A Phase I ESA Gone Awry Leads to Millions in Cleanup Liabilities — a Cautionary Tale for Property Transactions

Spencer Fane LLP
Kathleen M. (Kate) Whitby

January 29, 2919

Lenders, borrowers, purchasers, sellers, and even contractors sometimes get annoyed with environmental lawyers when we insist on reviewing Phase I Environmental Site Assessment (ESA) draft reports, looking at the underlying regulatory files, checking title reports, real property records, and contract terms, counting days to make sure that the Phase I report is not stale or expired at closing, and documenting which parties do, should, or do not have reliance rights under that report.

A pair of court cases currently making their way through the New York federal district court system illustrate why environmental lawyers fuss so much over the “i’s” and “t’s” of Phase I ESA processes.

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What to Expect in Environmental Regulation for 2019

McGuireWoods LLP
Michael H. Brady, Charles D. Case, David A. Franchina, Megan S. Haines, Amanda Kitchen Short, John M. Lain, Samuel O. Lumpkin, Dale G. Mullen, Heather Nixon Stevenson, Dana P. Palmer , W. Dixon Snukals, James A. Thornhill and Darin K. Waylett

February 4, 2019

Deregulation was one of the primary promises of President Trump’s campaign, and in 2018, the administration continued to roll back environmental regulation. The recent shutdown of the federal government has slowed deregulation, while at the same time affecting funding and implementation of programs. While it is difficult to estimate the impact of the recent shutdown, and the possibility of another, on environmental regulation, expect 2019 to continue the trend of federal deregulation, as well as judicial challenges to such deregulation. Meanwhile, certain states, like California, will continue implementing a comprehensive environmental regulatory agenda, while others may focus on clean energy, such as Maryland with its Clean Energy Jobs Act.

The following are some of the more material areas to track in 2019.

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EPA’s 2018 Environmental Enforcement Results Released

Hunton Andrews Kurth LLP
J. Tom Boer, Samuel L. Brown, Todd S. Mikolop and Alexandra Hamilton

February 12, 2019

Last week, the US Environmental Protection Agency (EPA) released its annual enforcement results for the 2018 fiscal year (ranging from October 1, 2017, to September 30, 2018). The report, prepared by EPA’s Office of Enforcement and Compliance Assurance (OECA), highlights the results of the agency’s civil and criminal enforcement of the nation’s federal environmental laws over the past year. The 2018 results mark the first full fiscal year of enforcement results, including inspections and compliance evaluations, under the Trump administration. A statement in the report from Susan Bodine, the Assistant Administrator for OECA, summarizes EPA’s enforcement priorities, explaining “[i]n fiscal year 2018, we continued our focus on expediting site cleanup, deterring noncompliance, and returning facilities to compliance with the law, while respecting the cooperative federalism structure of our nation’s environmental laws.”

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Which State’s Law Applies to Your Legacy Environmental Liability Claim?

Barnes & Thornburg LLP
John Fischer

January 30, 2019

It is a situation we have seen time and again, including in several recent matters: a policyholder headquartered in State A is pursued by the regulators in State B for investigating and cleaning up contamination at the policyholder’s facility located in State B. In the same circumstances and under the same policy language, the law of State A would require the carrier to cover the cost of the investigation and remediation, but the law of State B would not.

This drastic difference in outcome is common due to the sometimes vast differences in coverage law from state to state. The threshold question of which state’s law applies often makes all the difference between coverage and no coverage for contamination at a site that is in a different state from the state where the policyholder is based.

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BUILD Act Makes Two Major Changes to CERCLA

Winston & Strawn LLP
Maura T. Levine-Patton and John Fehrenbach

January 10, 2019

In March 2018, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) was amended by the Brownfield Utilization, Investment, and Local Development Act of 2018 (“BUILD Act”). The Environmental Protection Agency (EPA) solicited comments on the BUILD Act through July 10, 2018 and recently incorporated the Act’s changes in its FY 2019 brownfields grants guidelines. The BUILD Act makes two major changes to CERCLA: it increases funding for brownfield redevelopment grants, and formally extends the bona fide prospective purchaser (BFPP) statutory defense to tenants of contaminated sites, which previously had been a policy of EPA. Applications for grants to address sites contaminated by hazardous substances, pollutants, or contaminants under the new BUILD Act guidelines are due to EPA by January 31, 2019.

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Pennsylvania’s First PFAS Advisory Meeting Summary

Synergy Environmental, Inc.
Brian Loughnane, P.G
Bloughna@synergyenvinc.com

January 8, 2019

Much is being discussed in the news throughout Pennsylvania about Perfluorooctanoic Acid (PFOA) and Perfluorooctane Sulfonate (PFOS), which are part of a larger group of chemicals referred to as perfluoroalkyl substances (PFAS).  Concern exists about their release into the environment, their health effects and efforts needed to remediate PFAS. To help Pennsylvania residents learn more about PFAS, and to receive input from representatives of government, industry and advocacy groups, the Wolf Administration held its first public meeting of its multi-agency PFAS Action Team Friday, during November 30, 2018.

PADEP PFAS Action Team – 2018

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‘Waters of the United States’ rule from EPA, Corps may make real estate development more easily achievable and less costly

Thompson Coburn LLP
Spenser Owens and Paul Sonderegger

January 14, 2019

On December 11, 2018, the United States Environmental Protection Agency (EPA) and United States Department of the Army, Corps of Engineers (Corps) released for publication a new proposed “Waters of the United States” rule (WOTUS Rule) pursuant to their respective authorities under the Federal Water Pollution Control Act, 33 U.S.C. § 1251, et seq., also known as the Clean Water Act (CWA). If finalized in its current form, the new WOTUS Rule may have a profound effect on real estate developers, open new areas for development and construction, and reduce project costs.

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Recent Third Circuit Decisions Help Define Contours of CERCLA Liability

Riker Danzig Scherer Hyland & Perretti LLP
Alexa Richman-La Londe

January 7, 2019

Reprinted with permission. © 2019 Riker Danzig Scherer Hyland & Perretti LLP

The United States Court of Appeals for the Third Circuit recently handed down two noteworthy decisions on environmental liability under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”). One involves the appropriate methodology for allocation of cleanup costs between two responsible parties based on equitable factors; the other involves whether a new owner of contaminated property is responsible for governmental response costs incurred prior to its purchase of the relevant property. Both set new precedent that should be of interest to the regulated community.

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Proposed Changes to PADEP’s Management of Fill Policy

Synergy Environmental, Inc.
Brian Loughnane, P.G

December 18, 2018

A draft of the PADEP’s Management of Fill Policy is out for review, here are some thoughts from an Environmental Consultant.

Land owners, real estate developers, excavation contractors, municipalities, environmental consultants and lenders need to take note of the upcoming changes that will be occurring with the Pennsylvania Department of Environmental Protection’s (PADEP’s) Management of Fill Policy (Fill Policy).   During mid-November 2018 PADEP issued a notice that the current (first published during 2004 then amended in 2010) Fill Policy is being revised.  A draft has been issued and is out for review until early January 2019.  Projects and activities that involve earth disturbance or excavation will be impacted by the new Fill Policy.

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PFAS – Let’s Let the Science Catch Up

Hunton Andrews Kurth LLP
Daniel J. Grucza

December 10, 2018

Because of their widespread environmental presence, persistence and bioaccumulation, the group of substances known as PFAS have been described as a “Perfect Storm” of liability. The number of plaintiff’s suits concerning PFAS have spiked in the last few years. Also, EPA faces increasing bipartisan calls from Congress to adopt new drinking water standards and cleanup levels. In the interim, states are filling the void. In October 2017, the New Jersey Department of Environmental Protection announced a maximum contaminant level (MCL) of 14 parts per trillion for PFOA. Some NGO’s have called for levels as low as 1 part per trillion.

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