auditing and self-disclosure. It also marks the first time that the agency has proposed complete penalty forgiveness – including mitigation of economic benefit penalties – for entities that disclose and correct violations in conformance with the guidelines.

Click here to read the full GT Alert.

In Honor of World Water Day…

Posted in Clean Water Act, Environment, EPA, Safe Drinking Water Act, Stormwater, Water, Water quality, WOTUS

March 22 is World Water Day! In honor of this day, here is a roundup of GT’s recent water-related insights:

Brexit & REACH: Potential Changes to UK Chemical Regulation

Posted in Brexit, Chemicals, Energy, Environment, GT Alert, no-deal Brexit, UK, UK REACH, United Kingdom

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

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

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.

Register here by using the password “Pipelinemarch.”

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

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.

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