SCHNAPF ENVIRONMENTAL  REPORT

A Newsletter Covering Recent Environmental Developments and Caselaw
July/August 2000						Vol. 2, Issue 4	

Editor’s Note
Welcome to the Schnapf Environmental Report. The list of topics covered in this issue is as follows:
•	Federal Environmental Criminal Enforcement Declines 
•	EPA Reduces Penalties Under Audit Policy
•	Companies Obtain Relief Under State Audit Policies
•	CERCLA Recycling Exemption Requires Due Diligence
•	EPA Announces National Environmental Performance Track Program
•	Pennsylvania To Make Land Use Part Of Environmental Permit Reviews
•	CONRAIL Agrees to Fund Community Environmental Projects As Part of Settlement
•	Environmental Compliance Issues for Telecommunications Industry
•	Second Circuit Rules 1950s CGL Policy Applies to Gradual Pollution
•	Insurer Liable for Contaminated Property Acquired By Insured Policy Expired
•	Negligent Due Diligence Claims Against Environmental Consultants Increase
•	EPA Bringing NSR Actions Against Additional Industry Sectors
•	EPA Letter List Factors To be Considered in NSR Applicability Determinations
•	Company to Buy Emission Reduction Credits as Part of Settlement
•	Value of Emissions Credits Rise in California
•	EPA Settles Actions For CFC Violations
•	Mortgage lender  To Issue “Green” Mortgages
•	Critics Challenge Kyoto Protocol Emission Trading Program
•	EPA Proposes Regulations to Replace Tulloch Rule
•	EPA Issues TMDL Rule
•	Louisiana Company Fined for Drilling Wells in Wetlands
•	Ninth Circuit Upholds Wetlands Mitigation Formula
•	Missouri and Pennsylvania to Create Wetlands Banks
•	States Seeking Corporate Funding to Save Wetlands
•	Local Government Regulations Differ on Protection of Wetlands
•	Federal District Court Rules EPA Harassed Mill Owner
•	EPA Continuing to Bring UST Enforcement Actions
•	NY Appellate Courts Rule That Innocent Property Owners Not Liable for UST Contamination
•	NY Court Rules USTs are Fixtures Creating Liability for Landlord
•	EPA Proposes Amendments to CAMU Rule
•	EPA Brings PCB Enforcement Action Against Airport Authority and Contractor
•	Landlords and Property Managers Face Fines For LBP Disclosure Violations
•	EPA Approves 40 New Superfund Redevelopment Initiative Grants
•	EPA Awards Seven BCRLF Grants 
•	HUD Announces New Brownfield Grants
•	EPA Announces Prospective Purchaser Agreements
•	If You Clean It, They Will Play
•	California Creates Brownfield Fund
•	Wisconsin Law Providing Liability Relief To Municipalities Spurs Development
•	Successful Brownfield Projects in Pennsylvania
•	Pennsylvania Proposes Revising Brownfield Cleanup Standards
•	North Carolina Enacts Tax Credits for Brownfield Development and Dry Cleaners
•	EPA Completes Investigation At Florida Elementary School
•	EPA Completes Cleanups at Former Farm Sites
•	EPA Orders Warehouse Owners and Operators to Perform Cleanup
•	EPA Announces new Environmental Cost Accounting Protocol for Superfund Cleanups
•	EPA To Change Method for Calculating When Superfund Cleanups are Completed
•	Lender Liability Site to Be Redeveloped  
•	Prior Owner Not Liable Under CERCLA For Passive Migration
•	1990 First Circuit Decision on Parent Liability Not Altered by Best Foods Ruling
•	Conrail Allowed to Bring Cost Recovery Action
•	Automatic Stay Does Not Bar State Superlien Law
•	CERCLA Lender Liability Decision Does Not Bar Action Against State Finance Authority

DUE DILIGENCE/ AUDITING/ DISCLOSURE/ ENFORCEMENT 

Federal Environmental Criminal Enforcement Declines
Until the mid-1990s, federal enforcement for environmental crimes was directed largely at corporations. However, the last few years has seen a dramatic shift in criminal prosecutions towards individuals. Enforcement statistics recently released by the Department of Justice (“DOJ”) for fiscal year 1997 illustrate this trend. 
While the total number of businesses, organizations and individuals charged with federal environmental crimes declined for a second straight year from 511 to 446, only 25% percent of the cases were brought against businesses or organizations. The balance of the cases were brought against individuals and corporate officers.   Of the 446 case brought against individuals in 1997, 85% resulted in convictions. 25% of the convictions resulted in jail time. The average prison term was 21 1/2 months but half the sentences were for a year or less. 
In 1997 federal prosecutors commenced 952 criminal investigations compared to 909 for 1996. 53% of the 1997 criminal investigations involved alleged violations of wildlife protection laws while 47% involved pollution offenses. Federal prosecutors declined to prosecute 70% of the businesses or organizations that were investigated for a pollution offense and 67% of those investigated for a wildlife offense. The DOJ declined to bring criminal charges against 55% of the individuals investigated for pollution offenses and 38% of the individuals suspected of committing wildlife offenses. However, the federal government decided to pursue civil enforcement actions in 11% of the cases that had been declined for criminal referral. 
In 1997 the federal government filed 207 environmental civil actions and nearly all of these involved pollution. In 74 of the concluded cases, defendants paid an average fine of $2.5 million. In 1997 EPA also brought 3,427 environmental administrative actions. Private citizens brought 642 federal environmental lawsuits compared to 576 in 1994. State environmental agencies referred 379 matters to state courts in 1997. 
EPA Reduces Penalties Under Audit Policy
Companies are continuing to use the EPA audit policy to obtain significant penalty reductions for failing to file Toxic Release Inventory (“TRI”) reports required under the Emergency Planning and Community Right to Know Act  (“EPCRA”). For example, two companies recently obtained 100% penalty reductions.  EPA waived a potential penalty of $424,000 against General Electric for TRI reporting violations at its Grove City, Pennsylvania facility and waived a penalty of $7,400 against Dura Bond for failing to file TRI reports for its Steelton, Pennsylvania facility.
Other companies have achieved substantial penalty reductions in exchange for agreeing to perform Supplemental Environmental Projects (“SEPs”). For example, the Troy Chemical Corporation agreed to pay a penalty of $90,7000 and make $180,000 worth of improvements to its Newark, New Jersey facility. The company had failed to file TRI reports for 16 chemicals it had imported in the fiscal year prior to December 23, 1994 and also failed to file TRI forms for cumene and xylene for reporting years 1992 and 1993. Under the SEP, the facility will reduce air emissions of methanol. Troy will also install low-emission valves to lower the amount of methanol and other volatile chemicals that are vented into the atmosphere. Troy has also agreed to make two upgrades to significantly increase the amount of methanol and MODSOL that it recycles. This will reduce and reduce the quantity of hazardous waste it generates, lower the volume of wastewater discharges to the sewer system and also reduce the amount of raw materials it must purchase. 
Another company used the EPA Audit Policy to reduce Clean Air Act (“CAA”) violations. Adams Plating Co. agreed to pay a $6,250 penalty and perform a SEP estimated to cost $29,625 at the company's electroplating plant in Lansing, MI. Under the SEP, the company will install an upgraded blower system to cut emissions from its plating operations which will increase emissions control efficiency to 99.8 percent. 
Companies Obtain Relief Under State Audit Policies
Nearly two dozen states have adopted voluntary disclosure policies like the EPA Audit Policy. Though the kinds of penalty reductions and the eligibility requirements of these state policies may differ from the federal policy, they can nevertheless be used by companies to achieve significant reductions for violations of environmental laws that are voluntarily disclosed.
For example, the Idaho Department of Environmental Quality waived a $15,000 fine assessed against a Boise company for improper disposal of disposal of hazardous chemicals into its septic system. In exchange for the penalty waiver, the company will investigate and remediate potential soil and groundwater contamination, and will also fund a SEP. The SEP will involve connecting the facility to the Boise City Sewer system at an estimated cost of approximately $24,000.
In Oregon, a paper mill that faced potential penalties of over $480,000 for water quality violations was able to reduce its penalty assessment by 80% by voluntarily disclosing the violations. This was the first time that the state Department of Environmental Quality has used its self-disclosure rule in an enforcement matter. The DEQ self-disclosure rule was adopted in 1998.
CERCLA Recycling Exemption Requires Due Diligence
On November 29, 1999, Congress enacted the Superfund Recycling Equity Act (“SREA”) which exempts parties recycling certain materials containing hazardous materials from generator liability. In prior issues we have reported that while SREA expressly provides that the exemption would not affect any judicial proceedings instituted by the United States prior to the enactment of the amendments, there has been some confusion whether SREA applies to pending private actions. 
However, even if defendants in a private cost recovery or contribution action could assert the defense, these defendants would still have to overcome a significant hurdle that has received little attention since SREA was enacted. To qualify for the SREA liability exemption, recyclers must be able to show that they took “reasonable care” to determine if the companies they sold recycled materials to were in “substantive (not procedural or administrative) compliance with applicable federal, state or local environmental requirements”. SREA does not define “reasonable care” nor has EPA issued guidance interpreting the phrase. Thus, commercial recyclers, municipalities that run recycling centers and even non-profits that collect and sell recycled materials are unclear what level of inquiry they must perform in order to qualify for the liability exemption. Since SREA uses the “reasonable care” and not the phrase “appropriate inquiry” which appears in the CERCLA innocent purchaser’s defense, it is unclear if the kind investigation that would satisfy the innocent purchasers defense would be sufficient or is even necessary to assert the SREA defense. Thus, a party seeking to take advantage of the exemption does not currently know if it should perform a site inspection of the purchaser’s facility, have the buyer complete a questionnaire, conduct a data base search or simply have the buyer certify that it is compliance.
Moreover, it is unclear if scrap dealers would have to review all of the environmental laws affecting the buyer’s entire facility or simply determine if the buyer properly handled the scrap material. For example, should a company that sells scrap metal have to evaluate what the buyer did with the metal after it was melted or should a supplier of recycled paper have to determine if its customer is in compliance with the Clean Water Act after the used paper is broken down into a slurry?  While EPA is considering issuing formal guidance to address these issues, it will probably only be helpful for future recycling transactions since it is quite doubtful that scarp recyclers performed any customer compliance inquiries in the past. Thus, it is quite possible that the defendants who are allowed to assert the defense will not be able to successfully establish the elements of the defense. As a result, this defense may become as illusory as the innocent purchaser’s defense. 
Commentary: In our last issue, we reported that the district court for the eastern district of California ruled in California DTSC v. Interstate Non-Ferrous Corp that SREA applied retrospectively to pending state cost recovery actions. The court said SREA simply clarified that recyclers were not liable under CERCLA and did not alter the liability scheme of CERCLA.  If the law had changed the pre-existing liability scheme, the court would have had to determine if Congress had clearly expressed intent to have the law apply retroactively. In Morton International Inc v. A.E. Staley Mgf. Co., the federal district for the district of New Jersey extended California decision to contribution actions. However, the court did express concern that SREA’s fee-shifting provision could have a retroactive effect since plaintiffs could be penalized for filing actions commenced prior to the enactment of SREA.
EPA Announces National Environmental Performance Track Program
	Over the last several years, EPA has experimenting with new regulatory approaches designed to achieve high levels of environmental protection with greater efficiency while providing regulatory flexibility to facilities. Building on its experience with its Project XL and other similar programs, EPA has announced a new environmental performance program for facilities with superior environmental records. 
	The program will consist of two categories. The first track is the National Environmental Achievement track which will be designed for facilities that consistently meet their legal requirements, have implemented high-quality EMS, have made commitments to improve their performance and provide information to the public. The second tier known as the National Environmental Stewardship track is still under development and will be implemented in 2001. The Stewardship Track will be used to encourage higher levels of voluntary environmental performance than those expected under the Achievement Track. These may include improvement in several categories of environmental performance, product stewardship and even better public outreach. The Stewardship Track allows for participation by companies as well as individual facilities within a company.
In addition to receiving national recognition, EPA indicated program participants would be eligible for the following incentives: 

•	Reduced Discharge Monitoring Reports (“DMRs”) requirements under EPA's 1996 DMR burden reduction guidance.
•	Greater flexibility for meeting Best Available Control Technology (“BACT”) requirements of the CAA such as extending the applicability period for starting construction through a simplified control technology review. 
•	More advantageous terms under the State Revolving Funds (“SRF”) program of the Clean Water Act such as reduced interest rates and extended payback terms. 
•	Expedited review of new reduced risk pesticide product registrations for all of a participants pesticides manufacturing facilities. 
•	Reduced reporting requirements for facilities that achieve Maximum Achievable Control Technology (“MACT”) through pollution prevention methods such as process changes. EPA intends to accomplish this through a single generic rulemaking covering all MACT standards.
•	Streamlined monitoring, reporting, and other procedural requirements for Publicly-Owned Treatment Works (“POTWs”) 
•	Consolidating reporting under various environmental statutes into a single report. 
•	Allowing RCRA facilities to accumulate wastes for up to 180 days  without triggering RCRA TSDF permitting requirements. 
•	Expedited review for submitting TSCA Premanufacturing Notifications ("PMNs") where the applicant uses EPA's Pollution Prevention Framework when preparing the PMN submission.
•	EPA will allow participants to use the Audit Policy for violations discovered during on-site inspections conducted under the National Environmental Performance Track program if the facility could not reasonably be expected to have known about or identified the violation prior to the on-site visit. In the event the facility becomes subject to an enforcement action, EPA will consider the facility's participation in the program as an indication of the facility's good faith efforts to comply when calculating penalties.

	To be eligible for the program, a facility must satisfy the following criteria: 
•	Implementation of EMS- For purposes of the program, the EMS will include a written environmental policy that includes commitments to comply with both legal requirements and voluntary commitments, pollution prevention where source reduction is the first choice, continuous improvement in environmental performance including areas not subject to regulations and sharing information about environmental performance and the operation of the EMS with the community. The policy must establish measurable objectives and targets that meet policy commitments and legal requirements, reduce the facility's significant environmental impacts, and meet the performance commitments made by the facility to join the program. In setting objectives and targets, the facility should consider preventing non-compliance, preventing pollution at its source, minimizing cross-media pollutant transfers, and improving environmental performance. The facility should also establish procedures for achieving and maintaining compliance and performance objectives, communicating information regarding the EMS throughout the organization, provide appropriate incentives for personnel to meet the EMS requirements, and establish document controls including where EMS documents will be located and who will maintain them. There should also be general environmental training programs for all employees and specific training for those whose jobs and responsibilities involve environmental activities. The EMS should also provide for operation and maintenance programs for equipment and for other operations as well as an emergency preparedness program. There should also be an active program for assessing performance, preventing or detecting non-conformance (including an established compliance audit program and an EMS audit program) as well as a corrective action program for non-compliance with legal requirements and other EMS requirements. The EMS should also provide for management review of actual facility performance against the established objectives and targets of the EMS. EPA did recognize that the scope and level of formality of an EMS would vary depending on the nature, size, and complexity of the facility. EPA indicated that it believed that these EMS elements were within the capability of small facilities and could be met through a variety of approaches. To help small facilities implement an EMS, EPA will make guidance documents and assistance materials available.
•	Past performance and commitment to future improvements- The facility must have demonstrated environmental performance in certain categories. Three of the categories involve the use of resources (energy use, water use, and materials use) while four categories relate to negative effects of activities or processes (air emissions, waste generation, water discharges, and accidental releases). The final two categories relate to efforts to preserve or restore resources and to the environmental performance of products. Within each category, EPA has listed environmental aspects that a facility may choose from in reporting on its performance. A facility will be asked to select at least two environmental aspects from any of the categories and to describe the improvements in its performance during the current and preceding one-year. In making future performance commitments, facilities should select at least four environmental aspects, drawn from two or more categories. 
	EPA did recognize that a small facility might have fewer environmental aspects as well as more limited resources for measuring and committing to specific improvements in performance. Thus, small facilities will have the option of documenting improvement in one environmental aspect from any category. 
	In documenting past achievements and future improvements, a facility cannot rely on any actions taken to comply with existing legal requirements. However, facilities may use the results of its participation in EPA, state, and other partnership programs to document past achievements. EPA will not establish specific performance levels. 
•	Commitment to public outreach - There is no standard set of outreach activities, beyond what is required in the Annual Performance Report. EPA expects that applicants will already have established a public outreach program. For example, participants in the Responsible Care program or endorsers of the CERES (“Coalition for Environmentally Responsible Economies”) principles typically have a community advisory panel, newsletters, performance reporting, sponsorship of community activities, and other outreach activities.  In the application, each facility will be asked to describe its activities and plans in several areas including identifying and responding to community concerns regarding pollution, odors, traffic congestion, water discharges, and emergency warnings as well as reporting on the performance of its EMS and other performance commitments. The facility also will be asked to list any ongoing citizen suits against the facility. 
	EPA indicated that many small facilities have adopted lower-cost but effective outreach programs. At a minimum, a small facility should be able to document that it has designated a contact person  and has adopted procedures for responding to questions from local residents.  Other efforts could include a designated community liaison official, periodic public meetings or open houses. The level of public outreach would depend not only on the size of the facility, but also on the degree of community interest and the environmental effects of the facility's operations.
•	 Compliance with environmental laws- Facilities must have a good environmental compliance record and be in compliance with all applicable environmental requirements at the time of application. A facility will not be eligible for the program if there have been related violations of criminal laws involving the corporation or a corporate officer within the past 5 years, if there has been a criminal conviction or plea of an employee at the same facility for environmentally-related violations of criminal laws within the past 5 years or there is an on-going criminal investigation/prosecution of the corporation, corporate officer, or employee at the same facility for violations of environmental law. 
For civil enforcement, a facility will not be eligible to participate in the program if there has been three or more significant civil violations at the facility in the past 3 years, if the facility has Unresolved, Unaddressed Significant Non-compliance ("SNC") or Significant Violations ("SVE"), the facility will is subject to pending but not yet filed judicial or administrative actions, the facility is subject to ongoing EPA- or state-initiated litigation or is not in compliance with the schedule and terms of an order or decree.  In addition, EPA may also consider whether there are significant problems or a pattern of non-compliance in an applicant's overall civil or criminal compliance history. In addition, the facility must remain in compliance while it participates in the program.
Pennsylvania To Make Land Use Part Of Environmental Permit Reviews
With concern growing over sprawl, the Pennsylvania Department of Environmental Protection (“DEP”) has become one of the first state environmental agencies to routinely consider land-use issues during permit reviews for land-development projects. Under Governor Tom Ridge’s “Growing Smarter” land-use initiative, all state agencies must implement plans that promote sound land use by November 1st. 
Under the new program, applicants for nearly 80 types of environmental permits will have to answer questions to determine whether the project will conflict with comprehensive plans and zoning ordinances adopted by counties and local governments. Permit applications for construction of new buildings and structures and for infrastructure such as transportation, water, stormwater, energy and communication services are subject to the new requirements. The DEP intends to examine the positive benefits of projects such as whether the projects redevelop brownfields that save green space or restore the environment. In addition, DEP will review projects to determine if they support locally-designated growth areas, zoning ordinances adopted jointly by municipalities and farmland-protection programs.  Applicants will be required to provide expanded notices of the application and specifically solicit comments on potential conflicts with local land-use plans and zoning ordinances. 
DEP has the option of denying a permit application that conflicts with local land-use ordinances or attaching a special condition to the permit to minimize or overcome a conflict. DEP also can approve the permit where a conflict is considered minor or where other public needs may outweigh land-use concerns. 
DEP has estimated that as many as 5,000 of the 25,000 permits it reviews each year will be affected by the new requirements. The initiative will apply to pending permit applications. If land-use concerns have been raised during public reviews or by local governments, DEP will ask permit applicants to provide the same land-use information as new applicants. 
Conrail Agrees to Fund Community Environmental Projects As Part of Settlement
The Pennsylvania DEP also announced a $1.1 million agreement with Conrail to resolve environmental violations at the Hollidaysburg Car Shop and Reclamation Plant, the Juniata Locomotive Shop, and the East Bound Rail Yard facilities in Blair County. Half of the $1.1 million will fund community environmental projects (“CEP”) and the other half will go to the Solid Waste Abatement Fund. Pennsylvania sometimes accepts CEPs in exchange of reduced civil penalties when the proposed project has a substantial public health, safety or environmental benefit to the community. At the same time, the state attorney general announced that Conrail had agreed to pay a criminal penalty of $1.5 million for the Hollidaysburg site, including an additional $1.5 million CEPs. 
Under the CEPs, Conrail has agreed to fund will include $275,000 for the creation of a Canal Basin Park in Hollidaysburg that will an interpretative history of the 19th century canal. $75,000 will be used to pay for sampling at the Altoona City sewerage treatment facility located on the Beavertown branch of the Juniata River, and $200,000 will be directed to the Neighborhood Water Quality Protection Grant program that provides environmental education, water-related research, surveys, monitoring and water-quality improvement in low-income and or minority communities. 
Environmental Compliance Issues for Telecommunications Industry
Clients acquiring telecommunications companies often decline to perform environmental due diligence because they assume that these business do not have many environmental compliance issues. However, according to a recent issue of the EPA’s Enforcement Alert, telecommunication companies may have significant environmental requirements. These requirements can be triggered by the use of lead-acid or sulfuric acid batteries, valve-regulated or "gel cell" batteries as well as diesel, lead, halon, and propane. In addition, many facilities use diesel-powered backup generators that provide uninterrupted power to telecommunications facilities. 
For example, telecommunications facilities (central offices, mobile telephone switching offices, and garages) storing fuel oil for back-up generators or vehicle fleets may have to prepare written Spill Prevention Control and Countermeasure Plans (“SPCC”) under Section 311 of the Clea Water Act. 
Under the CAA, facilities constructing emission sources such as a backup generator must obtain permits before constructing or installing the emission source. The regulatory requirements for installing and operating backup generators vary among the states. Some states exempt smaller stationary sources such as backup generators from these permitting requirements. In Ohio, for example, generators with more than 50 horsepower, operate less than 500 hours per year and burn gasoline, natural gas, and low-sulfur distillate oil or liquid petroleum gas are exempted. This exemption is valid so long as the owner or operator maintains records for each exempt air contaminant source and retains these monthly records for at least five years. In addition, the CAA regulates refrigerants such as chlorofluorocarbons (“CFCs”) and hydrochlorofluorocarbons (“HCFCs”). These refrigerants may be found in air conditioning units used to cool electrical equipment. EPA recently fined a number of telecommunications company for allowing ozone-depleting substances to vent into the atmosphere from leaking equipment.
Telephone operations may also result in the generation of hazardous wastes and may also have regulated underground storage tanks (“USTs”) that may have leaked or may have to be upgraded to meet the 1998 UST standards. Also, telecommunications facilities that disposed of hazardous waste at off-site disposal facilities could become liable under CERCLA for the cleanup of contamination at those facilities. 
Under its Audit Policy, EPA has reached settlements year with 17 telecommunications companies that voluntarily disclosed and promptly corrected more than 2,000 environmental violations that occurred at more than 600 of their facilities. The telecommunications companies received a 100% waiver of the gravity-based penalties totaling more than $6 million. These 17 companies combined paid only $178,727 in penalties which represented the amount of the economic benefit realized through delayed compliance. In exchange for the penalty waiver, the 17 telecommunications companies implemented SPCC plans for 156 facilities, and filed EPCRA TRI reports for more than 1,000,000 pounds of diesel fuel, 482,000 pounds of sulfuric acid, and 410,000 pounds of lead present at their facilities. 
For example, earlier this year EPA entered into a settlement with MCI WorldCom, Inc for failing to submit TRI reports for sulfuric acid, diesel fuel and/or ethylene glycol at 47 facilities in 17 states, failing to obtain permits or submit late permit applications to construct or install standby generators at 67 facilities in seven states and not complying with SPCC requirements at 46 facilities in 25 states and the District of Columbia. The company agreed to conduct environmental compliance audits at its facilities and pay a penalty of $625,000 to resolve 216 violations of the EPCRA, CWA, and CAA at 153 of its facilities in 29 states and the District of Columbia. In addition, the company paid $50,000 in stipulated penalties for EPCRA Section 312 violations found at 100 out of 233 facilities audited. The company must still audit its WorldCom, Inc. facilities which merged with MCI in September 1998 and became known thereafter as "MCI WorldCom, Inc.
Commentary:  Users of computer-related equipment can also incur environmental cleanup liability if the equipment is improperly disposed. Computers and computer screens have electronic components that contain hazardous constituents such as lead, mercury, and cadmium. According to a study by the National Safety Council, more than 20 million computers have become obsolete in this nation and that by 2005, 55 million computers a year could be discarded in landfills. 
EPA is trying to encourage the development of Extended Producer Responsibility (“EPR”) programs where manufacturers will create products with less toxic content, greater recycled components and assume responsibility for taking back products at the end of their useful life. 
Until EPR becomes more widespread, users of computers and other electronic equipment can turn to computer asset recovery facilities who recycle computer components. Computer asset recovery facilities have processed more than 120 million pounds of scrap material. More than 95% of those materials, by weight, have been reused or recycled. However, one of the more difficult components to recycle are the circuit boards where components worth hundreds of dollars apiece are soldered in place then further secured with a protective adhesive such as an epoxy compound. The epoxy compound is used to form a hermetic seal to isolate components and connections from the environment and prevent corrosion and contamination. It is also used as electrical insulator and can act as a shock absorber to protect components from stress. While the solder can be easily removed with heat the presence of nearly indestructible epoxy adhesives around the components and their soldered connections has made disassembly so difficult that an estimated 77 percent of printed wire circuit boards cannot be reused.

ENVIRONMENTAL INSURANCE 

Second Circuit Rules 1950s CGL Policy Applies to Gradual Pollution
Prior to the mid-1960s, the standard comprehensive general liability (“CGL”) policy provided coverage for damage to property that was caused by an “accident”. By the end of the 1960s, many insurers had changed the wording of the CGL policies so to provide coverage for such damages that were caused by an “occurance”. The policies typically defined occurance as “an accident, including continuous or repeated exposure to conditions” which occurred during the policy period resulting in property damage or bodily injury that was “neither expected nor intended from the standpoint of the insured.” Exactly what constitutes an occurance has spawned considerable litigation. Recently, the federal Second Circuit Court of Appeals ruled in Olin Corporation v. Insurance Company of North America that the term “accident” was not limited to sudden or abrupt events but could include gradual pollution that occurred over time. 
In this case, Olin acquired a fertilizer plant located in Williamston, North Carolina in 1950. Olin manufacture pesticides at the site until 1967 when it leased the property. In 1968, Olin sold the property to Kerr-McGee Corporation who sold the property in 1983 to an individual who operated a weekend country-music dance hall in the old pesticide production warehouse. After a dance in June 1985, a patron complained about strong odors. Investigations by EPA and North Carolina detected high concentrations of pesticides. EPA then issued a number of CERCLA 106 orders requiring Olin to remove the contaminated soil, dismantle structures on the property that contained pesticides and to monitor the groundwater. At one excavation, water began flowing into the excavation. Olin collected the water in a 50,000-gallon pool and treated it with a carbon system. Both EPA and the state notified Olin in 1996 that no further cleanup activity was required at the site though Olin was expected to continue to monitor the groundwater. Olin spent approximately $3.7 million on soil cleanup and $362,000 on the groundwater work. 
Olin had purchased CGL policies from Insurance Company of North America (“INA”) from 1956 to 1973. After INA denied coverage, Olin brought an action in the federal district court for the District of Columbia which was transferred to the Southern District Court of New York. In a series of opinions, the court ruled that the term "accident" was not limited to an abrupt, one-time event and a jury found that INA could only be required to indemnify Olin for liability resulting from accidental damage to property from 1956 through 1970. The jury also found that the injury to soil occurred from 1956 through 1971 but that only the injury caused in 1956 and 1957 was accidental. The jury also found that injury to groundwater occurred during the same time period and that all the groundwater contamination was accidental. In addition, the jury determined that no such injury to property took place from 1951 through 1955 and 1972 through 1985 when Olin had no CGL insurance. Finally, the jury concluded that the EPA orders requiring removal contaminated soil and buildings from the site also required groundwater to be remediate. 
However, the district court ruled that EPA orders only required Olin to remediate the contaminated soil. Because the only accidental soil injuries were in 1956 and 1957, the court ruled that INA was only obligated to cover only the 1956 and 1957 portion of the soil cleanup costs. Next, the district court held that the $100,000 deductible was applicable to each year in which a policy was in effect. The court also decided that Olin had effectively decided to self-insure during the years that it did not purchase insurance. Therefore, the court allocated the cleanup costs for all the years that the jury determined damaged had taken place. 
INA appealed, arguing the terms and structure of the relevant policies provided “accident” did not apply to gradual infliction of damage. INA pointed out that the policy covered injury to property "caused by accident," while providing personal injury coverage attributable to an "occurrence." Since the post-1968 policies related "occurrence" to gradual events, INA said this was evidence that the term “accident” in the pre-1968 policies did not include gradual injury. 
However, the Second Circuit upheld all of the district court’s rulings. The court said that under New York law the key factor in determining if the environmental damage was caused by an “accident” hinged on whether the damage was intentionally done by the insured. The court also found there was nothing in the policies from 1956 to 1968 suggesting that the terms "accident" and "occurrence" should be distinguished on whether the injury occurred suddenly or gradually. The court also said that definitions contained in the post-1968 could not be used to interpret the earlier policies. Besides, the court observed, the post-1968 policy defined an” occurrence" as an "accident." The court said that an occurrence could not be both different from an accident and also defined by it. 
Because the vast preponderance of the costs that Olin incurred had been for soil remediation which the jury had disallowed, Olin argued on appeal that a portion of the money it spent to remediate the site should be attributed to the covered groundwater damage. The company reasoned that the soil cleanup was necessary to prevent the groundwater from becoming contaminated. However, the Second Circuit agreed with the district court that neither the EPA nor the State imposed the soil cleanup on Olin because of injury to groundwater. The court said that the 106 order required Olin to remediate the soil. The order did not require Olin to remediate the groundwater. While one motivation of EPA may have been to protect the groundwater, the court said that Olin’s liability was to cleanup the soil. 
Commentary: Between 1972 and 1985, CGL policies contained a “pollution exclusion”. However, exclusion contained an exception for pollution that was “sudden and accidental”. Courts have struggled with the meaning of the phrase “sudden and accidental” language. One line of cases holds that the phrase is ambiguous and should be interpreted to mean unintended and unexpected so that it is simply a restatement of the “occurrence” clause. Other courts, though, have held that the clause has a temporal meaning so that it excludes gradual pollution such as leaks from underground storage tanks. Beginning in 1986, CGL policies contained a “absolute” pollution exclusion. Most courts have held that the absolute pollution clause is unambiguous and precludes a broad range of environmentally-related claims.
Insurer Liable for Contaminated Property Acquired By Insured Policy Expired
	Does a CGL policy provide coverage if the damage occurred within the policy period but the insured did not acquire the property until after the policy had expired? The federal Court of Appeals for the Ninth Circuit recently ruled in KF Dairies vs. Fireman’s Insurance Company that the insurer did have a duty to defend an insured in a state cost recovery action where the insured did not take title to the contaminated property until after the policy period. 
In this case, KF Dairies held two CGL policies from the defendant from July 1, 1972 to January 1, 1976. In April 1976, the plaintiff bought and leased property in Tipton, California and also bought additional property in Fresno and Willows in 1985. Several years later, the plaintiff learned the soil and groundwater at all three sites was contaminated with petroleum hydrocarbons. When the plaintiff filed a bankruptcy proceeding in 1990, the California Attorney General's Office filed proofs of claim seeking to recover cleanup costs incurred by the state for the properties. 
The plaintiff determined that the contamination had taken place between 1972 and 1976 and filed a claim under its policies. When the defendant declined to defend against the proofs of claim, the plaintiff sought declaratory relief from the bankruptcy court. The court concluded that defendant should not have refused to defend the plaintiff in the state’s cost recovery action since the plaintiff was strictly liable under CERCLA for those costs as the owner of the property. The bankruptcy court then entered judgment against the defendant in the amount of $1,142,783 plus post-judgment interest. Following this decision, the parties reached a settlement which provided that the defendant would pay the plaintiff $1,300,000 if the defendant was unable to reverse the judgment. 
The district court reversed, holding that the defendant had no duty to defend the plaintiff as a matter of law since the plaintiff had acquired the sites (and therefore the CERCLA liability) after the insurance policy expired. The Ninth Circuit acknowledged that state courts had issued contradictory opinions on this issue and that the California Supreme Court had declined the appellate court’s request for certification. Relying on state insurance law, the Ninth Circuit reversed the district court’s ruling.
The appellate said that the policy defined an “occurrence” as "an accident, including injurious exposure to conditions, which results, during the policy period, in bodily injury or property damage neither expected nor intended from the standpoint of the insured." The court concluded that this policy language was unambiguous and contained no express exclusions or limitations. Since the clear language indicated that damage to the claimant is the event that triggers coverage and the contamination dated back to the policy period, the court reversed the decision of the district court. 
Negligent Due Diligence Claims Against Environmental Consultants Increase
As the number of so-called “commodity-style” phase I environmental site assessments (“ESAs”) proliferates, there is growing antedoctal evidence of an increase in claims being filed by clients claiming that the environmental consultant negligently failed to find environmental contamination during an ESA. We have learned that claims made under the Pollution Errors and Omissions Liability policies issue to environmental contractors now represent as much as 20% of the claims of some of the major environmental insurance companies. 
For example, an environmental consultant performed a Phase I ESA at a manufacturing facility in connection with a proposed merger. The ESA did not identify any evidence of contamination. Several years later, the purchaser/owner discovered that colored wood chips had been used as fill material at the property. It turned out that the blue coloring was actually a form of iron cyanide known as “Prussian Blue” which was a waste product of manufactured gas plants. The material had been deposited during the construction of towers for electrical power lines. The state determined that the fill material was a RCRA hazardous waste and required the property owner to perform corrective action. In addition, the owner discovered that parts of the site was contaminated with volatile organic compounds and found a leaking UST at the site as well. The total cleanup cost was estimated to be between $1 million-$8 million. The property owner also alleged diminution of property value of $2.5 million. Because the client never executed the form of terms and conditions issued by the consultant, the client claimed the limitation of liability contained in the contract did not apply. A jury ruled that there was an implied contract between the parties and that the limitation of liability was effective. The client has appealed the decision.
In another transaction, an environmental consultant performed a Phase I ESA on 19 retail properties that were being sold by its client. 15 of the properties had contained dry cleaning operations in the past. The consultant concluded that only two of the sites would have to be remediated. However, a consultant retained by the buyer determined that the consultant had used inappropriate cleanup standard and that many more sites would have to be remediated. The sale was delayed as the parties renegotiated the deal to address the environmental issues. In the intervening period, interest rates increased. As a result, the sales price was reduced. The client sued the consultant claiming delays were due to negligent investigation by the consultant and the delays were the cause of lower sales price. The client sued the consultant for $7 million but ultimately settled for $1.6 million.  

	

	AIR POLLUTION DEVELOPMENTS

  
EPA Bringing NSR Actions Against Additional Industry Sectors
During the past few  months we have been tracking the progress of the New Source Review (“NSR”) enforcement initiative launched by EPA and several northeastern states against coal-burning plants located in Alabama, Florida, Georgia, Illinois, Indiana, Kentucky, Mississippi, Ohio, Tennessee and West Virginia. These facilities pre-dated the federal Clean Air Act (“CAA”) and were “grandfathered” or exempted under the CAA from installing pollution controls required for new power plants. Under the NSR program, if these plants underwent “major” modifications, they would have to be equipped with state-of-the art emissions controls if the changes resulted in significant increases in six criteria pollutants. EPA asserts that the utilities engaged in major repairs and modifications that should have triggered the NSR requirements 
EPA has not been limiting its NSR enforcement effort to coal-burning plants. The agency has also been bringing actions against other industrial sectors. Unlike the coal-burning plants, these other enforcement actions do not involve improper repair or replacement but claim the facilities improperly expanded operations without undergoing NSR.  For example, a wood products manufacturer recently agreed to pay a $11.2 million fine. The company will also install art air pollution controls at 13 facilities in 5 states that will cost $74 million. The agreement also requires the company to perform an $8 million SEP. The company must also develop an EMS and perform compliance assessments.
The agency has also been targeting the pulp/paper industry. For example, Pennsylvania paper mill recently agreed to pay a $490,000 penalty and spend approximately $10 million to upgrade the plant’s pollution control system. The company will also commence new stringent air pollution monitoring and reporting requirements for pulp mills that are not slated to go into effect for another four years. EPA also recently filed a complaint against a Maryland paper mill charging that the company expanded its plant in the 1980s without undergoing NSR and failed to install required pollution control equipment. The expansion included installing two batch pulp digesters and a hardwood bleach line, rebuilding paper machines and increasing the capacity of an electricity-generating turbine. EPA is seeking hundreds of millions of dollars in fines and has asked that the company install SO2 and NOx emission control equipment to reduce emissions by 90%. Last year, EPA had threatened to fine seven Mid-Atlantic pulp and paper mills but is the first company in that group to be sued. 
EPA has also been focusing on the oil refinery sector. Recently, two major oil refiners agreed to spend $580 million to reduce air pollution at 12 refineries and pay $14.5 million in penalties. The agreements involved nine refineries owned by BP Amoco and three refineries owned by Koch Petroleum Group.  Under the agreement, Koch Petroleum will pay $4.5 million in penalties and will spend $80 million on pollution control equipment at three refineries.  BP Amoco agreed to pay a $10 million penalty and to spend up to $500 million on pollution control technologies. 
Commentary: Since EPA is bringing enforcement actions for changes to plants that may have occurred several decades ago, it is important that purchasers of business with CAA permits review the past changes and resulting emissions increases resulting from those changes to determine if the facilities might be vulnerable to EPA’s NSR initiative. This research should go beyond the customary regulatory records and should include purchase orders for new equipment, maintenance records, etc. Purchasers should also review current projects and pre-construction approvals. If EPA determines that a prior modification required NSR review, that finding could alter the emissions baselines for the current project. If the facility must lower its emissions threshold, the resulting difference between future and existing emissions could exceed the NSR threshold for a particular pollutant and transform the project into a “major” modification requiring NSR approval. If a facility determines that a prior change might have triggered NSR review, the facility should consider taking advantage of the EPA auditing policy established for NSR which we discussed in our November 1999 issue or the EPA Audit policy that was revised this spring.
EPA Letter List Factors To be Considered in NSR Applicability Determinations
Last year, Detroit Edison Company asked EPA to determine if a proposed replacement of a high-pressure section of two steam turbines at one of the company’s electric steam generating plants would be considered a major modification subject to the Prevention of Significant Deterioration (“PSD”) program. Recently, the agency provisionally concluded that the proposed project would not require a PSD permit because there was no information suggesting that the project would significantly increase emissions. However, EPA did caution the company that the project might be considered a physical or operational change that could trigger the NSR program. The agency then listed the following factors that should be considered when determining if a physical change is “routine” and thus excluded from the NSR program. 
·	Major components of a facility are modified or replaced 
·	The change requires pre‑approval of a state commission 
·	The source has characterized the change as non‑routine in internal documents
·	Repair requires the source to shutdown 
·	Materials, equipment and resources necessary to carry out the planned activity are already on site
·	The entire emissions unit will be replaced
·	The change will take a significant time to perform
·	Individual projects would be routine but combined projects would be considered non‑routine 
·	The change requires the net addition of parts to existing equipment
·	The purpose of the effort is to extend the useful life of the unit or to replace a unit at the end of its useful life
·	The modification will result in enhanced performance of the unit (e.g., increased capacity, operating rate, utilization, or fuel adaptability)
·	How frequently the change is performed in a typical unit’s life
·	Will the change be costly both in absolute terms and relative to the cost of replacing the unit
·	Is a significant amount of the cost of the change capitalized or is it paid out of the operating budget 
 In this case, EPA concluded that while utilities typically performed maintenance, repair and replacement of individual deteriorated turbine blades about once every four years, the reconfiguration and upgrade of a turbine’s entire high-pressure section  was a significant departure from necessary maintenance operations and was rarely performed at a typical utility. 
Company to Buy Emission Reduction Credits as Part of Settlement
A Rhode Island manufacturer recently entered into a settlement with the EPA where the company agreed to pay $240,000 in fines and spend at least $148,000 to buy 247 tons of emission reduction credits (“ERCs”) from Massachusetts to offset 247 tons of volatile organic compounds (“VOCs”) and nitrogen oxide (“NOX”) that the company emitted between 1993 and 1997. EPA claimed the company failed to obtain air permits for one of its two fabric coating lines and failed to install air controls on the second line. 
Commentary: Under the CAA, facilities that reduce emissions of VOCs or NOx below permitted levels may generate ERCs that can be sold or held for later use. ERC can be profitable for companies who are phasing-out plants or who have instituted work practices that have resulted in reduced emissions. They can also be useful for existing plants who need to offset increased pollution resulting from modifications to existing sources, construction of new sources or expansion operations or who only need the credits for peak production periods. Facilities that have had excess emissions may purchase those credits to offset the pollution they caused. 
Value of Emissions Credits Rise in California
Under the California RECLAIM trading credits (“RTCs”) program, the market price for NOx RTCs expiring in 2000 recently reached $11.25 per pound. NOx RTCs traded that expired in 1999 traded at $8.09 per pound while year 2001NOx credits are trading for $10.70/pound. While prices for short-term RTCs are rising, the price of medium- and longer-term NOx credits may be moderating. 2002 NOx credits sold for $5.42 per pound while RTCs beyond 2002 recently sold for $4.22 per pound. Nearly 220,000 pounds of NOx RTCs were traded on the Automated Credit Exchange which is the electronic exchange for trading California RECLAIM RTCs. Commentary: Market orders can cover several years, cycles or types. An order can combine purchases with sales. For example, a company can offer to buy credits up to one price limit  which might be its cost of control or sell credits above that price using the sales to pay for the control equipment. The electronic exchange processes all possible trades to find the optimum match to the company's criteria. 
EPA Settles Actions For CFC Violations
A Georgia company recently agreed to pay $400,000 to resolve chlorofluorocarbons (“CFC”) violations. The EPA alleged that the company did not use certified technicians to repair equipment containing CFCs and did not use CFC recovery equipment.
The former owner of a Kansas refinery also agreed to pay $600,000 to resolve multiple violations that occurred when it had owned the refinery. EPA claimed that company allowed six refrigeration units to release from 65 to 600 pounds of ozone-depleting refrigerants, failed to retrofit the leaking equipment and failed to notify EPA of the releases.
New York City recently entered into a settlement where it agreed to pay a $1 million penalty and undertake a SEP valued at $3 million to resolve allegations that it improperly discarded household appliances containing ozone-depleting substances or without verifying that the refrigerants were previously removed from the appliances. Ozone-depleting substances were released when city vehicles compacted or crushed the appliances without first removing the refrigerants.
The city has submitted a plan to assure that the appliances will be properly handled in the future.  The settlement also requires the city to buy nine ultra-low polluting compressed natural gas (“CNG”) heavy-duty trucks which will be operated by the Department of Sanitation and will build a CNG station to fuel these and other CNG trucks. The city will also construct six CNG fueling stations for light duty vehicles including one fueling station for the Department of Environmental Protection headquarters and another fueling station at the Department of Transportation headquarters.   The settlement also requires the city to conduct two pilot programs which will involve purchasing and testing two different types of devices that are intended to reduce emissions (including particulates) from garbage trucks which utilize conventional diesel fuel.  The city will be required to purchase 60 of these control devices. The city is expected to spend $570,000 for the heavy-duty CNG-powered trucks, $1.25 million to build the heavy duty fueling station, $880,000 for the six light duty vehicle fueling stations and $300,000 for the pilot programs.
Commentary: The CAA extensively regulates the use of ozone-depleting substances such as CFCs and hydrochlorocluorocarbons (“HCFCs”). These substances have been used in a wide variety of industrial applications such as refrigerants, propellants, degreasers and lubricants as well as numerous consumer products including air conditioning units in apartment buildings. While the manufacture of new CFCs is prohibited, businesses can continue to use CFC-dependent equipment for the useful life of the equipment. However, extreme caution must be used when servicing or repairing these older units to prevent inadvertent releases of CFCs or HCFCs.
 	Refrigerant recovery and recycling equipment must be used when servicing units containing CFCs or HCFCs to minimize the possibility of releases into the atmosphere. Companies must also use technicians who are certified to use these recovery and recycling equipment. In addition, the EPA continues to bring criminal actions against individuals smuggling CFCs into the country or companies that improperly use banned refrigerants. 
EPA does allow the sale of “reclaimed” refrigerants. Because of the continuing demand for CFCs and HCFCs, a market has developed for reclaimed refrigerants. As a result, many corporations who have replaced CFC-dependent equipment have stockpiled CFCs and HCFCs to sell or trade these substances to other companies, facilities, equipment manufacturers and brokers in exchange for cash, emissions allowances, goods or services. However, since EPA has adopted stringent rules for transferring reclaimed CFCs or HCFCs, some companies have run afoul of the EPA rules by selling recycled refrigerants which did not qualify as “reclaimed” refrigerant. Thus, it is important that sellers create supporting documentation to establish that the substances qualify as reclaimed refrigerants. This documentation should include the name and location of he facility where the material was reclaimed, the methodology used to purify the material, the purity level achieved as well as the purity verification test that was used.
Lender To Issue “green” mortgages
An English mortgage lender has joined forces with Future Forests to offer "carbon neutral" mortgages. The Norwich & Peterborough Building Society's Green Mortgage program offsets carbon dioxide emissions produced by homes by planting trees. For every home that is bought or re-mortgaged using a Green Mortgage, the building society will plant 40 trees - eight trees per year for five years. According to Future Forests, the average home can release about six tons of carbon dioxide per year time. It is believed that the trees will absorb or offset the carbon dioxide emissions produced by the property making the mortgage carbon neutral for five years. Homeowners will also save money from the energy-efficient features of the homes.
Critics Challenge Kyoto Protocol Emission Trading Program
Under the Kyoto Protocol, industrial nations may satisfy required emission reductions by engaging in emissions trading with other industrial nations. Proponents of the Kyoto point to the cap and trade sulfur dioxide (“SO2”) program in the United States as proof that market-based approaches can effectively reduce air pollution. However, critics point out that the SO2 program was easy to administer because it involved a manageable number of emissions sources  and the pollution was easily verifiable. By contrast, opponents of the Kyoto emission-trading program say that carbon is emitted from millions of sources all over the world which are far too many to monitor. Moreover, they argue that there is no binding international regulatory system to enforce emissions limits. The critics say Kyoto cap and trade program would allow industrial nations to borrow from future allocations to avoid meeting specified limits within designated dates. As a result, they claim that some nations are trading credits from more efficient energy projects planned long ago but only now coming on line. Moreover, under the 1990 baseline established for industrial countries, nations like Russia whose economy shrank dramatically after the breakup of the Soviet Union have large quantities of emissions rights to sell even though it is emitting far less today than it did in 1990. 
Another trading mechanism that is available is the Clean Development Mechanism (“CDM”) where a facility located in an industrial nation could obtain emissions credits from an undeveloped country in exchange for promoting a carbon reduction program. For example, a facility could sell China technology to make its coal cleaner or a coal-burning utility could pay to expand or preserve rain forests which would absorb some of the excess carbon dioxide emitted in the United States. The critics of the CDM program say CDM allows industrial nations to buy cheap emissions reductions in poor countries and to bank them indefinitely into the future. Moreover, when developing nations eventually become obligated to cut their own emissions, the CDM opponents say the developing nations will be left with only the most expensive options. The North-South carbon trades are being actively promoted by the World Bank even as the Bank continues to underwrite carbon-intensive projects in poor countries. Between 1992 and 1998, the World Bank underwrote $13.6 billion for coal-powered generating plants and oil and gas explorations in developing countries according to a study by the Institute for Policy Studies.

WATER POLLUTION/ENDANGERED SPECIES 

EPA Proposes Regulations to Replace Tulloch Rule
	Section 404 of the CWA prohibits discharges of fill or dredged materials without a permit. However, the drainage of wetlands is not expressly regulated by the CWA. To prevent the loss of wetlands from ditching or draining activities, the EPA promulgated the “Tulloch Rule” in 1993 which stated that “incidental fallback” of dredged materials would be considered an “addition of a pollutant” that would require a wetlands permit. In 1998, the Court of Appeals for the District Court invalidated the Tulloch Rule. In May 1999, EPA issued an interim rule that narrowly interpreted the scope of “incidental fallback”.
	On August 16th, the Army Corps of Engineers (“Corps”) and EPA proposed a rule that would modify the definition of “discharge of dredged material” (65 F.R. 50108). The proposed rule would create a rebuttable presumption that mechanized landclearing, ditching, channelization, in-stream mining, or other mechanized excavation activity in waters of the U.S. would result in regulated discharges of dredged material. The agencies stated that they believed these activities typically result in redeposits of dredged material that constitutes the “addition of pollutants” unless specialized techniques and equipment are used to ensure that only incidental fallback will result. 
	The agencies stated that activities using mechanized landclearing equipment typically moves substantial amounts of soil beyond the spot of removal and redeposit dredged material in a manner and amount that is different from or greater than incidental fallback. For example, brushrakes, rootrakes, hunkrakes, disc harrows, root plows, rippers, bulldozer plows, and many types of shearing blades normally scrape, pick up, move, or otherwise displace debris and soil. The agencies said that mechanized equipment such as graders or bulldozers is used to level or grade a wetland, soils are pushed by the blades and redeposited elsewhere in the wetland. 
	Other types of mechanized landclearing equipment that can substantially disturb and relocate soil and sediments would be subject to the proposed rule such as tree pushers and tree splitters. According to the agencies, tree pushers or tree splitters knock down trees and rip the roots out of the ground. Any roots remaining are then typically removed from the ground by the bulldozer's blade.
	Ditching and channelization activities use mechanized equipment of some type such as backhoes, bulldozers, dippers, or bucket dredges are also subject to the presumption. In channelization projects, bulldozers push sediments, including cobble, gravel, and sand from a particular place in the stream to another location. The agencies said that because of the soil movement and relocation of material, the use of bulldozers, deadlines, and backhoes, or other equipment of this kind will almost always result in discharges to waters of the U.S. 
	Under the proposed rule, persons proposing to conduct activities subject to the proposal may rebut the presumption that a regulated discharge of dredged material would occur by showing that the activity only resulted. Persons planning to engage in mechanized landclearing, ditching, channelization, in-stream mining, or other mechanized excavation activity should be prepared to show that any redeposits of dredged material in waters of the U.S. consist only of incidental fallback. In evaluating such a claim, the permitting authority will consider the nature of the equipment, its method of operation, whether redeposited material is suspended in the water column so as to release contaminants or increase turbidity, and whether downstream transportation and relocation of redeposited dredged material results.
Commentary: EPA has been using its stormwater permitting authority to halt destruction or degradation of wetlands caused by draining or ditching activities. On December 8, 1999, EPA promulgated its Phase II revisions to its stormwater regulations (64 FR 68721). This rule requires that a NPDES permit for storm water discharges into a MS4 or waters of the U.S. that are associated with construction site activities disturbing between one to five acres of land. Construction activity disturbing less than one acre would may also require a permit if the activity is part of a larger common plan of development or sale disturbing a total of one acre or greater, or if individually designated for permit coverage by the NPDES permitting authority. NPDES permitting authorities may waive the Phase II construction activity requirements where little or no rainfall is expected during the period of construction or when analysis indicates that controls on construction site discharges are not needed to protect water quality. Waivers are not available for construction activity disturbing five acres or greater which are subject to the Phase I stormwater regulations that were promulgated on November 19, 1990 (55 FR 47990). EPA expects that the Phase II requirements for construction activity will be implemented through general permits instead of individual NPDES permits.
EPA Issues TMDL Rule
In our January issue, we discussed EPA’s controversial proposed Total Maximum Daily Load (“TMDL”) regulations. Under section 303 of the CWA, states are required to develop TMDLs which calculate the amount of pollution that may be discharged into a water body to ensure that it achieves water quality standards. The states then use the TMDLs to allocate the amount of allowable pollutants that may be discharged by individual facilities using the stream or river.  
	On July 23rd, EPA published its final TMDL rule (65 FR 43585). EPA deleted some of the more controversial aspects from the final rule. For example, in the proposed rule EPA would have allowed certain point source storm water discharges from silviculture activities to be subject to the NPDES permitting program. EPA also proposed to designate certain animal feeding operations and aquatic animal production facilities as point sources in NPDES authorized states. EPA deleted these provisions from the final rule. The time period for states to update inventories of polluted waters was stretched from two years to four years. States will also have ten years from June 2000 to complete their TMDLs but could seek an extension of up to five years.  States would have to prepare TMDLs for waters that do not meet water quality standards and not those where water quality is threatened. In addition, EPA deleted the reference to drinking water contaminants from the definition of pollutants. The rule now only applies to pollutants that are subject to the NPDES permit program.  
	In a related action, EPA proposed changes to the NPDES regulations on August 23, 2000 to ensure implementation of the TMDL rule (65 FR 46058). Under the proposed rule, animal feeding operations (“AFOs”) and aquatic animal production facilities (“AAPFs”) could be designated as point sources subject to NPDES requirements on a case-by-case basis. 
	EPA also proposed eliminating the current regulatory exclusion for certain discharges from silvicultural activities. Currently discharges from silvicultural activities such as rock crushing, gravel washing, log sorting and log storage facilities are considered point sources and subject to regulation under the NPDES program. Other silviculture activities are defined as non-point source discharges. They include runoff from nursery operations, site preparation, reforestation and subsequent cultural treatment, thinning, prescribed burning, pest and fire control, harvesting operations, surface drainage, or road construction and maintenance. EPA is proposing to no longer define these activities as non-point sources and may require these activities to obtain NPDES permit on a case-by-case basis when EPA establishes a TMDL for a waterbody and determines that point source designation is necessary to ensure that the wasteload allocations under the TMDL are achieved. However, these activities would not become subject to the stormwater permit program.
	EPA is proposing to require that large new and significantly expanding dischargers obtain and maintain offsets of one and a half to one. The specific requirements for an individual discharger would be dependent upon the type of pollutant for which the waterbody is impaired and that the discharger is proposing to discharge, the source from which the discharger is proposing to obtain and maintain the offsetting load reductions, and the large new or significantly expanding discharger itself. These offsets would have to be obtained from existing point sources or non-point sources located on the same waterbody as the new discharger or existing discharger undergoing a significant expansion. EPA also indicated that it would have the discretion to not require an offset if it is determined that any offset would result in further degradation of water quality.  
Louisiana Company Fined for Drilling Wells in Wetlands
A publicly-traded independent oil and gas exploration and development company agreed to pay a civil fine of $700,000 and spend $500,000 to acquire and dedicate environmentally sensitive land in south Louisiana to The Nature Conservancy. The federal government claimed the company had drilled ten wells in areas that fell within the definition of a jurisdictional wetland. 
As part of the settlement, the company is required to indicate in its financial statements that the acquisition of lands and dedication to The Nature Conservancy was in connection with the settlement of the enforcement action. 
In another wetlands case, a Wisconsin developer agreed to pay a $25,000 penalty for discharging about 1,773 cubic yards of soil into 0.16 acres of wetlands without first obtaining a permit. As a condition of the settlement, the company also removed the soil.
Ninth Circuit Upholds Wetlands Mitigation Formula
The Ninth Circuit Court of Appeals approved a wetlands permit issued by the Corps which authorized a complicated wetlands mitigation project for a controversial development located near Marina Del Ray in Californian.
In Wetlands Action Network, et al. v. U.S. Army Corps of Engineers, the Playa Capital Company planned to build a mixed use development known as Playa Vista that would consist of residential areas, a marina, and numerous commercial developments including hotels, retail establishments, and an entertainment media and technology district which would cover over 1,000 acres. The proposed project has been controversial because it involves the largest remnant parcel of undeveloped land in the western portion of Los Angeles County. 
The Playa Vista property contains approximately 186 acres of federally delineated wetlands. As part of its project, the developer planned to dredge and fill 21.4 acres of wetlands. The developer proposed to divide the project into three phases. The first phase involved the development of approximately 5 million square feet of office space, 13,000 residential units, and hotel and retail space. In this phase, the developer proposed to fill 7.8 acres of flood control ditches and degraded wetlands located in seventeen isolated patches for mixed-use development.  During this phase, the developer also proposed to create a 51.1-acre freshwater wetland system consisting of 26 acres of freshwater marsh and 25 acres of freshwater riparian corridor. The freshwater wetlands system was to serve as mitigation for the total 21.4 acres of wetlands that would be dredged and filled for all phases of the Playa Vista project. However, creation of the freshwater wetland system would require filling 7.7 acres of wetlands for a berm to separate the freshwater wetlands from the saltwater wetlands although 4.0 acres would be restored in a later phase. The second phase called for the restoration and creation of a salt marsh which would occur in 160 acres of delineated degraded wetlands. By restoring those wetlands and converting uplands to wetlands, a 230-acre salt marsh system would be created. The third phase provides for the development of a marina and ecological enhancement of the Ballona flood control channel which will dredge and fill 9.8 acres of wetlands of which 3.7 acres are a man-made drainage ditch and 8.1 acres are scattered, degraded wetlands.
In October 1990, the developer submitted alternatives analysis which described six alternatives including four different configurations of the mixed-use development to avoid all or part of the wetlands as well as the possibility of using an offsite location for the development. Based on its analysis, the developer concluded that there was no practical alternative available that would result in less significant environmental impacts. In response to comments from other government agencies and environmental organizations, the developer submitted a revised alternatives analysis which evaluated five alternatives to the mixed-use development portion of the project and six alternatives to the freshwater wetland system portion. The analysis also concluded that no practical alternative was available.
In July 1992, the Corps issued a wetlands permit that contained special conditions requested by other federal agencies along with an Environmental Assessment (“EA”) and a Finding of No Significant Impact ("FONSI"). In the EA, the Corps found that the division of the project into three applications was a logical division and did not constitute inappropriate piece-meal of the overall project. Due to the relatedness of the three phases, however, the Corps found that it would accept mitigation credit for the future projects as part of Phase I provided that the later phases eventually receive authorization and that the success criteria for the freshwater wetland system was met. The Corps ultimately determined that the project would result in a net increase in wetland values.
Following issuance of the permit, the developer performed extensive filling, clearing, and grading in the wetlands. In 1996, the plaintiff filed its lawsuit alleging violations of National Environmental Procedures Act (“NEPA”) and the CWA. The district court granted the Corps' motion for partial summary judgment on the CWA claim but granted the plaintiff’s motion for summary judgment on its NEPA claims. The district court found that the Corps had violated NEPA by limiting the scope of its analysis to the impacts of activities covered by the permit instead of considering the impacts associated with the whole development project. The district court rescinded the permit and enjoined the developer from any undertaking any further construction activities in the area covered by the permit. 
The Ninth Circuit reversed the district court’s NEPA rulings. The Court agreed with the Corps that the three phases of the project were not connected actions because each have independent utility and therefore the agency was not required to consider the environmental impacts attributable to the three different phases in a single NEPA analysis. The Ninth Circuit also rejected the district court’s finding that the Corps had acted arbitrary and capriciously by ignoring comments in the administrative record that the freshwater wetlands system was not feasible. The Ninth Circuit said that while the record did contain many agency and public comments criticizing the freshwater system, the majority of these comments did not question the feasibility of the freshwater system or indicate that the system would have negative impacts on the environment. Since the Corps based its FONSI upon relevant and substantial data, the court said the fact that the record also contained evidence supporting a different scientific opinion did not render the agency's decision arbitrary and capricious
The plaintiffs had also argued that the Corps decision to issue the FONSI was arbitrary and capricious because it was based on an incomplete mitigation plan. However, the Ninth Circuit found that a careful review of the record demonstrated that mitigation measures were developed to a reasonable degree and had been reviewed by the Corps and other federal agencies at the time the permit issued. Moreover, the special conditions included in the permit and reviewed by the various agencies were extremely detailed. Thus, the Corps could determine the precise nature of many of the mitigation measures at the time that it made the permitting decision. The Ninth Circuit also said that the plaintiff’s exaggerated the need for mitigation. The court found that the record supported the Corps' finding in the EA that the scattered wetlands were highly degraded so little wetland value would be lost by the Phase I filling activity. Due to the value of the freshwater system, the Corps found that the development of Phase I would increase the wetland values of the area. In order to issue a FONSI, the Court said that the Corps only needed to find that the mitigation measures would render any environmental impact resulting from the permit activity insignificant.
Finally, the Court ruled that the Corps did not act arbitrarily and capriciously when it determined that an EIS was not required for the permit to fill in the 16 acres of degraded wetland given the mitigating value of the freshwater system. The court found that a majority of the objections raised to the development of the freshwater wetland system were premised on an opinion that it would be more appropriate to use the area as a salt- water marsh or that the geographic location of the marsh should be altered. These types of objections, the court said, did not pertain to the "size, nature, or effect" of the development of the freshwater system. The court said that during the two-year review process, the Corps addressed the potential effects to the satisfaction of the other federal resource agencies since the agencies eventually withdrew their objections to the issuance of the permit. Thus, the court concluded, the district court erred in finding that the Corps had violated NEPA when it issued the permit without preparing an EIS evaluating the environmental consequences of the entire Playa Vista project.
Missouri and Pennsylvania to Create Wetlands Banks
Under the CWA, when a proposed development demonstrates that that there is no practicable alternative to construction in a wetland and that all practicable measures to avoid and minimize impacts to wetlands have been incorporated into the project, the permitting agency may allow the development to create additional wetland as compensatory mitigation for the wetlands to be destroyed. In the past, the Corps has shown a strong preference for on-site mitigation. However, this has often resulted in a patchwork of isolated, poor quality wetlands. Further complicating the issue is that the agencies often lack the resources to adequately monitor these small wetlands. Another factor contributing to the poor performance of these mitigation wetlands is that developers are not in the business of creating wetlands. When a developer completes a project, it often transfers possession of the property to a third party who also does not have expertise in maintaining wetlands. As a result, the EPA and the Corps are increasingly allowing the use of wetlands mitigation banks which are large wetlands located on privately-owned or publicly-owned land that have been restored, created, enhanced, or, in exceptional circumstances, preserved expressly for the purpose of providing compensatory mitigation for authorized impacts to wetlands. A developer can make payments to the bank sponsor and receive “credits” towards its mitigation obligations. 
For example, the Missouri Conservation Department and the Corps recently approved the creation of a wetlands mitigation bank to enable the development of a $243.5 million industrial park that would have destroyed a stretch of Fox Creek in St. Louis County, MO. which is the only stream in St. Louis County that has not yet been channelized. The Fox Creek Stream Mitigation Bank is the first stream mitigation bank in the US. The developers will plant trees and scrubs to create a protected stream corridor 300 feet wide and 2.6 miles long in exchange for 197.2 stream mitigation credits which can be sold to developers for projects in the watersheds in nearby counties.
	In addition, the EPA and Pennsylvania recently proposed to enter into a wetland banking agreement to provide advanced compensatory mitigation for unavoidable, minimized impacts to wetlands resulting from transportation construction or maintenance activities performed by the state transportation agencies. For projects that impact total less than one acre of wetlands, the state agencies would receive mitigation bank debiting when they can demonstrate that on-site mitigation is not practicable or that wetland bank debiting provides greater environmental benefit than on-site mitigation. For projects that will affect more than one acre of wetlands, wetland bank debiting will be appropriate compensatory mitigation where it can be shown that on-site mitigation is not practicable and other off-site mitigation is not practicable or compensation through wetland bank debiting will provide greater environmental benefits than either on-site mitigation or other off-site mitigation. 
Commentary: The 1990 memorandum of agreement between the EPA and the Corps states that compensatory mitigation measures should be taken in areas adjacent to or contiguous to the site. If that is not possible, off-site mitigation is permissible but should be taken in the same geographic area. When developing compensatory mitigation, the function and value of the aquatic resources are to be considered which not only includes habitat for animal or plant life but also the natural filtration function provided by the wetlands, flood control and groundwater recharge. A one-to-one ratio is usually used for determining how many acres of wetlands must be restored or created. However, more acres of land may be needed to adequately replace functions that are lost by high quality wetlands or where there is a low likelihood of success.
The attraction of wetlands banks to developers is that they can be a cost-effective tool to meet their mitigation requirements and also frees the developer from having to manage the wetlands restoration project. Because the banks are relatively large, they have a better success rates and are easier to monitor for government regulators. Indeed, a Florida study indicated the survival rate for individual wetlands created by mitigation was only 27%. In some areas, credits from wetland mitigation banks sell for as much as $60,000 an acre. 
States Seeking Corporate Funding to Save Wetlands
To increase the amount of funding available for restoring wetlands, Maine, Massachusetts and Rhode Island have established Corporate Wetlands Restoration Partnerships (“CWRP”). The objective of the CWRPs is to reverse the degradation of the nation’s freshwater and saltwater wetlands and other aquatic habitats. The CWRPs leverage contributions from business which are placed into participating private foundation or state trust funds. These funds are matched by state and federal dollars. The amount of the matching government funds will vary by project. These CWRP funds will be used to support site specific wetland or other aquatic habitat restoration projects. The CWRP will coordinate its efforts with Coastal America, a partnership of federal agencies with similar habitat restoration goals. Projects that receive funds from CWRP will be approved by Coastal America and federal agencies will assist with their implementation.  The goal of the Maine CWRP is to raise $1 million from corporations which will be added to a federal contribution of $3 million. EPA has already contributed $25,000 to the program. The CWRP in Connecticut' hopes to bring raise $1 million in its first year.
Local Government Regulations Differ on Protection of Wetlands.
While the federal and many state governments are aggressively trying to halt the destruction of wetlands, inconsistent regulation by local governments may be hindering these efforts. An example from Maine illustrates this problem. The state Department of Environmental Protection prevents development within 25 feet of open-water marshes but allows houses and lawns to be built right up to the boundaries of forested wetlands. Some communities also require buffer zones around wetlands while others do not require any wetland setbacks. For example, a stream flowing between South Portland and Cape Elizabeth is flanked with wetlands. South Portland recently allowed a developer to fill in wetlands to make room for a new house. In contrast, developers who work on the Cape Elizabeth side are prohibited from building driveways across certain wetlands to reach prime land. Cape Elizabeth divides up its wetlands into two categories: wet and very wet. The town will permit a developer to build a driveway over ordinary wetlands to reach dry land if the driveway crosses at the point with the least impact. However, it will not allow a developer to cross land that is considered very wet. For the most valuable wetlands, the town requires a 250-foot setback. 
Some communities can encourage developers to preserve wetlands with innovate landscaping. Rather than filling wetlands to create lawns, for example, developers can create "rain gardens," natural-looking wetlands that absorb run-off within a subdivision.  Another town has established wetland setbacks as an interim measure that will expire in a year. In the meantime, the town's conservation commission will create a comprehensive and more complicated approach to wetlands protection, which will include land purchases as well as regulations.
Federal District Court Rules EPA Harassed Mill Owner
A federal district judge ordered the federal government to pay $68,726 to a defendant in a CWA criminal enforcement action to reimburse the defendant for expenses and legal fees incurred in connection with a “vexatious” prosecution by the federal government. Under a three-year-old federal law, exonerated defendants may seek legal fees from the government for non-meritorious prosecutions. 
The defendant is the owner of a company that manufactures wire mesh for lobster traps. In 1997, EPA received an anonymous tip from a former employee who claimed that the company had illegally discharged highly acidic wastewater into the town sewerage system. EPA inspectors tested the wastewater in a manhole outside the plant in 1997 and found excessive acidic water in the sewer. When EPA confronted the defendant with the data who urged them to test a second manhole that was closer to the point where the mill water entered the town system. 
In 1998, the defendant and his company were indicted on two counts of violating the CWA. However, the case was dropped in 1999 when a federal prosecutor revealed that the sampling results from the second manhole showing that the wastewater discharges were within legal limits had been withheld from a search warrant application. In addition, an expert hired by the defendant determined that other test results were altered to show violations. 

HAZARDOUS WASTES/USTS

EPA Continuing to Bring UST Enforcement Actions
When the EPA deadline for upgrading underground storage tanks (“USTs”) passed in December 1998, UST owners and operators had the option of temporarily close their tanks for up to a year prior before taking any action. Now that the temporary closure period has expired, the EPA is bringing enforcement actions against UST owners and operators.
For example, EPA is seeking $261,595 from an owner of 19 gas stations in New Jersey for failing to properly close 20 underground storage tanks at four stations in North Jersey and failing to immediately report a petroleum release at another New Jersey site.  EPA found that the 20 underground storage tanks at Super Value's four North Jersey stations were left temporarily closed for three to ten years.  Contamination was discovered at all four locations. In some cases, the leaking tanks were removed but contaminated soil was left at the site. One station with contaminated soil was located just 450 feet from the Oradell Reservoir which is a source of drinking water for the community. The full extent of contamination at each gas station has not yet been determined. The UST cleanups will be addressed under NJDEP oversight.
EPA also has settled a lawsuit against an Arkansas petroleum retailer for $80,000. EPA alleged that the retailer failed to properly conduct required tank and piping testing and also failed to upgrade 41 USTs located at 10 gas stations. Site inspections conducted by EPA did not uncover any evidence that the tanks were leaking. 
Commentary: Because the federal UST program has been designed to be primarily administered and enforced by state environmental authorities, EPA regional offices have limited resources for bringing UST enforcement actions. The federal Leaking Underground Storage Tank (“LUST”) Fund provides financial assistance to states to administer and enforce their UST programs. Occasionally, though, EPA has commenced UST enforcement initiatives when requested by a state or when an owner or operator of USTs appears to have engaged in a pattern of widespread non-compliance at multiple facilities.
NY Appellate Courts Rule That Innocent Property Owners Not Liable for UST Contamination
During the past few years, New York state courts have issued seemingly conflicting decisions on the liability or owners of petroleum-contaminated property who were not responsible for the discharges. Under the New York Oil Spill Prevention, Control and Compensation Law (the “Navigation Law”), dischargers of petroleum are strictly liable for all cleanup and removal costs as well as direct and indirect damages associated with the discharge. The statute does not expressly define who qualifies as a discharger. Operators of a facility where a release has occurred, the owner of tanks that leaked, suppliers of heating oil, installers of oil tanks and even oil brokers have been held liable as discharges but it is unclear if landowners who did not actively operate the source of contamination may be liable. 
The New York Court of Appeals which is the state’s highest court has not ruled on the issue. A line of cases has emerged from the Appellate Division’s Third Department that seemed to hold that a landowner might be liable as a discharger if it owns the system or the source of the contamination even where there was no evidence that the landowner caused or contributed to the contamination. Cases from the Fourth Department, though, have held that a landowner may not be liable as a discharger solely on its status as owner. These courts hold that there must be some evidence that the landowner caused or contributed to the spill 
In a recent series of opinions, the Appellate Division for the Third Department clarified the scope of the liability of property owners.  In New York v. Speonk Fuel Inc., the Appellate Division ruled that a purchaser must be the owner of the UST system causing the discharge to be liable as a discharger under the Navigation Law. In that case, the purchaser acquired a parcel of property in Long Island that the seller had previously operated as a gasoline station. The purchaser was the president of the defendant corporation which also purchased the service station business. Prior to the sale, the seller had tested five USTs at the site and one had failed the tightness test. After the purchaser signed the purchase contract but before the closing, the leaking UST was removed and the NYDEC performed a cleanup. The state attorney general then brought a cost recovery action under the state Navigation Law against the defendant, seller and the purchaser.  The defendant filed a motion for summary judgment arguing that it was not liable under the Navigation Law as a discharger because it not own the property at the time of the discharge. The Supreme Court denied the defendant’s motion but the Appellate Division reversed. The court noted that it has consistently ruled that an owner of a tank system may be held liable for a discharge in the absence of evidence that the owner caused the discharge. However, where the same person does not hold ownership of the tanks and the property, the court said it was not proper to impose strict liability on the faultless owner. Because there was no evidence that the defendant corporation had an ownership interest in the tanks or that it had contributed to the problem once it operated the property, the court held that the defendant was entitled to summary judgment. However, the court indicated a purchaser acquiring property is presumed to own the tanks, pipes, and other fixtures that make up the system in the absence of evidence to the contrary. The court said it was irrelevant that the tank was removed before the owner purchased the system. Because the purchaser was the owner of the system that had caused the discharge and that contamination remained from the discharge, it was appropriate to add the purchaser as a defendant.
In New York v. Green,  the Appellate Division for the Third Department reversed a grant of summary judgment in favor of the plaintiff and dismissed the complaint against the defendant. The defendant had owned and operated a trailer park in Orange County where a discharge took place from an above-ground heating oil tank utilized by a tenant of the defendant. After the DEC cleaned up the spill, the state filed a cost recovery action against the defendant.  In holding in favor of the defendant, the court indicated that its prior decisions in White v. Regan  and New York v. Tartan Oil  imposing liability on current landowners for discharges that took place prior to the time they acquired title had been misconstrued in subsequent decisions. The court clarified that those cases involved circumstances where the property owner held title to the land as well as the UST systems. The court then went on to state that in circumstances where the property owner does not own the tanks that caused the discharge, the landowner would not be liable per se under the Navigation Law. 
NY Court Rules USTs are Fixtures Creating Liability for Landlord
 An owner who leased property to a gasoline station may not seek reimbursement under the New York Environmental Protection and Spill Compensation Fund (“Spill Fund”) for loss of income and property damage. In 310 South Broadway Corporation v. McCall, the petitioner sought damages after its tenant failed to comply with a DEC consent order. The administrator of the Spill Fund concluded that the plaintiff was strictly liable under the Navigation law as the owner of the property where the discharged occurred as well as the UST system and therefore denied the reimbursement request. The owner then filed an Article 78 proceeding to review the Administrator’s decision.  After the Supreme Court dismissed the petition, the Appellate Division for the Third Department acknowledged that mere ownership of property was not sufficient to impose strict liability on a landowner. However, the court held that the petitioner was the owner of the tanks. The petitioner argued that a prior site operator installed the tanks and that title to the tanks had passed to the current tenant. The court disagreed, pointing out that the tanks had remained in the ground after the prior operator had vacated the premises and that the petitioner had executed UST registration forms had listed the petitioner as the owner of the USTs. 
The court also noted that the lease provided all improvements, equipment and appurtenances existing at the commencement of the lease or any such structures that were installed during the term of the lease would be deemed to be part of the realty and become the “sole and absolute property” of the landlord. The petitioner claimed that the USTs were trade fixtures which remained the property of the tenant but the court rejected this argument, ruling that the trade fixture exception only applied to movable trade fixtures. Once the tanks were placed in the ground, the court said, the tanks became affixed to the property and could not be considered trade fixtures under the lease. Thus, the petitioner was the owner of the tanks which caused the discharge and was not eligible for reimbursement.  
Commentary: Leases often allow tenants to construct or install equipment that is necessary for the operation of the tenant’s business including USTs. Many of the older leases simply provide that such equipment and fixtures are the personal property of the tenants and provide the tenants with the right to remove such personal property at the termination of the lease. However, these leases often do not address what happens if a tenant leaves fixtures such as USTs in the ground. Further complicating the situation is that the leases are often assigned or sublet to successive operators who use the USTs but ownership of the USTs are rarely addressed in the consents issued by the landlord. Then, after the last tenant vacates the premises, a dispute arises over who is responsible for removing the USTs and remediating the contamination associated with the USTs. 
Former tenants have argued that they abandoned the USTs which then became fixtures for which the owners were responsible. Cutting against this argument is the statutory definition of a UST owner in RCRA and many state UST laws. The federal definition provides that tanks the owner of tank that was no longer in use as of November 8, 1984 is the person who owned the tank immediately before the discontinuation of its use.
Moreover, the weight of authority seems to be that there is a rebuttable presumption that USTs which have been installed by a tenant for the purpose of carrying on a business are trade fixtures. Unlike fixtures, trade fixtures do not become part of the realty but instead remain the personal property of the tenant. Courts will often look to the intent of the parties in determining ownership of the USTs.
EPA Proposes Amendments to CAMU Rule
	On August 22nd, EPA proposed amendments to its Corrective Action Management Unit (“CAMU”) rule. The proposed regulation (65 FR 51079) describes the types of wastes that may be managed in CAMUs, establishes minimum design standards for CAMUs as well as treatment standards for wastes placed in CAMUs, and sets forth public participation requirements for CAMU decisions. In addition, creates requirements for CAMUs used only for treatment and storage.
	EPA issued its original CAMU rule on February 16, 1993(58 FR 8658). The purpose of the rule was to provide flexibility to owners and operators of RCRA treatment, storage and disposal facilities (“TSDFs”) that are managing hazardous wastes and media containing hazardous waste during corrective action or closure activities. The CAMU rule established a category of remediation wastes such as contaminated soil generated during corrective action or closure activities that could be managed, consolidated or placed into discrete areas at a RCRA facility known as a CAMU without triggering the RCRA land disposal restriction (“LDRs”) standards and minimum technical requirements (“MTR”) for land-based units (e.g., landfills, surface impoundments, waste piles). Industry and environmental groups challenged the rule. Earlier this year, EPA settled the litigation. As part of that settlement, EPA agreed to propose amendments to the rule. 
	The proposed amendments would replace the term “remediation waste” with “CAMU-eligible waste”. EPA clarified that this term would not apply to wastes generated from an on-going industrial process or wastes generated from the management of such wastes (e.g. sludges from impoundments). Instead, the rule would only apply to wastes that are managed to implement a cleanup. For example, wastes placed into a landfill could not be managed in a CAMU but soil contaminated from the leachate of the landfill could be placed in a CAMU. 
	The proposal continues to allow wastes removed from permanent disposal units (e.g., landfills, surface impoundments and land treatment units) undergoing closure to be placed into CAMUs since RCRA provides an option for closure in place. The agency believes that the ability to place such wastes in CAMUs would provide an incentive for companies to manage such wastes as part of a cleanup rather than leaving the wastes in place. However, wastes removed during RCRA closure of non-permanent land-based units such as waste piles would not be CAMU-eligible wastes since removal of wastes from waste piles and from similar land-based storage units is part of the normal course of operation of the unit and these type of land-based units are not intended to be the final resting place for wastes.
	EPA also proposed that wastes found in intact or substantially intact containers, tanks, or other non-land-based units during cleanups could not be managed in CAMUs. In addition to being easily managed under Subtitle C's hazardous waste requirements, such units do not typically contain the large volumes of waste typically found in land-based units. Moreover, in situ management is not likely to be a viable remediation option. 
	EPA did propose two exceptions to this exclusion. The first exception is for cleanup wastes that are first placed in the tanks, containers or non-land-based units as part of cleanup. The second exception is specifically for buried containers (not tanks or other units) that are excavated during the course of cleanup. EPA requested comments on whether buried tanks should be included in the exception. However, wastes found during cleanup in crumbling or unstable drums, containers, and other non-land based units that cannot be readily managed due to the likelihood of a release from the unstable unit could be managed in CAMUs. 
	Under the proposed amendments,  “historic waste” would be CAMU-eligible if it were found in a land-based unit. The most prominent examples of historic wastes that EPA identified are “gas holders'' at manufactured coal gas production facilities that operated before 1950. These historic units which typically are old building foundations analogous to concrete vaults would be considered land-based units under RCRA and the waste would be CAMU-eligible. EPA also indicated that it was aware that some facilities have old units that have not been used in decades and would arguably meet the definition of a tank. Therefore these wastes potentially would not be CAMU-eligible. However, if the unit is not in good condition or if from the age, construction, and size it would be reasonable to assume that such a unit would not be substantially intact, then the wastes removed from these units could be CAMU-eligible.
	The agency also said wastes generated from industrial processes could be placed in a CAMU when it is legitimately being managed in a CAMU to facilitate treatment or the performance of the CAMU.  An example of such a circumstance is using fly ash or cement kiln dust (“CKD”) as a stabilization agent to reduce leaching of metals from metal-bearing wastes.
	The agency also proposed to ban the placement of liquids into CAMUs except where such placement facilitates the remedy selected for the waste being managed in the CAMU. For example, a common practice for management of water-bearing industrial sludges or sediments is to de-water the materials prior to final disposal or treatment. In another example, soils or other contaminated materials can be subjected to a soil washing either with water or solvents, to remove soluble contamination. The residual liquids from de-watering or from soil washing would be containerized and disposed offsite. Another example is bioremediation of wastes which frequently requires the water or liquid additives to facilitate treatment. Management of the CAMU might also require use of water or leachate for dust suppression while the unit is operating or under construction.
	For CAMUs in which wastes will remain in place after closure, the proposed rule would establish a minimum liner requirement for new, replacement or laterally expanded CAMUs, create minimum national design criteria for CAMU caps and require notification for releases to groundwater from the CAMU and corrective action of such releases.
	EPA also proposed that the treatment requirement would apply to wastes that are determined to contain “principal hazardous constituents'' (“PHCs”). The proposal would limit treatment for such waste to any PHC in the waste rather than to the full menu of constituents under the LDR program that are subject to treatment. As proposed, PHCs would be determined on a site-specific basis and be those constituents that pose a risk that is substantially higher than the cleanup levels or goals at the site. The treatment standard for the PHCs would be based on either national minimum treatment standards adapted from the LDR Phase IV soil standards or site-specific adjustment of the minimum treatment levels. 
	The proposed rule also distinguishes between CAMUs where wastes will remain in place after closure and those wastes that may undergo pre-treatment or cleanup.  CAMUs that are used to stage wastes prior to additional on-site or off-site management, or for wastes that are stored prior to treatment in a non-land-based unit would not be subject to the treatment requirements. These treatment and/or storage CAMUs also would not have to comply with the minimum technical standards for liners and caps with certain exceptions for longer-term treatment or storage activities. Instead, treatment and/or storage CAMUs would only be subject to the staging pile performance criteria. Similarly, wastes managed in treatment or storage CAMUs would not have to meet the treatment standards for CAMU-eligible wastes that are permanently disposed in a CAMU. However, if the wastes were subsequently managed off-site, they would be subject to applicable LDRs. If they were subsequently managed in a permanent CAMU at the site, they would be subject to the treatment requirements for those CAMUs.
	Finally, CAMUs that are approved prior to the effective date of the final amendments and CAMUs which were not approved prior to the effective date of the final amendments but for which substantially complete applications were submitted to the Agency on or before 90 days after the publication date of the proposed rule would be grandfathered and only have to comply with the 1993 CAMU requirements.
Commentary: Currently, 21 States are authorized to administrator the existing CAMU program. In addition, 16 States have adopted CAMU regulations but that have not yet received authorization. For states with authorized CAMU programs, EPA proposed to grant them interim authorization for the proposed CAMU rule. The interim authorization-by-rule would be effective for all qualifying states on the same date that the CAMU amendments become effective rather than on the typical state-by-state interim authorization process. Only those states that are authorized for the 1993 CAMU rule at the time the proposed rule is signed would be eligible to receive interim authorization-by-rule. This interim authorization-by-rule would expire three years after the effective date of the CAMU amendments.
	One important restriction on the eligibility of states for interim authorization-by-rule is that eligible states cannot have audit privilege and immunity laws that EPA believes do not provide for adequate enforcement.. Currently, Illinois, Nevada, and Oregon are discussing concerns raised by EPA about their audit privilege and/or immunity programs. Under the proposal, these states would not qualify for interim authorization-by-rule. The other eighteen states that have received authorization for the 1993 CAMU rule do not have an unresolved audit privilege and immunity law and would receive interim authorization-by-rule. They are: Alabama, Arizona, Delaware, Georgia, Idaho, Indiana, Louisiana, New York, North Carolina, North Dakota, Oklahoma, South Dakota, Texas, Utah, Vermont, Washington, Wisconsin, and Wyoming. EPA recently proposed to grant Virginia authorization for the 1993 CAMU rule and should be eligible for interim authorization-by-rule.
There are 13 states authorized for corrective action that has not yet received authorized for the 1993 CAMU rule. They are: Arkansas, California, Colorado, Guam, Kentucky, Maine, Missouri, Mississippi, Montana, New Hampshire, New Mexico, Ohio, and South Carolina. In addition to these states, there may be states authorized for the 1993 CAMU rule that did not receive interim authorization-by-rule. Because CAMUs expedite clean-ups, EPA will encourage all of these States to seek final authorization for the CAMU regulations

TOXIC SUBSTANCES

 
EPA Brings PCB Enforcement Action Against Airport Authority and Contractor
EPA recently settled an administrative action against the Regional Airport Authority of Louisville and Jefferson County and its demolition contractor for improperly disposing PCB-contaminated electrical equipment and failing to properly store and mark the PCBs. The settlement requires the respondents to pay $84,200.  
Commentary: Since 1979, the EPA has banned the manufacture, use, distribution and processing of PCBs and has promulgated comprehensive regulations covering the use, labeling, storage, repair and disposal of equipment containing PCBs. In general, the PCB Ban does not apply to equipment with dielectric fluids containing less than 50 parts per million (“ppm”) of PCBs. 
During environmental compliance audits or environmental site assessments performed in connection with a corporate or real estate transaction, it is not uncommon to find transformers without any PCB labeling or identifying information such as the manufacturer's nameplate.  Usually, these transformers have not been tested for PCBs.  Under such circumstances, there is often considerable confusion over whether such transformers should be assumed to be free of PCBs. The EPA policy has been that in the absence of any PCB markings, identifying information or PCB test results, such transformers should be regulated as PCB Transformers.  Under the PCB Ban Rule, a transformer may only be considered a Non-PCB Transformer if its dielectric fluid has been tested or otherwise verified to contain less than 50 ppm of PCBs. There has also been some confusion as to whether the definition of PCB-Contaminated Electrical Equipment (containing between 50-500 ppm of PCBs) allows unmarked oil-filled transformers to be classified as PCB-Contaminated Transformers.  
In the so-called PCB Mega-Rule that EPA promulgated in June 1998 (63 FR 35,384), EPA concluded that the following transformers could be assumed to contain less than 50 ppm PCBs and hence not subject to the PCB regulatory program:  non-liquid filled transformers, transformers containing less than 3 pounds of fluid, transformers manufactured on or after July 2, 1979, certain mineral oil transformers of any volume and pad-mounted and pole-top transformers. However, the rule assumes that "small transformers" and other transformers were manufactured prior to July 2, 1979 which contain 3 or more pounds fluid other than mineral oil and whose PCB concentration is not established must be assumed to be a PCB Transformer (i.e., > 500 ppm). If the date of manufacture and the type of dielectric fluid is unknown, the transformer must be assumed to be a PCB Transformer. If the transformer is known to contain mineral oil, the agency policy is to consider the transformer to be a PCB-Contaminated Transformer. 
In Central and South West Services, Inc. v. EPA, the Fifth Circuit upheld this portion of the PCB Mega Rule. The court also upheld the portion of the rule regarding concrete surfaces that have been contaminated with PCBs. The Final Rule allows an owner to use but not commercially distribute concrete on which PCBs 50 ppm have been spilled. However, to continue to use this concrete the owner must clean accessible surfaces and then coat the surfaces and place signs warning of the presence of PCBs. These post-cleaning conditions apply regardless of the residual level of PCB contamination in or on the concrete. For example, if concrete is cleaned to a level below the 10 g/100 cm2 spill cleanup standard, the owner must still coat the concrete and mark it as PCB-contaminated.
The court also upheld a challenge to the “storage for reuse” portion of the Final Rule. Under this provision, PCB Articles may be stored for reuse indefinitely in storage units constructed to contain PCB spills or releases. PCB Articles may also be stored in any other area if the owner or operator of the PCB Article complies with the use and marking requirements for PCB Articles, maintains records indicating the date the PCB Article was removed from use as well as the projected location and anticipated use of the PCB Article and, if applicable, the date the PCB Article is scheduled for repair. If the owner or operator wants to store the PCB Article for more than five years, they must receive written approval from EPA Regional Administrator where the PCB Article is stored. EPA adopted these restrictions on storage for reuse because of a concern that utilities, brokers, junk yards service shops were circumventing the PCB disposal requirements by holding PCB Articles in storage for prolonged periods of time with no intent to reuse the Articles. On the other hand, EPA acknowledged that transformers can have an active service life of more than 40 years and that requiring regulated entities to dispose of this equipment prematurely based upon an arbitrary time limit would not be economically prudent nor serve any environmental goals. Moreover, electrical equipment in storage for reuse could be used as a spare or in emergency situations is both prudent and economically sound. The Fifth Circuit upheld EPA’s reasoning.
Landlords and Property Managers Face Fines For LBP Disclosure Violations
In prior issues, we have reported that EPA is continuing to uncover widespread non-compliance with the lead-based paint (“LBP”) disclosure rule that became effective in 1996. EPA discovered over 400 violations after examining leasing, rental and sales contracts in just one state. As a result of this evidence, the EPA regional offices have stepped-up their enforcement of the LBP rules.  
For example, the EPA Region 7 office recently issued 13 civil complaints with proposed penalties totaling $159,400 against landlords and property management companies in Missouri and Nebraska for failing to comply with lead-based paint disclosure rules. In nearly all of the cases, families with young children occupied the properties containing lead-based paint. The penalties ranged from $4,400 to $28,600 with most of the penalties averaging $10,000.

SUPERFUND/BROWNFIELDS

EPA Approves 40 New Superfund Redevelopment Initiative Grants
EPA recently awarded 40 new Superfund Redevelopment Pilots that will be used to help communities return contaminated sites to productive use. The local governments will receive up to $100,000 each which can be used for a variety of activities to develop local input on anticipated future uses and developing reuse assessments and reuse plans.
To date, 190 Superfund sites are being reused as retail stores, office buildings, golf courses, softball fields and tree groves. According to EPA, more than 13,000 acres have been returned to reuse and approximately 14,500 jobs representing $450 million in annual income are located on these recycled sites. 
Commentary: Under the Intergovernmental Personnel Act, personnel from a federal agency can provide assistance to local communities. In thirty-seven of the 40 pilots, EPA plans to provide funding for facilitators who will help the communities identify stakeholders, hold public meetings and reach a consensus on the reuse of a site. Additionally, EPA may help fund a position for a federal agency expert for at least one of the pilots.
EPA Awards Seven BCRLF Grants
     In July, EPA announced that $500,000 Brownfields Cleanup Revolving Loan Funds (“BCRLF”) pilot grants had been awarded to seven communities.  The grants were awarded to five communities in Pennsylvania and two in Michigan.  The BCRLF grants may be used by the recipients to provide loans to public and private parties to cleanup brownfields properties. The two Michigan grants were awarded following a revision of eligibility criteria that previously excluded grantee communities who were members of a larger consortium. All of the Pennsylvania grant recipients will contribute in-kind services to maximize loan values.  In addition, EPA also made supplemental revolving loan fund awards to three communities that had previously received grants and have now substantially depleted their available funds. The grantees were Shreveport, LA ($500,000), Stamford, CT ($250,000) and Trenton, NJ ($500,000).
HUD Announces New Brownfield Grants
HUD recently announced that 22 communities would receive $25 million in Brownfields Economic Development Initiative (“BEDI”) grants and $104 million in Section 108 guaranteed loans. Following are summaries of the projects that received the HUD funding.
Buffalo, NY will receive a $240,000 BEDI grant and $3.03 million Section 108 loan for the Union Ship Canal project located in South Buffalo. The BEDI will be used to pay off the Section 108 Loan. The Section 108 funds will be used for site remediation and site preparation.
Carson, CA will receive a $770,000 BEDI grant and a $5.5 million Section 108 loan to assist in the redevelopment of an approximately 90-acre site at the intersection of the Harbor Freeway (I-110) and San Diego Freeway (I-405). The new development will be a mixed-use project including a business park and freeway oriented retail activity. 
The County of San Mateo in partnership with the City of East Palo Alto will receive a $700,000 BEDI grant and a $5 million Section 108 loan for infrastructure improvements for a proposed mixed use development.
Kansas City/Wyandotte, KC will receive a $400,000 BEDI grant and $2 million Section 108 loan to support the expansion of an existing business facility. The BEDI funds will pay for $817,000 in remediation costs and the Section 108 loan will supplement $10 million from GMCA Commercial Mortgage Corporation.
Los Angeles, CA will receive a $1.09 million BEDI grant which will be used by a non-profit organization to purchase a contaminated site and pay for the remediation of the site. The city will also receive a $10 million Section 108 loan will be used as follows: $2.6 million to a developer to fund sewer line relocation, $5.3 million for the acquisition of another parcel and $2.1 million to assist in the development of office space at a third parcel.
Lowell, MA will receive $2 million BEDI grant and $2.5 million Section l08 loan. The funds will be used to conduct site cleanup, site preparation, site acquisition, and to begin construction of a 110,000 square foot multi-use performing arts center. 
Lynwood, CA will receive a $875,000 BEDI grant and $7 million Section 108 loan to partially finance the site cleanup and to construct a 126,000 square foot of retail space. 
Montgomery County, PA will receive a $2 million BEDI grant and $3 million Section 108 loan for site preparation of industrial property where a 570,000 square foot commerce office building and 500,000 square foot residential complex will be built. (See related story on the Pennsylvania brownfield program).
Phillipsburg, NJ will receive a $500,000 BEDI grant and a $2.5 million Section 108 loan to acquire, remediate and redevelop 100 acres of a 385-acre site that will be converted into a modern industrial park. The project will include construction of a 600,000 square foot manufacturing building, new roads, the extension of rail spurs off the existing track and upgrade utility connections. 
Portland, ME will receive a $1.8 million BEDI grant and $3.9 million Section 108 loan. The funds will be used to remediate existing scrap yards and industrial properties and redevelop the properties into offices relocating biotechnology firms and 33-unit tax credit apartment complex. 
Port Townsend, WA will receive a $500,000 BEDI grant and $1 million Section 108 loan for land acquisition, clean-up and redevelopment of the Thomas Oil Property located in the National Historic District. This project will will contain classrooms, conference facilities, maritime offices, museums display areas, retail shops, dock for historic vessels, and access to water. 
Provo City, UT will receive $1 million BEDI grant and $3.5 million Section 108 loan to complete environmental site-work and demolition of building foundations at a former steel plant. The site will be converted to a multipurpose property with business office space, warehousing and distribution, retail and a minor league baseball operation. 
Reading, PA will use HUD funds to acquire, cleanup and redevelop a 5-acre portion of Buttonwood Gateway Urban Renewal Area, including construction of a 82,000 square foot of manufacturing space. 
Saint Paul, MN will receive a $2 million BEDI grant to cleanup 125 acres of industrial, railroad and waste areas to build a new business center, housing units, access roads, bike trails and greenway connectors with linkages to the neighborhoods.  A $8 million Section 108 loan will be used for acquisition of property, relocation, demolition, and infrastructure site preparation. 
South Bend, IN will receive a $800,000 in BEDI grant and $3.4 million Section 108 loan to acquire and remediate an abandoned multi-story industrial manufacturing complex. The HUD funds will also be used to demolish buildings and develop infrastructure for potential use of property by modern manufacturing companies. 
City of San Antonio will receive a $1.5 million BEDI grant and a $9 million Section 108 guaranteed loan to redevelop the Friedrich Refrigeration plant for commercial and residential uses.
EPA Announces Prospective Purchaser Agreements 
EPA has proposed to enter into a prospective purchaser agreement (“PPA”) for the Green Industries Corporation site in Sharonville, Ohio. The PPA agreement will require the Port Authority to make a small payment to EPA and enter into the Ohio EPA Voluntary Action Program. In addition, the Authority will have to provide EPA with access to the site and to records kept by the Port Authority. 
Under a PPA for he North Penn Area 7 Superfund Site located in  Lansdale Borough and Upper Gwynedd Township, developers and the Commonwealth of Pennsylvania State Employees Retirement System have agreed to reimburse the EPA for $225,000 in response costs. 
EPA entered into two identical PPAs for the Sharon Steel Farrell Works Superfund Site (``Site'') in  Farrell, Pennsylvania. The prospective  purchasers, Shenango Valley Manufacturing Company (``SVMC'') and  Farrell Slag, Inc. (``Farrell Slag'') agreed to purchase approximately 200 acres of the Site. Sharon Steel Corporation  presently owns the Site and is liquidating its assets pursuant to  Chapter 11 of the Bankruptcy Code. Farrell Slag bid successfully for  the property. SVMC was the second highest bidder. Pursuant to the  bankruptcy sale, if Farrell Slag is unable to complete the purchase of  the property, it will be conveyed SVMC. Under the terms of each Purchaser Agreement, the  purchaser will pay the United States $40,000 for a limited covenant not  to sue, cooperate with EPA in the continued implementation of remedial  actions at the Site and otherwise comply with the requirements of the  Purchaser Agreement. EPA will conduct or oversee long-term remedial  actions at the Site and has initiated A RI/FS. 
	EPA also proposed to enter into a PPA with a developer who planned to acquire a 1.17-acre parcel which is part of the Middlefield-Ellis-Whisman Superfund Site located in California. The purchaser proposed to redevelop the site into commercial office space. The proposed PPA requires the purchaser to pay EPA a one-time payment of $75,000.
If You Clean It, They Will Play
A portion of the site for the new Fenway Park in Boston is on the state's list of contaminated properties. At the turn of the century, the site was reclaimed from mud flats and was filled with dirt containing coal, tar, ash, and arsenic. In recent years, repair shops, gasoline service stations, and tire companies have used the site. However, unlike other ballpark or shopping center brownfield projects where contaminated soil is often left in place and covered with an impermeable cap such as a parking lot or building foundations, the contaminated soil at the site will be excavated and hauled to an off-site treatment facility.
	Meanwhile, EPA will be investigating the extent of contamination at a children’s athletic field located on the outskirts of Cambridge, Massachusetts. Soil six inches below the surface of the field found was found to have 12% asbestos. The park is located next to land was used by a company that made asbestos brake linings and is currently owned by W.R. Grace which had a laboratory that tested new asbestos products in the 1960s and 1970s. It is believed that the asbestos could be from In addition, heavy metals and hazardous chemicals have been detected in the soils under the playing field. The source of the hazardous waste contamination is believed to be from soil that was excavated and dumped on the site by the Massachusetts Bay Transportation Authority in the 1970s when it extended a subway line through the area. The transit authority placed clean fill over the contaminated soil and rebuilt the playing field.
Commentary: Minor league ballparks have been a popular reuse for urban brownfield sites. Many landfills have been redeveloped into golf courses and soccer fields. The contamination at many of the sites is capped with an impermeable layer or several feet of soil underlain by an impervious geomembrane. 
California Creates Brownfield Fund 
California Gov. Gray Davis recently signed legislation establishing an $85 million fund to clean up and redevelop contaminated property in urban areas.  The law will also shift $5 million from the Underground Storage Tank Cleanup Fund to a special sub-account that will be used to reimburse fire safety agencies cleanups of contamination from leaking underground storage tanks. California and New York remain the two largest states in the country without brownfield laws. 
Wisconsin Law Providing Liability Relief To Municipalities Spurs Development 
One obstacle to brownfield redevelopment has been the reluctance of local governments to foreclose on abandoned property because of fear that the government will become liable for the cleanup of the contamination. To overcome this problem, many states have enacted laws that insulate local governments from liability when they foreclose on contaminated property to effectuate redevelopment. For example, the City of Milwaukee is now accelerating foreclosure proceedings in response to a new state law that that allows cities to foreclose on contaminated property and then transfer title to contaminated properties to a developer for a reduced price without incurring cleanup liability.  The city recently foreclosed on a brownfield property and then sold the property to National Recycling Inc. The company plans to spend approximately $90,000 to the remediate the site and will expand its existing operations onto the remediated site. 
Successful Brownfield Projects in Pennsylvania
The Pennsylvania land recycling program has been one of the nation’s more successful brownfield programs. A number of projects illustrate how the program is being used to bring contaminated properties back into productive use.
The Department of Environmental Protection (“DEP”) recently announced that a new, $85 million shopping center would be built on an 80-acre brownfield site in Plymouth Meeting, Montgomery County. The property had been used to manufacture refractory brick for the area steel industry to manufacture magnesium carbonate/asbestos pipe insulation. The developer has spent approximately $1 million of the $3.8 million environmental cleanup at the property. During construction, 750 tons of solid waste have been either been removed from the property or relocated and capped in designated areas. At the request of DEP, Plymouth Township and Conshohocken Borough, the developers also spent more than $1 million to provide stormwater management for the downstream community of Conshohocken. A 1,560-foot arched culvert was also constructed on the property to address storm water runoff in the Plymouth Creek watershed. In addition, working with the Montgomery County Rails to Trails coordinator and PennDOT, the developer built a 10-mile bike trail which will not only provide an outdoor recreational amenity for thousands of users but also serve as an alternative transportation access for employees. The bike trail will eventually connect to the Valley Forge National Park.  
The DEP also recently announced that the Redevelopment Authority of Westmoreland County would begin building a multi-tenant, light industrial manufacturing complex on the 36.5-acre site in Jeannette. The property had been used to manufacture glass since 1915 and has been vacant since the last owner filed for bankruptcy in 1993.To date, the authority has razed buildings, removed waste drums and piles, contaminated soils, asbestos and an underground storage tank. It has also completed decontamination and removal of equipment and piping. The authority plans to complete the cleanup while proceeding with redevelopment of the site. The authority plans to construct an in-place closure of a five-acre glass disposal area which will include the removal of waste from Brush Creek, placing riprap on the stream bank, groundwater monitoring, capping and revegetation. 
The Urban Redevelopment Authority, City of Pittsburgh and a developer plan to construct a recreational and residential project on a 238-acre site that was formerly owned and operated by Duquesne Slag Products for the disposal of the slag wastes from 1922 to 1972. 
The authority purchased the property in 1995 and will develop the site in three phases over a 10-year period.  Under a brownfield agreement with the DEP, the developers must submit a plan within six months for collecting seepage from the lower slopes of the site that flow into Nine Mile Run. The seepage has a high pH and is degrading Nine Mile Run which is one of the last remaining open waterways that travel through city limits. As part of the Phase I project, the authority is re-grading the site to support construction of single-family dwellings. The DEP is requiring a risk assessment to evaluate the dangers associated with the slag and slag moving activities in the Phase One area to residential users, adjacent properties, construction workers and trespassers at the site. The developer must also implement mitigation efforts including air monitoring of dust raised during construction activities.  The authority must also submit a sampling plan to DEP within 60 days for the newly exposed surface once the final subgrade is reached. The sample results will be evaluated for any health risks. After the sampling results are reviewed and a cleanup plan is prepared, site contractors may begin placement of a final cover of three feet on the site to support vegetation and then home construction. 
Commentary: In our January issue, we discussed how the Army Corps of Engineers could provide engineering expertise and financing to help brownfield projects. In this project, Corps agreed to rehabilitate 1.8 miles of Nine Mile Run. The Corps will provide $1 million to finance stabilization of the stream channel stabilization, creating wetlands and ponds in the flood plain, and improving fish habitat. 
Pennsylvania Proposes Revising Brownfield Cleanup Standards 
The Pennsylvania DEP proposed draft regulations that would establish revised criteria for calculating statewide health standard medium-specific concentrations (“MSCs”). The proposal also revises how developers would establish attainment with the MSC. 
The 1997 cleanup standards required MSC to be met ''within the property.''  However, this phrase included any additional areas where the contamination might reasonably migrate at concentrations that exceed the MSC for groundwater used or currently planned to be used. According to the DEP, one effect of this provision was to ''disqualify'' properties which may be relatively large compared to their contaminant plumes because the nonuse criteria (e.g., contaminant plume must be more than 1/2 mile from a upgradient municipal well) applied to the entire property even if the contamination could not reasonably migrate off the site from that isolated area. The proposal specifies that the MSC must be achieved 1,000 feet downgradient of all points of compliance plus any areas to which the contamination would reasonably migrate at levels above the MSC for groundwater used or currently planned to be used. 
The DEP also proposed changes for small excavation cleanups of petroleum releases where no prior site characterization is performed. Often times, the contamination at these small sites is excavated prior to any site characterization sampling. Sampling is usually conducted after the excavation to confirm that the contaminated soil has been excavated. Under the proposal, sites with a petroleum release where full site characterization has not been done in association with an excavation remediation, can demonstrate attainment of the MSC using the following procedure: 
For sites where there is localized contamination as defined in the document ''Closure Requirements for Underground Storage Tank Systems'', samples shall be taken in accordance with that document.
   	For sites not covered by the foregoing, samples shall be taken from the bottom and sidewalls of the excavation in a biased fashion that concentrates on areas where any remaining contamination above the statewide health standard would most likely be found. The number of sample points shall be determined by the amount of soil to be excavated. For 250 cubic yards or less of excavated contaminated soil, five samples shall be collected. For each additional 100 cubic years of excavated contaminated soil or for sites where there is a release to surface soils resulting in excavation of 50 cubic yards or less of contaminated soil, one sample shall be collected. If more than 1,000 cubic yards of contaminated soil will be excavated, the DEP will approve the confirmatory sampling plan. If water is encountered in the excavation and obvious contamination is observed or indicated, soil samples collected just above the soil/water interface shall meet the MSC. This shall be determined by using the saturated soil component of the soil-to-groundwater numeric value. If water is encountered in the excavation and no obvious contamination is observed or indicated, a minimum of two samples shall be collected from the water surface in the excavation. All sample results shall meet the statewide health standard.
North Carolina Enacts Tax Credits for Brownfield Development and Dry Cleaners
Under a new brownfields bill that was recently signed into law in North Carolina, developers of certain inactive contaminated industrial sites and properties contaminated by dry cleaning solvents would receive tax incentives. The bill would allow owners to exclude a percentage of the value of site improvements on a "stepped-down" basis. For the first year, 90 percent of the value could be excluded from property taxes, then 75 percent, 50 percent, 30 percent, and 10 percent annually through the first five years.  The tax credits become July 1, 2001.
 EPA Completes Investigation At Florida Elementary School 
EPA recently completed an investigation at an elementary school in Sarasota, Florida which  occupies the western section of  a former municipal landfill. The landfill was operated from the late 1950s to the late 1960s. During construction of the school, a geomembrane was placed between the landfill and the building foundations, and a passive vapor collection system was installed to vent methane gases that might accumulate in the buildings. While there was no evidence of any gas buildup, EPA became concerned that methane could accumulate beneath the school. As a result, EPA, recommends further methane monitoring outside the buildings and continuous monitoring within the buildings.
Commentary: Many brownfield programs prohibit contaminated sites from being redeveloped as schools, day care centers or other child-oriented facilities. However, school districts across the country are facing enormous pressures to construct new school facilities to meet expanding student enrollment. In many densely-populated urban areas, there are few sites large enough to build new schools. As a result, local governments are usually forced to demolish existing homes and businesses. Brownfield sites may be able to provide a solution to these urban school districts. Often times, brownfields are the only sites large enough for schools. Moreover, the risks posed by many of these sites can be remediated fairly quickly and cost-effectively. Building schools on brownfields would not only provide communities with much-needed educational facilities but also eliminate eyesores and the disproportionate impact that these abandoned properties have on low-income communities. Indeed, California recently established a brownfield schools program within the Department of Toxic Substances and has enacted legislation to ensure that the risks posed by potential school sites will be accurately characterized and addressed.  
EPA Completes Cleanups at Former Farm Sites 
In our November issue, we reported that EPA had begun a CERCLA removal action to remove pesticide contamination at a 500-acre residential community that had formerly been an apple orchard from 1903 to the mid-1980s. 
EPA commenced the removal action after the North Carolina Department of Agriculture and Consumer Affairs found elevated levels of lead arsenate, other pesticides and hazardous substances in water samples taken from private wells and in soil samples taken from residential yards. As part of the removal action, EPA excavated and disposed of 31,500 tons of contaminated soil at 28 residential properties where arsenic levels exceeded EPA's short term exposure cleanup criteria. The cost of the removal action was estimated at $4,000,000. 
EPA completed another cleanup at the V&M/Albaladejo Farm Superfund site. Four areas of the site once used to dump and burn plastic-coated electric cables, electrical equipment and car batteries to recover copper, aluminum and lead.  EPA had detected high levels of heavy metals in the soils near the dump areas as well as in surface water on the site and sinkholes within the immediate vicinity of the site. EPA removed nearly 3,000 cubic yards of contaminated at a cost of $2 million.
Commentary: These examples illustrate the importance of doing due diligence on farmland. Many of the pesticides and other chemicals that were used in the past do not breakdown as quickly as those in use today. Also, farmers tended to apply pesticides in higher concentrations than currently used now. In addition, farmers sometimes generate extra income by allowing portions of their land to be treated with industrial or residential sludges that are not regulated as hazardous wastes but which may contain hazardous substances. While sludges that are applied to land generally must now be approved, this practice was not well regulated in the past. A developer who is considering purchasing farmland should inquire into the past uses of the land. As part of this effort, local officials who may be familiar with local land uses should be interviewed and aerial photography which could show disturbed or excavated soil that may be indicative of past landfilling activities. 
EPA Orders Warehouse Owners and Operators to Perform Cleanup
The owner of a warehouse and its tenant entered into an administrative order with EPA in which the two companies have agreed to complete the removal of an estimated 2,000 drums and containers located in two warehouses in Pottstown. Many of the drums and containers were damaged, rusted or bulging. Open bags of solid materials were also found spilling or leaking. A community college, a daycare center, a motel and the town hall are located within a four-block radius of the buildings. In addition, a creek flowing by the warehouses empties into the Schuylkill River.
The United States District Court for the Southern District of Florida recently entered a judgment against owners of a business that operated a processing plant and warehouse that stored medical diagnostic chemical supplies from 1977 to 1992 in Fort Lauderdale. In 1994, EPA conducted a removal action at the Lauderdale Chemical Warehouse Site to remove chemicals that had been abandoned at the site. EPA reached an $80,000 settlement with one of the owners and a $230,000 settlement with another owner of the business. After a two-week trial, EPA obtained a judgment in the amount of $401,177.15, plus interest and enforcement costs against the third owner of business.  
EPA also completed a removal action at a 17-acre site located next to a residential area which contained three interconnected warehouses, two concrete foundations, remnants of buildings previously demolished by EPA, two collapsed buildings, and two Quonset huts. The warehouse buildings contained World War II-era military aircraft parts bought as surplus material for resale. Among these materials were hundreds of gauges marked with paint containing radium-226. A few contaminated aircraft parts still remain on site along with residual radium-226 dust in parts of the buildings and on exposed concrete foundations.  The EPA estimates that the cost to complete cleanup will be approximately $2.2 million. 
Commentary: Prospective purchasers or lessees sometimes do not require environmental site assessments of warehouse facilities because these facilities are often viewed as not posing significant environmental risks. Since the owner and tenants of a warehouse could be jointly liable for contamination caused by releases from the warehouse, or for personal injuries or property damage resulting from explosions or accidental releases of hazardous substances from a warehouse, prospective purchasers or lessees of warehouse facilities may want to perform due diligence determine if the warehouse they are considering is subject to state or federal Risk Mananagement Plans (“RMPs”) requirements established under section 112(r) of the CAA. They may want to limit themselves to occupying or owning warehouses that do not store ANY substances regulated by section 112 (r). (Readers should refer to our March 1999 issue available on our website for more information on RMP.) 
Likewise, lenders often take control of a defaulted borrower’s warehouse containing inventory and equipment that is subject to the bank’s security interest for the purpose of auctioning off the finished products, chemicals and equipment. Even when a bank does not take title to property, the act of possessing or exercising control over inventory at a borrower’s facility can expose a lender to possible liability as an operator. Lenders have often argued that they have simply relinquished possession of unsold inventory back to their borrowers. However, EPA has consistently that the position that such action constitutes abandonment of hazardous wastes when the borrower is insolvent and creates generator liability for the lender.
EPA Announces new Environmental Cost Accounting Protocol for Superfund Cleanups 
When EPA seeks recovery of response costs, the agency includes the cleanup costs as well as indirect costs which are agency expenses for the Superfund program as a whole but which cannot be linked to any one site. The indirect cost has been calculated as a certain percentage of the cleanup cost based on the indirect cost rate for the particular regional office. 
On October 2nd, EPA will adopt new full cost accounting principals for determining indirect costs associated with Superfund cleanups. EPA will base the new rates on full cost accounting principals recommended in 1995 by the Federal Accounting Standards Advisory Board. The new rates are expected to increase indirect costs that EPA deems recoverable from a cleanup by up to two-thirds. In some cases, that could mean that indirect costs will be as high as one-half of the direct costs for a cleanup. EPA estimates that indirect cost rates for each region will be as follows: 30.0% for Region 1; 30.8% for Region 2; 43.6% for Region 3; 48.1% for Region 4; 41.6% for Region 5; 29.0% for Region 6; 54.4% for Region 7; 35.1% for Region 8; 40.9% for Region 9; and 38.6% for Region 10. EPA will publish a final table of indirect costs by October 2, 2000.
EPA To Change Method for Calculating When Superfund Cleanups are Completed 
	During the initial years of the Superfund program, did not indicate that a cleanup of a Superfund site was complete until construction of the remedy was finished and the agency conducted a five-year review of the site. In 1993, EPA announced a policy change where a site cleanup would be considered completed when the physical remedy was finished even if the concentrations of hazardous substances have not yet been reduced to the levels required by the ROD. EPA would then propose to remove the site from the NPL. The agency also established a new category of NPL sites known as the Superfund Construction Completions List (CCL). In EPA's Close Out Procedures for National Priorities List Sites Guidance (OSWER Directive 9320.2-09 A-P, January 2000) EPA reaffirmed that a construction completion site was a former toxic waste site where physical construction of all cleanup actions is complete, all immediate threats have been addressed, and all long-term threats are under control.
	Under the 1993 CCL policy, EPA indicated that deleted sites would not qualify for the CCL if physical construction remains to be conducted under another statutory authority. Thus the only sites that were eligible for the CCL were NPL sites and not those proposed for inclusion on the NPL or previously deleted from the NPL. Recently, the agency proposed a policy change in which deleted NPL sites would be added to the CCL. EPA said that a deleted NPL site should be accounted for on the CCL when EPA determines that all physical construction is complete under all statutory authorities and all applicable construction completion policy criteria have been satisfied. Any previously listed NPL Superfund site added to the CCL as a result of this proposed policy change will be subject to all report documentation requirements as currently required for construction completions at NPL sites. 
Lender Liability Site to Be Redeveloped
Last August, we reported that a lender had agreed to pay EPA $300,000 to settle a cost recovery action that had been filed in connection with actions that the bank had taken during liquidation activities at the former Clearwater Finishing plant in Aiken, Georgia. Recently, EPA entered into a covenant not to sue with a brownfield redeveloper who plans construct a convert the old textile plant into a state-of-the art eco-mall which will be home to the study and development of environmental related businesses.
The site had been abandoned by its former occupants 10 years ago, leaving behind more than 1,000 drums containing a variety of hazardous substances and owed $366,000 in back property taxes. The site had been taken over by the Forfeited Land Commission. The Clearwater Development Corporation which is a subsidiary of Environmental Control Systems purchased the plant in May 2000. The site redevelopment is taking place while the site cleanup is progressing. The first tenant on the property is expected to be a composite wood producer Thus far, EPA has incurred approximately $1.3 million in response costs and ECS has incurred another $1 million in cleanup costs. ECS also agreed to reimburse EPA $5,422.25 4 in exchange for the covenant not to sue.

   
 ENVIRONMENTAL CASES INVOLVING CORPORATE AND REAL ESTATE TRANSACTIONS 

Prior Owner Not Liable Under CERCLA For Passive Migration
A federal district court in Hawaii ruled that a prior site owner is not liable under CERCLA for passive migration of hazardous waste that occurred while the party owned the property. The court in Servco Pacific Inc. v. Dods, ruled that to be a past owner at the time of disposal, a former owner must have actively disposed the hazardous substances. 
The action was brought by the current tenant of a site that had been used as a wood treating facility in the 1960s. In 1996, the plaintiff discovered an unregistered UST site which had contaminated the site with a variety of hazardous substances including chromium, arsenic and pentachlorophenol used to treat lumber to repel termites. 
The plaintiff filed a private cost recovery and contribution action against its landlord, the Damon Estate, one of the trustees of the estate, City Mill Co who had subleased a portion of the site from 1984 to 1985 and then assigned its leasehold interest to the plaintiff, and other parties who had leased portions of the site in the past. After the plaintiff filed a motion for summary judgment against the estate, City Mill joined in the motion against the estate, seeking a ruling that it was not liable under as a current owner or an owner at the time of disposal.
The estate claimed that City Mill could be liable as a prior owner even if City Mill did not know of the UST because the contaminants were passively migrating during its occupancy of the site. The court did acknowledge that the Fourth Circuit, in Nurad Inc. v. William E. Hooper & Sons Co. had ruled that disposal is not limited to active human conduct but said that decision had " not been well received." Instead, the court decided to follow rulings of the Second, Third and Fifth circuits which hold that disposal requires some sort of human conduct. 
1990 First Circuit Decision on Parent Liability Not Altered by Best Foods Decision
	In its 1990 landmark decision in U.S. v. Kayser-Roth, the First Circuit held a parent corporation liable as an operator because it had exercised pervasive control over its subsidiary. The court also found the parent liable as an owner of the subsidiary’s facility without piercing the corporate veil because of the control the parent had exercised over the subsidiary. The court entered a judgment against the parent for EPA’s past response costs as well as a declaratory judgment for all future response costs. Shortly after EPA filed a motion to recover those additional costs, the Supreme Court issued its decision in U.S. v. Bestfoods. In that decision, the Court ruled to find a parent liable as an owner a court must use a corporate veil-piercing analysis which requires some showing that the corporate form was abused to accomplish fraud or some other wrongful conduct. In addition, the Court held that the focus for parent “operator” liability is not the relationship between the parent and the subsidiary but whether the parent exercised control over the operations of the facility. 
As a result, Kayser-Roth filed a motion seeking relief from the declaratory judgment, arguing that the earlier decision had improperly focused on the relationship between the parent and the subsidiary in determining operator liability. Kayser-Roth also claimed that there was no basis for piercing the corporate veil because corporation was not used to accomplish fraud or wrongful purpose. However, the court ruled the 1990 decision was correct because it had found that Kayser-Roth was essentially in charge of all operational aspects of the facility including those involving environmental matters. 
The court also said that Best Foods did not hold that fraud was the only ground for piercing the corporate veil and that the factors used in the 1990 were not improper.    
Conrail Allowed to Bring Cost Recovery Action
	Under CERCLA, parties that incur response costs may either file a section 107 cost recovery action or a section 113 contribution action. In a section 107 action, defendants may be jointly and severally liable for all of the plaintiff’s cost while under a section 113 contribution action a plaintiff may only recover the cleanup costs attributable to the defendant. Most courts have held that only innocent parties may bring 107 cost recovery actions. In Conrail v. American Premier Underwriters, Inc., a federal court for the eastern district of Pennsylvania ruled that Conrail might bring a cost recovery action for cleanup costs incurred at the Hollidaysburg Car Shop and Reclamation site owned by Conrail. While Conrail is a PRP for contamination occurring after it took title to the property in 1976, the court allowed Conrail to proceed with its cost recovery action against the defendant for the pre-acquisition contamination because the Regional Rail Reorganization Act of 1973 provided immunity to Conrail for pre-existing contamination on properties transferred to it under the act. Thus, the court ruled, Conrail was an innocent party for the pre-acquisition contamination and may recover all of the costs associated with the pre-acquisition contamination that it was ordered to remediate by the state of Pennsylvania.
Commentary: Since Conrail did contribute to the contamination at the site after it acquired ownership, the corporation would not normally be considered an innocent party for any response costs regardless of when the contamination took place. Courts do not usually confer innocent purchaser status for specific types of contamination. However, in this case, the court felt constrained by prior cases that found that Congress had intended to provide a fresh start to Conrail from the liabilities that had driven the prior railroad companies into insolvency. (Readers should read the related article in our Auditing section discussing the redevelopment plans for this site.)
Automatic Stay Does Not Bar State Superlien Law
A handful of states have enacted so-called superlien laws that provide the states with a first priority lien over previously recorded security interests to recover cleanup costs at a property. In In re 229 Main Street Ltd. Partnership v. Massachusetts, the federal district court for Massachusetts ruled that the state does not actually have to perfect a lien prior to the filing of a bankruptcy petition but simply provide written notice to the property owner of its intent to perfect its superlien.  
In this case, the property owner held title to a site where contamination was migrating into drinking water wells. The state performed an emergency cleanup and sent a letter to the property owner in November 1998 that it intended to place a superlien on the property. At an administrative hearing, the administrative law judge (“ALJ”) denied the property owner’s request for a stay of the proceedings. The property owner then filed a petition for bankruptcy along with a request for an automatic stay in the administrative hearing. The state opposed the stay and the ALJ ruled that the state’s action fell within an exception to the automatic stay. After the bankruptcy court also denied a motion to hold the state in contempt for violating the automatic stay, the property owner appealed.
The district court held that the automatic stay has an exception for creditors with a pre-petition interest in property that can be perfected under state law at a time after a third party has acquired interests in the property. The court said that if the interest had not been perfected before the petition had been filed but applicable state law would allow the perfection to be effective against an intervening buyer, the bankruptcy code would allow the interest to be perfected against the trustee.
The property owner argued that the state did not have a pre-existing property interest at the time of the bankruptcy filing. However, the court ruled that under the state superlien law, the property owner becomes liable to the state at the time the state incurs response costs which occurred pre-petition. The court also said that the bankruptcy code does not focus on the date the lien becomes effective but on the effect the lien has once it becomes effective. Furthermore, the court said the letter to the property owner demonstrated that the state had a real and identifiable interest in the property.    
CERCLA Lender Liability Decision Does Not Bar Action Against State Finance Authority
 	In 1989, the Court of Appeals for the First Circuit ruled in Waterville Industries, Inc. v. Finance Authority of Maine that the CERCLA secured creditor provided immunity to a state finance authority. Not deterred by this adverse holding, the property owner subsequently filed a breach of contract action in state court claiming that the finance authority failed to disclose the presence of contamination at the site. 
The finance authority had foreclosed on the property in 1980 after a wool-processing mill had defaulted on its loan. Prior to selling the site at auction, the finance authority received three letters from the state attorney general indicating it had been informed by the state DEP the site had two unused waste lagoons that had to be closed. The attorney general told the finance authority that while closure was overdue, the DEP would not require closure at that time. However, the DEP requested that the finance authority close the lagoons or require closure as a condition of the sale. When Waterville Industries purchased the property in 1983, the finance authority never disclosed the existence of the lagoon. In the late 1980s, the EPA issued an administrative order against Waterville for failing to close the lagoons and entered into a consent order with the company in 1989 to remediate the site and pay civil penalties. 
In 1993, a jury awarded Waterville $150,000 in damages on its breach of contract claim. The state appealed claiming that the CERCLA ruling precluded the contract claims. This summer, the Maine Supreme Court ruled that the state action was not barred by the CERCLA ruling since the federal court had no jurisdiction over the state claim. Moreover, the action was not barred by the doctrine of election because the state never had a claim against the state under CERCLA. However, the remanded the case to the trial court to determine if material evidence had been improperly excluded at trial.
Commentary: This case once again illustrates that the CERCLA secured creditor exemption does not insulate financial institutions from state common law claims. While many states have enacted state lender liability statutes, these laws generally provide liability relief from statutory contribution or cost recovery actions and not common laws claims. A number of states also have environmental disclosure statutes which require disclosure of environmental conditions. Lender liability statutes in those states generally to not provide protection for failure to comply with the disclosure requirements. Lenders should carefully review the provisions of state lender liability laws and the scope of environmental disclosure laws as part of their the loan due diligence.

Copyright (c) 2000 by Lawrence Schnapf. The Schnapf Environmental Report is a bi-monthly newsletter which provides updates on regulatory developments and highlights significant federal and state environmental law decisions affecting corporate and real estate transactions, and brownfield redevelopment. The newsletter is published by Lawrence P. Schnapf, 55 E.87th Street, #8B, New York, New York 10128. Telephone: (212) 996-5395. Fax: (503) 213-9314. E-Mail: LSchnapf@environmental-law.net. Subscription rate for the Schnapf Environmental Report is $75 for one year (six issues) or $20 per issue. The Schnapf Environmental Law Center also offers a seminar  “Environmental Problems in Business Transactions” which has been approved by the New York Continuing Legal Education Board as an Accredited Mandatory Continuing Legal Education (“MCLE”) Program. A course book with transactional forms is included with the seminar. The course book may be purchased separately. The seminar can be conducted at your office or at periodic department meetings that you might organize over the course of the year. If you are interested in this seminar or purchasing the course book, please contact Larry Schnapf. The information contained in this newsletter is not offered for the purposes of providing legal advice or establishing a client/attorney relationship. Environmental issues are highly complex and fact-specific and you should consult an environmental attorney for assistance with your environmental issues.