This year is sure to bring a number of significant changes in the areas of waste and contamination. Areas where changes may occur are in vapor intrusion, waste management and cleanup, brownfields/due diligence and issues related to real estate purchases.
The contamination and waste management issues to follow in 2013:
- EPA Vapor Intrusion Guidance: Despite numerous promises to do so, the United States Environmental Protection Agency (EPA) did not issue its updated guidance for considering vapor intrusion in determinations about protecting public health at Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund) and Resource Conservation and Recovery Act (RCRA) sites in 2012, but has indicated that it will be issued in 2013. This guidance is expected to be used as a basis for changes to or development of state guidance as well. Two guidance documents are expected to be issued, one dealing with petroleum underground storage tanks and the other one addressing vapor intrusion from chlorinated solvents. The chlorinated solvents guidance document will be much more site specific and emphasize the use of empirical data (especially indoor air sampling), moving away from the tiering approach and Johnson and Ettinger model screening. State regulators and industry groups have raised concerns about changes EPA has made to its draft petroleum vapor guidance, specifically on the depth of soil that must be present to screen out a site for vapor concerns. In June 2012 EPA increased the vertical separation distance from 15 to 30 feet of clean soil. Along with the final guidance, EPA intends to issue additional guidance on community involvement in vapor intrusion issues and technical support documents.
- State-Led Group Delays Vapor Intrusion Guidance: The Interstate Technology and Regulatory Council (ITRC) has pushed back the release date of its guidance for assessing vapor intrusion at petroleum-contaminated sites by six months because EPA has yet to issue its own guidance. While the EPA guidance will address petroleum contamination only from underground storage tanks, the ITRC guidance will also address petroleum contamination from aboveground sources, including tanks, pipelines and refineries.
- Reopening of Closed Remediation Cases: EPA and state agencies are expected to reopen sites, especially during five-year CERCLA reviews, to incorporate vapor intrusion considerations when they were not done as part of earlier remedial decisions. These reviews will likely affect remedies at a number of Superfund sites where remedies were developed before vapor intrusion risk was identified as a problem. EPA is also developing a plan to add the analysis of vapor intrusion to the Hazard Ranking System to allow sites to be listed on the National Priorities List solely on the basis of vapor intrusion risk.
Waste Management and Cleanup
- Hazardous Waste Electronic Manifest System Regulations: EPA was authorized by statute in 2012 to establish a hazardous waste manifest system that will replace the paper system that has been in place for decades. EPA is expected to promulgate regulations to implement the system in 2013, with the system becoming active in 2015.
- Management of Hazardous Waste Pharmaceuticals: EPA has announced that it intends to establish management standards for hazardous waste pharmaceuticals generated by healthcare facilities and anticipates that the rule will be published for public comment by August 2013. EPA intended to add hazardous waste pharmaceuticals to the Universal Waste Program in 2008, but the public comment raised concerns for the lack of notification by the generating facilities as well as tracking of the waste generated under the Universal Waste Program. EPA has stated that the new rule will cover only pharmaceutical waste generated at healthcare facilities that meet the definition of a RCRA hazardous waste.
- State-Level Regulation of Pharmaceutical Waste: States are also active in the regulation of pharmaceutical waste. For example, on Sept. 28, 2012, California Governor Jerry Brown signed AB 1442, a bill intended to define pharmaceutical waste under the California Medical Waste Management Act and better regulate its disposal through a waste hauling exemption. AB 1442 could be significant for pharmacies operating in California because two major retail pharmacies were recently hit with civil penalties under environmental statutes due in part to the way these companies handled waste and unused or expired pharmaceuticals. It is a common practice for pharmacies and other healthcare facilities to return unused pharmaceuticals to the manufacturer for credit or disposal. The intention of AB 1442 is to allow pharmacies and healthcare facilities to return pharmaceutical waste to manufacturers using common carriers and avoid more expensive hazardous waste and medical waste shipping.
- Coal Combustion Residues (CCR): EPA continues to mull over its choice between regulating CCR as a solid or as a hazardous waste, as proposed in June 2010. EPA issued a Notice of Data Availability on Oct. 12, 2011, containing the results of its ongoing information search, and the comment period for this action ended on Nov. 14, 2011. Congressional attempts to preempt the EPA rulemaking failed during the 112th Congress. However, both environmental and industry groups have filed suit in the U.S. District Court for the District of Columbia challenging EPA’s continued inaction. The lawsuits have been consolidated, and the parties are awaiting the court’s ruling on cross motions for summary judgment. Meanwhile, EPA is now indicating that a final rule will not be promulgated until sometime in 2014.
- RCRA Challenge Prior to Enforcement of Order: In its decision in Sackett v. EPA, the Supreme Court ruled that compliance orders issued under Section 309 of the Clean Water Act are final agency actions that can be challenged under the Administrative Procedure Act prior to enforcement of the orders or imposition of penalties. It is important to note that this case has a broad reach — EPA issues similar orders under the Clean Air Act, the RCRA and the Toxic Substances Control Act. Since Sackett, a variety of complaints have been filed on this issue, including one recent suit by Soco West challenging a unilateral RCRA compliance order issued by EPA (Soco West v. United States Environmental Protection Agency, filed in the U.S. District Court for the Central District of California). The order mandates a variety of remediation activities (including a slurry wall and a cap) at the historic waste processing site. Soco West argues in its complaint that the order constitutes appealable final agency action for which there is no legal basis because EPA had previously issued a determination that there was no imminent and substantial endangerment to human health or the environment at the site. Soco West also argues that EPA’s order is arbitrary and capricious because the federal agency had delegated oversight of the facility to a California state agency that was already involved in a state enforcement action. It will be interesting to watch this case — if Soco West prevails, it will be the first application of the Sackett holding in a RCRA context.
- Hydraulic Fracturing: Waste generated by hydraulic fracturing was also a hot topic on the state level in 2012. For example, the New Jersey House and Senate passed by wide margins legislation to ban the storage or treatment of hydraulic fracturing waste, only to have it vetoed by Governor Christie. We expect states to continue to push forward legislation in 2013 related to various aspects of hydraulic fracturing, including storage, treatment and disposal of waste. EPA is studying the potential impacts on drinking water of hydraulic fracturing operations. The study commenced last year and will be completed in 2014, and at the end of 2012 EPA released a progress report outlining the research process. EPA is studying five water quality issue areas: Water Acquisition, Hydraulic Frac[t]uring Fluid Spills, Well Injection, Flowback/Produced Water, and Wastewater Treatment and Disposal. This report is expected to confirm the need to promulgate new regulations under the Clean Water Act on water quality associated with hydraulic fracturing, including wastewater treatment and disposal.
- New ASTM Phase I Standard: EPA published the All Appropriate Inquiries (AAI) standard in 2005 and expressly provided in the regulation that AAI could be met by following ASTM “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process” E1527-05. ASTM has established a task force to propose an updated standard that ASTM expects to release in 2013. The next task force meeting is in April 2013. ASTM has indicated that it does not expect any significant changes, although the task force is considering revisions to the portion of the standards addressing agency file review. Because agency files can be complex and file reviews often require a Freedom of Information Act request, additional requirements relating to such reviews may increase the cost of Phase I Environmental Site Assessments. EPA will have to follow with a rulemaking to adopt the new standard. For more detail on AAI, click here.
- Possible Changes to Forest & Rural Land Phase I Standard: ASTM has not stated its intention to modify its separate standard for meeting AAI for forestland and rural property, entitled “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process for Forestland or Rural Property” E2247-08. Conforming changes may be necessary though, depending on the changes to E1527, and will likewise require EPA to complete a rulemaking. For more information on this ASTM standard, click here.
- Brownfields Grant Funding: EPA will continue to fund a variety of brownfield grants in 2013 for assessment, cleanup and areawide planning. How the funding of these grants will fare in the future is unclear, with the budget cuts the government faces with the upcoming debt ceiling debates. State programs are also seeing their federal funding reduced as more and more tribal response programs seek funding. Reduced federal funds will continue to shift brownfield redevelopment costs to the private sector.
Real Estate Purchasers
- Circuit Court Appeal of BFPP Case: The U.S. Court of Appeals for the Fourth Circuit heard arguments in the appeal of Ashley II of Charleston, LLC v. PCS Nitrogen, Inc. LEXIS 104772 (D.S.C. Sept. 30, 2010) on Dec. 5, 2012. The opinion has not yet been released. In the lower court case, a purchaser was found not to meet the requirements of a bona fide prospective purchaser (BFPP) and thus was liable under CERCLA. The court determined that the purchaser failed to meet certain “continuing obligations” that the purchaser must continue to meet post closing in order to maintain its BFPP defense. One of the parties has asked that the court take up the issue of successor liability of such party in the case, since the court’s decision could render the other issues moot, including the BFPP defense analysis. For more information on Ashley II and the BFPP defense, click here.
- EPA Enforcement Discretion Related to Tenants: EPA expanded its enforcement discretion regarding liability of tenants under CERCLA in a new guidance document entitled “Revised Enforcement Guidance Regarding the Treatment of Tenants Under the CERCLA Bona Fide Prospective Purchaser Provision,” dated Dec. 5, 2012. Pursuant to earlier guidance from 2009, EPA only recognized the BFPP protection for tenants where the leasehold rights of a tenant equated with a purchase or where a landlord of the tenant was itself a BFPP and thus the tenant derived the BFPP protection from the landlord. EPA’s recent guidance has now expanded its enforcement discretion to extend to tenants who, similar to a purchaser seeking BFPP protection, meet the BFPP criteria. While many tenants performed pre-lease Phase I’s on commercial and industrial properties simply for due diligence purposes prior to the December guidance, those planning to lease commercial and industrial properties will have new incentive in 2013 to perform pre-lease ASTM Standard Phase I’s prior to entering into leases. For more information on EPA’s December guidance click here.
- State Notification Programs: The Maryland Department of the Environment (MDE) has announced its intent to reissue regulations in 2013 to implement a 2008 law requiring “responsible persons” to notify MDE of sampling results showing levels of contamination above certain screening levels. Regulations were originally proposed in 2009 and withdrawn in 2011. One of the more troubling aspects of the earlier draft of the regulations was the requirement on current and former owners and operators to disclose sampling results in reports in their files showing levels of contamination above the notification criteria. This could be particularly troubling for large property owners in Maryland. The original screening levels were also very low. How MDE will react to the information it receives, such as bringing an enforcement action under the Controlled Hazardous Substance Act (state-level CERCLA-like statute), is unclear. How the regulations ultimately address the notification levels could have a chilling effect on commercial and industrial real estate transactions in Maryland since sellers may be reluctant to allow purchasers to test and develop information that the seller may have to disclose to MDE. The requirement to look back at old files will also concern current and former owners and tenants. How this unfolds in Maryland will need to be closely watched in 2013 because their regulations could serve as a possible template for other state disclosure laws.