EPA Guidance to Commercial and Industrial Lessees for CERCLA Liability Protection for Historic Contamination

The United States Environmental Protection Agency (EPA) recently issued revised guidance clarifying its position that commercial and industrial tenants can protect themselves from contamination liability under the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, or "Superfund") by relying on an “all appropriate inquiry” of the ownership and uses of the property, timely performed by the landlord, or by timely performing the all appropriate inquiry themselves. Under EPA’s prior guidance, it was unclear that these statutory defenses were available to tenants. CERCLA imposes strict, joint, and several liability on designated persons, including owners and operators of facilities, where there has been a release or threatened release of hazardous substances. Although the mere execution of a lease does not necessarily impose CERCLA sec. 107 liability, tenants leasing contaminated properties may fall within the “operator” liability designation even if the contamination occurred prior to the tenant’s use of the property. Tenants are also listed in the CERCLA sec. 101(40) definition of "bona fide prospective purchaser" ("BFPP"). CERCLA provides a liability defense to BFPPs who can meet certain requirements, including the making of an "all appropriate inquiry", ordinarily a Phase I environmental site assessment, prior to purchasing or leasing the property. This defense can protect against CERCLA liability at a site that has historical environmental contamination that was not caused by the tenant. Subject to certain conditions, the BFPP defense applies even when the inquiry reveals historical environmental contamination on the property to be purchased or leased.

Under EPA’s revised guidance, a tenant can have derivative BFPP protection by relying on the landlord’s all appropriate inquiry or by performing the all appropriate inquiry itself prior to commencing operations if the landlord failed to timely undertake it or has acted in a way to invalidate this protection. The new guidance indicates how EPA will exercise its enforcement discretion under CERCLA. It is important to note that EPA may still take enforcement action against a tenant if it is potentially liable for reasons other than its status as a tenant or where the owner is not in compliance with state or federal regulatory requirements or cleanup orders.

A prospective lessee of commercial or industrial property should determine if the owner or landlord of the property timely performed an all appropriate inquiry prior to its purchase of the property, where the inquiry, purchase and lease occurred after January 11, 2002. If not, the tenant may want to consider performing a Phase I environmental site assessment prior to entering into a lease to obtain protection from CERCLA liability claims.

A link to EPA’s guidance document is here: "Revised Enforcement Guidance Regarding the Treatment of Tenants Under the CERCLA Bona Fide Prospective Purchaser Provision"

Federal Court Dismisses As Premature Lawsuit Challenging DRBC Failure to Comply With NEPA in Developing Natural Gas "Fracking" Regulations

A federal district court judge has dismissed as premature three consolidated lawsuits challenging the failure of the Delaware River Basin Commission (DRBC) and other federal defendants to comply with the National Environmental Policy Act in the course of drafting and considering regulations that would permit natural gas development in the Delaware River Basin.   In a memorandum and opinion dated September 24, 2012, the court dismissed the actions for lack of jurisdiction.  The court found that because the DRBC has merely released draft regulations for public comment, plaintiffs had not yet established an "injury-in-fact " requisite to establish Article III standing for federal court jurisdiction. The court observed, "The line between proposed regulations and final regulations may be subtle, but the court believes it is real[.]" The court recognized that "a plaintiff can show an injury-in-fact through showing the creation of an increased risk of invasion of concrete interests; in NEPA cases, this chain of reasoning is extended to allow for an injury based on the increased risk in uninformed decision-making that will create an increased risk in the invasion of a concrete interest." However, generally in such cases, "the agency has done something that has affected legal rights or obligations of some party in a way that made an invasion of plaintiffs interests more likely, or refused to do something that allowed an already existing invasion to continue."  Here, because the regulations are merely draft, "the court has no way of judging reliably how probable it is that the regulation will be enacted, and thus no way of judging whether risks that natural gas development may create are more than conjecture." The court also found that the claims were not ripe for judicial review.

However, the dismissal is by no means the end of the lawsuit. We can reasonably anticipate an appeal of the dismissal. Moreover, under the court's ruling, a challenge to the regulations as violative of NEPA would be ripe and appropriate if, and when, such regulations are issued in final form and plaintiffs are able to establish the requisite "injury-in-fact."

The Court Found That All Plaintiffs Had Interests Sufficient to Bring the Lawsuit

Although the court rejected the plaintiffs' claims of "injury-in-fact" to confer Article III standing, the court found that all of the plaintiffs had concrete interests sufficient to bring the lawsuits: State of New York, Delaware Riverkeeper, Riverkeeper, Inc., Damascus Citizens for Sustainability, and the National Parks Conservation Association. The interests that New York State asserted are particularly interesting, because they involve air pollution as well as concerns over water quality.  One set of interests asserted by New York was maintaining the status quo in the Upper Delaware River, home to numerous endangered species. New York claims ownership of the shellfish, fish, birds, and other animals that live wild on New York’s land and in its waters. New York also asserted property rights in land, facilities, and the rights to conservation easements along the Upper Delaware, which gave New York proprietary interests sufficient to confer standing.  New York’s other asserted interest is tied to preventing increases in ozone (O3) concentrations over New York’s population, which can increase due to natural gas production. As New York asserted,  ozone can cause respiratory health problems, asthma attacks, and may also be linked to higher mortality rates. The court declared that New York's "desire to prevent its residents from suffering from increased ozone exposure is analogous to a state’s desire to secure the abatement of a public nuisance—in other words, a quasi-sovereign interest in the health of its residents."

The Troubled History of DRBC Compliance With NEPA

The court did not address the merits of the plaintiffs' claims that DRBC violated NEPA by drafting natural gas development regulations without complying with NEPA's procedural requirements.  However, one need look no further than the court's simple review of DRBC history to see that DRBC's compliance with NEPA requirements is problematic:

After NEPA was enacted in 1970, the DRBC promulgated regulations implementing it as to its own operations. (NGO Pls. Mem. (11–CV–2599 Docket Entry # 79–1) at 4–5.) The CEQ’s guidelines on preparing EISs published in the 1970s included the DRBC as a federal agency. (Id. at 5.) The DRBC performed NEPA analyses during that decade. (Id.) In 1980, however, the DRBC suspended its NEPA-implementing regulations due to lack of financial resources and indicated it would rely on an agency of the federal government to serve as “lead agency” and perform EISs for DRBC projects. (Id.) In 1997, the DRBC repealed its NEPA regulations. (Id.)

It is hard to imagine how an agency could successfully claim that it can avoid NEPA obligations because of "lack of financial resources."  We note that historically the DRBC has prepared environmental impact statements and in several cases the Commission conceded that it was a federal agency for purposes of NEPA. See, e.g., Bucks County Bd. of Commissioners v. Interstate Energy Co., 403 F. Supp. 805, 808 (E.D. Pa. 1975) (DRBC as the designated federal agency to prepare and review an EIS); Borough of Morrisville v. DRBC, 399 F. Supp. 469, 479, n.7 (E.D. Pa. 1975) (DRBC conceded it was a federal agency for purposes of NEPA). In Delaware Water Emergency Group v. Hansler, 536 F.Supp. 26, 36 (E.D. Pa., 1981), while the court expressed some doubt on the matter, it also noted that the DRBC did not dispute that NEPA obligations applied to it, and stated 'to the extent that the United States' member of the Commission votes in favor of an application or otherwise acquiesces in accordance with the Compact, such approval might be deemed Federal action.'"

We will report on further developments in the case as they emerge.

National Park Service Issues Final Environmental Statement on PP&L Susquehanna-Roseland Transmission Line Through Delaware Water Gap National Recreation Area

The National Park Service has published its Final Environmental Statement (FES) on the Susquehanna-Roseland Transmission Line through the Delaware Water Gap National Recreation Area. The FES effectively approves the utilities' proposed route of a new 500kV line across the Delaware Water Gap National Recreation Area, Middle Delaware National Scenic and Recreational River, and the Appalachian National Scenic Trail in Pennsylvania and New Jersey.

The final environmental statement confirms NPS's previous determination that the "no action" alternative is the environmentally-prefereable alternative, but determined that the utilities' proposed route - among six alternatives evaluated - is its "preferred alternative", assuming the incorporation of "critical mitigation measures."  The "preferred alternative" is the one “which the agency believes would fulfill its statutory mission and responsibilities, giving consideration to economic, environmental, technical and other factors.”

NPS made this determination despite finding that the proposed route "would cause significant adverse impacts to geologic resources; wetlands; vegetation; landscape connectivity, wildlife habitat, and wildlife; special-status species; rare and unique communities; archeological resources; historic structures; cultural landscapes; socioeconomics; infrastructure, access and circulation; visual resources; visitor use and experience; wild and scenic rivers; and park operations."

Specifically, among other impacts, the alternative will cause:

• conversion of 20.28 acres of forested wetlands to scrub shrub and/or emergent wetlands
• adverse impacts to 15.22 acres of Exceptional Value Wetlands and/or rare and unique wetlands
• clearing of 240 acres of vegetation, including 129 acres of mature forest
• adverse impacts to multiple archaeological sites, at least 17 historic structures, 18 cultural landscapes, including the Appalachian National Scenic Trail.

The FES articulates NPS's intention to require mitigation of adverse impacts where possible:

The NPS expects to conclude consultation by including in any ROD a binding commitment to the mitigation measures disclosed in this EIS, as required by 36 CFR § 1508.8. Mitigation measures specific to the impact topics, where applicable, are presented in appendix F. The NPS would also establish mechanisms to ensure that all mitigation obligations are met, mitigation measures are monitored for effectiveness, and unsuccessful mitigation is quickly remedied. In instances where impacts cannot be avoided and mitigation is not feasible, compensation for resources lost or degraded through project construction, operation, and maintenance would be required. Examples of items that cannot be remedied through mitigation include impacts that degrade the scenic and other intrinsic values of the parks or impacts that result in the loss of recreational use and visitor enjoyment.

The Final Environmental Impact Statement is available here.

Note: This is an update to our prior posts on this topic of January 21, 2010 and December 3, 2011.

Risks of Fracking Gas Well Leases: "Homeowners and Gas Well Drilling: Boon or Bust"

Underscoring the risks of Marcellus Shale formation gas well leases that we discussed in our post of December 4, 2011 is an EcoWatch article posted yesterday by New York attorney Elisabeth Radow, "Homeowners and Gas Well Drilling: Boon or Bust."   It contains a thorough and extensive analysis of numerous issues relating to gas well drilling and leases for such activities and the risks for property owners who enter into such leases.  Accompanying the analysis are a series of photographs of actual well drilling sites by photographer J Henry Fair, best known for his Industrial Scars series, in which he "researches our world’s most egregious environmental disasters and creates images that are simultaneously stunning and horrifying". Mr. Fair’s work has been featured in national and international media and has been exhibited world wide. The article and photographs make for sobering reading and viewing for anyone who has entered into such a lease or is considering such a lease.  Property owners who may enter into such leases should be fully cognizant of the significant environmental and legal risks of these transactions.  This article provides valuable information on these issues.

Congressional Research Services issues CRS Report to Congress on "Proposed Keystone XL Pipeline: Legal Issues"

CongressionalResearchService

On January 23, 2012, the Congressional Research Services issued a Report to Congress on "Proposed Keystone XL Pipeline: Legal Issues."   The entire report (PDF, 29 pp.) can be found here.  The report analyzes a variety of legal issues, including: the sources of Presidential and State Department legal authority regarding cross-border facilities, reconciling the Executive and Legislative roles related to foreign commerce and judicial interpretations of those roles,  constitutional concerns related to potential action by States related to the pipeline, preemption issues, the National Environmental Policy Act (NEPA)  process for permitting of the pipeline, and the availability of judicial review of actions taken under Executive Order 13337.  The Report to Congress provides a typically thorough review of the issues and is required reading for persons interested in the legal issues arising from the Keystone XL proposal.   The Summary of the Report states, in part: "New legislative activity with respect to the permitting of border-crossing facilities, a subject previously handled exclusively by the executive branch, has triggered inquiries as to whether this raises constitutional issues related to the jurisdiction of the two branches over such facilities. Additionally, as states have begun to contemplate taking action with respect to the pipeline siting, some have questioned whether state siting of a pipeline is preempted by federal law. Others argue that states dictating the route of the pipeline violates the dormant Commerce Clause of the Constitution which, among other things, prohibits one state from acting to protect its own interests to the detriment of other states. This report reviews those legal issues. First, it suggests that legislation related to cross-border facility permitting is unlikely to raise significant constitutional questions, despite the fact that such permits have traditionally been handled by the executive branch alone pursuant to its constitutional “foreign affairs” authority. Next, it observes generally that state oversight of pipeline siting decisions does not appear to violate existing federal law or the Constitution. Finally, the report suggests that State Department’s implementation of the existing authority to issue presidential permits appears to allow for judicial review of its National Environmental Policy Act determinations."

A companion report from CRS focusing on policy issues associated with the proposal, "Keystone XL Pipeline Project: Key Issues" (CRS Report R41668), is also available here.

National Park Service Issues Draft Environmental Impact Statement on Susquehanna-Roseland 500kV Transmission Line

Update: The National Park Service has now published the Final Environmental Statement on the project. See our September 1, 2012 post for updated information.

The National Park Service has published its Draft Environmental Impact Statement (DEIS) for construction and right-of-way permit as requested by Pennsylvania Power and Light Electric Utilities Corporations (PPL) and Public Service Electric and Gas Company (PSE&G), in connection with their proposed Susquehanna-Roseland transmission line.  The project is more fully described in our previous post of January 21, 2010.

The National Park Service found that PPL's proposed route and all alternatives that would cross the Delaware Water Gap National Recreation Area would have adverse environmental impacts.  The DEIS concludes that the environmentally preferred alternative is "no action": to deny the request for the right of way and construction permit.

A public comment period including public meetings has started and will end on January 31, 2012. Comments can be submitted electronically at the NPS Planning, Environment and Public Comment page.

Three public hearings (6:00-9:00pm) will be held:

Tuesday, January 24, 2012 (snow date 1/31 if required) Fernwood Hotel and Resort U.S. 209 Bushkill, PA 18324

Wednesday, January 25, 2012 (snow date 2/1 if required) Stroudsmoor Country Inn - Ridgecrest RD#4 Stroudsmoor Road Stroudsburg, PA 18360

Thursday, January 26, 2012 (snow date 2/2 if required) Farmstead Golf and Country Club 88 Lawrence Road Lafayette, NJ 07848

National Research Council Issues New Report: "America's Climate Choices"

The National Research Council released today a new report, "America's Climate Choices", the final volume of the "America's Climate Choices" suite of activities. The report examines the nation’s options for responding to the risks posed by climate change. The report concludes that it is imprudent to further delay actions to substantially reduce greenhouse emissions, and offers a series of recommendations for national policy.  The primary recommendation is for the nation to substantially reduce greenhouse gas emissions, with the "most effective strategy" to "begin ramping down emissions as soon as possible". The NAS recommendations also include mobilization for adaptation to climate change, including adaptation planning and implementation "at all levels of society".  

A PDF of the entire report can be downloaded for personal use.  It will make sobering reading.

Chesapeake Bay Foundation and Pennsylvania Environmental Council Issue New Proposal to Reform Pennsylvania Laws on Natural Gas Drilling

The Chesapeake Bay Foundation (CBF) and the Pennsylvania Environmental Foundation (PEC) have submitted a legislative proposal to the Corbett administration and state lawmakers "designed to help ensure safe and responsible Marcellus Shale drilling and gas extraction in Pennsylvania." The proposal sets forth detailed amendments to the Pennsylvania Oil and Gas Act  to confer additional authority to regulate and manage deep shale and unconventional drilling techniques that were not contemplated when the law was enacted.  The proposal was provided to Governor Corbett’s Marcellus Shale Commission and members of the Pennsylvania General Assembly.

The proposed amendments are based on the findings of a PEC report issued last year called “Developing the Marcellus Shale” which outline a series of environmental policy and planning recommendations for unconventional shale gas development.  The PEC/CBF press release states: "These amendments are aimed at restoring public confidence in the industry’s ability and commitment to responsible drilling and environmental compliance. The proposal includes 50 specific amendments to the Act which reform the permit process to allow for greater stakeholder input and set clear environmental protection standards for the hydraulic fracturing process and the infrastructure that should be required for shale gas extraction."

The organizations propose to split the gas well drilling permit process into two phases that require enhanced collection and review of site-specific data prior to approval. The proposal also calls for a number of tighter restrictions in the Pennsylvania Oil and Gas Act.

A copy of the press release can be found here. A PDF of the complete, detailed legislative proposal is here.

PADEP/EQB Propose Overhaul of State NPDES Program Requirements

The Pennsylvania Department of Environmental Protection (PADEP) and the Environmental Quality Board (EQB) have proposed a complete reorganization and overhaul of the current Pennsylvania program regulations for National Pollutant Discharge Elimination System (NPDES) permits, monitoring and compliance.  As the public notice says, "The primary goal of the proposed rulemaking was to rebuild the regulation from scratch." The new proposed requirements are set forth ina proposed rulemaking published in the February 13, 2010 Pennsylvania Bulletin. The proposed rules can be found online at http://www.pabulletin.com/secure/data/vol40/40-7/276.html.  Public comments on this proposal may be submitted to the Environmental Quality Board at any one of the following addresses: U.S. Mail: EQB, P.O. Box 8477, Harrisburg, PA 17105-8477; Electronically: RegComments@state.pa.us; Street Address: 16th Floor, Rachel Carson State Office Building, 400 Market Street, Harrisburg, PA 17101-2301.  Comments must be received by the Environmental Quality Board by March 15, 2010.

National Park Service to Evaluate 500kV Transmission Line to Cross Appalachian Trail and Delaware Water Gap National Recreation Area

SECOND UPDATE: The National Park Service has now published the Final Environmental Statement on the project. See our September 1, 2012 post for updated information.

UPDATE:  The National Park Service has published its Draft Environmental Impact Statement on the proposed action. It concludes that the preferred environmental alternative is the "no action" alternative. The public comment period on the DEIS is open until January 31, 2012.

 The National Park Service is deciding whether to allow the construction of a new 500 kV electric transmission line to cross the Appalachian National Scenic Trail and the Delaware Water Gap National Recreation Area.  Today (January 21, 2010) it issued its Notice of Intent to Prepare an Environmental Impact Statement (EIS) for a construction and right-of-way permit requested from the Delaware Water Gap National Recreation Area, Middle Delaware National Scenic and Recreational River, and the Appalachian National Scenic Trail, in connection with the Susquehanna to Roseland 500kV Transmission Line. 

You can view the Federal Register notice here. The public participation and public scoping process under the National Environmental Policy Act commences with the Federal Register publication today. The public can comment on the project's purpose, need, objectives, preliminary alternatives, mitigation and other issues by submitting comments through the NPS project website at http://parkplanning.nps.gov/dewa/.

The project proposes to expand upon an existing right-of-way which contains a single 230,000 volt (230kV) electric transmission line by replacing the existing towers with new, taller tower structures and adding an additional 500,000 volt (500kV) transmission line. The request would necessitate widening the existing ROW and constructing new access roads. The expanded line and new towers will impact three units of the National Park Service: the Delaware Water Gap National Recreation Area; the Middle Delaware National Scenic and Recreational River and National Recreation Water Trail; and the Appalachian National Scenic Trail (AT). The NPS is preparing an Environmental Impact Statement (EIS) to evaluate the permit request.

Additional information, including the NPS internal scoping meeting report, is available from the National Park Service Planning, Environment and Public Comment page for the project.

EPA Announces New Proposed NAAQS (Air Quality) Standards for Ozone

The United States Environmental Protection Agency today announced a set of new proposed National Ambient Air Quality Standards (NAAQS) for ground-level ozone, also known as "smog". Ground-level ozone is linked to various serious health problems, ranging from aggravation of asthma to increased risk of premature death in people with heart or lung disease. EPA is proposing to replace the standards set in 2008 by the Bush administration. Those standards were roundly criticized as inadequate to protect human health as required by the Clean Air Act. EPA's press statement states: "EPA is stepping up to protect Americans from one of the most persistent and widespread pollutants we face. Smog in the air we breathe poses a very serious health threat, especially to children and individuals suffering from asthma and lung disease. It dirties our air, clouds our cities, and drives up health care costs across the country." The new primary standard, developed to protect public health, is proposed to be a level between 0.060 and 0.070 parts per million (ppm) measured over eight hours. The current eight-hour primary standard is 0.075 parts per million (ppm). EPA is also proposing to set a separate “secondary” standard to protect the environment, especially plants and trees. This seasonal standard is designed to protect plants and trees from damage due to ozone exposure,

EPA will receive public comments on the proposed rule for a period of sixty days from the date the proposed rule is published in the Federal Register.  We'll update this post with a link to the Federal Register notice when it is published.

FIRST UPDATE:  EPA has announced public hearings on this ozone NAAQS rulemaking. See the public notice for details of the EPA hearings scheduled for Arlington, Virginia and Houston,Texas on February 2, 2010 and in Sacramento, California on Feburary 4, 2010.

SECOND UPDATE: January 19, 2009: EPA today published the Federal Register notice on the proposed rule to revise the NAAQS for ozone. A copy of the proposed rulemaking is available online at http://edocket.access.gpo.gov/2010/2010-340.htm. Written comments to EPA are due by March 22, 2010. Comments may be submitted electronically to http://www.regulations.gov (follow the on-line instructions) and via e-mail to: a-and-r-Docket@epa.gov