Practice Update – Environment, Energy, and Resources Practice Group

Environmental Law

SWC - Environmental Law Practice

The Firm’s Environment, Energy, and Resources Practice Group is handling a diverse set of matters as the new year commences. From transactional matters to regulatory and compliance cases to hazardous waste investigation and cleanup sites, we are keeping busy.

The Firm has clients who are buying and selling commercial properties. One property is adjacent to or down gradient of more than one Superfund site and will require environmental assessments and carefully crafted environmental clauses for the contract of sale as a result. Another property is the former site of a dry cleaning establishment. Environmental assessments as part of an all appropriate inquiry, and environmental clauses to address the specific circumstances of this site are necessary. Whether our client is the buyer or the seller, we provide guidance to assist in protecting it from the impacts of environmental conditions.

One of the Firm’s clients owns property in a heavily contaminated waterfront area in which both the federal and state governments are overseeing and directing cleanups. The ultimate goal of the governments is to get the area cleaned up and developed in a manner that will benefit the entire community. We are negotiating on behalf of our client to accomplish an appropriate and cost-effective investigation and cleanup of the property under the regulatory program that will best suit the client’s property-development interests. In addition, since the client purchased the property after the alleged discharge, the Firm will litigate against prior property owners and operators in an effort to recover the costs of the environmental investigation and remediation.

A couple of our clients are potentially responsible parties (“PRPs”) at a multi-party Superfund site involving an area of widespread groundwater contamination covering three towns in Nassau County. Currently, we are negotiating with USEPA and the other PRPs the terms and conditions for implementation of the remedial design work.

Soil vapor intrusion is an environmental condition that many property owners in or adjacent to industrial areas are being directed by the regulatory agencies to address. We have several clients facing this issue. One has been directed to investigate a possible soil vapor condition on its property that is suspected to be the result of an off-site source of contamination. We are negotiating an agreement with USEPA that will be implemented by both the owner of the impacted property and the owner of the property that is the suspected source of the contamination. We are drafting a separate agreement between the two property owners that will determine the terms and conditions of their agreement to implement together the Order on Consent with USEPA.

We are finalizing our wetlands permitting work with one client, and advising others with regard to steps necessary before making any alterations to bulkheads, docks, and other waterfront construction.

Finally, we are looking forward to continuing our solar leasing work and our consultations with wind energy companies this year.

The Firm’s Environment, Energy, and Resources Practice Group looks forward to another full year advising and guiding our clients.

Posted by Miriam Villani

What Does a Trump Presidency Mean for the Environment?

Environmental Law

On November 8, 2016, Donald J. Trump was elected the next President of the United States. We can expect many changes as the country transitions from the Obama administration to a Trump administration. One of several issues that will receive a lot of attention is the environment. What will Trump’s administration mean for the environment as well as for those businesses that are impacted by environmental and energy regulation?

It is still early and not possible to know what Mr. Trump’s administration will do with regard to environmental protection and energy regulation; however, Mr. Trump made certain promises during his campaign and he has started to outline his plans. He also has named the person who will lead the EPA transition team on climate. As a result, we have an idea of what his environmental policy may look like.

Mr. Trump has plans to reorganize domestic energy and environmental priorities, and to withdraw the United States from the Paris climate accord. On his website, greatagain.gov, Mr. Trump states that it is his plan to open onshore and offshore leasing on federal lands and waters to encourage the production of fossil fuel resources in an effort to make America energy independent. The Trump administration says it “will end the war on coal,” review all anti-coal regulations, and reopen shuttered coal mines. Mr. Trump wants to reduce the role of the Environmental Protection Agency to an advisory one and scrap the Climate Action Plan and the Clean Power Plan, President Obama’s proposed plan to move utilities toward lower carbon emissions. It is Mr. Trump’s view, as stated on his website, that these steps will lead to “more jobs, more revenues, more wealth, higher wages, and lower energy prices.”

Mr. Trump has selected Myron Ebell to run the EPA working group on his transition team. Mr. Ebell is the director of energy and environmental policy at Competitive Enterprise Institute, and is known around the world as one of America’s most prominent climate-change skeptics. This appointment is a significant indication of the direction we can expect Mr. Trump’s environmental and energy policies to take.

Although it could take a while for Mr. Trump to withdraw the United States officially from the Paris accord, in the meantime we can expect him to not enforce its guidelines and to repeal climate change regulation put in place under President Obama’s administration. With a Republican Congress, Mr. Trump will not face a lot of resistance, but pulling out would have implications for Mr. Trump’s dealings with foreign leaders. On the other hand, fossil fuel industry advocates will see much opportunity in this policy change, such as opening more public land and offshore areas to oil and gas drilling, and building more energy infrastructure.

The coal industry is particularly buoyed by Mr. Trump’s promises to rescind the coal mining lease moratorium and repeal anti-coal regulations. It is the coal sector’s view that it has suffered lower demand and job loss as a direct result of the impact of regulations directed at its industry. Nevertheless, it is unlikely that coal is going to make a comeback despite Mr. Trump’s vows. Environmental considerations aside, it remains to be seen whether the steps Mr. Trump takes, if any, to increase the use of coal will make economic sense. Coal is a fuel that is being phased out because of its pollution — among fossil fuels, it is the dirtiest — and because of the falling prices of renewables such as solar and wind. Investors are choosing solar and wind because of economics.

During his campaign, Mr. Trump showed less than enthusiastic interest in wind and solar energy and voiced his intention to end federal spending on renewable energy in order to support a fossil fuel energy policy. However, if the United States begins to fall behind economically because the renewables energy market is being ignored here, the Trump administration may take a different look at this issue. The first and best innovators in the world are going to be the ones who get the advantage in the developing energy market.

One of Mr. Trump’s promises is fairly certain to be carried out — his plan to eliminate EPA’s Clean Power Plan. The Clean Power Plan, based on Section 111(d) of the Clean Air Act, was proposed in June 2014 to put limits on greenhouse gas emissions from existing fossil fuel-fired power plants. It was finalized in August 2015. The rule considers the states’ ability to shift power generation to cleaner sources. The Clean Power Plan is under review by the U.S. Court of Appeals, due to a suit brought by 27 states and a few corporate interests, over whether EPA properly exercised its authority under the Clean Air Act. The case is expected to go to the Supreme Court next year. Legal commentators have suggested that Mr. Trump has several options for addressing the Clean Power Plan. He could not defend it in court, rescind the rule, or ask Congress for support in blocking it.

The actions Mr. Trump has promised to take with regard to the environment are in keeping with his plans to reduce federal regulation, and to move away from a strong central government. Mr. Trump’s anti-regulation position is based on a view that the economy will be able to grow if business is free of the control of an over-powerful federal government. It is important to keep in mind that this position anticipates that the states will retain their authority to regulate and we may see states take up the slack. As the federal environmental programs are eliminated or cut back, states are likely to take steps to control their environmental affairs in a way that makes sense to them. This will mean a lack of uniformity across the country, and neighboring and down-wind states could end up with complaints about pollution impacts from states with less stringent environmental regulation. Significantly for businesses on Long Island and in the rest of New York, New York State has a robust environmental conservation and protection program administered by the New York State Department of Environmental Conservation. We can expect that New York State will continue its environmental regulatory program during Mr. Trump’s presidency.

Many questions remain about what Mr. Trump’s environmental policy will look like, but one thing is fairly certain: we are likely to see a rollback of efforts by President Obama to combat climate change, including the repealing of regulations, a push for increased fossil fuel development, and a limiting of the work of energy regulators. In the face of this expectation, we will see the states take on a more significant role in environmental protection and energy regulation.

 

Posted by Miriam Villani

EPA Proposes Changes to Construction General Permit Regulating Construction Activity Stormwater Discharges

Environmental Law

The United States Environmental Protection Agency (EPA) has recently proposed to reissue the Construction General Permit (CGP). The CGP, a general permit issued under the Clean Water Act’s National Pollution Discharge Elimination System (NPDES), authorizes certain stormwater discharges from construction activities subject to NPDES regulations. The reissued CGP will replace EPA’s 2012 version which will expire on February 16, 2017.

The proposed CGP contains several minor, new, or modified requirements including, among others, the following changes to the expiring 2012 permit:

  • The proposed CGP requires that authorized non-stormwater discharges of external building washdown waters not contain hazardous substances, such as paint or caulk containing polychlorinated biphenyl (PCBs).
  • CGP holders must include contact information for the EPA in the public notices that are to be posted at a safe, publicly-accessible location in close proximity to the construction site.
  • The proposed CGP changes the requirement for temporary stabilization for stockpiles or land-clearing debris piles from “where practicable” to require cover or appropriate temporary stabilization for all inactive piles that will be unused for 14 or more days.
  • The proposed CGP requires waste-container lids to be kept closed when not in use, or, for waste containers that do not have lids and could leak, permittees are required to provide cover or a similarly effective means to minimize the risk of discharge of pollutants.
  • In connection with demolition of structures with at least 10,000 square feet of floor space that were built or renovated prior to January 1, 1980, the proposed CGP requires permittees to implement pollution prevention controls to minimize the discharge of pollutants in stormwater and to prevent the discharge of pollutants from spilled or leaked materials from construction activities to minimize the exposure of building materials containing PCB to precipitation and stormwater.

In addition to these proposed changes to the CGP, EPA is also soliciting comments on other potential changes to the CGP that are being considering, relating to, among other things: (i) requirements for a group Stormwater Pollution Prevention Plan (SWPPP) for sites with multiple operators; (ii) modifications of the site stabilization deadlines; (iii) increasing site inspection frequency; and (iv) requiring operators to make the SWPPP available to the public.

Construction operators located in geographic areas where the EPA is the NPDES permitting authority will be subject to the regulations of the reissued CGP that will take effect in 2017. In states where the EPA is not the NPDES permitting authority, such as New York, the state-issued permit requirements must meet the minimum requirements of the CGP. Thus, state-permitting authorities, in practice, will often follow EPA and its changes to the CGP.

For more information on regulation of stormwater discharges from construction activities, please contact Miriam Villani or Joseph Bjarnson.

 

Posted by Joseph Bjarnson

Draft Revisions to The New York State Hazardous Waste Management Regulations are Open for Public Comment

Environmental Law

The New York State Department of Environmental Conservation (“NYSDEC”) released a draft of proposed amendments to the Hazardous Waste Management Regulations (6 NYCRR Parts 370-374 and 376) on February 4, 2015. The proposed amendments were released as a “Draft for Consideration” (DFC) that is being made available for informal public comments before the draft regulations are formally proposed and published in the State Register. NYSDEC will accept written comments to the proposed amendments through April 6, 2015.

As an authorized state for the hazardous waste management program in lieu of the United States Environmental Protection Agency (“EPA”), the State must adopt regulations at least as stringent as EPA’s hazardous waste regulations. The draft amendments propose to incorporate thirty-seven (37) federal rules that were federally adopted from January 2002 through April 2012. The State is not mandated to adopt federal rules that decrease regulatory stringency and a number of less stringent rules will not be adopted.

In addition, NYSDEC is proposing several State-initiated changes to the existing regulations to provide clarification and to correct errors. Some of the proposed State-initiated changes will make certain regulations less stringent than they are currently, but not less stringent than EPA’s regulations. They will improve management of waste streams or processes, while maintaining protection of public health and the environment.

NYSDEC is seeking comments on the proposal to adopt the following EPA rules:

  • EPA’s Solvent Contaminated Wipes Rule of July 31, 2013—This rule revises the definition of solid waste to conditionally exclude solvent-contaminated wipes that are cleaned and reused and revises the definition of hazardous waste to conditionally exclude solvent-contaminated wipes that are disposed. NYSDEC currently has a policy that encourages reuse of industrial rags and soiled clothing (Policy DSW-HW-03-09, “Regulatory Status of Laundered Industrial Rags and Soiled Clothing”). However, since the state policy is less stringent in several ways than the EPA rule, NYSDEC must either rescind or revise the policy, or promulgate regulations. To read about the options NYSDEC is exploring, see http://www.dec.ny.gov/regulations/100442.html
  • EPA’s Carbon Dioxide Sequestration Rule of January 3, 2014—Captured Carbon Dioxide (CO2) is not typically considered a waste under the hazardous waste regulations. However, CO2 that is injected in underground injection control wells solely for the purpose of long-term storage is considered by EPA to be a “discarded material,” and thus a waste, and potentially a hazardous waste. This rule would exclude carbon dioxide streams from being classified as hazardous waste if certain conditions are met. For more information about the Carbon Dioxide Sequestration Rule, see http://www.dec.ny.gov/regulations/100557.html
  • EPA’s Hazardous Waste Electronic Manifest (e-Manifest) Rule—This rule provides the legal and policy framework to authorize the use of electronic manifests. The electronic system must go into effect in all states at the same time, regardless of whether the individual states have adopted effective regulations. Although the start-up date has not been established yet, it is expected to be later in 2015. Authorized states are required to adopt equivalent and consistent provisions. NYSDEC is considering no longer collecting hard copy forms from hazardous waste generators, transporters, and disposal facilities using the e-manifest system. For more information about the Electronic Manifest Rule, see http://www.dec.ny.gov/regulations/100585.html
  • EPA’s 2008 Definition of Solid Waste Rule, as amended in January 2015—This rule redefines “hazardous secondary materials” and is intended to make it easier and more cost-effective to safely recycle hazardous secondary material. In order to maintain regulations that are as stringent as EPA’s regulations, NYSDEC must adopt the revised definition of “legitimate recycling,” the prohibition of sham recycling, and new record-keeping requirements to demonstrate that material is not accumulated speculatively. If NYSDEC does not meet the deadline to adopt the more stringent provisions, EPA will have the authority to enforce those provisions in New York State. For more information on the Definition of Solid Waste Rule, see http://www.dec.ny.gov/regulations/100652.html
  • Amendments to NYSDEC’s Used Oil Management Regulations (6 NYCRR Subparts 374-2 and 360-14)—These amendments include possible revisions that would no longer require Petroleum Bulk Storage (PBS) registration for certain small used oil tanks; possible revisions that allow used oil collection centers collecting used oil in small volumes to obtain a Part 360 registration and more closely follow EPA requirements in lieu of obtaining a Part 360 permit; possible revisions to replace the current vehicle-to-vehicle exemption and 10-day exemption with a Part 360 registration requirement; and possible revisions to time required to retain certain records from 7 years to 3 years to more closely conform with the state’s Part 370-374 and 376 hazardous waste management regulations, and EPA’s Part 279 used oil management regulations. For more information on the proposed changes to the Used Oil Management Regulations, see http://www.dec.ny.gov/regulations/100657.html

 

To assist the public in understanding the draft regulations, NYSDEC will hold a public information meeting at the NYSDEC Central Office on 625 Broadway in Albany, on March 10, 2015, 1:00 pm – 3:00pm. Pre-registration is encouraged.

For more information on hazardous waste management, please contact Miriam Villani or Jenna Gallagher.

Posted by Miriam Villani

New Air Quality Standards May Impact Local Industries

Environmental Law

 

On November 25, 2014, the Environmental Protection Agency (the “EPA”) released long awaited proposed rules intended to strengthen the O3 National Ambient Air Quality Standards (NAAQS) for ground-level ozone in the United States (40 CFR Parts 50, 51, 52, 53, and 58).  These rules are expected to impact a number of industries, especially the manufacturing and agriculture sectors.  The EPA is currently accepting comments on the proposed rule and will continue to do so until March 17, 2015.  Anyone impacted by the proposed rule is encouraged to submit comments at https://www.federalregister.gov/articles/2014/12/17/2014-28674/national-ambient-air-quality-standards-for-ozone.

Ground-level ozone, commonly referred to as “bad ozone,” is created by chemical reactions between nitrogen oxides and volatile organic compounds.  Unlike “good ozone,” which is created in the upper atmosphere and helps to protect the earth from some of the sun’s harmful ultraviolet rays, bad ozone is created by pollutants from, among other things, manufacturing and motor vehicle emissions.  Under the Clean Air Act, the EPA is required to set two standards for ground-level ozone: a “primary standard” to protect public health, including at-risk groups (children, the elderly, and those with lung-related diseases), and a “secondary standard” to protect the public welfare, including the environment and plant life.  In an effort to protect both the public health and welfare, the EPA is proposing new primary and secondary standards.

Under the proposed rule, both standards measuring the amount of O3 in the air would be strengthened from the existing 75 parts per billion (75 ppb) to a measurement within the range of 65 to 70 ppb.  The EPA is also taking comments on decreasing the range as low as 60 ppb for the primary standard.  Simply explained, the standards would be measured by a “daily maximum 8-hour average,”[1] meaning that the daily “concentration” is determined by taking the highest 8-hour average for the 17 8-hour periods starting between 7:00 A.M. and 11:00 P.M. (e.g. the first 8-hour period being 7:00 A.M. through 3:00 P.M., the second being 8:00 A.M. through 4:00 P.M., etc.).[2] The fourth highest daily maximum 8-hour average of O3 concentration would be averaged for three years to determine if a site area has met the new standards.[3] These measurements would be made using a chemiluminescence analyzer.[4] Implementation of methods to satisfy these new standards will be the responsibility of each state, although the EPA expects most counties to meet the standards by 2025.

This new standard could have a substantial impact on many local industries.  In particular, because power plants and other large-scale emitters have already been outfitted with reduction technologies to decrease ozone pollutants, the cost of targeting these emitters may be prohibitive.  This may cause other industries to shoulder much of the reduction cost.  It is foreseeable that the manufacturing, agriculture, and transportation industries could be encouraged to adopt “low-emission technologies” and discontinue the use of older equipment.  Such technologies include new electric-hybrid and alternative fuel vehicles, CFC free refrigeration and air-conditioning systems, and scrubbers for boilers.[5] While these technologies have become more commercially solvent over the past decade or two, the costs of retrofitting entire vehicle fleets or shops may prove costly in these sectors.  The impact on local industries, such as Long Island’s agricultural sector and municipal transportation systems, may be substantial.  Many industries, however, may have already adopted these cleaner technologies and may not deem it necessary to make such alterations.  It should also be noted that Long Island’s healthcare industry may feel a bit of a pinch in adopting these new technologies, but it should also see a slight shrinking of demand moving forward as a result of the potential health benefits stemming from the rule’s implementation.

The EPA has published estimated costs and benefits for the new standards in the billions of dollars.[6] According to EPA’s calculations, the nationwide costs of strengthening the standard to 70 ppb by 2025 would be approximately $3.9 billion.  To strengthen the standard to 65 ppb by 2025 would cost an estimated $15 billion.  These estimates exclude California because the EPA has granted extensions to several counties to meet these standards.  California’s estimated costs are $800 million for 70 ppb and $1.6 billion for 65 ppb.  Despite these projected costs, EPA estimates the benefits to be tremendous.  The EPA expects that reducing the ground level ozone to the proposed levels will yield annual health benefits of $6.4 billion to $13 billion at 70 ppb and $19 billion to $38 billion for 65 ppb.  California estimates the benefits in its state to be $1.1 billion to $2 billion for 70 ppb and $2.2 billion to $4.1 billion for 65 ppb.  Money aside, the EPA also estimates anywhere from 750 to 4,300 fewer premature deaths and 790 to 2,300 fewer cases of acute bronchitis in children.[7] Asthma-related emergency visits should also decrease, among other things.

Industry groups have already published studies in opposition to the proposed rule claiming that the implementation costs and the economic consequences of the rule will be severe.    For example, the National Association of Manufacturers commissioned a study highlighting the negative economic impacts of the rule[8] and several politicians, including Speaker of the House John Boehner, have claimed that the rule would have serious impacts on national GDP, family budgets, and national workforce growth.[9] According to opponents, the long-term costs of the proposed rule include an annual reduction of the national GDP by billions of dollars, a decrease in average household consumption, and an increase in energy costs.  Some opponents to the rule simply argue that there is insufficient evidence to encourage stricter standards.[10]

Please remember that the comment period for this Rule is open through March 17, 2015.  The rule will likely impact many regional industries and we encourage all who may be affected to submit a comment.  If you have any questions regarding the proposed amendments to 40 CFR Parts 50, 51, 52, 53, and 58, or air emissions in general, please contact Miriam E. Villani or Michael J. Barone, Jr.

 

The author acknowledges Michael J. Barone, Jr., for his contribution to this article.


[1] Environmental Protection Agency, 79 F.R. 75234, 75396 (Proposed December 17, 2014).

[2] Id. at 75402.

[3] Id. at 75396.

[4] Id. at 75397.

[5] EPA, Regulatory Impact Analysis of the Proposed Revisions to the National Ambient Air Quality Standards for Ground-Level Ozone at 7-19,http://www.epa.gov/ttn/ecas/regdata/RIAs/20141125ria.pdf.

[6] Id. at 8-4.

[7] Id. at ES-14 – ES-15.

[8] Assessing Economic Impacts of a Stricter National Ambient Air Quality Standard for Ozone, Nera Economic Consulting (July 2014), http://www.nam.org/Issues/Environment/Ozone-Regulations/NERA-NAM-Ozone-Full-Report-20140726.pdf.

[9] Joe Koncelik, EPA’s Long Anticipated Ozone Decision, Ohio Environmental Law Blog (Dec. 1, 2014), http://www.ohioenvironmentallawblog.com/tags/naaqs/.

[10] Coral Davenport, E.P.A. Ozone Rules Divide Industry and Environmentalists, N.Y. Times, (Nov. 26, 2014), available at: http://www.nytimes.com/2014/11/27/us/epa-ozone-limits-divide-industry-and-environmentalists.html?_r=0.

 

Posted by Miriam Villani

ENVIRONMENTAL REVIEW FOR PHYSICAL CULTURE OR HEALTH ESTABLISHMENTS OF LESS THAN 20,000 GROSS SQUARE FEET ELIMINATED FROM BSA SPECIAL PERMIT APPLICATION

Environmental Law

 

Pursuant to the New York City Zoning Resolution, before opening a physical culture or health establishment (“PCE”), a special permit is required from the Board of Standards and Appeals (“BSA”).  A PCE includes a health club, gym, or any other business offering physical exercise, massage or use of steam rooms and saunas.  The City has made a change to the environmental review process for special permit applications for PCEs by eliminating the need for the environmental review for PCEs under 20,000 gross square feet. This will save many PCE special permit applicants time and money.

An application to the BSA for a special permit constitutes an application for discretionary approval and is therefore subject to the City Environmental Quality Review (“CEQR”) process.  Generally, CEQR requires that City agencies examine the environmental impact of an action before granting discretionary approvals.   

Under CEQR (and also under State Environmental Quality Review Act (“SEQRA”) outside of New York City), proposed actions are categorized as either Type I, Type II, or Unlisted.  The City maintains its own list of Type I and Type II actions. PCEs had been categorized as Unlisted – meaning that they were neither specifically listed as an action likely to have an adverse environmental impact (“Type I”), nor were they categorically found not to have an adverse impact on the environment and explicitly exempt from environmental review (“Type II”). As an Unlisted action, PCE applications for a special use permit required the applicant to submit a detailed Environmental Assessment Statement (“EAS”) to the BSA for review as well as pay a CEQR application fee.

The City reviewed an extensive history of prior special permit applications for PCEs and determined that PCEs of up to 20,000 gross square feet, rarely, if ever, resulted in a finding of significant environmental impact.  Accordingly, the City has added PCEs to its list of Type II actions. It did not make sense for the BSA to require the submission of an EAS and the payment of a CEQR application fee if the BSA always found that there was no adverse impact on the environment. The City is drawing a line based upon the size of the PCE, and has determined that PCEs above 20,000 gross square feet should be subject to environmental review since they may result in adverse environmental impacts.  Since most PCEs fall below 20,000 gross square feet in size, this change will save most PCE special permit applicants time and money by eliminating the need for the preparation of the EAS and the BSA’s environmental review, as well as the payment of the CEQR fee.

For more information on the CEQR process or on the filing of special permit applications to the New York City BSA, please contact Dan Braff or Jason Kaplan.

Posted by Miriam Villani

US EPA Approves 2013 Amendments to Standards and Practices for All Appropriate Inquires

Environmental Law

 

On December 30, 2013, the United States Environmental Protection Agency (“EPA”) took direct final action to amend the Standards and Practices for All Appropriate Inquiry (“AAI”) Rule regarding ASTM International’s E1527-13 “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process,” 78 Fed. Reg. 79319 (Dec. 30, 2013). This final rule allows for the use of E1527-13 to satisfy the requirements for conducting AAI under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”). Further, EPA intends to remove all reference to ASTM E1527-05 in the AAI rule and recommends that all environmental professionals and prospective purchasers use the ASTM E1527-13 standard.

EPA had originally issued a direct final rule on August 15, 2013, however the rule was withdrawn after EPA received negative comments during the public comment period. Simultaneous with the issuance of the direct final rule, EPA had also issued a proposed rule to amend the Standards and Practices. EPA then relied on this proposed rule to respond to comments and proceed to this final rule.

AAI is a process of evaluating a property’s environmental conditions and assessing whether any contamination exists. A purchaser of potentially contaminated property must follow prescribed AAI standards and practices in order to receive the liability protections under Section 101(35) of CERCLA for bona fide prospective purchasers, contiguous property owners, or innocent landowners, as set forth in the Small Business Liability Relief and Brownfields Revitalizations Act (the “Brownfield Amendments”). The Brownfield Amendments require EPA to develop regulations establishing standards and practices for AAI. EPA issued a Final Rule (40 C.F.R. § 312) establishing standards and practices for conducting AAI in November 2005.  Under the 2005 Final Rule, Bona fide prospective purchasers, contiguous property owners, and innocent landowners could either conduct Phase I environmental site assessments pursuant to the AAI Final Rule or, alternatively, by complying with two ASTM standards recognized as equivalent to the AAI Final Rule: ASTM E1527-05, “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process,” and ASTM E2247-08, “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessments for Forestland or Rural Property.”

ASTM E1527-13 is the latest replacement option for bona fide prospective purchasers, contiguous property owners, and innocent landowners to use. This Phase I environmental standard updates its 2005 predecessor by clarifying and revising definitions of Recognized Environmental Condition (“REC”), Historical Recognized Environmental Condition (“HREC”), and Controlled Recognized Environmental Condition (“CREC”). The most notable updates concern the revised definition of “migrate/migration” to specifically include vapor migration. This change now makes it necessary for environmental professionals to identify as a REC a release that migrates onto a subject property via a vapor pathway.

Further, guidance was added to ASTM E1527-13 at section 8.2.2, Regulatory Agency File and Records Review. The new standard for file and record review recommends that environmental professionals make efforts to review and document the validity of information taken from searches of agency databases. The goal is to increase validity in Phase I ESA reports. Because this new standard is more comprehensive than its predecessor and represents the current industry standard, prospective purchasers and users can be more confident in the ESA results. 

Although the final rule approving ASTM E1527-13 does not explicitly supersede or replace ASTM E1527-05, EPA strongly recommends that entities use the ASTM E1527-13 standard for the purposes of CERCLA landowner protections. EPA notes, however, that “[i]n the near future, EPA intends to publish a proposed rulemaking to remove the reference to ASTM E1527-05 standard in the All Appropriate Inquiries Rule.” EPA’s intent is clear: “to promote the use of the current industry standard and reduce confusion associated with the regulatory reference to a standard no longer recognized as current by ASTM International and no longer marketed by the standards development organization as reflecting its current consensus-based standard.”

Although the updated standards provide a more comprehensive assessment of environmental site history and conditions, complying with E1527-13 may be more costly and may increase the time needed to complete an ESA report than under E1527-05. However, the benefits will likely outweigh the possible increased cost. This new standard will provide a more comprehensive review of the historical environmental conditions at a property as well as risk of vapor migration and intrusion. A potential purchaser and user of the report will now have more confidence in the ESA report.

Although ASTM E1527-05 has not yet been removed as a standard to conduct AAI, it is not recommended that environmental professionals continue to use this standard. An environmental professional could face claims of professional negligence because EPA has clearly indicated that E1527-13 is now the current industry standard. Therefore, if a consultant fails to conduct an assessment of the real or potential occurrence of vapor migration and vapor release at a property, and such was later discovered, that consultant could face liability. For many environmental professionals, this change will not result in any material difference in the manner in which they conduct their Phase I ESAs. Nevertheless, all environmental consultants should review the new standards carefully and ensure their reports reflect the additional requirements.

This direct final rule became effective on December 30, 2013. Prospective purchasers and environmental professionals should now use ASTM E1527-13 in conducting Phase I Environmental Site Assessments to comply with the AAI rule and to be eligible to claim limitations on CERCLA liability in conjunction with a property purchase.

For more information on the new ASTM E1527-13 or liability protections under CERCLA, please contact Miriam Villani or Jason Kaplan.

Posted by Miriam Villani

New York Green Bank to Kickstart Clean Energy Investment

Environmental Law

 

The State of New York wants to jump start investment in clean energy projects.

In Governor Andrew M. Cuomo’s 2013 State of the State address, he proposed the New York Green Bank (“NY Green Bank”), a financing mechanism to spur private sector investment in “commercially-proven energy efficiency, renewable energy, and other clean technologies.”

On December 19, 2013, the New York Public Service Commission (“PSC”) approved $165 million in funding of the NY Green Bank. This funding was combined with $45 million previously allocated to it from emission allowance sales under the Regional Greenhouse Gas Initiative (“RGGI”) and created an initial $210 million reserve to achieve the Bank’s objectives.

The NY Green Bank will not operate like your typical bank; you won’t be able to make deposits or get a free water bottle when you open an account. Rather, the NY Green Bank will partner with “financial institutions and industry participants such as energy service companies, developers and equipment manufacturers to support economically viable clean energy projects.”

The State realized that the current system of providing subsidies and grants to incentivize clean energy was not working. New York State entities spend approximately $1.4 billion annually towards clean energy development and implementation, yet despite this level of spending, clean energy goals were not being reached. That model was not sustainable. The hope is that this one is.

The NY Green Bank will leverage private capital to finance its initial investments, and once those investments mature, the capital will be returned to the bank to be reinvested in other new clean energy projects. There are many “economic and creditworthy” renewable energy projects throughout New York that cannot get the financing. Several barriers prohibit private sector capital from flowing to these projects, namely “federal policy uncertainty, the absence of standardized contracts and underwriting criteria, and limited loan repayment and project performance data.”

To overcome these barriers, the NY Green Bank will operate with the following objectives:

  1. To enhance total market participation by providing credit support and/or aggregation mechanisms designed to scale clean energy generation and energy efficiency projects.
  2. To partner, rather than compete, with market intermediaries — such as project developers, energy service companies, or financial institutions—that are already making progress in the market, but where that progress is constrained by the lack of availability of reasonably priced financing.
  3. To leverage both the capital and institutional capabilities of its private sector partners.
  4. To not be in the subsidy business, but rather will earn a return on investments to preserve and grow its capital base, recycling that capital into new clean energy projects when its initial investments mature, ultimately creating a fully self-sustaining $1B support system for the clean energy finance market.[1]

 

With the establishment of the NY Green Bank, New York has set itself up to compete in the renewable energy future and to attract cleantech and sustainable energy projects to the Empire State. The NY Green Bank compliments New York’s other clean energy objectives, such as the New York Renewable Portfolio Standard which is New York’s goal to reach 30% renewable energy supply by 2015.

A positive sustainability loop has been created for renewable energy in New York. As these programs boost finance and development of clean energy projects throughout the state, there will be real short and long-term benefits for the economy and environment; our dependence on fossil fuels are reduced, jobs are created, air quality is improved, consumer energy bills are reduced, and our energy system as a whole is more resilient. New York’s energy future appears to be very bright.

The NY Green Bank expects to begin engaging potential partners in January 2014.

For more information on clean energy investment and the New York Green Bank, please contact Miriam Villani or Jason Kaplan.


[1] New York Green Bank, Summary, Available at http://www.governor.ny.gov/assets/documents/GBBackgrounder91013.pdf.

Posted by Miriam Villani

SCOTUS to Hear Question on EPA Regulation of Greenhouse Gas Emissions from Stationary Sources

Environmental Law

 

The Supreme Court of the United States (“SCOTUS”) has agreed to hear arguments on a narrow question concerning the United States Environmental Protection Agency’s (“EPA”) authority to regulate greenhouse gas emissions from stationary sources such as oil refineries and power-generating facilities. In the seminal case Massachusetts v. EPA, 549 U.S. 497 (2007), the Court held that carbon was a pollutant that could be regulated under the Clean Air Act. The Court further held that pursuant to Clean Air Act § 202(a)(1), the Agency was required to regulate motor vehicle emissions if it found that such emissions endangered the public health and welfare. In 2009, the EPA made its Endangerment Finding determining that greenhouse gases endangered the health and welfare of Americans and, pursuant to this finding, the EPA enacted standards for motor vehicle greenhouse gas emissions. However, the issue now is whether the EPA’s authority to regulate motor vehicle emissions gives it the right to regulate stationary-source emissions. This issue stems from the EPA’s issuance of the “Timing Rule,” which determined that EPA’s authority to regulate motor vehicles triggered its authority to regulate stationary sources through permit programs under the Act. The Court is only reviewing this narrow issue and not revisiting the scientific underpinning of climate change and whether carbon is a pollutant. Both industry leaders and environmentalists are content with this review, though for very different reasons. Those representing industry are encouraged by this decision hoping that the Court will reign in EPA’s power to regulate greenhouse gases under the Clean Air Act. Environmentalists are glad that the Court is only reviewing a very limited question and it is their belief that no matter the decision, it will not have a significant impact on the EPA’s goal to reduce greenhouse gas emissions. Arguments will be heard in early 2014.

For more information on greenhouse gas emission standards and EPA regulatory authority, please contact Miriam Villani or Jason Kaplan.

Posted by Miriam Villani

NYSDEC Finalizes Environmental Audit Incentive Policy

Environmental Law

 

The New York State Department of Environmental Conservation (“NYSDEC”) has finalized its Environmental Audit Incentive Policy. The Policy, which becomes effective November 18, 2013, encourages regulated entities to self-audit their operations and facilities with the goal of improving compliance with environmental laws and regulations, and protecting public health and the environment. After gathering comments and insight from business leaders, government officials, and other stakeholders over the past year, NYSDEC’s final policy invites eligible entities to review and investigate their current business practices and adopt internal approaches, including environmental management systems and pollution prevention, to prevent environmental violations.

The Policy provides NYSDEC with authority to reduce or waive civil penalties for violations when regulated entities discover violations through their internal audit and voluntarily disclose their findings to NYSDEC. Further, as NYSDEC states in its Policy, “[t]his Policy also identifies incentives for regulated entities to go ‘beyond compliance’ by agreeing to evaluate and incorporate environmental management and pollution prevention into their systems.”

The establishment of this Policy in no way limits the NYSDEC’s authority to regulate, inspect, and enforce the environmental laws of New York State and NYSDEC will continue its effort to protect human health and the environment. This Policy incentivizes entities for being proactive and taking affirmative steps to ensure environmental compliance. Many entities within the regulated community have already developed and implemented environmental management systems, and “[t]his Policy supports those efforts and encourages widespread use.”

The final policy does not apply to every entity and for every environmental violation. NYSDEC narrowly tailored its policy to only apply to eligible entities[1], for eligible violations[2], who notify NYSDEC in writing of the violation within 30 days from discovery[3] (or other time frame established as part of an environmental audit agreement). 

Voluntarily disclosing a violation is only one part of the process. Once NYSDEC is notified of the violation, the eligible entity must then “correct all disclosed violations expeditiously, consistent with any applicable time frame and protocol prescribed by law and regulation, and as may be directed by the Department in writing.”  The Department expects the violation to be corrected within 60 days of notification.

The benefits and incentives for complying with the policy are not unsubstantial. Typically, civil penalties for environmental violations include “an amount representing the gravity of the violation and an amount equal to the economic benefit of delayed compliance.”[4] For those eligible entities that voluntarily disclose violations, pursuant to this Policy, NYSDEC will waive the gravity component. For eligible entities that engage in environmental audits or have an environmental management system as part of its ordinary course of business, NYSDEC will further reduce the penalties, including reduction of the economic benefit component. Eligible entities that enter into formal audit agreements and make long-term commitment to an environmental management program are provided the highest level of incentives.

This Policy serves two necessary functions. First, NYSDEC does not have the resources or manpower to inspect, investigate, and fine every regulated facility in violation of New York State environmental law and regulations and this self-audit policy removes that heavy burden from the Department and enables the regulated community to go “beyond compliance” and be rewarded for it. Second, the Policy will lead to immediate response to environmental violations, assisting in the ultimate goal of further protections to human health and the environment.

While cynicism may remain in critics who foresee regulated entities taking advantage of the NYSDEC policy by only reporting minor violations to mask larger environmental issues, the overall consensus among both environmental groups and business leaders is that this policy creates public and private sector cooperation that will lead to environmental stewardship through efficient and cost-effective practices.

For more information on NYSDEC’s Environmental Incentive Audit Policy and environmental issues in business operations, please contact Miriam Villani or Jason Kaplan.


[1] Entities will not be eligible if, within the past five years, they received a Notice of Violation, Environmental Conservation Appearance Ticket, Notice of Hearing and Complaint, or an administrative or judicial order, and were uncooperative in remedying past violations. The Department defines uncooperativeness as including “failing to respond to Department correspondence, or failing to take good faith steps to remedy violations….” See NYSDEC, Commissioner Policy 59 – Environmental Audit Incentive Policy (Oct. 16, 2013) http://www.dec.ny.gov/regulations/93791.html.

[2] Eligible violations include “violations of New York State law and regulations discovered by an eligible regulated entity through an environmental audit, or discovered by the Department, its contractors, or other state, federal or local government agencies during pollution prevention or compliance assistance.” A full list of violations excluded from eligibility under the Policy can be found at http://www.dec.ny.gov/regulations/93791.html.

[3] “A regulated entity is deemed to have discovered the violation when any officer, director, employee, or agent of the facility knows or has reason to believe that a violation has, or may have, occurred.” See NYSDEC, Commissioner Policy 59 – Environmental Audit Incentive Policy (Oct. 16, 2013) http://www.dec.ny.gov/regulations/93791.html.

[4] See id.

Posted by Miriam Villani