[CPEO-BIF] Schnapf suggestions sent to Administrator Pruitt

[Larry Schnapf]

Lenny asked that I share with the list serve the remedial reform proposals
that I submitted to the new Administrator and to key congressional
committees. 

 

I believe these suggestions could advance the Administration's goals of
making regulations more efficient and stimulating economic activity without
weakening environmental protections. My recommendation about employing cost
recovery for brownfield grants is intended to make that program more
sustainable as well as advance the President's goal of imposing
"consequences" on companies that abandon plants to export jobs to foreign
countries. I hope that these proposals can help the Administration recognize
that brownfield and superfund programs are tools to advance its economic
goals and not obstacles to dismantle. 

 

Some of these recommendations may be too much "inside baseball" for the
subscribers and are not necessarily in order of importance.

 

1.	CERCLA Continuing Obligations Guidance- The 2002 amendments to
CERCLA added the Bona Fide Prospective Purchaser (BFPP) and Contiguous
Property Owner defenses. These defenses (in particular the BFPP defense)
were enacted to help incentivize purchasers to acquire and remediate
contaminated properties so they can be put back into productive use. While
EPA promulgated an all appropriate inquiries (AAI) rule to help define the
pre-acquisition obligations necessary to be able to assert these defenses,
there is little guidance from EPA on how property owners or operators may
satisfy their "appropriate care" or "continuing obligations" so they can
maintain their liability protection after taking title or possession of
property. The 2003 "Common Elements Guidance" is inadequate. The lack of
guidance and recent caselaw have created uncertainty for developers and
undermined the value of these defenses. EPA should issue detailed guidance
on what constitutes appropriate care. Developers and property owners should
not have to rely on ASTM to provide guidance on how to comply with their
legal obligations.

 

2.	Revise "Enforcement Discretion Guidance Regarding the Affiliation
Language of CERCLA's Bona Fide Prospective Purchaser and Contiguous Property
Owner Liability Protections" - This memo did not sufficiently address
concerns raised by the Ashley decision that purchasers of contaminated
property could lose their eligibility for the BFPP by agreeing to indemnify
sellers. 

 

3.	More Robust Use of PPAs and CPO "Assurance Letters"- With the
passage of the 2002 CERCLA amendments, EPA announced in guidance that it
would issue PPAs or CPO assurance letters only in rare instances because the
landowner liability protections were self-implementing. However, these
agreements can be incredibly valuable. EPA should urge its regional offices
to issue such documents where they can facilitate redevelopment such as in
urban superfund sites (e.g., Gowanus Canal, Newtown Creek) and where
municipal governments are willing to foreclose on contaminated properties
and then convey title to redevelopers. The PPAs should include "appropriate
steps" language so purchasers can know how they will be able to maintain
their liability protections. 

 

4.	Clarify Scope of Municipal Liability Protections Under CERCLA to
Encourage Taking Title of Vacant Properties and Facilitate Reuse- There is
considerable uncertainty among local government community if municipalities
can invoke the protections of 42 U.S.C. 9601(20)(D) and (9601(35)(A)(ii)
where they take title in lieu of formal tax foreclosure proceeding since
this may not be "involuntary". Local governments might be more willing to
take title and assemble vacant properties so they would become more
attractive to redevelopment if they could obtain clarity on the scope of
this protection. Presumably, a purchaser from a municipality would then be
able to assert the BFPP or third party defense. A related problem is that
the BFPP defense would not apply to local governments who took title prior
to January 11, 2002. 

 

5.	Reform EPA Remedial Programs Into a Single Unified Cleanup Program-
Our nation's remedial programs were created as we became aware of new
concerns. This has resulted in different cleanup standards and procedures.
We have separate staffs for CERCLA, RCRA, TSCA (PCBs), USTs, etc. We now
have three decades of experience remediating sites. I think we should
strongly consider combining these discrete offices into one streamlined
remedial office that will provide consistent regulatory approach and reduce
unnecessary staff. 

 

6.	Clarify Lender Obligations Following Foreclosure- The original EPA
lender liability rule contained a "bright-line" test for lenders to follow
so they can be deemed to have taken commercially reasonable steps to sell
property following foreclosure, thereby staying within the safe harbor
created by the secured creditor exemption. Unfortunately, when the rule was
vacated and the 1996 lender liability amendments were added to CERCLA, the
"bright line" test was omitted. So lenders have no guidance on how to
proceed during what is the worst economic downturn since the Great
Depression. Can they reject an offer that is equal to artificially depressed
price? How long can they hold onto property without losing protection? Some
states allow for two years while others allow up to five years to sell the
property.  Greater clarity will help lenders move these properties. If
control of Congress changes, this can be legislative proposal. 

 

7.	Encourage States to Adopt Licensed Professional Programs- States are
facing severe staffing constraints which are creating backlogs in site
remediation. Seems to me EPA could use its authority under section 128 of
CERCLA (approval of state response programs) as well as its RCRA delegation
authority to have states adopt licensed site professional programs like MA,
NJ and CT so that states could devote their limited resources to the sites
that pose the greatest risk to human health and the environment. EPA could
establish a national licensing program for consultants that sets forth
minimum professional requirements and states could adopt these programs as
part of their remedial programs. One way to accomplish this could be by
amending the All Appropriate Inquiries (AAI) Rule to revise the definition
of Environmental Professional. This could avoid having to promulgate a new
regulation. If control of Congress changes, this can be legislative
proposal.

 

8.	Revise NCP- revising the NCP. It was last revised in 1990. Since
then we've learned a lot about cleanup and have lots of informal guidance to
help streamline the process and make it more cost-effective. It does not
make sense to continue to follow the RI/FS lockstep process. Why review five
alternatives? In NY, we have a proposed remedy and an unrestricted cleanup
alternative and are able to generate robust cleanups. If we can incorporate
these innovations in the NCP, we will be able to get faster cleanups that
are more cost-effective while preserving right of contribution. Right now,
firms are incentivized to follow the lock-step approach to preserve their
ability to pursue cost recovery..

 

9.	Revise CERCLA Disclosure Requirements With Amnesty Program To
Incentivize Accelerated Cleanups- Property owners are not currently required
to disclose historic contamination. As a result, many sites remain
unremediated until the owner is ready to sell the property while residents
may continue to be exposed to unhealthy levels of vapors or unknown
groundwater contamination. To help accelerate cleanups, I think EPA could
announce it was going to change its disclosure rules from reportable
quantity approach to contaminant concentrations and at the same time provide
current property owners a one year amnesty period to voluntarily disclose
contamination. Much like the EPA audit policy, owners who disclose the
existence of contamination that they are not responsible for would be
afforded BFPP status. They would have to exercise "appropriate care" but not
full cleanup. The SARA Title III program resulted in substantial reductions
in pollution. It seems worth the try to experiment with an amnesty period
for contaminated sites.  

 

10.	Pursue Cost Recovery From PRPs For Sites Receiving Brownfield Grants
- EPA has been awarding brownfield grants to local governments without
considering if there is a responsible party that could be incentivized to
participate in a cleanup. EPA should conduct PRP searches for all sites that
are awarded brownfield grans or loans, and then seek cost recovery from
those entities to replenish the brownfield funding program. This will allow
the brownfield program to be more sustainable and not be reliant on
Congressional appropriations. This approach would ensure that polluters are
forced to pay for the contamination they leave behind when they abandon a
community and would also impose "consequences" on those firms that closed
plants to export jobs to foreign nations.

 

11.	Shift Away from Brownfield Grants/Loans Towards Greater Use of Tax
Credits- A recent EPA study found that despite 40 years of remedial
programs, the nation still has approximately 300,000 contaminated sites that
will take another 25-30 years to cleanup at an estimated cost of $200
billion (not adjusted for inflation). There is simply not enough public
money to complete this task. Moreover, the brownfield financial incentives
are becoming public works projects that are not nimble enough for private
developers. Rather than giving funds to local government to investigate and
reuse planning, we can incentivize the private market to do this work by
expanding and extending brownfield tax credits. The New York Brownfield tax
credit program is a strong example of how tax credits can incentives
investments in contaminated properties. Tax credits put the upfront risk on
the developer instead of the taxpayers. The IRS code section 198 tax
expensing for brownfield sites should also be renewed. 

 

12.	Require States To Use Parceling To Encourage RCRA Brownfields- EPA
RCRA Brownfield Reforms urged states to allow owners or operators of TSDF to
sell off clean parcels of their facilities (e.g., portions never used for
any waste management) while the HWMUs or SWMUs were undergoing corrective
action. EPA should more forcefully use its delegation authority to allow
this much needed reform. 

 

13.	Clarify RCRA liability for Generator-only sites- There is much
confusion if closure obligations for a generator site run with the land. In
other words, a site may have been owner or operated by a defunct generator.
A prospective purchaser is interested in redevelopment but is concerned it
will become subject to closure obligations for the areas where wastes were
managed. Presumably, generator sites could be treated as any brownfield site
without the need to undergo formal RCRA closure. 

 

14.	Add Landowner Liability Protections to TSCA for PCB Cleanups-
Purchasers often take steps to qualify for CERCLA BFPP only to learn after
taking title that the property has been impacted with PCBs and they are
subject to TSCA cleanup. This might require Congressional action but I do
not see any reason why TSCA should not have a BFPP defense. After all,
Congress added AAI and BFPP to OPA in 2004 with little controversy.

 

15.	TSCA PCB Reform- The PCB cleanup and disposal rules are a bit
RCRA-like, a bit CERCLA-like and not well integrated. The cleanup should
also not depend on the original spill concentration but on current
concentrations and media. I'd like to see the entire Subpart D to 40 CFR 761
repealed with disposal of PCB-containing material handled entirely within
RCRA via the listed-waste and LDR route.

  

16.	Adopt National Environmental "WARN" Obligations Under RCRA- to
prevent future brownfields, companies closing operations should be required
to notify relevant permitting authority at least 90 days in advance of
closing to ensure that appropriate closure occurs so that public money does
not have to be used to address cleanup or local government seeks brownfield
funds. This would be another way for environmental regulations to serve as a
tool to impose "consequences" on companies seeking to export jobs to foreign
countries.

 

17.	Adopt Restatement (Third) of Torts Approach to Joint Liability- When
CERCLA was enacted, Congress said that liability should be premised on
evolving concepts of common law. At the time of its enactment, the Second
Restatement was in effect which favored use of joint liability for
indivisible harm. However, this was before states began adopting comparative
negligence statutes. The Third Restatement states that the law has shifted
dramatically from the use of joint liability and that courts should try to
find a basis for apportioning liability where there is a reasonable basis.
Despite the publication of the Third Restatement in 2000, federal courts
continue to cling to the doctrine espoused by the Second Restatement. As
recently as last month, an appeals court declined to adopt the suggestion of
an amicus brief submitted by The American Tort Reform Association to use the
Third Restatement to apportion liability for the Fox River cleanup. My post
on this case is at:
http://www.environmental-law.net/2012/08/7th-circuit-declines-to-apply-third
-restatement-of-torts-in-apportionment-case/ EPA could issue interpretative
guidance that it now considers the Third Restatement to be the governing law
for CERCLA liability. This would reflect the Congressional intent to follow
the evolving common law.  

 

Lawrence Schnapf



55 East 87th Street #8B
New York, New York 10128
212-876-3189 (p)
917-576-3667(c)
 <mailto:Larry at SchnapfLaw.com> Larry at SchnapfLaw.com
 <http://www.SchnapfLaw.com> www.SchnapfLaw.com 

 

2016-17 Chair-NYSBA Environmental Law Section

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