By Patrick D. Joyce, Jeryl L. Olson, and Craig B. Simonsen

EPA SignThe U.S. Environmental Protection Agency is modernizing its self-disclosure policy, commonly known as the Audit Policy, through a centralized “eDisclosure Portal” to receive and automatically process self-disclosed civil violations of environmental laws. 80 Fed. Reg. 76476 (December 9, 2015).

The new Portal will serve as an alternative to traditional paper or telephone disclosures, with the EPA encouraging users to use the eDisclosure Portal to make the disclosure process faster and more efficient.  EPA hopes that the eDisclosure Portal will encourage more violators to self-disclose in a timely manner.

The eDisclosure portal will accept new disclosures involving almost all types of civil violations, which will be placed into two categories:

  • Category 1 Disclosures: all EPCRA violations except CERCLA 103/EPCRA 304 chemical release reporting violations and EPCRA violations with significant economic benefit.
  • Category 2 Disclosures: all non-EPCRA violations, EPCRA violations where the violator cannot meet the Audit Policy “systematic discovery” (audit) requirement, and all EPCRA/CERCLA violations excluded from Category 1.

Pre-existing unresolved EPCRA disclosures may be resubmitted through the eDisclosure system within 120 days after launch of the portal, or by April 7, 2016.

In its eDisclosure Information Sheet, EPA notes that it is retaining the incentives outlined in its “New Owner Policy,” but that it will continue to “accept and process new owner disclosures outside the eDisclosure system.”

The requirements for the voluntary disclosure process, including the twenty-one (21) day disclosure period, will remain the same.  An online Compliance Certification will be due within sixty (60) days of submitting the initial online disclosures (or within ninety (90) days for Small Businesses Compliance Policy disclosures), but violators may request an extension for Category 2 disclosures.

EPA will spot check Category 1 disclosures to ensure accuracy and all Category 1 electronic Notices of Determination are conditional upon the accuracy of the representations made by the violator.  EPA will screen Category 2 violations for criminal violations and other serious issues.

While the benefits of the eDisclosures process for the Agency are apparent, companies considering disclosures should carefully consider the pros and cons of disclosure, the timing requirements, and the risks associated with disclosures.

For any self-disclosure questions, and for assistance with any of your disclosures, please contact the authors, your Seyfarth Shaw attorney, or any member of the Environmental, Safety & Toxic Torts Team.

By Jeryl L. Olson and Craig B. Simonsen

Power Lines and Pulp Mill PollutionIn a busy day for vapor intrusion, last week the U. S. Environmental Protection Agency made several announcements about vapor intrusion.

First, it announced it had submitted a draft rule to the White House OMB seeking to add vapor intrusion to the pathways evaluated under the Hazard Ranking Scoring (HRS) System for National Priority List (NPL) Superfund sites.   Additionally, EPA published two new sets of technical guidance on assessing vapor intrusion. One guidance document has been prepared for assessing vapor intrusion from leaking petroleum underground storage tank sites, and the other guidance document is aimed at assessing vapor intrusion for sites with non-petroleum contamination.

Draft Rule on Assessing Vapor Intrusion as Part of Site Hazard Ranking

With respect to EPA’s draft rule adding assessment of vapor intrusion to the Hazard Ranking Scoring process, this is the Agency’s second effort at adding the vapor intrusion pathway to the other types of pathways which are already considered in evaluating and then listing a site on the National Priorities List. The same version of the rule was previously submitted to, but then withdrawn from, OMB consideration.

EPA believes now that it is necessary to evaluate vapor intrusion in scoring of sites for the NPL in order to ensure that health risks associated with vapor intrusion are addressed and cleaned up as part of Superfund remediations. Opponents to the process, however, believe that adding assessment of the vapor intrusion pathway to the NPL HRS scoring system will lead to more sites being listed on the NPL, despite the belief that EPA’s Superfund program is already taxed. If the draft rule receives OMB approval, the rule will be published as a Notice of Proposed Rulemaking in the Fall of 2015.

New Vapor Intrusion Guidance

With respect to new vapor intrusion guidance, EPA published guidance both on performing vapor intrusion assessments where the source is petroleum vapor from leaking underground storage tanks (“Technical Guide for Addressing Petroleum Vapor Intrusion at Leaking Underground Storage Tank Sites,” EPA 510-R-15-001, June, 2015) (hereinafter “PVI Guidance”) and for vapor intrusion risks associated with all other types of sites and non-petroleum chemicals (“OSWER Technical Guidance for Assessing and Mitigating the Vapor Intrusion Pathway from Subsurface Vapor Sources to Indoor Air,” OSWER Publication 9200.2-154, June, 2015) (hereinafter “OSWER VI Guidance”).

According to EPA, the existing 2002 (“OSWER Draft Guidance for Evaluating the Vapor Intrusion to Indoor Air Pathway from Groundwater and Soils,” EPA530-D-02-004) guidance on vapor intrusion assessment is replaced by the two new PVI, and OSWER VI Guidance documents. In promoting the two new sets of guidance, EPA indicates that the mitigation measures advocated in the new guidance are “more cost-effective” than mitigation measures considered in the previous draft guidance, and EPA is also advising its new approach to testing for vapor intrusion is more “flexible,” including sampling indoor air or sampling the external sub-slab area.

While comprehensive, and containing certain “user-friendly” features, the new draft guidance for vapor intrusion is not without controversy. EPA has acknowledged that its 2002 draft guidance indicated that OSHA, and not EPA, would take the lead in looking at occupational exposure to vapor intrusion. In the new guidance, EPA seems to back off its previous acquiescence to OSHA’s primary jurisdiction where there is occupational exposure, and merely mentions that there are Memoranda of Understanding (MOUs) between OSHA and EPA dated November 23, 1990, and February 1991, which govern the Agencies’ relative responsibilities (but of course those MOUs pre-date vapor intrusion as a current focus of concern). Tellingly, in Section 7.4.3 of the OSWER VI Guidance, EPA specifically states its reasons for its recommendation that EPA standards, as opposed to OSHA PELs or TLVs, should be used for evaluating VI human health risks for workers in non-residential buildings. EPA bases its conclusions on what it characterizes as OSHA’s own recognition that its PELs are “outdated and inadequate for ensuring protection of worker health.”

LUST PVI GUIDANCE

The LUST PVI Guidance is less substantial, both in terms of technical information and volume, than the OSWER VI Guidance, and is on its face aimed at EPA regulatory personnel investigating and assessing petroleum vapor intrusion (PVI). Nevertheless, the guidance indicates it is intended for all “UST regulators and practitioners.” The PVI Guidance looks at petroleum hydrocarbons (PHCs) in diesel, gasoline, and jet fuel related volatile organic chemicals (VOCs) such as BTEX, methane generated from anaerobic biodegradertory of petroleum products, and is focused on providing screening criteria based on the distance between PVI sources and potential receptors.

It is interesting to note the PVI Guidance states it is applicable to “…new and existing releases of PHCs and non-PHC fuel additives from leaking USTs and to previously closed sites where the implementing agency has reason to suspect that there may be a potential for PVI.” [Emphasis added]. Despite that statement, the PVI Guidance does acknowledge that it “…does not impose legally binding requirements on implementing agencies or the regulated community”; and, thus, the guidance should not be read as triggering a need for VI assessments at closed LUST sites.

Other features of the PVI Guidance are two “user-friendly” features: a Table, and separate Flowchart, each summarizing EPA’s recommended actions for addressing PVI at LUST sites, and an entire section discussing computer modeling of PVI.

OSWER VI GUIDANCE

Of the two VI policies published June 11, the OSWER document on non-petroleum VI is the more robust of the documents published, with 245 pages of technical guidance. One of the stated purposes of the OSWER Guidance is to “…promote national consistency in assessing the vapor intrusion pathway …” while providing a “…flexible screening based approach to assessment…”. As with the PVI Guidance, the OSWER VI Guidance is ostensibly aimed at any CERCLA , RCRA or Brownfield sites being evaluated by EPA, or for authorized state RCRA corrective action programs or state-led CERCLA sites, however, it is expected that particularly in states with fledgling VI policies, the OSWER Guidance will become the standard for VI assessments and mitigating measures.

Features of the OSWER VI Guidance include a comprehensive guide to preliminary and detailed VI sampling and assessment technologies in myriad settings (VI in inclusion zones, settings with multiple buildings evaluating concurrent indoor and ambient air sources, etc.). The guidance also discusses strategies for risk assessment under numerous exposure scenarios. Finally, there is a lot of attention focused on mitigation systems in buildings, and subsurface remediation.

By Andrew H. Perellis, Jeryl L. Olson, and Ilana R. Morady

On October 6, 2014, EPA finalized an amendment to the “All Appropriate Inquiries” (AAI) rule to remove the reference to ASTM E-1527-05. 79 Fed. Reg. 60087. This means that ASTM E-1527-05 is no longer adequate to establish landowner and lender liability protections under CERLA. Buyers, sellers, and lenders take note: you will now need to ensure that your AAI is conducted under the newer 2013 ASTM standard.

“All Appropriate Inquiries,” or AAI, is the process of evaluating a property’s environmental conditions and assessing the likelihood of any contamination. Buyers, Sellers and Lenders involved in the transfer of real estate, including real estate transferred as part of a corporate merger, acquisition or asset sale, know that ASTM E-1527 is the typical starting point for conducing AAI and thus obtaining landowner and lender liability protections under the environmental statute CERCLA. In 2013, the 2005 ASTM standard was revised (see our article, SOMETHING NEW IS IN THE AIR:  Important Changes to ASTM E 1527 “Phase I” Environmental Due Diligence, to read more about the 2013 revisions). EPA’s policy at the time was that both ASTM E1527-05 and E1527-13 were consistent with the AAI rule at 40 CFR Part 312.  Now, however, EPA has amended the AAI rule  to remove the reference to ASTM E-1527-05, thus rendering the 2005 standard inadequate for establishing CERCLA landowner and lender liability protections.

The amendment comes after EPA received many adverse comments in response to its decision to allow both ASTM E1527-05 and E1527-13. Commenters stated that using two standards could create confusion, especially since even ASTM no longer recognizes 2005 as meeting its standards for good customary business practice. EPA ultimately agreed, and is now requiring the 2013 standard to establish AAI. Thus, if you are commissioning a Phase 1 audit report to establish AAI, you will need to make sure  the environmental consultant performing the Phase 1 relies upon ASTM E1527-13.

Many attorneys on the business and legal sides of transactions involving the transfer of real property have developed working knowledge of the primary purposes of performing Phase I environmental due diligence: (1) gain information on the environmental conditions of a property; (2) establish defenses to CERCLA liability; (3) secure lending; and (4) secure insurance.

Many attorneys are also generally familiar with the CERCLA defenses parties seek to establish when conducting appropriate environmental due diligence:  (1) Innocent Purchaser Defense; (2) Bona Fide Prospective Purchaser defense (also applies to tenants); (3) Contiguous Property Owner defense; and (4) Lender Liability defense.

Notwithstanding this collective knowledge, environmental attorneys often receive the question: What is a REC, anyway?

For the answer, do checkout this discourse, beginning at page 14, prepared by Ilana Morady, Jeryl Olson, and Andrew Perellis.

By Andrew H. Perellis, Philip L. Comella, and Craig B. Simonsen

Speaking of the U.S. EPA’s draft guidance addressing vapor intrusion at contaminated sites, Mathy Stanislaus, the Agency’s Assistant Administrator for Solid Waste and Emergency Response, recently told BNA Bloomberg that “my plan is to get this out this year.”

The Agency published its original notice in November 2002, of its “Draft Guidance For Evaluating The Vapor Intrusion to Indoor Air Pathway From Groundwater And Soils (Subsurface Vapor Intrusion Guidance)”. The Agency has been operating with this draft guidance since that time. Comments on this initial notice were due in February 2003.  A subsequent request for comments was then published in March 2011, which public comments were due in May 2011. The rulemaking docket was then again re-opened on April 16, 2013, for public comments on two draft documents. One was the original broad vapor intrusion guidance for all compounds, and two was a second narrower guidance on petroleum hydrocarbon vapor intrusion from underground storage tanks.  Public comments were then due by June 24, 2013.

The Agency indicates that it has “extensively engaged stakeholders and considered extensive and substantive public comments received in 2011 and 2012.” Indeed, the rulemaking docket indicates that over 170 comments were filed. In a bit of confusion, BNA Bloomberg indicates that “Stanislaus said the agency received about 1,000 comments in 2013 on the draft guidance, which it is currently evaluating.” Whether the docket contains 170 or 1000 public comments, the Agency “is working to complete its work expeditiously and issue final subsurface vapor intrusion guidances so that it can be applied in forthcoming decisions.”

In this webinar, Seyfarth Shaw’s environmental group will distill the universe of environmental concerns in business transactions down to the top ten issues that practitioners should be aware of and think through.

Business transactions occur against an evolving landscape of changing environmental laws and rules. Many deals go forward, however, with boilerplate environmental clauses, imprecise definitions of key terms, incomplete indemnities, and only a vague understanding of the key environmental risks. Overly narrow clauses may expose a buyer or seller to the very risk they were trying to avoid.  Overly broad clauses may cover unintended events, needlessly prolong negotiations, and create unnecessary ill-will among the parties.

If you are involved in business transactions, please feel free attend our webinar on the “Top Ten Environmental Issues in Business Transactions.”  Registration is free, but required.

By Jeryl L. Olson

In follow-up to our August 16, 2013, blog regarding the EPA’s Direct Final Rule installing the new ASTM E1527-13 as an alternative, updated process for conducting Phase I environmental due diligence, it should be noted the Agency has indicated (in an email to BNA reporter Pat Ware) that it will WITHDRAW that rule.  78 Fed. Reg. 64403 (Oct. 29, 2013).

The ASTM E1527 standard is identified in 40 CFR Part 312 as the standard to be followed to ensure a user of the standard can assert Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) affirmative defenses (innocent purchaser and bona-fide prospective purchaser defenses) to CERCLA liability for contaminated real property,  The ASTM E1527 standard is universally used in real estate transactions to assess environmental conditions on properties subject to transactions.

The withdrawal is based on comments received by EPA which criticize not just the terms and conditions of the 2013 version of the ASTM standard, but EPA’s interpretation of how and when the new standard can be used. BNA reports that comments were received which criticized the Agency’s position that users may rely on either the 2005 or the 2013 versions of the standard when performing Phase I assessments. The BNA reported criticisms suggest that because the 2013 standard will be more expensive, institutional users of the standard (e.g. lenders) who tend to be high-volume purchasers of consulting services for Phase I assessments will continue the use of the 2005 standard, which is less expensive, thus rendering the 2013 standard at best moot, but most likely, confusing and potentially controversial to the myriad users of Phase I reports.

It is expected that consultants who have been gearing up for the new 2013 standard which was anticipated to become effective late this fall, will fall back for now and will be proposing services based solely on the 2005 standard.

NOTE: This blog has been updated with a more recent blog.

By Jeryl L. Olson

The U.S. EPA has published its approval of the updated ASTM Standard that is the basis for the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) affirmative defenses.  Amendment to Standards and Practices for All Appropriate Inquiries, 78 Fed. Reg.  49690 (August 15, 2013). 

EPA published its approval of the “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process,” ASTM E1527-13, updating ASTM E1527-05.  The codification of the ASTM standards as the 40 CFR Part 312 (Innocent Landowners, Standards for Conducting All Appropriate Inquiries) EPA- approved method of performing environmental due diligence for purposes of establishing the innocent purchaser defenses and bona fide prospective purchaser defenses  has broad ramifications; even where the purpose of conducting environmental due diligence  is not to establish the basis for a future CERCLA defense,  the standard is so universally applied that it has become defacto the standard of environmental due diligence. 

There are no substantive differences between the 2005 and 2013 version of the ASTM Phase I due diligence standard, and therefore EPA has published the updated standard as a direct final rule.

By Alison Boyer

In a One Minute Memo Seyfarth Shaw reviews the new procedure for evaluating and managing environmental risks for Small Business Administration loans.

The SBA has consolidated the procedures for administering “regular servicing” 7(a) loans and those deemed to have “liquidation” status in Standard Operating Procedure (SOP) 50 57 “7(a) Loan Servicing and Liquidation” (SOP 50 57) which took effect March 1, 2013. Chapter 5 of SOP 50 57 revises the guidelines for managing environmental risks associated with SBA loans and expands the application of the guidelines beyond actions taken in connection with a defaulted loan to also include actions taken in connection with regular servicing (i.e., collateral substitution or release). SOP 50 57 does not modify the procedures to be followed in connection with originating a new loan in which case, with respect to environmental due diligence, lenders will likely require an acceptable Phase I ESA.

The guidelines set forth in Chapter 5 of SOP 50 57 could serve as a best practices tool for any lender, whether making SBA loans or not, in assessing and managing environmental risks not only at the origination stage but also in servicing loans.