On March 10, 2015, EPA issued a new revised 2015 Update to its Supplemental Environmental Project (SEP) Policy, thereby superseding prior SEP policies.
RCRA / Hazardous Waste & Solid Waste
Last week, on January 13, 2015, EPA issued its new “Definition of Solid Waste” Final Rule in the Federal Register at 80 Fed. Reg. 1694. This new rulemaking will have significant impacts regarding how secondary hazardous materials are recycled and exempted from the hazardous waste regulations. Unless challenged (and by all accounts it appears at least certain aspects may be litigated based on initial comments by various industrial sectors) the rule becomes effective on July 13, 2015, where EPA is the authorized implementing agency (Iowa, Alaska, American Samoa, and Puerto Rico and the U.S. Virgin Islands). Because RCRA is a federally delegated program, other states will have to adopt the more stringent aspects of the rule discussed below.
On November 12, 2013, the First Circuit Court of Appeals handed down its decision in VFC Partners 26, LLC v. Cadlerocks Centennial Drive, LLC, slip op. (1st Cir., 2013). This decision serves as a reminder that courts will look carefully at the words used in a loan agreement’s environmental indemnity provisions to decide whether or how they apply. If the actual wording chosen (likely many years earlier) does not fit the environmental costs sought to be indemnified, the party pursuing indemnity may be greatly disappointed.
On April 4, 2013, the Fourth Circuit handed down its much-awaited decision about what a bona fide prospective purchaser (BFPP) of contaminated property must do to retain the Brownfields defense to Superfund liability. In PCS Nitrogen Inc. v. Ashley II of Charleston LLC, No. 11-2087, slip op. at 31 (4th Cir. April 4, 2013), the Court held that a property redeveloper, Ashley II, was liable as a current owner potentially responsible party (PRP) for soil contamination at the former phosphate fertilizer plant despite its “all appropriate inquiry” pre-purchase investigation of past environmental conditions at the facility. Ashley II knew that old sumps at the property contained contaminated water, yet for years did nothing to clean out or close the sumps. This failure to stop a continuing release violated the post-purchase “due care” or “reasonable steps” requirements of the BFPP defense, and negated its applicability to Ashley II.
In an effort to encourage brownfield site redevelopment and renewable energy development on contaminated sites, on December 5, 2012, EPA issued a guidance document designed to clarify the scope of enforcement discretion the agency will provide to tenants who undertake steps to avoid liability under CERCLA’s Bona Fide Prospective Purchaser (“BFPP”) provisions. In conjunction with the guidance memorandum, EPA also issued three new model comfort/status letters for lessees involved in renewable energy development on contaminated property.
Businesses that own contaminated property in Missouri, such as brownfield sites and former industrial locations, can avail themselves of Missouri’s Environmental Covenant Act (MoECA), RSMo Section 260.1000 et seq., 10 CSR 25-18.010(18), to expedite cleanup and, if site conditions allow, beneficial reuse of those properties. In particular, property owners can record an environmental covenant on their property that restricts certain land uses and site activities to minimize exposure to impacted soils and groundwater.
When coupled with a risk-based cleanup approach, an environmental covenant can present significant advantages to a property owner. Most notably, a company can clean up a site based on human health and environmental risks associated with appropriately tailored uses of the property, such as cleaning up an industrial property to satisfy industrial standards as opposed to residential standards.
The most common types of activity and use limitations found in environmental covenants include:
Environmental covenants like other property interests are recorded in a property’s chain of title to provide notice to prospective buyers of the specific activity and use limitations imposed by the restrictions.
Missouri, along with more than 20 other states, has adopted a version of the Uniform Environmental Covenants Act. The Missouri Department of Natural Resources (MDNR) has a “model” environmental covenant used by the agency in situations where MDNR is the sole overseeing Department and a second model covenant in which both EPA and MDNR are the overseeing agencies.
The provisions in the new model Environmental Covenant differ only somewhat from the provisions in the prior model Environmental Covenant, but the new model serves as a reminder that Missouri has a robust risk-based cleanup program when it is neither pragmatic nor cost-effective to clean up sites to residential levels. The use of Missouri’s risk-based program should be carefully evaluated considering site-specific circumstances.