PA Brownfields Environmental Law : Pennsylvania Environmental Law & Brownfields Lawyer & Attorney : Fox Rothschild Law Firm : Philadelphia PA

Last week, I attended the April meeting of the Delaware Valley Regional Planning Commission's Environmental Justice Work Group. DVRPC staff presented an overview of its updated comprehensive plan, Connections 2040, which contained eye-opening information that is relevant to developers throughout the Delaware Valley.

Holding all else equal – that is, absent implementation of the comprehensive regional plan – DVRPC's long-term projections showed high growth expected in the outermost parts of Chester County, Montgomery County, and Bucks County, and slower-to-flat growth in most of Philadelphia and the other surrounding Pennsylvania suburbs. But in Delaware County, DVRPC projected losses of both jobs and population, focused in the central part of the county and the communities along the Delaware River. (Click for a pdf showing DVRPC’s projections)

Connections 2040, however, would focus on reinvestment in the central cities of the region, primarily on infill development and redevelopment near existing transportation infrastructure. Transportation capital investments over the next 2 to 3 decades would largely be devoted to maintenance and repair of our existing transportation infrastructure, rather than on expansion of service. This may seem frustrating to the many of us who commute from suburb to suburb, rather than from suburb to Philadelphia; most commuting trips now fall into the former category, and I'm sure there are many who, like me, would like to take the train but find our options lacking and wind up in the car.

But transportation and comprehensive planning in the Delaware Valley are caught in a bind of scarce funds as pressures on both federal and state shares create a shrinking overall pie. Beyond repairing and maintaining existing roads, bridges, and rail lines (some of which have deteriorated to the point that closure is required), available funding will be prioritized for operational improvements such as SEPTA's new fare collection system. Expansion of service will be the third priority, but meaningful expansion, at least through the medium term, does not appear to be in the cards. Thus, faced with the alternative of perpetuating car-centric suburban sprawl that lacks access to public transit, DVRPC’s planners believe that focusing growth into areas that are already well served by existing infrastructure will help to reduce energy demand through more compact land-use patterns and to reduce transportation-related emissions that both cause air pollution and contribute to global climate change.

Given this backdrop, Connections 2040 would seem to offer significant opportunities to developers who are willing to take on Brownfields projects in the central cities of the greater Philadelphia region. Ultimately, the additional costs associated with these sites could compare quite favorably to the costs of building out new infrastructure and navigating regional and local planning policies for new development on greenfield parcels in the far suburbs of Philadelphia.

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This afternoon, April 16, 2013, USEPA's Office of Solid Waste and Emergency Response released for public input two draft vapor intrusion guidance documents: a general guidance for all compounds; and one focused on petroleum hydrocarbons released from underground storage tanks. The documents can be accessed at:  http://www.epa.gov/oswer/vaporintrusion. Public input must be submitted by May 24, 2013, at:  http://www.regulations.gov; docket number: EPA-HQ-RCRA-2002-0033-007.

As reported previously on this blog, our office was among those who formally petitioned USEPA, in December 2012, to release these documents for public comment on the basis that the leaked versions revealed an approach that has fundamentally changed from the last general USEPA draft from 2002.  We appreciate that OSWER has taken this important step, and we encourage all interested stakeholders to review these important documents and provide their input.  Please reach out to a member of our group if you would like to explore collaborating in this effort.

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As I train back from the second day of the Environmental Law Forum, here are some takeaways from the presentations I attended today:

·        1. The Environmental Hearing Board Roundtable session continues to be one of the most useful and entertaining sessions at the Forum. 

The five judges of the EHB offered pointers and procedural insights on practice before the Board, covering the pre-hearing phase and the hearing itself. One particularly interesting discussion related to what seems to be an uptick (perhaps driven by Marcellus Shale appeals) in party requests to designate discovery materials, and sometimes motion exhibits, as confidential business information (CBI). The judges are very cognizant of the balance to be struck between protection of documents that fit within the scope of the CBI rules on the one hand, and the public interest in open and transparent proceedings on the other. The panel’s general sense was that even when the parties to the appeal jointly request CBI designation, the Board cannot simply defer to the parties’ characterization, but must take a hard look at the materials to ensure they truly are CBI.

·         2. Water quality, air quality, and mining cases are driving the most appeals that come before the EHB, with oil and gas matters not far behind.

It’s not surprising to see water quality and mining at the top of the list, as they are two areas in which statutory fee shifting provisions exist, making appeals in these areas attractive to third party community groups or environmental organizations. 

·         3. Keep your eyes peeled for revisions to the EHB Rules.

Draft rules are now wending their way through final state agency reviews before publication in the Pennsylvania Bulletin. The revisions will cover the EHB’s move to mandatory electronic filing (other than for Notices of Appeal, which may be filed electronically or in hard copy); clarification of the timing of responses to dispositive motions in third party appeals; and the deletion of outdated rules that pertain to the Pennsylvania Costs Act, which lapsed in 2007. The proposed rules could be published within the next month, and would become effective later this year.

·         4. My colleague Phil Hinerman’s Insider’s Guide to the Pennsylvania Environmental Hearing Board is an indispensable resource for practitioners.

Phil’s EHB practice guide got a nice shout-out from the panelists in the Skills session on Appeals.

·         5. Even state practitioners would do well to sit in on the annual session led by Temple Law Professor Todd Aagaard and Widener Law Professor Jim May on Federal Environmental Decisions.

Todd and Jim engagingly summarized a variety of federal appeals court and U.S. Supreme Court decisions from the past year, and drew out trends and analysis with applicability to Pennsylvania environmental law, such as the 6^th Circuit’s recent decision in the Summit Petroleum case defining adjacency for purposes of aggregation of air sources, which litigants have already sought to rely upon in litigation pending before the EHB.

As usual, on top of the great programming that the Forum puts on every year, it was great to see former colleagues and old friends, and to meet new friends. Thanks to the organizers, course planners, and faculty.

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As indicated in a recent post, ASTM International has developed a revision of the Phase I protocol, Standard Practice for Environmental Assessments: Phase I Environmental Site Assessment Process (“E 1527‑05”) that will be issued this year.

A topic being heatedly discussed, especially by consultants, is whether the revised E 1527 will require vapor intrusion evaluation or a vapor encroachment analysis under ASTM's E 2600-10, Standard Guide for Vapor Encroachment Screening on Property Involved in Real Estate Transactions.  The answer on both accounts is "no." 

A better question is whether the significant scientific and regulatory developments related to vapor migration and intrusion in many jurisdictions should already be informing professional judgments of environmental professionals performing Phase I environmental site assessments under the existing E 1527-05.  The answer to this question, in my view, is "yes."

Vapor intrusion evaluations are well beyond the level of information and analysis that takes place in a Phase I. Speculating about whether chemical vapors are entering buildings should not be part of a Phase I report. This is the reason that ASTM's E 2600-08, Standard Practice for Vapor Intrusion Assessment  (which used Phase I-type information to presume that vapor intrusion was occurring at a target property) needed to be thrown out. 

ASTM's replacement document, the E 2600-10 Standard Guide for Vapor Encroachment is purposefully not a Standard Practice.  The E 2600-10 Guide itself expressly states that it is not part of all appropriate inquiries or of the performance of a Phase I under E 1527-05.  I was a primary author of the Legal Appendix published with E 2600-10.  Why I was involved in the process, and yet don't recommend E 2600-10 to clients, is a separate topic that relates to strong resistance to withdrawing E 2600-08 without a replacement document, and, for example, the fact that search distances in E 2600-10 don't meet the requirements of E 1527-05.    

On the other hand, there is nothing in the existing E 1527-05 (or coming in the revision) that carves the presence of hazardous substances in vapor form out of the definition of a recognized environmental condition ("REC") (nor anything that carves vapors out of the scope of AAI or CERCLA jurisdiction). The growing understanding of how volatile chemicals move in the subsurface should inform environmental professionals' judgments about whether hazardous substances are likely present at a target property in making Phase I REC determinations; the developing science, regulations and guidance on vapor intrusion may need to be considered by the environmental professional when he or she determines whether the presence of a volatile chemical in the subsurface of the property can be considered de minimis. 

Having said all of this, when an environmental professional has determined that volatiles are likely present at the target property in the groundwater (or soil) above de minimis levels, that condition is the REC, and there is no justification or need for the environmental professional to speculate further about the vapor pathway in the Phase I report.  Evaluation of that pathway is beyond Phase I, as is complete delineation of the extent of any other REC.

To me, it seems that it should be a rare case where a consultant can, on Phase I type information, support a determination that a hazardous volatile is likely present in soil gas of the target above de minimis levels based solely on vapor movement (independent of groundwater movement) from an offsite release. In other words, the 'vapor only' REC is theoretically possible, but should be practically rare, and nothing in AAI or E 1527-05 justifies speculation or requires sampling.

Because there is and will continue to be confusion on this topic, it is important to make sure that you are on the same page with any consultant you hire for a Phase I, especially for brownfield properties.  Note especially that a consultant who inserts a statement disclaiming any consideration of vapors in the Phase I assessment may generate a Phase I report that does not satisfy all appropriate inquiries.

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A Task Group within ASTM International has developed a revision of its ubiquitous Phase I protocol, Standard Practice for Environmental Assessments: Phase I Environmental Site Assessment Process (“E 1527‑05”). The revision is currently under review by USEPA and will be issued this year.

I participated in the revision as the leader of a Focus Group that developed a clarified definition of recognized environmental condition, the core term that defines the focus of a Phase I environmental site assessment.

We developed the revision by reducing the existing definition to its essential elements (in light of the requirements for all appropriate inquiries under the federal Superfund law):

The presence or likely presence of a hazardous substance (or petroleum) at the property

1) due to a release or spill to the external environment; or

2) under conditions that pose a material threat of a future release or spill to the external environment.

Of course, a de minimis condition is not a REC. To constitute a REC, a condition must present a risk to people or the environment, or require clean-up or trigger enforcement, if it were brought to agency attention.

Note: this revised definition clarifies the existing one; it does not change its meaning.

We expect to further address this clarification, as well as the significance of other revisions, in subsequent blogs.

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Earlier this month, the Pennsylvania Senate Environment Resources and Energy Committee took up Senate Bill No. 411, designed to foster the use of mine influenced water for hydraulic fracturing and other gas well development. The bill, originally proposed by Senator Richard Kasunic, was unanimously approved by the committee and can now move on to the full Senate.

The bill would amend Pennsylvania’s Environmental Good Samaritan Act (the “Act”) in several respects:

• By expanding or adding definitions under the Act to make clear that projects that withdraw, divert, and use mine influenced waters for fracking or other gas well development, industrial or other water supply, or other beneficial uses, with and in some cases without treatment, are eligible for the protections of the Act;
• By expanding the scope of immunity afforded under the Act to include such projects, as well as limiting the legal liability of landowners, mine operators, and water pollution abatement project operators involved in treating mine influenced water from such projects for any costs, injury or damages resulting from the approved uses;
• By exempting the operators and backers of such projects from certain requirements or liabilities under the Surface Mining Conservation and Reclamation Act, the Hazardous Sites Cleanup Act, the Solid Waste Management Act, and the Clean Streams Law; and
• By modifying existing exceptions to the immunity afforded under the Act to clarify that those exceptions would not apply to those who use, allow the use of, or provide mine influenced waters as part of a water pollution abatement project for fracking or other gas well development, industrial or other water supply, or other beneficial uses.

S.B. 411 still has a long way to go before it, or some further amended version, winds up on the Governor’s desk. But on the heels of PA DEP’s recent White Paper (PDF), which I blogged about last month, it appears that the use of mine influenced waters in fracking and gas well development has bipartisan traction in the state Senate. We will continue monitoring the bill and will provide further updates as the legislative process unfolds.

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Updating my November 28, 2012 post, the Department is in the process of finalizing updated guidance for its policy covering public participation in the permit review process. The existing policy, Document ID 012-0900-003 (PDF copy here), was last updated in July 2005. At the February 5, 2013 meeting of the Environmental Justice Advisory Board, staff from the Department’s Policy Office briefed the members of the EJAB and other attendees on the upcoming revised guidance, which the Department expects will be published for public comment around the end of February 2013. Some highlights of the presentation:

• The update will remove outdated references, such as to the old Money-Back Guarantee Program, and will clarify policies in an effort to achieve consistency across the regional offices.
• The update will emphasize the actual elements of public participation as opposed to internal Department procedures supporting public participation.
• Other goals include:
  • improving efficiency in the permitting process while honoring the requirements of public participation;
  • clarifying the types of public participation available for particular actions;
  • clarifying DEP’s role at public information meetings and public hearings;
  • clarifying when it is appropriate to schedule a hearing or other applicable public participation meeting;
  • establishing standards for conduct at public informational meetings and public hearings (addressing such things as time management; fairness issues; use of demonstrative exhibits, props and signs; disruptive behavior; and public safety issues);
  • to the extent possible, harmonizing the elements of and requirements for public participation across the relevant environmental statutes.

Note that the updated guidance expected at the end of the month will address only the public participation policy that is applicable to Department permits or plan approvals with a public comment process (the policy does not apply to Notices of Intent for coverage under general permits or to permits by rule). An update to the separate Enhanced Public Participation Policy for Environmental Justice (EJ) communities (PDF copy here) is still several months away from being ready for public comment. I’ll update the blog as each of the updated policies are released for comment, and I encourage those of you who interact with the Department on permits to submit your input on the policies as proposed.

Finally, in another follow-up to my November 28, 2012 post, the EJAB members were also advised at our February meeting that the Department’s eMap PA online map application has been updated with 2010 Census data. The new data resulted in the designation of 185 additional census tracts in the Commonwealth as EJ Areas. If you have a project proposed in an area that might fall within the eligibility criteria for an EJ Area, I encourage you to check eMap PA and to review the existing EJ Public Participation Policy.

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In December 2012 we reported on some of the challenges created by the vapor intrusion pathway under the Act 2 brownfields program in Vapor Intrusion and Act 2 – Imperfect Together. This is an update. 

On January 29, 2013, the Department convened a meeting of the vapor intrusion subcommittee of the Cleanup Standards Scientific Advisory Board at the Rachel Carson Building in Harrisburg. We reviewed and discussed a proposal from the Department for how vapor intrusion could be managed under a Statewide Health Standard (“SHS”) clean-up and possible paths forward to update the existing guidance. The meeting included worthwhile discussion on number of aspects of this difficult subject. 

If nothing else, our discussions brought into sharp focus the biggest challenges the CSSAB and Department face in revising the vapor intrusion guidance:

1.         Soil gas samples. Given growing concern about the reliability of soil gas samples taken from outside the footprint of an existing building (see recent NJ 2013 VI Technical Guidance treatment of this issue, Section 3.3.2, Alternative Soil Gas Sampling), whether near-building and “exterior” soil vapor sampling can and should play a role in evaluation of the vapor intrusion pathway.

2.         Future development. Especially in light of the concern noted above about the reliability of exterior soil gas sampling, how to establish a SHS mechanism for vapor intrusion analysis for sites (and parts of sites) that do not yet contain buildings to prevent vapor intrusion analysis for future development from undermining the certainty of an Act 2 release of liability.

3.         Screening values for indoor air, ground water, soil gas, sub-slab soil gas and/or soil. 

-- On what basis to establish appropriate screening values for groundwater and subslab soil gas that are protective but not overly conservative? Is Johnson-Ettinger still the appropriate model to use?

-- How to make screening values established from modeling more relevant and useful for a wider range of sites where, e.g.,  soil types or depths to contaminant may differ from the model’s assumptions.

-- How to mitigate effects on existing releases of liability when revised screening values are established that likely will differ by orders of magnitude from the values in the 2004 guidance.

-- Whether meaningful screening values can be established for soil sample results, or whether any amount of volatiles in soil samples could justify further steps to evaluate the vapor pathway even in the SHS context.

-- Whether to use the existing DEP toxicity values or the IRIS values set by the United States Environmental Protection Agency in calculating screening values.

4.         Timing. The Department is anxious to move forward with guidance for SHS clean-ups. There was considerable sentiment within the subcommittee that the current 2004 guidance, in particular the screening values in that guidance, needed to be updated as soon as reasonably possible. However, one consideration is that USEPA has not issued a revision of its 2002 vapor intrusion guidance (initially targeted for November of 2012) and some interested parties, including our office, have submitted formal requests urging that USEPA issue its fundamentally rewritten guidance as a draft for public comment before issuance of a final document. 

The Department and the subcommittee will be working through each of the these issues as we move toward revised guidance in the coming year. The full CSSAB meetings for 2013  are set at the moment for April 11, 2013 and October 23, 2013. 

If you have questions, insights or concerns please let us know.  We will keep you posted here.

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For the past several months, PADEP has been working internally and with stakeholders to develop policy supporting the use of mine influenced waters (“MIW”) in the natural gas extraction process — that is, using acid mine drainage and mine pool water, from Pennsylvania’s long history of coal mining, for fracking. The concept is that the impacted mine waters, which typically require treatment before discharge to surface waters, could serve as a substitute for the natural gas extraction industry’s withdrawal of millions of gallons of water from the same freshwater sources that also support aquatic life, our drinking water, and recreational uses. If workable and done safely, it’s a clear win-win — the gas extractors can use MIW that is already plentiful but has no higher use absent expensive long-term treatment, while preserving the Commonwealth’s natural resources.

Last week, PA DEP released a white paper entitled “Utilization of Mine Influenced Water for Natural Gas Extraction Activities” (the “White Paper”; link is to PDF). The document attempts to address storage and liability issues, which, if left unresolved, would significantly increase the legal risk and lower the economic incentive for transporting and using MIW. The White Paper also provides procedural guidance for those seeking to submit proposals to use acid mine drainage waters in the development of gas wells.

The storage options covered by the White Paper either would require new permitting, or might involve modification of existing well permits and Water Management Plans. One option, known as nonjurisdictional impoundment, would also require showings that the MIW (a) will not result in water pollution and (b) meets a specified set of parameters based upon EPA’s NPDES standards for mine drainage (measured at the source, prior to storage). The other storage options cited in the White Paper would not require that the MIW meet such parameters.

The White Paper’s proposed long-term liability solutions are somewhat more limited. The challenge for expanding the use of MIW into fracking applications is that Pennsylvania’s Clean Streams Law has been interpreted by state courts to impose long-term treatment obligations on those who pump water from abandoned mine pools and thereby create a discharge. As the White Paper notes, long-term treatment of MIW is expensive and labor- and capital-intensive.  So PADEP offers two options for users of MIW for fracking to limit their liability under current law and policy: First, some operators could structure their project to fit within the scope of the Environmental Good Samaritan Act, which provides fairly broad protection from civil liability under state law to certain eligible parties for projects involving treatment of MIW, with specified exceptions. Second, PADEP could enter a Consent Order and Agreement with the MIW user under which the Department would agree not to hold the user liable for long-term treatment obligations, so long as the user meets project-specific conditions. 

The CO&A would theoretically limit the user’s liability to the state, but would not address civil liability to third parties. For the user who cannot meet the requirements of the Environmental Good Samaritan Act, though, a CO&A may be the next best available option to protect against at least the long-term treatment liability that could otherwise attach. In some circumstances, a belt-and-suspenders approach that employs both the Environmental Good Samaritan Act and a CO&A might make sense. In any case, early communications with PADEP's program staff will be critical. Natural gas extractors who are considering MIW projects should consult environmental counsel to discuss how to take full advantage of the available protections against liability under Pennsylvania law and how best to navigate the process within PADEP.

Looking to the future, PADEP notes that it might be appropriate to develop a general permit covering the use of MIW for fracking, or even to rework its oil and gas regulations in a way that would directly address the issue. Importantly, the MIW policy appears to have earned support across a wide spectrum of stakeholders, from the oil and gas industry to environmental organizations. Indeed, the White Paper expressly envisions the creation of partnerships between industry and watershed groups to help foster MIW uses. Time will tell whether the mechanisms and options set forth in the White Paper will help promote this new use for impaired mine discharges, or whether further regulatory or legislative actions will be necessary for the concept to reach its full potential.

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The TMDL regulatory scheme is taking hold in many sectors of our country. In fact, even the wine growing industry in Napa and Sonoma Valleys are being impacted by proposed regulations.  If interested (and yes, Pennsylvania has a growing wine industry too), see Philip Hinerman's recent post at Fox Rothschild's Legal Tastings blog.  

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Brownfield developers have been living with the Uniform Environmental Covenants Act (UECA) in Pennsylvania since it became effective in February 2008.  At the time it became effective, we all knew that it required that deed restrictions put in place prior to February 18, 2008 would have to be converted to UECA environmental covenants (ECs) five years down the road.  Well, February 18, 2013 is now almost upon us, and as far as I can tell, no one is doing much to prepare for that date.  Like everything else, there are two strategies that can be pursued.  Property owners can be proactive or they can sit around and wait for something bad to happen.  I'm in the camp that thinks that property owners should be proactive when it comes to the UECA conversion requirement.

Here is what property owners should be doing to address the upcoming deadline.  First, anyone who currently owns one or more brownfield sites in Pennsylvania should be taking an inventory of those sites and determining whether any of those sites have deed restrictions containing activity and use limitations that were put in place prior to February 18, 2008.  You can figure that out by looking at the deed.  An activity and use limitation that would subject the property to the UECA conversion requirement is any kind of engineering or institutional control put in place in order to demonstrate attainment or maintenance of an Act 2 standard or to demonstrate satisfaction of a corrective action requirement under the Storage Tank Act.  So, for example, say you completed an Act 2 site remediation at a brownfield site in 2005 and you demonstrated attainment of the Site Specific Standard by putting a cap (asphalt parking or a building) in place over some contaminated soil.  Prior to UECA, the remediator would put a deed restriction in the deed imposing that engineering control on the property, which would identify the location of the contaminated soil and cap and require the property owner to maintain the cap.  Now, under UECA, the current owner of that property would be obligated to take action to address the requirement that those prior existing deed restrictions be converted to a UECA covenant on or before February 18, 2013. 

Does that mean that anyone with a such a deed restriction, as noted above, needs to quickly put together an UECA covenant and get it into PADEP before February 18, 2013?  The answer is no.  Subsequent to UECA's signing, PADEP adopted regulations at 25 Pa. Code Chapter 253 that implement UECA.  Section 253.10 deals with the conversion requirement.  In the regulations, the Department opened up a giant loophole to the conversion requirement by allowing property owners who otherwise would have to convert their deed restriction to a UECA covenant to simply send in a letter and request a waiver of the conversion requirement "until the property is transferred to a new owner."  Thus, the simplest thing for property owners to do is to send in a written request for the waiver sometime before February 18, 2013.  That would postpone the need to impose a UECA covenant until such time that the property is sold.  One requirement to be aware of is that when a written request for a waiver is filed, the property owner must include proof that the deed restriction was previously recorded.   In addition to the option of requesting a waiver, property owners could just go ahead and prepare a UECA covenant and submit it to PADEP prior to February 18, 2013, if they just wanted to get it over with. 

One thing to keep in mind is that the Department cannot impose any additional restrictions in the environmental covenant that aren't in the existing deed restriction that is being converted.  So, for example, most deed restrictions don't include any requirement to perform periodic compliance monitoring or file annual reports with PADEP.  UECA covenants, however, typically include language in Section 7 (found in the model EC on PADEP's website) that impose compliance monitoring requirements.   A deed restriction converted to an UECA covenant should not have a monitoring requirement unless it's in the original deed restriction.   That comes straight out of Section 253.10(b) which states: "The Department will not require, but may allow" an EC to contain restrictions or requirements not contained in the existing deed restriction.  

How is failure to comply with the UECA conversion requirement likely to come up in the real world?  Here is how I see it coming up.  Let's say you have a property transaction involving a brownfield site that occurs after February 18, 2013.  Let's assume you are representing the seller.  The buyer asks to see the deed or gets a title report and they determine that a deed restriction was imposed on the property back in 2005 as part of an Act 2 cleanup.  The deed restriction wasn't converted to an EC and no written waiver was requested.  Arguably, this is a violation of UECA, and under the language of most asset purchase agreements, this would constitute a breach of the covenant to comply with law.  What if the lender or the buyer says that they won't close until that breach is remedied?  Now, you've got to delay your closing while the seller or the seller's counsel prepares an environmental covenant and submits it to PADEP for review and approval.  That could take several weeks or longer.  If the deed restriction had already been converted to an EC, there'd be no delay.  Question -- what's the likelihood in that scenario that PADEP would seek to impose fines or penalties on the seller for its failure to comply with UECA?  I think the likelihood would be very low.  First, UECA has an enforcement provision but it doesn't include seeking monetary fines or penalties.  Second, this really isn't a high priority for the Department's enforcement efforts.  There is no environmental harm from the failure to convert a deed restriction to an EC.  The deed restriction still exists.  It's really just a paperwork violation, and nothing more.

Before I wrote this entry, I called Troy Conrad in PADEP's Central Office to see what message the Department wants to get out on the conversion requirement.  Troy said we should expect to see some announcements or press releases from the Department in the near future regarding the conversion requirement.  They are encouraging property owners to apply for the written waivers that were made available by the UECA regulations.  While the Department does plan to enforce the requirement, Troy acknowledged that it would be very expensive and time consuming for the Department, on its own, to figure out what properties have deed restrictions subject to the conversion requirement.   As a result, it's really in the Department's interests for property owners to be proactive and apply for the waivers and then convert to ECs when those properties are sold.  According to Troy, when PADEP grants a waiver request, it will put that information into the UECA registry, so the information is then publicly available and searchable on PADEP's website.  Troy also suggested that property owners carefully consider whether the activity and use limitations imposed on a property even require a UECA covenant.  He made a good point in noting that deed acknowledgments and deed notices don't necessarily trigger the conversion requirement (such as those required under HSCA or SWMA) and that you need to take a careful look at how the regulations define "instrument", since only "instruments" are subject to the conversion requirement.   I think that's very sound advice.   Troy also suggested that if anyone has any general questions about the conversion requirement, they can send in a question to Central Office, since the land recycling program still has a Q&A section on its webpage.    For questions about specific sites, he suggested the property owner contact the respective PADEP regional office ECP program staff for those clarifications.   Troy said there's been no flood of waiver requests or UECA conversions, so it's likely that people are still considering their options or just haven't focused on the requirement.

As noted above,  I'd recommend that brownfield property owners be proactive when it comes to the UECA conversion requirement.  That involves looking at property deeds, determining whether those deeds contain deed restrictions that would be covered by the UECA conversion requirement, and applying for written waivers.  Under Section 253.7, an UECA covenant ordinarily requires a $500 fee, but fees are not required for EC's or waiver requests submitted under Section 253.10, provided the person submitting the EC or waiver request did not cause or contribute to the contamination.    

It's really amazing how quickly those five years flew by.   

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The year comes to a close today with the Pennsylvania Supreme Court having yet to rule on the constitutionality of Act 13’s provisions concerning the ability of municipalities to control Marcellus Shale development through local zoning rules (those provisions were overturned by the Commonwealth Court in a closely divided decision in July 2012).  Despite the legal uncertainties that remain, 2012 saw significant growth of the unconventional gas industry in Pennsylvania:

• Pennsylvania is now reportedly second only to Texas in number of workers employed in the unconventional oil and gas industry, although that number likely includes some non-permanent residents who moved to PA for work in the industry. 

• Marcellus Shale wells in Pennsylvania and West Virginia now account for about 25 percent of all U.S. shale gas production, nearly double the production reported for the Marcellus play in 2011. 

Last week saw the release of the U.S. Environmental Protection Agency’s progress report on its research studies into water use in hydraulic fracturing operations. EPA – relying in part on data from Pennsylvania drilling sites and waterways – is looking specifically at the following research questions:

1. What are the possible impacts of large volume water withdrawals from ground and surface waters on drinking water resources?

2. What are the possible impacts of surface spills on or near well pads of hydraulic fracturing fluids on drinking water resources?

3. What are the possible impacts of the well injection and fracturing process on drinking water resources?

4. What are the possible impacts of surface spills on or near well pads of flowback and produced water on drinking water resources?

5. What are the possible impacts of inadequate treatment of hydraulic fracturing wastewaters on drinking water resources?

EPA is expected to release its conclusions in a final report in 2014.

Last week also brought the expected news that current EPA Administrator Lisa P. Jackson will step down once President Obama’s second term begins. As speculation builds about the President’s nominee for the EPA’s top spot, I anticipate that – even though most regulation of unconventional gas operations occurs at the state level – the agency’s direction on the regulation of hydraulic fracturing and other aspects of unconventional oil and gas development will be a significant issue when the U.S. Senate holds confirmation hearings for the new Administrator in early 2013.

This raises an intriguing question: would a nominee from outside the EPA’s current management structure, particularly one experienced with Marcellus Shale development, find an easier path to confirmation in the newly seated Senate than someone from within the agency? That may depend on how difficult a confirmation battle the Obama Administration is prepared to support, in a second-term environment in which even rumored nominees for the top spots at the Departments of State and Defense have found themselves the subject of strong opposition.

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The Pennsylvania Environmental Hearing Board is proposing amendments to its Rules of Practice and Procedure to keep it in step with most county and federal courts in the Commonwealth.  At long last, the EHB is adopting a mandatory electronic filing process.  In the past, the EHB judges would discuss electronic filing in their initial case management orders.  Now, electronic filing of pleadings will be mandatory, unless specific exceptions are given on a case by case basis.

One of the biggest changes is that notices of appeal may now be filed either electronically or by the conventional methods.  In the past, notices of appeal were ONLY allowed to be filed by conventional fax or mail. 

The EHB was also able to address the issue of electronic filings under seal.  There will be a  provision allowing documents to be filed under seal, with appropriate indications during the electronic filing.  Documents under seal will only be reviewed by Board personnel and the parties to the case.

Electronic filing enlarges the filing time to midnight of the day the filing is due.  A confirmation of the filing will follow that will include the date and time the document was received.  For purposes of calculating responses to the electronic filing, documents filed after 4:30 will be considered filed on same day as received, but considered served on the next business day.

Other rule changes address responses to dispositive motions.  In the past, there was confusion when a party to the EHB proceeding wanted to file a “me too” companion motion, but asserted new facts in its motion.  If  one party filed a motion and another party wanted to join the motion, there was normally no problem.  However, if the joining party wants to file a companion motion that asserts new facts, it was unclear under the old rules whether the response time for the new filing was governed by the original motion’s date of filing or the second motion’s date.  The new rule clarifies this and states that parties who wish to file a motion asserting additional facts or legal theories must file within 15 days of the original dispositive motion.  Opposing parties then receive an additional 30 days to respond to the second motion. 

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On December 5, 2012, US EPA issued a “Revised Enforcement Guidance Regarding the Treatment of Tenants under the CERCLA Bona Fide Prospective Purchaser Provision.”  US EPA undertook this effort to encourage reuse of contaminated properties for renewable energy development. However, the updated guidance is broad enough to apply to other tenant situations and may justify consideration of "all appropriate inquiries" in more lease situations.

The problem that US EPA is trying to address with this guidance is that a key Superfund 'landowner liability protection' (think limited and conditioned defense to liability) – for bona fide prospective purchasers (42 USC §§ 9601(40), 9607(q)(1)(C) and 9607(r)(1)), which provides a defense even where an acquirer knows of the existence of contamination at the time of acquisition – is not available to those who lease contaminated property unless the tenant’s landlord meets the requirements of the defense. In other words, according to the language of CERCLA itself, a tenant’s bona fide prospective purchaser defense must be derived from the defense of an eligible landowner.

This can be an obstacle to attracting renewable energy projects to contaminated properties. Most renewable energy project developers do not want to buy contaminated land. They do, however, need sufficient rights in the property developed to justify and secure the significant financial investment that will be needed, for example, to put a solar farm on a closed and capped landfill. A lease with a term tailored to the project’s horizon may provide the right balance and allow the developer to ensure that it is not stuck owning unwanted land and potential liability when the project has run its course. 

Under the revised policy issued last week, US EPA indicates that it will use its enforcement discretion not to pursue a tenant that meets the criteria of the bona fide prospective purchaser defense (including for example, conducting a pre-lease Phase I) even though the tenant is not a itself a “purchaser,” and even where the tenant’s landlord is not eligible for the defense, for example, because he or she owned the property when disposal occurred there.

This may help get more solar farms on more closed landfills (or other renewable energy projects at contaminated sites), which is a very good idea for a number of reasons, including the long term security and operation and management of the property. First, though, the basic economics of the project must be strong enough to overcome the inherent complications and associated additional time and costs, as well as lingering risks, involved in building on land where significant contamination remains. With strong fundamental project economics, the additional costs and lingering risks can be managed. US EPA’s sincere, though much conditioned, message in this revised guidance that it will be reluctant to pursue such developers will help.  For more on US EPA’s encouragement of the development of renewable energy projects on contaminated sites see Re-Powering America’s Land. 

Of course, any potential liability under Pennsylvania’s or other state’s law would also need to be sorted through as well.    In that regard, it is worth noting that Act 2 releases of liability can extend to a person “who develops or otherwise occupies the identified site.” See 35 P.S. §6026.501(a)(2). 

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