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

Last week, PADEP posted some "frequently asked questions" on the UECA section of its brownfields webpage.  Since that time, I've held my fire, trying to understand what it all means for brownfield redevelopment in Pennsylvania.  As noted in previous postings, I had been contacted by PADEP Deputy Secretary Jill Gaito, prior to the PBI Environmental Law Forum, who told me that the Department was working on the Q&A and would be posting it shortly on its website.   Louise Thompson, who spoke on behalf of PADEP at the Forum on the Act 2 Update panel, gave a preview of the Q&A in her presentation.  (Incidentally, in recognition of her outstanding service to the Commonwealth and her retirement from the position as SE Regional Counsel, Louise received a well-deserved standing ovation both after the Act 2 panel discussion and the first day lunch.  She has since been replaced by Martha Blasberg.  I wish Louise well in her retirement and offer my congratulations to Martha on being selected as Regional Counsel.  She'll have very big shoes to fill.)  Now the Q&A is on the Department's website for everyone to see, and presumably, the Department's staff will be using the Q&A to guide their decisions absent further instructions from Central Office.

I've now had a chance to digest the Q&A and here is what I think of all of this.  I very much appreciate the Department's attempt to think through the issues.  I take Deputy Secretary Gaito at her word that the Department's interpretation of UECA will not substantive change the manner in which it implements Act 2.  With that said, I still don't like the fact that the Department is doing this all behind closed doors.  The manner in which it interprets UECA will have a lasting effect on the Land Recycling Program.  I continue to believe that everything should be done out in the open and in accordance with the Department's Policy on Policy Development.   The Department has, for years, provided Q&A on its website as it relates to Act 2 and the Land Recycling Program.  But that Q&A is a further interpretation of the regulations that were adopted after a year of public comments, and the technical guidance manual, which was adopted after substantial public input from the CSSAB and others.   My understanding is that the Department felt some pressure to roll out the UECA Q&A in order to get something out there and that it does intend to follow-up by seeking public input on its interpretation of UECA.  The problem is that once something gets put on the website in the form of Q&A it has a tendency to develop a life of its own, and it becomes policy even in the absence of any public input or comment.  I'm hoping this Q&A is merely the first step in a process that will ultimately lead to some technical guidance that considers the broader implications of the UECA/Act 2 interface on brownfields redevelopment in the Commonwealth.

In terms of the specifics, I've focused most of my attention on what the Q&A means for a remediator seeking to attain the Site Specific Standard at a site where there is off-site migration but everyone is using public water.  The concern has been that, in those circumstances, the Department would say that UECA requires covenants on all downgradient properties above the plume, and that would effectively destroy the ability to use the Site Specific Standard in these circumstances, or at least provide a serious enough disincentive that developers would avoid such sites.   According to the Q&A, the Department will require remediators in those circumstances to either get covenants on all the downgradient properties OR show that a municipal ordinance exists that prevents the use of groundwater and meets other specific criteria (which may be difficult to meet) OR agree to a Post Remediation Care Plan (PRCP) that would, in perpetuity, require the site owner to verify the continued nonuse of groundwater on the downgradient properties in accordance with 250.303(d)(3).  In most of these instances, the way out would appear to be agreeing to the PRCP.  But is that really necessary to comply with Act 2?  My answer is no.  250.303(d)(3) is a regulatory section that has specific applicability to remediation projects undertaken pursuant to the Statewide Health Standard.  It was not intended to be applied by the Department to projects using the Site Specific Standard.  In the instance of a Site Specific cleanup, you can implement a remediation at a site by using pathway elimination which "eliminates all current and probable future exposure pathways", under 250.606.  Moreover, under 250.410(d), a cleanup plan is not required and no remedy is required to be proposed or completed "if no current or future exposure pathways exist."  When you implement a pathway elimination remedy, there is no "standard" (some number between 1 in 10,000 and 1 in 1,000,000 cancer risk) developed for the substances found at the site.  No numerical standard needs to be developed for any substances because you are using pathway elimination.   In essence, the Department is now telling people who want to use a Site Specific Standard/pathway elimination remedy that 250.404 and 250.410 are no longer applicable because of UECA.  Now, you'll be forced to to use 250.303 to implement that Site Specific/pathway elimination remedy, even though 250.303 was never intended to be used in the case of Site Specific cleanups.  Worse still, the Department is apparently now saying (Q&A answer 6) that if you've received a non-use aquifer determination under 250.303, now you'll be required to verify that determination year after year, in perpetuity, absent a conforming municipal ordinance.   I'm sure that will come as very unwelcome news to those who received non-use aquifer determinations previously and will need to convert to covenants under UECA within 5 years. 

In my mind, some of this is overkill and is not required by either Act 2 or UECA.  The perpetual reassessment on the future use of groundwater is a significant and profound change in how Act 2 has been implemented, and it very well may will have a chilling effect on brownfield remediation projects in Pennsylvania.   Let's hope the Department is open to further discussion on this subject.  For now, it's provided several options for avoiding the need to obtain covenants on downgradient, off-site properties.   Those options are welcome but ultimately unsatisfying.   Perpetual groundwater reassessments have never been required before and they don't make sense for Site Specific/pathway elimination remedies.  There must be a better way, and I encourage the Department to work with interested parties to develop other options.

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Those hoping to gain some new insight into PADEP's interpretation of UECA during the annual PBI Environmental Law Forum were given just a small glimpse during the Act 2 Update, which included Louise Thompson, the Regional Counsel in the SE Regional Office, and Terry Bossert, the former PADEP Chief Counsel.  Louise Thompson did a good job of summarizing the information that is currently on the Department's website (the 2 page summary, model covenant and model notice letter), and she informed the standing room only audience that there is a Q & A list being prepared by Central Office that will be based, in part, on questions already being submitted by environmental lawyers and consultants.  She urged the attendees to "keep the cards and letters coming."   For those not able to attend, here are some of the more significant comments made by Louise Thompson:

• While compliance reporting (section 7 of the model covenant) was made optional under UECA, it is likely to be required in almost all environmental covenants.
• PADEP does not want to be a "holder" of an environmental covenant.  As a holder, PADEP would hold a property interest, and it takes an Act of the General Assembly for the Commonwealth to give or accept a property interest.  This has also turned out to be a real problem for PENNDot with regard to its compliance with UECA, and PADEP is trying to work through that.  
• PADEP would like remediators to submit draft environmental covenants at some point in the Act 2 process well before the Final Report is submitted, most likely with the Cleanup Plan or the site characterization report. 
• There is no petroleum exemption under UECA.
• PADEP will not be notifying developers/remediators of sites that have deed restrictions that need to be converted to environmental covenants.  
• With regard to Site Specific Sites with off-site migration, the Department has not decided that environmental covenants will be required on all downgradient properties.  At this point, the Department is considering various options and alternatives, including some that focus on municipal or county ordinances (like those in Bucks and Montgomery Counties that regulate well drilling), and some that would impose post remedial care requirements to ensure that wells haven't been drilled on downgradient properties.

Terry Bossert, who was involved in the behind the scenes legislative work during the discussion and passage of UECA by the General Assembly,  made the following points during his presentation:

• UECA does not amend Act 2, and it was not intended to have a substantive effect on Act 2.
• UECA should more properly be referred to as ECA, because PA tinkered with the model Act, as did many of the other states that enacted it.
• There was a reason why many of the provisions in UECA were made optional.  When the statute says that something is optional, it means it has to be agreed to by the persons who sign the environmental covenant.  That would appear to indicate that the grantor has the power to decide whether one of the optional provisions should go in the covenant.  With that said, there is also language in the Act that says PADEP has the ability to impose conditions as part of its review and approval of the covenant.  So if the grantor refuses to agree to one of the optional requirements, PADEP could invoke its authority and impose that condition.  The question in many instances will be whether it's worth fighting with the Department over the inclusion of one of the optional provisions in the covenant.
• The obligation to convert a deed restriction to a covenant applies only if the activity and use limitations were necessary to attain an Act 2 standard.  If the owner placed a limitation on the use of the property for other reasons, then it would not need to be converted. If, for example, the owner wrote into the deed a restriction against using the groundwater, but that condition wasn't needed for Act 2 protection (e.g., you met the statewide health standard but had some contamination in the interior of the property), then that restriction would not need to be converted to a covenant.

There was also some lively Q&A from the audience at the Act 2 update on UECA.  It was also a hot topic of conversations out in the hallways.  I made sure to tell people about my recent conversation with Deputy Secretary Gaito (see my most recent blog entry prior to the Forum) in which she agreed with Terry Bossert that UECA was not intended to have a substantive impact on Act 2 and the manner in which PADEP has handled Act 2 remediations over the last 13 years.

It is obvious that there are lots of opinions about UECA both inside and outside the Department.  Additional comfort, guidance and direction is needed from Central Office, and the sooner the better.       

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Earlier today, Jill Gaito, PADEP's Deputy Secretary for Revitalization and Local Government Support, reached out to me regarding the Department's implementation of UECA.   According to Deputy Secretary Gaito, she intends to ensure that the Department's implementation of UECA does not result in a dramatic change to the Act 2 program.  She is appealing for calm while the Department puts together additional information for the regulated community.  She boldly stated that the "Land Recycling Program will not backslide on her watch."  She further instructed that anyone who has questions regarding the Department's implementation of UECA should direct their inquiries to Troy Conrad, the Director of the Land Recycling Program in Central Office. 

I very much appreciated the call from Deputy Secretary Gaito.  It's clear that she has heard the concerns being expressed by those who are invested in the success of the Act 2 program, and she is taking those concerns very seriously.   It sounds like more information may be coming out of the Department later this week or early next week.   Until then, we should all take a deep breath.  The sky is not falling.              

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In my continuing efforts to understand the potential impact of the Uniform Environmental Covenenats Act (UECA) on brownfields redevelopment in Pennsylvania, I have now spoken with a former PADEP Chief Counsel who was involved in Pennsylvania's enactment of the Act.  He said that UECA was never intended to be "a substantive environmental remediation bill."  Moreover, it was never intended to change anything required by Act 2.  The Act was intended to standardize deed notices and provide a uniform way to do that.  It would appear that steps being taken now to implement UECA at PADEP could lead to the worst kind of unintended consequences, more specifically, making the Site Specific Standard useless for any site where groundwater contamination migrates beyond the property boundary.  I'm told that there was never any discussion regarding off-site migration during the legislative debate.

I urge everyone to read the comment just posted on this blog by Gary Brown from RT Environmental.  Gary stated: 

"Implementation of this policy change without prior public and legislative input is inappropriate on DEP's part and undercuts the statements of DEP's top officials and the Governor that they are in favor of remediation and redevelopment in the Commonwealth. PA MUST NOT REPEAT THE MISTAKES OF OTHER STATES." 

Gary is right on.   The most sensible thing the Department can do at this point is to prepare a draft policy or guidance on its proposed implementation of the UECA and roll it out for public review and comment.   That is the only way for the Department to fully understand all of the potential consequences.       

In speaking with other environmental attorneys who work on Act 2 projects, I'm already hearing that some of them may advise their clients to avoid going through Act 2 if the Department requires covenants from downgradient property owners.  Surely that is not what the Department wants.   For years, the Department has been trying to get as many sites as possible into the Act 2 process.

I'm also told that the remediator that potentially has the most to lose if covenants are required from downgradient property owners is the Pennsylvania Department of Transportation.  PennDOT apparently makes extensive use of the Site Specific Standard in its acquisition of properties for road construction and its own site remediation work.  It would be ironic indeed if PADEP's implementation of UECA ended up costing the Commonwealth millions of dollars and delaying road construction projects across the Commonwealth.  Presumably PADEP is seeking input from PennDOT and other affected state agencies before it prepares any policy or guidance.   Maybe a cost-benefit analysis would be in order before any final policy or guidance is adopted.

I encourage others to weigh in on this important Act 2 policy issue.   

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Does the Uniform Environmental Covenants Act (UECA) recently signed into law by Governor Rendell require that environmental covenants be recorded on adjacent properties when the remediator seeks to attain the Site Specific Standard on a property where groundwater contamination is migrating off-site?  That, my friends, is a very real issue that is being hotly debated.  You can read all of the information posted on PADEP's website regarding the UECA and not find the answer to that question.  Yet, it may be the most significant issue arising under the UECA and how the Department answers that question may very well determine the continued use and viability of the Site Specific Standard at sites involving off-site migration.  

The way it works now, and has worked for the last eleven years, a remediator can demonstrate attainment of the Site Specific Standard at a site with groundwater contamination migrating off-site by doing a fate and transport analysis and showing that there is no impact on drinking water or surface water and demonstrating that vapor intrusion is not an issue.  The remediator in that case would, after completion of the attainment sampling, publish a notice of the remediation in the local newspaper and submit the Final Report for review and approval to PADEP.  In addition, under Act 2, the remediator would record a deed restriction stating that the groundwater on his or her property should not be used for drinking water purposes.  Such notice would be recorded only on the property being remediated. 

Here is a hypothetical showing how this issue may arise.  Let's say you are a developer looking to purchase a shopping center that has, among other things, a dry cleaner.  You decide you want to do some soil and groundwater sampling to determine if there is any contamination.  You find that there is PCE in the groundwater at the property.  You determine that the shopping center and all properties surrounding it are on public water and there are no drinking water wells.  You also determine that there is a local ordinance prohibiting the installation of any new drinking water wells.  Your consultant takes two rounds of samples and does a fate and transport analysis and determines that while PCE in the groundwater is migrating off-site, it isn't impacting any drinking water wells or surface water.  Your consultant also determines that the PCE levels are below the threshold of the vapor screen so there is no vapor intrusion issue.  Now your due diligence period is about to expire, and you, as a buyer, need to decide whether or not you want to proceed with the transaction.  You ask your consultant to give you a scope of work and cost estimate to complete the Act 2 process and get a release of liability.  Your consultant says that you will need to do 8 quarters of groundwater samples and then file a Final Report under the Site Specific Standard.  Now you remember that one of your lawyers mentioned that Pennsylvania recently adopted the Uniform Environmental Covenants Act and that you heard that in order to get an Act 2 release in this situation you might have to get the owners of the adjacent properties to agree to place environmental covenants on their properties because the plume has moved off-site.  You worry if that is true you could get to the end of the process and any one of those adjacent property owners could say no and prevent you from getting your Act 2 Final report approved using the Site Specific Standard.  Is that a real concern?

From what I have been hearing, it sounds like it is.  The alternatives to using the Site Specific Standard in that hypothetical are not very good.  You could install a treatment system or use some treatment technology to try to get to the statewide health standard for PCE, which would probably be so expensive it would kill the deal. (It also would be unnecessary given that there is no risk to public health or the environment).  You could also go ahead and try to buy the property without getting an Act 2 release, but your lender may require that you agree to get the Act 2 release as a condition to obtaining financing.  You had big plans for upgrading and expanding that aging shopping center, but maybe it just isn't a good deal anymore.

How the Department interprets the UECA will effect not just future deals, but past deals as well that involved using the Site Specific Standard.  What about the developer that bought that shopping center a few years ago and now is being told that he or she needs to convert the deed restriction that was imposed on the shopping center property into an environmental covenant?  Will that person have to go to those adjacent property owners whose properties sit above the plume and ask for permission to put environmental covenants in the deeds for those properties?   If those adjacent property owners refuse, would the Department require the shopping center owner to remediate to the statewide health standard or lose the Act 2 protection to a reopener?  It's hard to believe that the drafters of the UECA would have intended a result that could have such a chilling effect on brownfield transactions and the use of the Site Specific Standard under Act 2. 

One of my fears is that the wrong interpretation of the UECA may lead people away from brownfield properties, especially those in highly urbanized areas.  How would anyone be able to gather environmental covenants on all the adjacent properties effected by groundwater contamination at a property in the middle of Philadelphia or Pittsburgh?  Why would anyone even want to get involved with such a project with that level of uncertainty? Some of those sites may qualify as non-use aquifers, but many others will need the flexibility afforded by the Site Specific Standard.  If you remove that flexibility, developers of properties in those urban areas will look elsewhere, most likely to greenfield sites in suburban areas, leaving those brownfield sites blighted and unreclaimed, and for no good reason.      

PADEP has not yet released any written guidance on how it will enforce the UECA beyond a short summary and a model covenant on its website.  Nevertheless, I have heard from several consultants that Department staff in the tanks program has told people that in order to demonstrate attainment of the Site Specific Standard on a site with groundwater contamination migrating off site, you will need to obtain environmental covenants from each and every property owner whose property is above the plume of contamination.  Because such an interpretation would result in a significant and material change to how Act 2 cleanups have been conducted in the Commonwealth since the Act 2 regulations were first adopted in 1997, I would hope that the Department would handle this like any other new policy and seek public comment before moving in that direction.  This is a matter of great significance for the Act 2 program.  Accordingly, the Department should follow its policy on policy development and prepare a draft policy for public review and comment, obtain public comment from all affected parties and stakeholders, and then release final guidance after due deliberation. 

The Act 2 program is one of the most successful environmental programs in the history of the Commonwealth.  For many years, the redevelopment of brownfield sites has been the engine driving economic development in the Commonwealth.  At this point, it is unclear where PADEP ultimately will come out on this.  The annual Environmental Law Forum is next week in Harrisburg and I am sure this issue will be discussed.  If the Department's representatives provide any further guidance on the subject at the Forum, I will let you know. 

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