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

Act 2 has been around for over twelve years now and yet there are only a small handful of Environmental Hearing Board (EHB or Board) cases that address Act 2 issues.  The EHB is the administrative board that hears appeals of final actions taken by PADEP.  Earlier this month, the EHB issued a decision in Citizens Advocates United to Safeguard the Environment, Inc. (CAUSE) v. DEP, Hazleton Redevelopment Authority and Hazleton Creek Properties, EHB Docket No. 2006-005-L (Nov. 2, 2007) that addressed, among other things, an interesting aspect of the interface between Act 2 and the Solid Waste Management Act.

The CAUSE v. DEP case involved a 277 acre property in Hazleton that had a history of strip mining, deep mining, and waste disposal activities.  There was a former unlined municipal dump on site that covered 55 acres.   In 2004, PADEP issued general permit (GP) WMGR085 to Lehigh Coal and Navigation for the processing and beneficial reuse of residual waste, consisting of dredge material, cement kiln dust, lime kiln dust, coal ash and cogeneration ash, at the Springdale Pit in Schuylkill and Carbon Counties.  Hazleton Creek Properties (HCP) filed a Determination of Applicability for authorization to use GP WMGR085 to bring an estimated 10,000,000 cubic yards of the same residual waste mixture to the Hazleton property.  The Department published notice of its approval of the DOA on October 22, 2005 and CAUSE appealed.  The Department and HCP subsequently entered into an Act 2 Special Industrial Area (SIA) Agreement on December 5, 2005 that addressed the Act 2 remediation of the on-site landfill, and CAUSE appealed the SIA Agreement.  

The EHB ultimately held that the Department abused its discretion in approving the use of the GP without an adequate groundwater monitoring system.  They remanded the case back to the Department for the review and approval of a revised monitoring plan.  If you read through the entire 79 page decision, you'll see that the EHB addressed a number of Act 2 issues.

The first issue addressed was the right of a third party to appeal different Act 2 approvals.   A prerequisite for entering into an SIA Agreement is the submittal of a thorough site characterization referred to as a Baseline Environmental Report (BER).  HCP argued that because CAUSE failed to appeal PADEP's approval of the BER report, it had no right to raise any issues relating to the scope and performance of the investigations contained in the BER in appealing the SIA Agreement.  The EHB noted that Section 308 of Act 2 gave "participants in the Act 2 process" the right to appeal decisions of the Department throughout each phase of the process, but that appeal right did not extend to third parties.  A third party would still be required to prove that it had standing to appeal the action.  In the case of a BER, the EHB correctly noted that the Department's approval of the BER did not authorize HCP to take any action that would affect third parties, inasmuch as an SIA Agreement was statutorily required before HCP could take any action pursuant to the findings in the BER.  As the EHB ruled, "the [SIA Agreement] was clearly appealable by CAUSE, the BER approval almost certainly was not."  In practical terms, the EHB's ruling can be read to say that third parties do not have the right to appeal PADEP approvals of Act 2 site characterization reports (like an RIR that is approved as part of a site specific cleanup) because they don't authorize the remediator to take any specific action.   The approval of a cleanup plan or a Consent Order and Agreement (as is the case of a buyer-seller agreement or SIA agreement), which do allow a remediator to take specific action at a site, can be appealed by a third party to the extent they can meet the standing requirement and show how the approval adversely affects their interests. 

Second, the decision addressed the interface between Act 2 and the Solid Waste Management Act.  In order to get an SIA Agreement approved under Act 2, a BER must be performed that characterizes the extent of soil and groundwater contamination at the property.  The EHB found that the BER submitted by HCP included a groundwater investigation that "was adequate for designing an Act 2 remedy based in part on site specific standards for the landfills on site."  In other words, it was good enough to show that capping the on-site municipal dump with two feet of material would not have an adverse effect on the groundwater effected by the Act 2 remedy.  The General Permit, however, authorized HCP to do much more than just cap the 55 acre on-site dump (the Act 2 cleanup), it allowed them to reclaim the entire site (the cleanup done under the Solid Waste Management Act).  The GP, which was issued pursuant to the Solid Waste Management Act, imposed a separate groundwater monitoring requirement on HCP.  At a minimum, the EHB said, that monitoring system "must be capable of detecting the off-site migration of significant levels of contaminants."  Most importantly, the EHB noted that "[a] groundwater investigation suitable for one purpose may not be adequate for another."  While HCP's groundwater investigation was adequate for designing an Act 2 remedy, it was "not sufficient to support bringing 10 million cubic yards of new waste mixtures onto the site" pursuant to the GP issued in accordance with the Solid Waste Management Act.  

The CAUSE v. DEP case is interesting because it touches on an Act 2/SWMA interface issue that isn't really addressed in the Act 2 Technical Guidance Manual, namely the use of a GP at an Act 2 site.  The TGM has several pages that discuss the relationship between Act 2 and facilities regulated under the Solid Waste Management Act.  That information has been very helpful to remediators that need to understand the requirements for addressing Act 2 sites with former waste disposal areas.  As discussed above, the CAUSE v. DEP case addresses a situation involving the use of a SWMA General Permit at an Act 2 site.  If HCP never filed a DOA to use a general permit, the issue of the adequacy of the groundwater investigation under Act 2 versus a groundwater monitoring plan required under the SWMA would never have come up.   In many instances, an Act 2 remediator can and should be able to remediate a site without the need of a General Permit that imposes a going forward groundwater monitoring requirement.   Moreover, in certain circumstances, the permit requirement can be waived under Section 902 of Act 2.

The CAUSE v. DEP case will cause remediators to think very carefully before they decide to use a SWMA general permit at an Act 2 site.  They need to ask themselves whether that GP imposes a groundwater monitoring requirement over and above what is required by Act 2.  If it does, can they design a groundwater monitoring system that would satisfy the requirements identified by the EHB (e.g., a "meaningful monitoring system" capable of providing early warning)?  Or would such a system be so potentially difficult to devise and expensive, as to lead the remediator to stick with just remediating a portion of the site under Act 2 and foregoing the additional remediation that would need to be done pursuant to the GP?   It may be that the groundwater monitoring issue only becomes significant at a site like the one in Hazleton, which the EHB referred to as "extremely complex", involving a 10 million cubic yard beneficial reuse project within city limits.  With that said, I urge everyone to read the entire CAUSE v. DEP decision.  The Board had many interesting things to say about the Department's increasing use of General Permits, including the thought that perhaps "[t]he Department should be wary of carrying a good thing too far."  

A Happy Thanksgiving to all.

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I came across an interesting case in Massachusetts in which a judge declared a lease for a brownfield site invalid because the landlord failed to include the proper notice of the relevant land use restrictions required by that state's Brownfields Act.   I haven't seen a similar case in Pennsylvania, but I don't see why the same logic couldn't be applied to an Act 2 site in which the seller failed to provide proper notice of the required deed restriction.  Here's a summary of the case.

The case is Cummings Properties, LLC v. Massachusetts General Physicians Organization, and the decision was issued by the Massachusetts Superior Court on October 2, 2007.  A copy can be found on Westlaw at 2007 WL 3261299.  In this case, the owner of a property at 10-P Commerce Way in Woburn, Massachusetts executed a Notice of Activity and Use Limitation (referred to as an AUL) on the property in 1996, as required under Massachusetts Chapter 21E.  The AUL was prepared and recorded in lieu of removing certain hazardous substances found in the soil and the groundwater.  The AUL recorded in 1996 expressly permitted the property to be used for "office, industrial, commercial, retail, hotel/lodging, warehouse, healthcare, and research and development."  In 2002, the Massachusetts DEP audited the property under the State's Brownfields Act and required that the owner amend the AUL to expressly prohibit "child care, day care and residential purposes."  

Several years later, in June of 2005, the Massachusetts General Physicians Organization (MGPO) contacted the property owner with a request for proposal to lease space to house its LADDERS program, which provides medical and therapeutic care for children with autism and related disorders.  The property owner owned several properties in the area under consideration by MGPO.  A lease was prepared for one of those properties, 10 Gill Street in Woburn, Massachusetts.  The lease included a rider which contained the AUL deed restrictions that were applicable to 10-P Commerce Way.  The lawyer for MGPO deleted the AUL language from the lease, because it didn't apply to the property at 10 Gill Street.  There was a delay in negotiations between the property owner and MGPO, and the property owner decided to lease the property to another party.   The property owner then suggested that MGPO could lease a different property that it owned, 10-P Commerce Way, on the same economic terms as previously provided for 10 Gill Street, and MGPO agreed to that.  A new lease was presented, and for some unknown reason, most likely mistake, the AUL applicable to 10-P Commerce Way, was not included in the lease presented to MGPO.  The parties went on to execute the lease without the required AUL.

There was a build-out required to get the property ready for MGPO.  Sometime after the lease was signed and before MGPO was scheduled to take occupancy, the property owner realized that the reference to the AUL (which had been deleted from the draft lease for 10 Gill Street), should have been reinserted in the lease for 10-P Commerce Way.   The attorney for the property owner then notified the attorney for MGPO of the oversight.  While MGPO was considering the implications of the AUL, the owner continued the build-out of the property.  The MGPO retained an environmental consulting firm, which provided a list of work that would need to be performed by the property owner to satisfy MGPO, including placing a geotextile barrier fabric and three feet of clean fill on all existing landscaped areas of the property.  The property owner rejected that demand and offered reassurances that the building had been in existence for 20 years with no problems, that DEP itself had been a prior tenant, and it made a wager that the soil at the site was "cleaner than that in front of Massachusetts General Hospital itself."  At that point, MGPO decided the 10-P Commerce Way site was a no-go.  The property owner notified MGPO that it had spent almost $600,000 building out the site to MGPO's specifications and that it expected to be reimbursed.  MGPO refused to make payment, saying that it never would have signed the lease had it known of the AUL.  At that point, the property owner sued and MGPO countered by saying the lease should be declared void for the owner's failure to incorporate the AUL as required by Massachusetts law.

The court agreed with MGPO and held that the lease was void and against public policy because it failed to include the Notice of Activity and Use Limitation as required by Massachusetts DEP and the Massachusetts Brownfields Act.   First, it found that Massachusetts had established a comprehensive regulatory program for remediating contaminated properties.  Second, it found that an integral part of that regulatory program was the requirement that "deeds, leases and other instruments of transfer" incorporate the required AUL explicitly or by reference.   Third, it concluded that the lease signed by the parties did not reference the AUL, so Massachusetts law was, in fact, violated.  Notwithstanding the fact that MGPO's intended use of the property (as a health care facility) would have been permitted under the AUL,  the court found that the failure to include the AUL deprived MGPO of notice which would have been relevant to any potential sub-leasing or assigning of the lease.  MGPO also argued that its patients might be alarmed knowing the property was a "less-than-fully remediated brownfields site."  The court concluded that whether such concerns were well or ill-founded, the breadth of the notice requirement in the law underscored the point that MGPO had "a legal right to be informed of the AUL and to make its own decisions", and that the property owner bore the responsibility for providing that information.

Having declared the lease void, the court did not rule on the issue of whether MGPO should have to share in the costs of the build-out (because at some point it did learn of the AUL and allowed the owner to continue the build out ).  It said that issue presented a question of fact beyond the bounds of the summary judgment motion that the court was asked to rule upon.  

Could a similar scenario happen in Pennsylvania?  Act 2 specifically requires that deed notices be provided for all brownfield sites that do not meet either the background or residential statewide health standard.  In addition, agreements entered into with PADEP under Act 2, such as SIA Agreements and Buyer-Seller Agreements, contain provisions requiring specific deed notices restricting future uses of the property.  In the event that such a notice was not provided, could a lessee argue that the failure to include the notice in a lease voids the relevant lease agreement?  Probably not.  Unlike in Massachusetts, there is no language in Act 2 or, for that matter in HSCA, indicating that the notice is for the benefit of lessees.  In both instances, the statutes talk about a "deed notice".  HSCA puts the responsibility for making the deed notice on a "grantor" as part of the "conveyance of property."  With that said, what about a situation in which the seller of a property failed to include the deed notice required by HSCA and Act 2?  Well, there you might find yourself in a situation similar to the Massachusetts Superior Court  looking at the facts in the MGPO case.  You'd have a comprehensive state regulatory program that governs the remediation of contaminated properties.  You'd also have state law requiring the inclusion of a deed notice for the conveyance of property that doesn't meet the background or residential statewide health standard under Act 2.   It would be possible, therefore, for a court in Pennsylvania to reach a similar conclusion (declaring a purchase agreement void) given the right factual circumstances. 

The MGPO case is a very interesting case for brownfield practitioners.  The lesson of the MGPO case is that when a state brownfield law requires that notice be provided of relevant land use restrictions, failure to provide that notice could trigger litigation and potentially undo a transaction.  It's best to always understand the relevant notice requirements and be mindful of them.       

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In my last entry, I wrote about using brownfield sites to generate solar energy.  In this post, I'd like to focus on one of the hottest topics in the field of environmental law -- green building. 

What is a green building?   According to EPA's website, "a green building" is a building that is "purposely designed to reduce both the direct and indirect environmental consequences associated with its construction, occupancy, operation, maintenance and eventual decommissioning."  The U.S. Green Building Council (which is a coalition of approximately 2000 different organizations) developed a certification system that can be used to qualify buildings as "green buildings".  The certification system,  which is referred to as LEED for Leadership in Energy and Environmental Design, uses a 69 item checklist.   A project must achieve a minimum of 26 points in order to qualify for certification.   LEED ratings range from Platinum to Certified and reflect a number of factors, including water conservation, energy use and efficiency, and use of recycled or environmentally beneficial materials. 

What kinds of design features are considered in constructing a green building?  First, of course, is the location.  According to EPA, "the most ideal site for a Green Building" is a brownfield.  Brownfields are good locations because they already have the infrastructure (sewer, water, roads) in place and are more likely to have mass transportation available.  The building should also be designed to conserve water and energy.  EZFLO faucets eliminate water waste, for example, by shutting off when they aren't in use.  Recycled materials should be used as much as possible.  For example, using waste wood fiber or recycled plastic instead of virgin wood for decks or using recycled tires or fibers for floors and carpets.  Landscaping should also be designed to utilize native plants that require minimal irrigation or pesticides to maintain.  Plants should also be used to provide shade to reduce energy costs.     

A few years ago, EPA launched its Green Buildings on Brownfields Initiative.   The Agency selected eight communities for pilot projects to encourage the use of green building techniques at brownfield properties.  At the conclusion of the pilot projects, EPA issued a fact sheet looking at the lessons learned for building green on brownfields.  The five lessons were (1) green buildings can leverage green money in that 5 of the pilots involved green buildings for non-profit organizations that used their eco-friendliness as a showcase for fundraising; (2) some pilots were successful in using green buildings to demonstrate a renewed commitment to a healthy community to replace an image resulting from a legacy of contamination; (3) education through the use of visual presentations was helpful in explaining the benefits of green building over conventional buildings; (4) establishing clear green goals early helped cut down on costly design changes; and (5) it may be challenging to find green building expertise in smaller towns and cities, but help is available.  At this point, EPA is not planning any additional Green Buildings on Brownfields pilots.  Although EPA has said it doesn't intend to issue any more pilot grants, the lessons learned by the Agency are very helpful.  

Let's think about the benefits of using green building techniques on a brownfield site.  The most obvious benefit is in marketing.  The American consumer is becoming greener by the day.  Green consumer products, such as hybrid cars, are in high demand.  Those same consumers are also corporate decision makers.  Many companies want to build an image of eco-friendliness for their customers, and one way of demonstrating that kind of commitment is to bring those customers to a green building.  The PADEP has built a number of Green buildings, including its district mining office in Ebensburg, Cambria County, which was the first in the U.S. to receive a LEED gold rating.  That office building used recycled structural steel and roofing shingles and paint and adhesives made from low or no VOC content.  It makes sense for the state environmental agency to build green buildings but what about a fast food company, like, let's say McDonald's.  Well, a new McDonald's built in Savannah, Georgia shows that even a burger shop can go green.  According to an article in QSR Magazine, the McDonald's, along with a nearby Panera's, are part of one of the country's first green certified shopping centers, called Abercorn Common.  At that shopping center, stormwater flows through porous pavement, rooftops are painted white to reflect heat, and the stores are positioned so that sunlight provides most of the lighting during the day.  The owner of the McDonald's says that he has seen real savings on his water and utility bills.  There's no need for a sprinkler system to keep the lawn green, because water from roof drains is collected for on-site irrigation.  In fact, the shopping center's owner calculated that 5.5 million gallons of rainwater is collected annually and used to irrigate the center's landscaping.   

One argument people have made against building green is that it can be more expensive than using conventional building techniques.  While it's true that up-front costs may be higher, the Green Building Council has estimated that an upfront expenditure of 2 percent in green-design will net a 20 percent return on total costs over a twenty year period.  At the Abercorn Common shopping center, the owner said the total incremental cost added for his green building elements was less than 1 percent of construction costs.   

Green building is happening right here in Pennsylvania.  In an article appearing in the Philadelphia Inquirer on October 25, 2007, O'Neill Properties Group announced that it was building 6 new green commercial office buildings in Bensalem, Bucks County, at the former Eastern State School and Hospital.  In addition, the 58 story Comcast Center being built in Center City Philadelphia, will be  a  LEED certified green building.   Overall, there are currently 27 certified projects and 150 registered sites in the Delaware Valley. 

The value of green building construction starts is expected to exceed $12 billion in 2007.   As more builders decide to go green, their counsel need to become more familiar with the certification process and the specific issues that arise in green building, such as defining terms and understanding claims made in contract documents.  Careful attention needs to be paid to interactions with design professionals and to product warranties.  My partner, Phil Hinerman, is a board member on the US Green Building Councils' Delaware Valley Chapter.  We intend to keep a close watch on green building trends and use this space to provide updates on new developments, especially new brownfield projects involving green building. 

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