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

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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Vapor intrusion, the migration of a volatile chemical from subsurface contamination into the indoor air of a building, was not viewed as a significant exposure pathway in 1995 when Act 2 was written into law. It is viewed as significant now. The emerging importance of this pathway poses unique challenges for DEP and responsible parties under Act 2. It also has the potential to undermine some of the predictability that Act 2 is designed to provide. Managing the risks related to vapor intrusion under Act 2 requires understanding the issues, including the steps that DEP has already taken to address them and the changes that are likely to come. We cover these issues briefly in this post.

Part of the challenge of vapor intrusion for DEP, and the regulated community, is structural -- vapor intrusion exposures are not considered in development of Statewide Health Medium Specific Concentrations (MSCs) for soil and groundwater under Act 2. Perhaps more in theory than practice, this means that achieving MSCs for a volatile contaminant below a building does not ensure that the contaminant is not present at unacceptable levels in the indoor air – the MSCs are not calculated to be protective for vapor migration to indoor air (though they may be protective for most substances in any event). More problematic is that the “point of compliance” for attainment of groundwater MSCs is the property boundary. This means that under the attainment criteria established in the Act 2 statute itself, high levels of a volatile chemical – a source for vapor intrusion to indoor air -- could be left in groundwater under an on-site building as long as the groundwater MSC is achieved at the property boundary.   

DEP has taken steps to address these issues. 

In January 2004, the DEP Clean Standards Science Advisory Board (CSSAB) issued Section IV.A.4 of the Technical Guidance Manual -- Pennsylvania Vapor Intrusion into Buildings from Groundwater and Soil under the Act 2 Statewide Health Standard (2004 SHS VI Guidance). This guidance states, “Indoor air quality (IAQ) from the vapor intrusion of contaminants into buildings from groundwater and soil is not assessed under the Statewide Health standard in the Act 2, Chapter 250 regulations.”   Though not itself a regulation, the guidance provides “additional screening requirements . . . to prevent unacceptable risk” from vapor intrusion in the context of Statewide health standard sign-offs. The guidance provides decision matrices to be followed under the Statewide health standard; includes MSCs for Indoor Air Quality; screening values that can be used to evaluate groundwater and soil data if site conditions match the underlying assumptions; and a framework for evaluating vapor intrusion risks.  DEP also developed valuable questions and answers on vapor intrusion in the Land Recycling Q and A Database (Category: Vapor Intrusion).  

In January 2011, DEP made the evaluation of vapor intrusion part of the law in promulgating a regulatory provision at Section 250.312 for Statewide Health Standard signoffs: “The final report must include, as appropriate, an assessment of the vapor intrusion pathway.”

In addition, in March 2011, DEP re-convened the CSSAB Vapor Intrusion Subcommittee, to support an update of the 2004 SHS VI Guidance. Preliminary work was done by the DEP and the subcommittee in 2011. After a hiatus, the next meeting of the subcommittee is scheduled for late January 2013. As a member of that subcommittee I will keep you posted as appropriate. At this point, I expect a guidance more focused on sub-slab and indoor air sampling -- consistent with recent New Jersey VI Guidance and the recently ‘leaked’ revision of the USEPA guidance, substantial revision to some of the screening values, and that includes discussion of proceeding directly to the installation of mitigation systems in lieu of extended investigation.  Mitigation systems can be relatively inexpensive and work well.  The downside is the environmental covenant that will be required if mitigation is to be relied on in a release of liability.    

One recommendation, if you plan to rely on an existing Act 2 release of liability for any site where volatile contaminants remain, seek out good advice on whether vapor intrusion has the potential to undermine the certainty you expect from the release of liability.

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