SCHNAPF ENVIRONMENTAL  REPORT

A Newsletter Covering Recent Environmental Developments and Caselaw
November 1, 2000						Vol. 2, Issue 5	

Editor’s Note

No, you have not missed an issue. We have decided to date the newsletter when it is publish instead of the period of time covered by the issue. The list of topics covered in this issue is as follows:
Page 2	Review of Key Definitions for Revised ASTM Due Diligence Standard	
Page 5	13 Charged With Laboratory Fraud
Page 5	Environmental Consultant Settles Negligent Due Diligence Claim
Page 6	Voluntary Disclosure Leads to Criminal Violations
Page 7	Five Telecommunications Companies  Voluntarily Disclose Violations
Page 7	EPA Targets Correctional Facilities for Environmental Compliance
Page 8	Utility Uses Audit Policy to Acid Rain Penalties
Page 8	EPA Promotes State One Stop Program
Page 8	Insurance Products Used to Facilitate Transactions
Page 9	Insurance to Pay for Iron Mountain Settlement
Page 10	Insurance Agent Liable for Cleanup Because of Negligent Misrepresentation
Page 10	Agreement With City Does Not Bar Federal CAA Action
Page 10	EAB Upholds EPA NSR Complaint Against TVA
Page 10	US and Canada Reach Agreement on NOx Emission Reductions
Page 11	Asbestos Abatement Company Owner Convicted
Page 11	EPA Announces Largest CFC Settlement
Page 12	EPA Considering Waiving Some CAA Requirements to Spur Brownfield Development in Chicago
Page 12	EPA Proposes To Settle NSR Violation With Illinois Manufacturer
Page 12	EPA Files Complaint Against Kodak for Leaking Valves and Pumps
Page 13	Companies Form GHG Partnership
Page 13	Tips for Radon Testing 
Page 13	District Court Allows Corps to Enforce Interim Tulloch Rule
Page 14	EPA Brings Enforcement Actions Against Towns for Wetlands Violations
Page 14	Supreme Court to Review Wetlands Taking Case
Page 14	EPA Objects To Meadowlands Mills Project
Page 15	EPA To Allow In-Lieu Fees Instead of Mitigation
Page 16	California Adopts New Runoff Rules
Page 16	EPA Brings More CSO Enforcement Actions
Page 16	EPA Delays Radon Drinking Water Standard
Page 17	EPA To Limit Use of Mixing Zones
Page 17	Corrective Action Reforms Increase Pace of Cleanups
Page 18	Computer Equipment Contains Hazardous Materials
Page 18	Recommendations for Owners of Home Heating Oil Tanks
Page 19	EPA Announces Grants For MTBE Cleanups
Page 19	EPA Reports on UST Cleanups
Page 19	Penn State To Pay $27,000 For Gasoline Spill
Page 20	U.S. Postal Service Fined For Improper Waste Disposal
Page 20	More Building Owners Fined for Failing to Disclose LBP
Page 21	EPA To Allow Boston LBP Abatement Debris to Be Classified as Household Waste
Page 21	Residential Building Auctions Subject to LBP Disclosure Rule
Page 22	HUD Announces Grants For LBP Testing
Page 22	Homes To Be Inspected for Mercury Contamination
Page 22	Connecticut Utility Agrees to Pay $72,930 For PCB Violations
Page 23	EPA Launches PCB Transformer Enforcement Initiative
Page 23	EPA Announces New Brownfield Cleanup Revolving Loan Funds
Page 23	California Establishes Brownfield Financing Program
Page 24	New Jersey Issues First Check Under Brownfield Reimbursement Program
Page 24	Pennsylvania Announces New IDA Brownfield Inventory Grants
Page 24	Pennsylvania Brownfield Grants Help Waterfront Brownfield Project
Page 25	Pennsylvania Issues New “Growing Greener” Grants
Page 25	Pennsylvania Brownfield Cleanups Completed
Page 25	Pennsylvania Approves First Good Samaritan Project
Page 26	Wisconsin Issues First Reimbursements Under Dry Cleaner Fund
Page 26	DOT Announces $47 Million in Grants To Help Make Communities More Livable
Page 26	EPA Enters into Prospective Purchaser Agreements
Page 27	Ninth Circuit Rules that Passive Migration is Disposal Under CERCLA
Page 28	EPA Approves Further Cleanup at Residential Community
Page 28	Consultant Review Costs Not Recoverable Under CERCLA
Page 29	Third Circuit Rules SREA Applies Retroactively
Page 29	Corporate Officer Not Liable Under Responsible Corporate Officer Doctrine
Page 29	Bankruptcy Court May Not Incorporate State Settlement in Reorganization Plan
DUE DILIGENCE/ AUDITING/ DISCLOSURE/ ENFORCEMENT

Review of Key Definitions for Revised ASTM Due Diligence Standard
In our June issue, we reported that the American Society for Testing and Materials (“ASTM”) had approved changes to its standard practice E1527 for Phase I Environmental Site Assessments. Following is a description of some of the key changes to the scope and definitions of the standard.
Non-Scope Considerations-Prior versions of ASTM 1527 had identified issues that could impact commercial real estate but that were not required to satisfy the all appropriate inquiry requirement of the CERCLA innocent purchaser defense. ASTM left it up to the user whether to include these items in the scope of work. These considerations included asbestos-containing materials, radon, lead in drinking water, lead-based paint and wetlands. The 2000 revision expands the list of non-scope considerations to include endangered species, regulatory compliance, ecological resources, industrial hygiene and indoor air quality, health and safety, power lines and electromagnetic fields, and cultural and historical resources. The list is not intended to be all-inclusive
Significant New Definitions-
•	Activity and Use Limitations- This definition applies to legal and physical restrictions such as engineering and institutional controls that reduce or limit potential exposure to soil or groundwater contamination, prevent activities that could interfere with the effectiveness of a response action, or ensure maintenance of a condition of no significant risk to human health and the environment. 
The practice does not require the environmental professional to check for recorded activity and use limitations. Instead, the user has the obligation to check for or retain a title company or title professional to find reasonably ascertainable activity and use limitations recorded against the property. Activity and Use Limitations that are unrecorded or recorded in any place other than the local land title records will not be considered to be reasonably ascertainable.    
•	Business Environmental Risk- The focus of ASTM 1527 continues to be defining the standard for satisfying the “all appropriate inquiry” requirement of the CERCLA innocent purchaser’s defense. However, the practice committee recognized that the innocent landowner defense is not the primary reason why ESAs are performed. Accordingly, the revised practice now contains a new term “Business Environmental Risk” and expressly states in paragraph 4.4 that evaluation of Business Environmental Risks will require services beyond the scope of ASTM 1527.This new term refers to a risk that may have a material environmental or environmentally-driven financial impact on the business associated with the current or planned site use. An investigation to evaluate material environmental risks will usually be much broader than one designed to qualify for the CERCLA innocent purchaser’s defense and will likely involve one or more of the " Non-Scope " Considerations set forth in section 12.
•	Material Threat- This phrase means a physically observable or obvious threat which is reasonably likely to lead to a release that in the opinion of the environmental professional threatens and might result to impact human health and the environment. The practice gave an example of an aboveground storage containing hazardous substance that shows evidence of damage. The damage would be considered a material threat if the damage was serious enough to contribute to tank integrity failure that could cause a release of its contents to the environment.
•	Historical Recognized Environmental Condition (“HREC”)- The goal of the ASTM standards was to establish protocols for discovering Recognized Environmental Conditions (“RECs”). Environmental professionals were obligated to identify RECs that were visually and physically observable during the site visit or that were identified in interviews or record reviews. 
The definition of REC applies to the presence or likely presence of hazardous substances indicating that a release or threatened release has or may have occurred in the past into structures on the property, or into the soil, groundwater or surfacewater of the property. The term includes the presence of hazardous substances or petroleum under conditions that are in compliance with environmental laws. However, it does not include de minimis conditions that did not present a material risk of harm to public health or the environment and that generally would not result in any enforcement action if brought to the attention of governmental agencies. 
In addition, there has been considerable confusion about whether an REC identified in a prior ESA such as a leaking underground storage tank, past release that has been remediated using a risk-based cleanup approach, or contamination that has been addressed using engineering or institutional controls to prevent exposure to on-site residual contamination should still be considered an REC. As a result, section 3 of ASTM 1527 now contains a new term Historical Recognized Environmental Condition (“HREC”). This term refers to environmental conditions that would have been considered RECs but may not be considered RECs because the conditions have been remediated to the satisfaction of the applicable government agency. Such satisfaction might be evidence by a No Further Action or its equivalent. The practice provides that the environmental professional performing the ESA will make the decision about whether a former environmental condition is a HREC or REC after taking into account the current impact that the environmental condition has on the property. The new practice contains new documentation procedures for reporting the existence of environmental conditions which are discussed in the documentation section of this article. 
•	Historical Research- Perhaps the largest source of due diligence claims litigation has been claims of inadequate historical research into the past uses and conditions of the property. Section 7 of ASTM-1527 establishes categories of government records and historical sources that are to be reviewed as part of the minimum scope of work for a Phase I ESA. 
The purpose of the historical review is to develop a picture of the past uses of the property and surrounding area to determine the likelihood that past uses may have led to RECs on the property. Environmental professionals are not required to conduct exhaustive reviews of records but only review those records or historical sources that were reasonably ascertainable or information that is practically reviewable. The practice defines reasonably ascertainable information as data that may be obtained within reasonable time and cost constraints while information that was practically reviewable referred to information that did not require extraordinary analysis. ASTM 1527 suggests that records that are sorted or filed according to limited geographic areas would be considered practically reviewable while large data bases that are not organized by zip code or other geographic designation or that are organized by chronological order would not be considered practically reviewable. For information to be obtainable within a reasonable time and cost constraint means that the information would be provided by a source within 20 calendar days of receiving a written, telephone or in-person request at no more than a nominal cost for retrieving and copying the materials. Information that can only be reviewed by a visit to the source will be considered to be reasonably ascertainable if the site visit is permitted within 20 days of the request.
The 2000 revision places greater emphasis on investigation of historical contamination. It adds three types of government records that need to be reviewed. The environmental professional must review the CERCLIS NFRAP list for both the property and adjoining properties. In addition, state lists of brownfield sites and local land records where activity and use limitations may be recorded also have to be reviewed.
The 2000 revision also requires users to evaluate the existence or effectiveness of institutional and engineering controls. However, it does not make any other changes to the requirements pertaining to historical source review. In 1993, the practice only required the environmental professional to review a least one reasonably ascertainable standard historical source dating back to 1940 or the property’s first obvious use. The practice indicated that if title search records were used, at least one additional historical source would have to be consulted. In 1994, this requirement was changed to require the environmental professional to review as many standard historical sources as were necessary and were reasonably ascertainable and likely to be useful in determining prior use. 
Standard historical sources that were reviewed in a prior ESA do not have to be reviewed again but uses of the property since the prior ESA should be identified. This requirement is particularly important for shopping centers since approximately 70% of shopping centers may have had dry cleaner as tenants at some point in time. Many dry cleaners establishments only operate for a couple of years. Therefore, it is possible that a dry cleaner could have operated at a site after an ESA was performed but vacated the premises prior to the current ESA. 
•	Enhanced User Responsibilities- Under the existing ASTM 1527, the user had a number of responsibilities during the ESA. The 2000 revision expands the responsibilities of the user. Now, the user is responsible for providing information about activity and use limitations, and must also identify the reason for the ESA (e.g. qualify for the innocent purchaser’s defense, understand all of the environmental risks associated with the property, etc). If the user indicates it wants a more complete understanding of the environmental risks associated with the property, then the environmental professional will need to determine, based on experience, if the scope of services needs to be expanded. If the user declines to indicate the purpose of the Phase I, the environmental professional must add limiting language to that effect.
Commentary: Decisions on HRECs, though, may require input from lawyers. For example, if an adjoining site has impacted the property but the contamination is being remediated by the adjoining property owner, does this qualify as a HREC? Does it depend on the likelihood that the adjoining property owner would indemnify the user or whether the user would have a cause of action for stigma damages? Also, if the property itself has been remediated and been issued a No Further Action letter with reopeners, does the presence of the reopeners prevent the ERC from being considered an HREC? Another illustration might be a property containing an engineering control in the form of a cap that is subject to institutional controls preventing disturbance of the soil. If the property owner fails to maintain the cap, it could become liable for addressing the contamination? If so, should the cap be considered a HREC? What if the property owner plans to expand a building into the area of the cap?  Would this transform the HREC back into an ERC? It is difficult to see how an environmental professional could make decisions about HRECs in these situations without assistance from an environmental attorney.In our next issue, we will discuss the documentation changes to the standard.
13 Charged with Laboratory Fraud
As the environmental due diligence market becomes increasingly competitive, we are witnessing more and more examples of laboratory fraud. Indeed, in the biggest case of laboratory fraud to date, the U.S. Department of Justice (“DOJ”) recently charged thirteen former employees of Intertek Testing Services Environmental Labs, Inc. (“ITS”) with falsifying thousands of test results for superfund sites. 
Between January 1994 and December 1997, ITS analyzed approximately 250,00 samples for more than 59,000 projects. The company charged about $35.7 million for those tests which included tests collected by contractors retained by EPA as well as state environmental agencies. The DOJ alleges that ITS falsified testing data to hide miscalibrated instruments that did not meet quality control standards. 
The defendants are charged with various counts of mail fraud, wire fraud and presenting false claims. They face possible lengthy jail terms and fines ranging from $1 million to $7.5 million. The former ITS vice president could face a maximum term of 155 years in jail for 30 counts of fraud crimes. 
In January 1998, London-based ITS voluntarily disclosed the problems to EPA and requested relief under the EPA audit policy. However, EPA denied the request. 
Commentary: The majority of laboratory errors are due to improper training, not following proper procedures, or malfunctioning equipment. Clients should not assume that lab results are accurate and should question anomalous results. Clients should make sure that laboratories used to analyze samples are licensed and have used appropriate laboratory protocols. 
Environmental Consultant Settles Negligent Due Diligence Claim
Last issue we reported on the growing number of negligence claims being filed against environmental consultants. We have learned that another environmental consultant recently settled a lawsuit filed by a former client.
In this case, the consultant performed a Phase I environmental site assessment (“ESA”) report in the early 1990s and was told to indicate if any suspected asbestos-containing materials (“ACM”) was present but was not required to sample for ACM. The consultant had been asked by the client’s law firm to perform the ESA and a draft Phase I report was issued to the client’s law firm. The report indicated that an ACM survey had been “reportedly” performed at the facility several years earlier and that it had indicated there was no ACM at that facility. The Phase I report went on to say that no suspect ACM had been observed during the ESA. 
The law firm forwarded the draft report to the client and the deal was consummated. The consultant was not asked to provide a final report. The environmental consultant sent an invoice to the law firm which was forwarded to the client who paid the consultant. 
Several years later, the client discovered that ACM was present throughout the building on piping and in the form of spray insulation located above drop ceilings. Faced with several million dollars in ACM abatement costs, the client sued the consultant for negligent due diligence. The consultant claimed that it was not required to perform an ACM survey as part of a Phase I ESA, that the report was only a draft and could not be relied upon by either the law firm or the client. The consultant also argued that its client was the law firm and not the company who had acquired the business. Further complicating the matter was the fact that the environmental consultant did not have any insurance coverage during the time it had performed the due diligence. On the eve of trial, the parties reached a settlement. 
Commentary: While the terms of the settlement were confidential, the case offers several lessons to consultants. First, the case once again illustrates the importance of memorializing assignments in a written scope of work. Many clients do not realize the limited nature of ESAs. They often believe it encompasses all business risks related to environmental conditions associated with property or a business. It is important for consultants to understand the client’s objectives for performing the due diligence and to advise the client of the limitations of the project. As part of this effort, the consultant should identify in the scope of work, the tasks to be covered by the assignment as well as the non-scope items. Moreover, in many transactions, parties focus on material liabilities when allocating responsibility for environmental obligations. Thus, it would be prudent for consultants to also identify the materiality thresholds for the particular project. The scope of work should also clearly describe what kinds of reports were to be generated. In this case, there was some confusion whether the report marked “draft” should have been considered a “final” report.
Second, often times, law firms contact consultants on behalf of their clients and request that all information flow through the law firm in order to try to preserve the confidentiality of the information. Consultants often feel uncomfortable asking law firms with whom they have a close relationship to execute contracts for each assignment. However, this practice will inevitably lead to misunderstandings that could destroy a relationship with a good source of business. One way to minimize the discomfort would be to negotiate a standard form of contract between the law firm and consultant which can be amended to add the name of the client and the requirements of a particular deal. The contract should specifically identify the client, who the invoice should be sent to and also indicate whether the law firm shall be responsible for payment in the event of a default by the client. Alternatively, the consultant could enter into a written contract with the client which parallels the conditions of the scope of work. In addition, any changes in the assignment should be documented in writing. The contract should also contain limitations of liability. In this case, the absence of a written contract exposed the consultant to potential liability that far exceeded the fees it received for the project as well as the limitation of liability set forth in its written contracts.
Third, another contract issue is who may rely on the report? Usually, only the party in a contractual relationship with the consultant may rely on a report. However, often there are critical non-contracting parties to a transaction such as lenders or landlords who may insist on reviewing the reports. The consultant should identify the parties who may rely on the reports and also place limits on how long those parties may use the information in the reports.
Voluntary Disclosure Leads to Criminal Violations
A laboratory subsidiary of ITS located in Linden, N.J. and two supervisors pleaded guilty to falsifying chemical analyses for reformulated gasoline. The supervisors face a maximum penalty of five years in jail and a $250,00 fine. The corporation faces a maximum fine of $500,000 or up to twice the profits gained from the scheme and up to five years of probation. Each of the individual defendants and the corporation also face an order of restitution and costs of prosecution
Caleb Brett, USA samples petroleum products and provides quantitative and qualitative analyses to meet commercial and regulatory specifications. According to the government, Caleb falsified data from early 1995 through early 1997 to make it appear that gasoline complied with EPA reformulated gasoline (“RFG”) specifications. According to a company representative, the employees were motivated by a desire to retain the blender's business. 
RFG is a cleaner-burning gasoline which is required to be used in nine major metropolitan areas of the United States with the worst ozone air pollution problems. Gasoline cannot be lawfully marketed in those states unless it complies with the RFG specifications. As a result of the fraud, an estimated 200 million to 300 million gallons of gasoline was distributed in the New York, New Jersey and Connecticut area from 1995 through early 1997 which did not meet RFG standards.
The investigation began in February 1997 when Caleb voluntarily disclosed the improper activities. The company sought relief under the EPA audit policy. However, EPA declined to give Caleb relief because after the company made its voluntary disclosure, certain company managers took steps to cover up the data falsification. Since the company did inform EPA about the violations, the company was not prosecuted for the underlying falsification scheme but for the concealment of the activities after the disclosure. Thus, the company pleaded guilty to one count of conspiracy to make false statements to the EPA and the U.S. Postal Inspection Service.
Commentary: The ITS cases illustrate one of the principal concerns that many companies have about the EPA Audit policy. Companies have been reluctant to use the policy out of fear that they may not only fail to obtain relief from civil penalties but also become subject to criminal prosecution. EPA has consistently stated that its policy was not to recommend criminal enforcement for companies that voluntarily disclosed violations provided they qualified for the audit policy. Specifically, EPA has indicated that when a voluntary disclosure results in a criminal investigation, it will not recommend criminal prosecution for the entity when the disclosure satisfies the audit policy though the agency may pursue the culpable individuals. The agency has also indicated that final prosecutorial discretion rests with the DOJ. Here, senior management disclosed the violations as soon as they were discovered but instead of obtaining relief from civil penalties, the company as well as the culpable individuals was charged with criminal violations. Of course, the company still was able to plead to a lesser criminal offense. Nevertheless, this case serves as a warning to corporations considering using the EPA audit policy.
Five More Telecommunications Companies Voluntarily Disclose Violations
In our previous issue, we discussed the environmental compliance issues facing the telecommunications industry. Recently, five telecommunications companies voluntarily disclosed 3,457 environmental violations at 1,122 of their facilities in 45 states and the District of Columbia. The companies entered into settlements under the EPA Audit Policy and paid a total of $329,426 in fines which represented the amount of the economic benefit the companies gained from the non-compliance. The EPA waived 100% of the gravity-based penalties.
The settling companies included AirTouch Communications, Inc., AT&T Corp., Broadband, LLC, NEXTLINK Communication, Inc. and Qwest Communications International, Inc. Most of the violations involved failure to file toxic release inventory (“TRI”) reports, failure to file SPCC plans, not applying for permits to construct or install stand-by generators, not maintaining records for appliances containing more than 50 pounds of refrigerant, failing to repair refrigerant leaks from heating, ventilation and air conditioning units, and not obtaining financial assurance for underground storage tanks.
EPA Targets Correctional Facilities for Environmental Compliance
In prior issues, we have discussed the EPA enforcement initiative that has been targeted at colleges and universities. Recently, EPA announced an enforcement initiative that focuses on state correctional institutions located in the Mid-Atlantic States.
Like universities, correctional institutions engage in a variety of activities that are covered by environmental laws and regulations. These include wastewater treatment, fuel storage and industrial operations such as furniture manufacturing and auto body repair. 
For example, EPA has identified numerous violations at a number of correctional institutions in Pennsylvania. The EPA determined that a facility located in Montgomery County, Pennsylvania had violated effluent limitations for ammonia nitrogen being discharged into a Perkiomen Creek tributary, had improperly stored and managed hazardous waste, and failed to develop a spill prevention plan for oil tanks. The total penalty proposed for all the violations is $90,200. EPA also has taken enforcement action against the District of Columbia Department of Corrections for violations of hazardous waste and petroleum storage tank laws and regulations at the Lorton Correctional Institute, in Lorton, Virginia.
Utility Uses Audit Policy to Acid Rain Penalties
Interstate Power Company (“IPC”), a subsidiary company of Alliant Energy Corporation, Cedar Rapids, Iowa, recently agreed to pay a penalty of $200,000 and permanently surrender 1,474 sulfur dioxide (“SO2”) allowances worth $198,990. 
This action settles a complaint filed by EPA on July 31, 2000 which alleged that IPC failed to timely install and complete certification testing of the required acid rain continuous emission monitors (“CEMs”) for sulfur dioxide, volumetric flow, nitrogen oxides, and oxygen or carbon dioxide on Boiler 6 at IPC's station in Dubuque, Iowa. The complaint alleged that IPC failed to perform the same requirements at Units 1 and 2 at IPC's station in Lansing, Iowa. In addition, IPC failed to complete the requirements for the opacity monitors on these units. The complaint further stated that by failing to complete acid rain permit applications, the company illegally operated these units without a permit. 
IPC was able to reduce its penalties under the EPA Audit Policy. The penalties represented the economic benefit that IPC had obtained by failing to install, certify, operate, and maintain monitors continuously since January 1, 1995.
EPA Promotes State One Stop Program
EPA recently invited nine states to join the One Stop program which was established to create a high quality national environmental information network. The program allows users to easily submit, use and retrieve environmental information.  Each state enrolled in the program is eligible for $500,000 grants which can be used to upgrade environmental databases and information management systems. States currently enrolled in the program are Arizona, California, Florida, Georgia, Indiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Hampshire, New Jersey, New York, New Mexico, Oklahoma, Oregon, Pennsylvania, Texas, Utah, Virginia, Washington, West Virginia and Wisconsin. The states that were invited to join the program were Delaware, Illinois, Louisiana, Maine, Montana, North Carolina, Ohio, Rhode Island and South Carolina. 
Commentary: The one stop program can be particularly useful for tracking institutional and engineering controls. These records frequently are misfiled or are not easily retrieved. As a result, contractors may inadvertently damage engineering controls or violate deed restrictions.

ENVIRONMENTAL INSURANCE

Insurance Products Used to Facilitate Transactions
Environmental insurance is playing an increasingly important role in business transactions. Insurance can help provide comfort to purchasers and their lenders. Many sellers also have been using insurance in lieu of providing contractual indemnities or establishing remedial escrow accounts. Following are some examples of how insurance was recently used to facilitate transactions.
A developer is planning to purchase a 2.8-acre vacant commercial property with a 42,000 square foot building. A printing operation had been located at the site from 1963-1997. The purchaser is planning to rehab the building and lease it out to several tenants. 
The groundwater beneath the property was contaminated with VOCs from five USTs that were abandoned in place in 1986 and a dry well. Residual contamination remains in the source area and while the contaminant concentrations in the groundwater have been decreasing, there is evidence that the groundwater contamination was migrating towards a creek. There has been no off-site investigations and the extent of surface water impacts are unknown. There is also some concern that a DNAPL may have penetrated the bedrock.
A remedial action plan (“RAP”) had been conceptually approved by the state under the Maryland voluntary cleanup program. The RAP will require if excavation and disposal of contaminated soils, and installation of a passive in-situ groundwater interceptor trench/ reactive chamber system with discharge of treated groundwater to the creek. The estimated installation cost of the trench and treatment system is $656,500 plus $258,000 for O&M over 10 years. In addition, the state requested that three groundwater-monitoring wells be installed in the bedrock. 
The purchase price will be $100,000 and the purchaser will agree to assume responsibility for all required remedial activities and future environmental liabilities. The seller wants the purchaser to obtain insurance to assure that the cleanup would be performed. The proposed coverage will only be for undiscovered contamination at the subject site.  The known contamination will be endorsed onto the policy after the RAP has been completed and received a satisfactory MDNR review. A ten-year policy has been proposed with limits of $5,000,000 with a premium of $120,000 and a $25,000 deductible. 
In another proposed transaction, a bank wanted to purchase a 1.81-acre site that is currently used as a grocery but used as a gasoline station prior to the 1990s. The bank is also acquiring two contiguous lots as well and will then enter into a sale/leaseback arrangement with a real estate developer. Another lender will finance the sale/leaseback transaction. 
The contract provides that the Seller will be responsible for the known groundwater contamination until the issuance of a NFA letter. The seller is also required to post a $25,000 escrow to secure the cleanup obligation and has agreed to purchase an insurance policy that will name the bank and the real estate developer as additional insureds.
The service station had removed six USTs in 1991 that contained diesel fuel. Dissolved benzene was detected in the groundwater but monitoring data from the past eight years confirms that the contaminant concentrations are declining, the plume has stabilized and that it is not likely to spread any further. The edge of the plume is about 10 feet beyond the property boundary. A drinking water well located 600 feet down gradient of the site on a nearby farm has not been impacted by the plume. The seller has proposed a monitoring-only remedy. It is estimated that the costs of the monitoring program will be $25,000. 
Two insurance policies have been proposed. One policy will have a term of 5 years and address third party liability. The policy will have a limit of $1 million, a deductible of $25,000 and a $20,000 premium. The second policy will act as a backstop for the seller’s indemnification. The term will also be 5 years with a limit $1 million, a deductible of $50,000 and a premium of $40,000. 
Insurance to Pay for Iron Mountain Settlement
An international chemical, pharmaceutical and Biotechnology Company has agreed to spend over $800 million to address acid mine discharges flowing from the Iron Mountain Mine. Under the agreement, the company will build a treatment plant that will essentially operate in perpetuity to treat the acid water flowing from the defunct copper mine.
The site near Redding, California was an active copper mine for more than 100 years. The acid mine discharge is originates in the miles of tunnels beneath the mountain where iron sulfide in the pyrite deposit become exposed to oxygen and chemically altered to iron sulfate. When water, which had been pumped out during the mining operations, fills the tunnels and comes into contact with the iron sulfate, sulfuric acid is formed. The acidic water discharges from the mines and renders much of the surface water incapable of sustaining life. While over more than $200 million has been spent on the site, the acid mine discharges cannot be halted. Instead, the discharge can only be captured and then treated before being released into the river. 
The mine was added to the National Priorities List when it was owned by Stauffer Chemical Co. The company was acquired by the French company Rhone Poulenc which in turn merged in 1999 with a German company Hoechst. The current company was formed from these companies. 
The current owner has agreed to pay $160 million now for an insurance policy that will pay up to $300 million in cleanup costs over the next 30 years if it is needed plus a final $514 million payment in 2030. 
Insurance Agent Liable for Cleanup Because of Negligent Misrepresentation
The Court of Appeals for the Fourth Circuit ruled that an insurance agent who failed to disclose that an environmental insurance policy barred coverage for sudden and accidental pollution losses is liable for the policyholder's cleanup costs. In Advanced Environmental Technology Corp. v. Brown, the court said the agent was liable under Maryland law because he negligently misrepresented the available coverage when he issued the certificate of insurance even though he did not intend to deceive the policyholder. The court said that intent to mislead is an element of fraud but not negligent misrepresentation. The broker was found liable for $414,154 in damages for 40 gallons of PCB-contaminated oil released from a transformer that was broken while being removed from the site.

AIR POLLUTION DEVELOPMENTS

Agreement With City Does Not Bar Federal CAA Action
A district court for the northern district of Ohio ruled in U.S. v. LTV Steel Co. that a municipal enforcement proceeding does not bar the federal government from bringing its own enforcement matter under the Clean Air Act (“CAA”).
In 1996, LTV paid a $2,500 to Cleveland to settle opacity and sulfur dioxide violations. EPA then issued a notice of violation in 1997 and filed a complaint in 1998. LTV argued that the Eighth Circuit’s 1999 decision in U.S. v. Harmon Industries precluded the federal enforcement proceeding. However, the district court ruled that the city action involved violations of the municipal code and  not the CAA. Moreover, only the state may be delegated authority to administer the CAA.  
EAB Upholds EPA NSR Complaint Against TVA
The EPA Environmental Appeals Board (“EAB”) affirmed an agency complaint that the Tennessee Valley Authority (“TVA”) violated new source review requirements at almost all of its facilities. EAB rejected TVA's claims that the modifications to its facilities fell within the exception for routine maintenance. However, the board also ruled that EPA officials did not successfully prove that all of TVA's modifications resulted in emissions increases for a number of criteria pollutants.
Commentary: One of the reasons why the EPA launched its NSR enforcement initiative was that the agency believed that many businesses expanded operations during the economic recovery of the 1990s but did not seek pre-construction permits for those new or modified sources. For example, EPA Region 7 has started is targeting grain processors because steady increases in demand from this sector has led to modifications of existing process units or construction of new ones. The regional office will allow the companies to voluntary complete an air compliance audit within six months and disclose any potential areas of noncompliance to EPA. Violations detected during the audits will be available for penalty mitigation under the audit policy.
US and Canada Reach Agreement on NOx Emission Reductions
The US and Canada have developed a draft agreement of the Ozone Annex to the 1991 Canada-US Air Quality Agreement in which the US would agree to cut NOx emissions from power plants and other industries by 35%. Canada has agreed to cut its NOx emissions by 50%. The NOx emissions reductions are to be phased in beginning in 2004 and must be achieved by 2007. 
The draft agreement applies to specific regions of each country. In Canada, the areas that would be subject to the agreement include central and southern Ontario and southern Quebec. The areas where the US reductions would have to be achieved include 18 northern and northeastern states and the District of Columbia. 
The US will achieve NOx and VOC reductions from mobile sources, new and modified stationary sources, stationary sources of hazardous air pollutants (“HAPs”), consumer and commercial products, architectural coatings, and automobile repair coatings. Canada plains to implement annual caps 39 kilotons of NOx emissions from fossil fuel power plants in southern Ontario and 5 kilotons of NOx in southern Quebec by 2007.
Asbestos Abatement Company Owner Convicted
EPA is continuing to vigorously enforce its asbestos regulations that have been issued under the CAA. The asbestos rules establish notification requirements and procedures that had to be followed when performing renovation or demolition of buildings having asbestos-containing materials (“ACM”). These ACM regulations were extensively revised in 1990. Owners and operators of buildings (e.g., building managers, contractors, etc.) must comply with the ACM rules when more than 260 linear feet or 160 square feet of friable ACM is to be disturbed during construction activities.
The owner of an asbestos abatement company was convicted of conspiracy to launder money and the illegal abatement of asbestos from 1995 through 1999 throughout Central and Upstate New York.  The owner was ordered to forfeit to $939,079.98 and faces maximum possible penalty of sixty-five  years in jail and a  $4,128,000.00 fine.
The government established the illegal removal of asbestos had taken place at more than 1,000 facilities in central and upstate New York including elementary schools, churches, nursing homes, hospitals, state police barracks, the New York Legislative Office Building, and numerous other public buildings and private residences. There was evidence that the large amounts of visible asbestos were released into the air during the removal process and that workers were knowingly sent into asbestos "hot zones" without respirators or without being directed to wear respirators and without being given sufficient replacement filters for the respirators.  The owner of the company also falsified medical clearance evaluations required to be completed by doctors prior to workers performing asbestos abatement work. In addition, he conspired with accredited laboratories to falsify air monitoring required by law to measure asbestos exposure to workers and those who occupy the buildings following the purported removal.  There was also  evidence the asbestos had been  fully removed. In at least one instance government witnesses testified to finding large quantities of asbestos remaining after the purported cleanup.
EPA Announces Largest CFC Settlement
EPA recently reached a $3.5 million settlement with a Little Rock, Ark. bakery to resolve claims that the bakery improperly emitted thousands of refrigerants like chlorofluorocarbons (“CFCs”) and hydrochlorofluorocarbons (“HCFCs”) from refrigerating equipment. This settlement is the largest in the history of the EPA's stratospheric ozone protection program. 
The EPA claimed that Meyer's Bakery which is a large commercial bakery that produces bread, muffins and other bakery goods for distribution throughout the United States and Canada failed to repair leaks, maintain complete service records or develop a retrofit or replacement plan for these leaky systems. The violations occurred at Meyer's facilities in Arkansas, Arizona. Florida, Kansas and Texas. 
Commentary: CFCs and HCFCs 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. The average home air conditioning system holds 7 to 8 pounds of refrigerants and a car air conditioning system usually holds about 2 pounds. 
EPA Considering Waiving Some CAA Requirements to Spur Brownfield Development in Chicago
EPA is considering companies building or expanding factories in Chicago to bypass some CAA requirements for "ozone non-attainment area" under a Project XL proposal. 
Chicago has been declared a "severe non-attainment area" for ozone. Under the CAA, businesses that want to locate or expand and need to add new sources or modify existing sources have to obtain emission offsets for any additional pollution resulting from the new or expanded operations. The offsets can be generated by reducing emissions elsewhere at the business or buying emission "credits" for other companies that have reduced pollution.
According to EPA, about 80 percent of Chicago air pollution does not come from large stationary sources such as factories but from thousands of vehicles and small businesses such as dry cleaners. 
Under the Project XL proposal, EPA is considering granting Chicago regulatory flexibility in meeting CAA by allowing the city to create "economic development zone" where expanding or relocating companies wouldn't be required to obtain these emission offsets. Instead, Chicago would be required to develop a pool of pollution offsets from other sources which the new business can draw upon for their offsets. 
One way Chicago hopes to generate the pool of emission offsets is by reducing emissions would be locating the development zones in areas that would reduce employment-related travel or encourage public transportation. Other examples would be improving mass transit and providing incentives for the public to use "clean" products—such as using electric lawnmowers instead of gas-powered lawnmowers. Chicago will be required to generate pollution emission offsets that are 40% less than under the normal permit requirements. 
EPA Proposes To Settle NSR Violations With Illinois Manufacturer
The United States proposed to enter a settlement into Illinois steel and wire company requiring the company to install pollution control equipment on an electric arc furnace and to pay a civil penalty in the amount of $434,460. Under the proposed consent decree, the company will also implement three Supplemental Environmental Projects (``SEPs''), including a road paving project, installation of a new baghouse dust transfer system and installation of a new electrolytic macroetching machine intended to reduce emissions of particulate matter and hydrochloric acid vapors at the facility.
EPA Files Complaint Against Kodak for Leaking Valves and Pumps
EPA recently cited Eastman Kodak Company with failing to test and monitor 592 valves and 175 pumps that are used to carry hazardous wastes containing volatile organic compounds at its Rochester plant. The agency is seeking a penalty of $303,064 for the violations which it discovered after a 1999 inspection.
The hazardous wastes are generated in Kodak's chemical manufacturing processes.  As a result of a three- day EPA inspection of Kodak and information submitted by the company at EPA's request, the agency determined that 446 valves were not checked monthly for leaks of volatile organic compounds from December 1996 to September 1997 nor were they part of larger tests done by Kodak in December 1996 that would have made them exempt from monthly testing and subject only to quarterly testing. EPA also determined that since December 1996 Kodak failed to do monthly monitoring of 146 valves and make weekly visual inspections of 171 pumps used to move hazardous wastes through the pipes.
Kodak apparently believed these valves and pumps were not regulated.  In addition, the agency charged that Kodak did not perform annual testing of four other pumps to determine whether they had detectable emissions of volatile organic compounds, and that it failed to initially test 26 portable tanks used to store volatile hazardous wastes to make sure they had no detectable emissions.  
Companies Form GHG Partnership
While governments continue to haggle over implementation of Kyoto Protocol, companies are voluntarily taking actions to reduce their greenhouse gas (GHG) emissions. For example, Dupont, Shell, Alcan Aluminum, BP, Suncor Energy (Canada), Pechiney (France), and Ontario Power Generation (Canada) recently announced they will form partnerships with a private environmental group to make significant voluntary reductions in their GHG emissions.
Under the agreement, Environmental Defense will provide the participating corporations with technical advice, and publish audited inventories of each company’s GHG emissions. If the participating companies reach their targets, the amount of GHG emissions released by these companies worldwide would be reduced by 15% annually compared with a 1990 baseline. The GHG emission reductions will help companies minimize waste generation, reduce fuel inputs, and process engineering efforts. The partnership with Environmental Defense allows these corporations an opportunity to boost their public image as good corporate stewards. The companies may also benefit from credits for early reductions under future trading programs.
Tips for Radon Testing 
Radon is an odorless radioactive gas that is formed by the decay of uranium and radium that is present in soils and rock. The radioactive gas usually escapes harmlessly into the atmosphere. However, because of differences in air pressure between buildings and the outdoor air, the gas can seep into residential buildings through foundation cracks and openings in those buildings and accumulate into unhealthy levels in unventilated areas such as basements. Radon gas can dissolve in groundwater and escape into the air when the water is used for showering or other household uses. Moreover, radon gas can be introduced into buildings from certain stone materials. 
Exposure to elevated levels of indoor radon gas can cause a variety of health problems including lung and stomach cancer. While radon gas is more common in certain parts of the country, any home may have a radon problem especially during the winter and summer when the homes are likely to be sealed off for heating or cooling purposes. 
The EPA has established an action level for Radon of four Pico curies per liter of air (4 pCi/L). EPA estimates that six percent of all homes nationwide may have elevated levels of radon gas. In Pennsylvania, the state DEP and the EPA have estimated that 40 percent of Pennsylvania homes have radon levels greater than four pCi/L and that radon readings of greater than 20 pCi/L have been found in all 67 Pennsylvania counties. Readings topping 100 pCi/L (or 25 times the action level) have been found in 60 counties. 
Commentary: The most common test for radon is a do-it-yourself, short-term charcoal canister test that's available for about $20 at most hardware and home-improvement stores. Homeowners also can hire a state-certified company or individual to do the testing. Because of the health risks posed by radon gas, many residential transactions now require a radon test. In fact, some states now require sellers and brokers to disclose to buyers information that might be available regarding the presence of radon.

WATER POLLUTION/ENDANGERED SPECIES

District Court Allows Corps to Enforce Interim 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” (64 Fed. Reg. 25,120).
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 redeposit 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 U.S. District Court for the District of Columbia recently upheld the May 1999 interim regulations in American Mining Congress v. Corps of Engineers. However,  the court cautioned the agencies that they did not have "unqualified authority” to regulate material re-deposited into a wetland during a clearing operation language and that the agencies had to comply with the limitations set forth in the May 1998 appellate decision. Specifically, the court said that the agencies should not interpret the appeals court as authorizing them to limit incidental fallback only to the situations where material is returned to 'virtually' the exact spot where it was removed.
EPA Brings Enforcement Actions Against Towns for Wetlands Violations
In our prior issue, we warned owners of property that because local government did not consistently regulate wetlands development, they could not rely on local authorizations as a substitute for a federal wetlands permit. Now, the EPA has begun bringing enforcement actions against towns and municipalities that have failed to comply with federal wetlands regulations.
For example, EPA recently fined the Municipality of Toa Baja, Puerto Rico, $5,000 penalty for filling wetlands without prior authorization during a road project.  The wetland was filled in during construction of a road crossing over a wetland tributary. The area was covered with dirt and gravel and cement headwalls were also installed. The Agency only assessed a $5,000 penalty for this violation because the environmental harm was minor and the work could qualify for authorization.  
Supreme Court to Review Wetlands Taking Case
The U.S. Supreme Court agreed to review whether if wetlands regulations that predate an individual's ownership of property containing wetlands can give rise to a takings claim under the Fifth Amendment to the U.S. Constitution. In Palazzolo v. Rhode Island ex rel Tavares, the plaintiff acquired property containing 18 acres of wetlands in 1978 from a corporation in which he was the sole shareholder.  After his application for a wetlands permit was denied, the petitioner filed an inverse condemnation claim. The Rhode Island Supreme Court ruled that the claim for compensation was not ripe because the property owner was not deprived of the beneficial use of his property and because the regulations limiting development of wetlands predated his ownership. Therefore, he could not have had reasonable investment-backed expectations. The court also noted the wetlands had a value of $157, 500 and that the non-wetlands portion of the property would be worth $200,000 if developed. 
EPA Objects To Meadowlands Mills Project
The section 404 wetlands program not only imposes costs and delays on developers but also often requires projects to be redesigned to mitigate adverse impacts to wetlands. A recent example of this recently occurred in New Jersey where EPA recently recommended that the Corps should not issue a wetlands permit for the mixed-use commercial development project proposed to be located in New Jersey meadowlands. 
In November 1996, EPA objected to the Meadowlands Mills project and recommended that the Corps deny the permit.  At EPA’s urging, Corps determined that the project would have a significant effect on wetlands and required a federal EIS. EPA then reviewed the draft environmental impact statement (“DEIS”). The project would include a super-regional retail/entertainment center, office space, hotel, mass transit facility, warehouse distribution facilities and associated parking structures and roadways
EPA recommended that the Corps rejected three alternatives of the project because there were other alternatives that had less adverse impacts to the environment. The DEIS alternatives would have resulted in the filling 206, 166 and 144 acres of wetlands respectively.  There were two other alternatives that would have filled in 132 and 134 acres of wetlands. Because the two alternatives would have impacted less wetlands and are, therefore, would be less damaging to the aquatic ecosystem, the three larger alternatives clearly violated the wetlands regulations 
EPA also noted that none of the proposed alternatives contained a mitigation plan. While the applicant proposed turning wetlands into flood detention basins, EPA does not consider stormwater detention basins qualify as mitigation. 
EPA also raises concerns about the lack of an alternatives analysis of any sort for the two roadway configurations proposed for the five Meadowlands Mills project scenarios.  While the roadways would result in more than 40 acres of wetland loss, the DEIS did not look at alternatives such as making roadways smaller or elevating them.  In particular, the EPA asked the Corps to consider ways to reduce the impacts of Route 120B, which would bisect the entire area of the tract that is proposed to remain as wetlands.  By bisecting the tract, the road would greatly reduce the value of the wetlands by blocking its hydrological functions and by acting as a barrier to the free movement of mammals, reptiles and amphibians across the wetland system.
Commentary: Under the federal wetland regulations, developers are required to restore degraded wetlands or create new wetlands to replace the wetlands lost by the project. In 1990, the EPA and the Corps entered into a memorandum of agreement (“MOA”)which clarified the procedures for determining the level of mitigation that will be required. The MOA established a goal of “no net loss of wetland values and functions.” Mitigation measures must be applied using “sequencing” criteria that that first requires an applicant to avoid wetlands impacts to the “maximum extent practicable”. In this analysis, the agencies will ask if there are any practicable alternatives that would not result in a loss of wetlands. A permit will not be issued if a practicable alternative exists which is less environmentally damaging. If not, the sequencing criteria require the applicant to redesign the project to minimize the unavoidable impacts of the project. The MOA states that no permit may be issued unless “appropriate and practicable” steps have been taken to minimize adverse impacts.
EPA To Allow In-Lieu Fees Instead of Mitigation
EPA issued a guidance document which will allow developers to satisfy their wetlands mitigation obligations by making payments to designated parties instead of building new wetlands or buying credits in a wetlands banks.
While the guidance document states that mitigation banks are the preferred means of compensation for wetlands losses when on-site mitigation is not practicable or is less environmentally preferable, the agency said in-lieu fees may be paid when a mitigation bank does not provide "in kind" mitigation or when the only credits available are for preservation, not for restoration, creation, or enhancement. The in-lieu fee may be used for both individual wetlands permits and general or nationwide permits.
An in lieu-fee would not normally satisfy the mitigation banking requirements set forth in the 1995 mitigation bank guidance because the mitigation effort would not be completed in advance of the impacts from the project. Also, there is usually no timetable for the implementation of the mitigation effort.
In-lieu fees may be paid to a so-called in-lieu sponsor who will usually be a natural resource management entity. The in-lieu sponsor will be responsible for implementing and monitoring wetland or aquatic resource development projects, and for insuring that the project has adequate funds. The sponsor will have to enter into an agreement with the Corps prior to accepting in-lieu fees and for providing regular progress reports to the Corps. The funds must be used to replace wetlands functions and values, and not to finance non-mitigation activities such as education. Funds collected should be sufficient to provide at least a one-acre for one-acre replacement though mitigation rations may be increased to compensate for temporary losses in wetlands function and values. Land acquisition and initial biological or physical improvements should be completed by the first growing season following collection of the initial in-lieu funds.
California Adopts New Runoff Rules
The California State Water Resources Control Board recently approved rules that will require developers in the Los Angeles area to control sources of polluted runoff. Beginning in February 2001, developers will need to implement measures to reduce the flow of targeted contaminants, including gasoline, motor oil and pesticides. Government officials estimate that the compliance costs for the new regulations could account for 1% to 2% increases in project costs. Projects that fall under the scope of the new rules include commercial developments of 100,000 square feet or larger, automotive service stations, and parking lots with 25 or more spaces. In certain cases, developers will be required to pre-treat wastewater before sending discharging the water into storm drains.
EPA Brings More CSO Enforcement Actions
Some municipalities are served by combined sewer systems  where the wastewater collection system conveys both sanitary wastewater and stormwater through a single set of pipes to a publicly-owned treatment works (“POTWs”). During wet weather, the capacity of the wastewater system will often be exceeded. The combined sewer systems are designed to discharge the mixture of sanitary wastewater and stormwater through overflow points directly into a receiving waterbody prior to reaching the POTW. These wet weather discharges from the overflow points are known as combined sewer overflows (“CSOs”) and can result in deterioration of water quality. CSOs were not usually specifically addressed in NPDES permits and some cities have tried to argue that the CSO outfalls were not covered by their permits. 
EPA recently proposed to enter into a settlement with the Allegheny County Sanitary Authority (Alcosan) and 83 municipalities that use the system requiring Alcosan to complete renovations to the sewer system to eliminated combined sewer overflows. The estimated cost of the project is as high as $1 billion for Alcosan, and approximately $2B for its member municipalities that own their own sewer systems. 
The proposed consent decree follows enforcement actions taken by EPA against other cities including Miami FL ($2 million penalty), Atlanta, GA ($2.5 million penalty plus $27 million for water projects) and New Orleans, LA ($1.5 million penalty and $0.2 million in SEPs). EPA estimates that approximately 1,000 cities in the US, particularly in the Northeast and Great Lakes regions have combined sewer systems that contribute to water quality degradation during inclement weather.
Commentary: EPA addresses CSOs under its Combined Sewer Overflow (CSO) Control Policy. The CSO policy provides for the development of site-specific NPDES requirements using BAT/BCT technology as well as the use of Best Management Practices.
EPA Delays Radon Drinking Water Standard
EPA has delayed issuing its maximum contaminant level (MCL) for radon in drinking water until June 2001. Under the proposed rule, water systems in states that chose to develop aggressive programs to reduce radon gas in indoor air would be required to meet a MCL of 4,000 pCi/L of drinking water. Water systems in states without indoor air protection would have to institute their own programs or meet a more stringent standard of 300-pCi/L. States in New England and certain sections of the mid-Atlantic and Southeastern states will likely be hit hardest by the new standards, because radon levels tend to be highest in these locations. The MCL would apply to community systems that serve 25 or more people and use groundwater as a drinking source.
EPA To Limit Use of Mixing Zones
Under the CWA, states are required to adopt water quality standards which are then used to develop total maximum daily loads (“TMDLs”) . The TMDLs 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.
In developing water qualify standards, states have been allowed to use mixing zones which are areas beyond the discharge points where high concentrations of pollutants are diluted by the surrounding water so that the water quality beyond the mixing zone complies with the water quality standard. By using mixing zones, state permit writers allow high levels of pollutants to be discharged. However, because of concern over the impacts of these higher pollutant loadings and because EPA has encountered inconsistent implementation of mixing zone requirements, the agency is proposing to limit or in some cases prohibit the use of mixing zones. Several states are already developing policies to prohibit or limit mixing zones for certain pollutants. These states are currently considering requiring pollution prevention studies by dischargers prior to authorizing mixing zones, and encouraging the ban of mixing zones for bio-accumulative pollutants. 
EPA is considering a full range of options for the proposed regulation, including the approach recently finalized for the Great Lakes system that prohibits mixing zones for bio-accumulative, persistent and toxic (“BPT”) chemicals of concern. EPA estimates that the Great Lakes  mixing zone ban will eliminate up to 700,000 toxic pounds of chemicals that are currently being discharged into the Great Lakes and that accumulate in fish and wildlife, including mercury, dioxin, PCB's and  pesticides. Mercury discharges alone will be reduced by up to 90  percent.  EPA also estimated half of 600 major industrial and municipal facilities authorized to discharge into the Great Lake will be affected by the rule. The agency intends to phase out the mixing zones out over a ten-year period in a cost-effective manner. Existing dischargers  who can establish that they have already reduced discharges of toxic or bio-accumulative chemicals as much as possible, and that further requirements are not technically feasible or cost effective may be able to be exempt from the new requirements. However, these dischargers would have to continue to meet water quality standards, and reapply for the exception every 5 years. 
Illinois, Indiana, Michigan, Minnesota and Wisconsin-already prohibit mixing zones in the Great Lakes. New York, Ohio and Pennsylvania-will have 18 months to adopt the rule.

HAZARDOUS WASTES/USTS

Corrective Action Reforms Increase Pace of Cleanups
A recent report issued by the US General Accounting Office (“GAO”) has found the corrective reforms instituted by EPA during the past two years have contributed to an increase in the number of cleanups at facilities subject to the Resource Conservation and Recovery Act (“RCRA”) 
According to "Hazardous Waste: EPA has Removed Some Barriers to Cleanups," 231 sites will be cleanup in 2000 compared to 142 in 1997. However, the report said that additional reforms will be necessary to complete cleanups at the 809 facilities currently subject to corrective actions.  GAO indicated that the present pace, these cleanups at these facilities will not be completed for nearly 30 years. 
Commentary: EPA has announced a number of corrective action reforms on July 8, 1999 after a 1997 GAO report indicated that RCRA rules were thwarting cleanups. Some of the reforms EPA has implemented include issuing a hazardous remediation waste management rule that established less stringent treatment standards for contaminated soils and guidance promoting the use of risk-based approaches to groundwater cleanups. administrative reforms that establish goals to control the migration of contaminated ground water.
Computer Equipment Contains Hazardous Materials
In our last issue, we discussed the increase in computer asset recovery facilities that recycle computer components. While computers and personal electronics are not classified themselves as hazardous wastes and may generally be disposed with other solid wastes, many businesses are increasingly using recyclers for their used computer equipment out of concern that they may become liable as generators of hazardous waste if they discard computer equipment in landfills. 
For example, computer monitors may contain up to four pounds of lead which is used to protect the computer user from radiation. Monitors that are thrown away with regular household trash are now the greatest single source of lead in landfills. Computer hard drives may contain mercury, arsenic, cadmium and other toxic chemicals.  These substances may leach into groundwater if the landfills are not equipped with liners.
Commentary: New Jersey is encouraging organizations and computers to voluntarily donate computers to organizations that will reuse the equipment, take the equipment to special computer recycling centers, or to dispose the equipment at facilities designed to handle hazardous waste. The equipment can be disposed on hazardous waste collection days held by county governments or by directly contacting county governments.
Recommendations for Owners of Home Heating Oil Tanks
The federal underground storage tank (“UST”) program does not regulate heating oil USTs used to heat the premises where the UST is located. However, California, Delaware, Kansas, Maine, Maryland, Massachusetts, Montana, New Mexico and Rhode Island regulate heating oil USTs used for heating commercial premises regardless of size under their state UST programs. 
Some states do regulate home heating oil USTs below a certain size. For example, Virginia exempts home heating oil USTs below 5,000 gallons, Pennsylvania does not regulate those USTs with a capacity below 3,000 gallons and  New Jersey exempts heating oil USTs used for on-site consumptive use at commercial premises with a capacity below 2,000 gallons. The cutoff for Minnesota, Nebraska, New Hampshire, New York and Washington is 1,100 gallons
While property owners in those states may not have to register their heating oil tanks nor comply with the UST design standards, the UST owners could still find themselves liable for notifying local authorities for releases of petroleum from leaking home fuel oil USTs and for cleaning up the spills. Following are steps that homeowners can tank to minimize their liability. It is best to perform these steps during the fall prior to receiving the first shipment of home heating oil.
•	Conduct a visual inspection of the tank. Check the tank and its structural supports for signs of rust, leaks and cracks; 
•	Check the fill line and feed line to the furnace for leaks. Any wet spots or odors may signal a problem; 
•	Make sure all appropriate furnace and tank fittings are tight; 
•	If a tank is in the basement, a secondary containment dike should be placed around the tank, fill pipe and outgoing valve. If there is an oil spill, this will keep the spill from spreading to the outside; 
•	Once a furnace is operational, the owner should regularly monitor oil usage so that a leak does not continue undetected. 
•	The fill pipe should be clearly marked with a red flag. The fuel delivery company should be informed how the fill pipe has been marked; 
•	If possible, underground tanks should be replaced with an aboveground horizontal tank;
•	If possible, a vertical tank should be replaced with a horizontal tank to prevent it from toppling; 
•	The tank should be securely anchored to a foundation that extends below the frost line which will also help keep tank from toppling; 
•	Residents who suspect tank problems should contact their oil company immediately for assistance.
•	The state environmental agency and local fire department should be immediately contacted if an oil spill is detected.
EPA Announces Grants For MTBE Cleanups
EPA has announced that it will be awarding $100,000 grants to 10 communities to assess and cleanup USTs sites contaminated with MTBE. The grants are part of the EPA USTfields programs which was established for abandoned or underused industrial and commercial properties where redevelopment is complicated by real or perceived environmental contamination from federally-regulated USTs. Because the sites are contaminated with petroleum from abandoned USTs, they are not eligible for brownfield assessment demonstration pilot (“BADP”) or Brownfield Revolving Cleanup Loan fund (“BCRLF”) pilot grants. These USTfields pilots are intended to supplement an existing EPA brownfield cleanup and redevelopment pilot. EPA plans to select 40 more USTfields pilot projects in 2001.
The ten communities include:  Nashua, N.H.; Trenton, N.J.; Wilmington, Del.; Anderson, S.C.; Chicago, Ill.; Kansas City, Mo.; Albuquerque, N.M.; Salt Lake City, Utah; Oakland, Calif.; and Portland, Ore.  
EPA Reports on UST Cleanups
According to data released by EPA, approximately 85% of 743,000 UST systems in operation in September 2000 are in compliance with the December 22, 1998 UST standards. By that date, UST owners and operators had to equip existing USTs with spill, overfill and corrosion protection. Tanks that were not upgraded had to be replaced or permanently closed. EPA indicated that 405,000 releases have been confirmed and 357,268 cleanups have been initiated. EPA estimates that 164,000 cleanups have not yet been completed. 
EPA also reported that 27 states have UST programs that are approved by EPA. These programs are supported with funds from the LUST Trust Fund which has a balance of approximately $1.3 billion. Approximately 40 states have UST cleanup funds that pay for most UST cleanups and are separate from the LUST Trust Fund. 
Penn State To Pay $27,000 For Gasoline Spill
In our two prior issues, we described the federal enforcement initiative that EPA has launched against colleges and universities. Recently, Pennsylvania State University agreed to settle an enforcement action brought by the state Department of Environmental Protection (“DEP”). The university will pay a $6,100 fine and has agreed to fund four Community Environmental Projects (“CEPs”) in the amount of $20,900 for a gasoline leak discovered in August 1999 at the university’s Physical Plant Building. The DEP alleged that the university failed to maintain adequate line leak detection on two 10,000-gallon underground storage tanks.
The CEPs include $3,900 to the Clearwater Conservancy for a laptop computer and a network scanner to support the Spring Creek Water Resources Monitoring Project, $2,000 to support the Spring Creek Watershed Cleanup Day 2001, $4,000 to construct a sentinel well to measure the effectiveness of the groundwater treatment system and $11,000 in landfill credits to be used by DEP staff for proper disposal of materials when there is no responsible party. 
EPA Announces Additional UST Enforcement Actions
EPA continues to bring enforcement actions against owners and operators of USTs that are not in compliance with the 1988 UST standards.
In New Jersey, EPA is seeking $220,871 from six Raceway service stations and the president of the company. EPA charged the corporations and its president failed to install leak detection at four of the six stations, failed to properly close down unused underground storage tanks at two stations, failed to assess the extent of contamination around two unused waste oil tanks, and failed to do annual tank tightness tests.  Two of the six gas stations have known petroleum leaks. At one facility, petroleum seeped into an electrical conduit owned by an electric utility. EPA believes that more releases from these Raceway stations may be discovered in the near future
Also in New Jersey, Richards Fuel Oil in Somerville, NJ faces up $71,019 in penalties for substandard USTs. EPA claims the company failed to properly close three unused USTs, failed to regularly test the three tanks for leaks and failed to maintain financial assurance for those tanks from October 1998 to June 2000. The company also faces a potential fine of $52,200 for failing to file and update an SPCC plan for the facility.
EPA discovered the violations during a site inspection on October 21, 1999 and sent a letter to the company requesting information about the four USTs which were used to store kerosene, gasoline and diesel fuel.  When the company failed to respond to EPA's letter, the agency sent a second letter.  Richards submitted two responses to this second letter which were both incomplete. The company's response to a third letter sent by the agency was also incomplete.
U.S. Postal Service Fined For Improper Waste Disposal
The U.S. Postal Service and a contractor have agreed to pay more than $100,000 for illegally disposing of industrial waste unearthed in 1999 during construction of a new mail distribution facility in the BANCO Industrial Park, North Huntingdon, Westmoreland County. 
According to the state DEP, the contractor removed 6,000 tons of waste from the site and illegally dumped it a few miles away in a residential area. The waste had been previously disposed on site decades ago by a unit of Westinghouse Electric. The waste material consisted mostly of mica, a fine dust that causes respiratory irritation, which is used in electric component manufacturing, and associated paper and fiberglass backing materials. 
Heavy rains last fall caused some of the mica waste to wash off the construction property. Strong winds also blew the mica dust into some of the nearby residences. The settlors eventually removed all of the waste from the neighborhood and disposed it in a permitted landfill. Homes were also sampled for the mica dust and cleaned by the contractor.
The Postal Service will pay a $3,000 civil penalty and contribute $36,000 for a North Huntingdon Township CEP. The contractor will pay a $68,000 fine for moving the waste off the construction property. The CEP will re-channel a local stream, stabilize its slope and reduce erosion.

TOXIC SUBSTANCES

More Building Owners Fined for Failing to Disclose LBP
EPA is continuing to bring enforcement actions against owners and managers of homes and apartment buildings for failing to provide with the federal disclosure requirements for lead-based paint (“LBP”). 
In Washington, D.C., a partnership which owned a apartment building as well as the managing agent have agreed to pay a $16,632 penalty for failing to disclose the presence of LBP to tenants who rented five apartments in 1997 and 1998. At least one of the apartments had a child under the age of six. EPA reduced the penalty under its audit policy because the parties complied with the LBP disclosure rule immediately after receiving information about the rule at a July 1999 meeting hosted by their congresswoman.
EPA is also seeking a $33,000 penalty against the owner of single-family home for failing to disclose the presence of LBP to tenants who leased the home in January 1999. The owner did not become aware that lead paint was in the building until after renting the home. 
A San Antonio landlord was fined $128,920 for failing to comply with the LBP disclosure requirements when renting six apartments to families with children ranging from 1 to 18 years old. EPA launched its enforcement action after a tenant alleged their 1-year-old child was poisoned by LBP.
EPA To Allow Boston LBP Abatement Debris to Be Classified as Household Waste
LBP abatement work frequently generates waste that may be considered a hazardous waste under RCRA. Because EPA is concerned that the potential costs for complying with RCRA requirements may be reducing the number of residential LBP abatements, the agency proposed management and disposal standards for LBP debris in December 1998 that would supplant RCRA regulation for LBP debris. EPA believes that the proposed rules could reduce LBP disposal costs from an average of $316 per ton to approximately $37.50 per ton. Most home lead-removal projects cost between $7,000 to $10,000. It has been estimated that the proposed changes could save up to $600 per project.
Boston recently became the first city to take advantage of this approach when it entered into a Project XL agreement which will allow LBP demolition debris from residential buildings to be regulated as a non-hazardous waste.
Commentary: The proposed LBP Debris rule would apply to any firm or individuals who generate, store, transport, reuse, reclaim or dispose of LBP Debris resulting from demolition, renovation, remodeling of residential housing covered by the 1996 Lead Paint Disclosure Rule as well as public and commercial buildings. Homeowners who generate LBP debris as a result of renovation or remodeling that they conduct themselves will not be required to comply with the rule. Likewise, if a homeowner hires a contractor to perform abatement, renovation or demolition activities, the contractor will be considered the generator of the LBP Debris and be responsible for complying with the requirements of the rule. 
LBP Debris includes solid materials resulting from demolition activities that are coated with LBP as well as architectural component debris such as windows, doors, molding, etc. The architectural component will become LBP debris as soon as it is separated from the building structure. However, the proposed rule would not apply to LBP wastes that are likely to have concentrated levels of lead such as LBP chips, dust, blast media, solvents, sludge and treatment residue when these wastes are generated from non-demolition activities (e.g. abatement or deleading). These wastes would continue to be subject to RCRA unless they qualify for one of the RCRA exemptions. 
Under the proposed rule, parties handling LBP Debris must comply with certain management standards. LBP debris may not be used as groundcover such as mulch or wood chips or for any landscaping. It may also not be used as fill material, roadbed material or site leveling purposes. If LBP Debris is applied in any of these ways, the parties will be considered to have engaged in the improper disposal of hazardous wastes. The management standards also require that LBP Debris may not be stored for more than three days unless the material is kept in a closed receptacle or area with limited access. In no event may LBP be stored for more than 180 days. Generators or transporters who accept LBP Debris may not transfer the LBP Debris without providing notice to the recipient that the material is LBP Debris. Copies of the notifications must be retained for three years. 
The LBP Debris may be disposed at a variety of facilities including construction and demolition landfills, non-municipal landfills which are allowed to accept waste from small quantity generators of hazardous waste, and hazardous waste disposal facilities, including landfills and incinerators. The proposed rule allows the reuse of LBP Debris such as architectural components or decorative pieces for historic preservation or when homeowners are trying to find hard-to-find doors, windows, etc, provided the LBP Debris does not contain deteriorated LBP. If so, the LBP would first have to be removed or encapsulated before the LBP may be reused. Antique dealers or salvagers who sell LBP Debris with deteriorated LBP would be in violation of the proposed rule. 
Residential Building Auctions Subject to LBP Disclosure Rule
The LBP disclosure rules require sellers or lessors to disclose the presence of LBP and provide federally-mandated lead hazard information for transactions involving certain housing built prior to 1978. Recently questions have been raised about the applicability of the LBP disclosure rules to auctions of buildings.
An increasing number of building owners are using auctions to sell  buildings that are potentially subject to the LBP disclosure requirements. Generally, the owners arrange to have the auctioneers place a statement in the bid notice indicating that the housing was built prior to 1978 and is subject to LBP disclosure and that potential parties should make inspections prior to placing a bid. The winning bidder at the auction receives the LBP information and is given the option of waiving the inspection or having an inspection. In most cases the buyer will waive the inspection.  To prevent bidders from voiding transactions because of the presence of LBP, some sellers and auctioneers indicate in the bid materials that the properties are sold "as is." 
When it published the LBP disclosure rule on March 6, 1996, EPA indicated that foreclosure sales were not subject to the LBP rule because access to the properties prior to foreclosure was usually not possible and because the transaction was not usually between the property owner and the prospective purchaser. Moreover, the mortgagee or trustee normally would not have information about the presence of LBP. However, the preamble to the rule did indicate that a subsequent sale of targeted housing acquired through foreclosure would be subject to the disclosure requirements.
In their “Interpretative Guidance for the Real Estate Community on the Requirements for Disclosure of Information Concerning Lead-Based Paint in Housing Part II” published December 5, 1996, EPA and HUD indicated for auctions not associated with foreclosures, prospective buyers are usually allowed a due diligence period (response to question 50). The agencies said that during this period, sellers may give potential buyers any information on lead-based paint, allow lead-based paint inspections and otherwise comply with this rule. However, EPA and HUD did not provide guidance for auctions that do not provide a "due diligence" period. The agencies have not time released any further guidance for such situations.  
HUD Announces Grants For LBP Testing
The Department of Housing and Urban Development (“HUD”) is requiring that housing developments built before 1978 which are receiving federal project-based assistance must undergo inspections for LBP. To help defray the costs of the tests and risk assessments for privately owned, low-income units, HUD will be providing $84 million to conduct LBP testing and more than $20 million to train additional inspectors.
Homes To Be Inspected for Mercury Contamination
Natural gas distribution companies serving Detroit and Chicago have agreed to inspect thousands of homes that may have been contaminated with mercury that spilled when the utilities replaced gas pressure regulators. 
Beginning in the 1960s, the utilities replaced older gas meter regulators that contained mercury. During this procedure, workers accidentally spilled small amounts of liquid mercury. 
Commentary: As a result of the widespread spills detected in these two metropolitan areas, it would be advisable to add mercury to the list of substances such as asbestos, lead-based paint and radon that should be routinely investigated when purchasing homes and commercial buildings. 
Connecticut Utility Agrees to Pay $72,930 For PCB Violations
A Connecticut utility agreed to pay $72,930 to settle claims by EPA that two of the company's subsidiaries failing to comply with PCB management rules. 
According to EPA, Connecticut Light and Power Co. which is a subsidiary of Northeast Utilities System failed to comply with the PCB spill policy at six electrical substations in five Connecticut towns and at one pole-mounted transformer. In addition, EPA alleged that another subsidiary, Northeast Nuclear Energy Co., used paint contaminated with PCBs at its Millstone Nuclear Power Station to coat the inside of a fire water storage tank from 1969 to 1999. When the tank was drained in 1998, the company improperly disposed of PCB-contaminated paint and failed to prepare proper documentation for four 55-gallon drums of water and sludge shipped off site for disposal.
EPA Launches PCB Transformer Enforcement Initiative
EPA recently announced an enforcement program to encourage owners of transformers containing PCBs to comply with the PCB regulatory program. For example, EPA recently fined Pacific Tube Company of Commerce, Calif. $16,382.50 for failure to properly label a PCB transformer and for failing to comply with PCB record-keeping requirements. EPA initiated this case last year after an inspection of the Pacific Tube facility identified the PCB transformer. The inspection was performed under a grant to the California Department of Toxic Substances Control. 
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.  EPA has clarified that any oil-filled transformer whose PCB content is unknown must be assumed to be a PCB Transformer. However, if the transformer is known to contain mineral oil, the agency policy is to consider the transformer to be a PCB-Contaminated Transformer 
SUPERFUND/BROWNFIELDS

EPA Announces New Brownfield Cleanup Revolving Loan Funds
EPA has announced that it will accept proposals for 35 new Brownfields Cleanup Revolving Loan Fund (“BCRLF”) Pilots. The BCRLF pilots which may range from $350,000 to $1,000,000 may be used to test cleanup and redevelopment planning models, direct special efforts toward removing regulatory barriers without sacrificing protectiveness and facilitate coordinated public and private environmental cleanup and redevelopment efforts. 
Eligible entities for BCRLF pilots will be states, political subdivisions, or federally recognized Indian Tribes that have established and can demonstrate progress already made in the assessment, cleanup and revitalization of brownfields in their community, State or Tribe. Coalitions of eligible entities are permitted to apply but a single entity must be identified as the applicant. Applicants must demonstrate (1) an existing commitment to brownfields; (2) an ability to manage a revolving loan fund and environmental cleanups; (3) a need for cleanup funds; (4) commitment to making loans and to creative leveraging of EPA funds with public-private partnerships and in-kind services (matching funds are not required); and (5) a clear plan for sustaining the environmental protection and related economic development activities initiated through the BCRLF program. The deadline for the new proposals is December 18, 2000.
California Establishes Brownfield Financing Program
California has established an $85 million Urban Cleanup Loan Program to provide financial assistance to developers, businesses, schools, and local governments.  The program has two components:
The first component is a site investigation loan program that provides low-interest loans of up to $100,000 to conduct preliminary endangerment assessments of underutilized urban properties. The loan would be repaid over a two-year period if the loan recipient decides to buy the property.  Up to 75% of the loan amount can be waived by the state if the property is determined not to be economically feasible to purchase.
The second component of is the Cleanup Loan and Environmental Assistance (“CLEAN”) Program which provides low interest loans of up to $2.5 million for the cleanup or removal of hazardous materials at properties where redevelopment is likely to have a beneficial impact on the property values, economic viability and quality of life of a community.
New Jersey Issues First Check Under Brownfield Reimbursement Program
Under the New Jersey brownfield program, a developer may be entitled for reimbursement of up to 75% of cleanup costs associated with the development of brownfield sites. The money is funded from sales and business tax revenues generated by businesses operating on redeveloped brownfields.
Recently, New Jersey issued the first check under its brownfield reimbursement program. A check in the amount of $1 million was issued to ARC Properties Inc which represents about half the money the company spent to clean up contaminants at a 30-acre site in Edison, N.J. The site had been used to manufacture steel tubing from the 1950s until a few years when the business filed for bankruptcy. Small industrial and commercial tenants also operated at the site. The site remediation activities included excavation and off-site disposal of 3,000 tons of soil, removal of drums, transformers, liquid-filled interior sumps, trenches, underground storage tanks and removal of asbestos-containing building materials. 
ARC has redeveloped the site into the Edison Crossroads Retail Center. Tenants at the site include Home Depot U.S.A., Office Depot, Edwards Super Food Store, Worldwide Floor, Coverings Inc., and Petco. According to the state, the project has created several hundred jobs and generated an estimated $2 million in sales tax revenues since the shopping center opened in early 2000. The state also said that the value of real property at the site has increased from $8 million to $31 million. The company will receive an additional payment of $500,000 next year. The New Jersey Department of Environmental Protection (“DEP”) also announced that said five other developers have entered into agreements with the state to participate in the program and 100 more projects are in the preliminary approval stages.
Pennsylvania Announces New IDA Brownfield Inventory Grants
The Pennsylvania Department of Environmental Protection (“DEP”) recently announced grants to four development authorities to help the agencies identify potential brownfields. The Brownfield Inventory Grants provide recipients with $1,000 for every site they identify with a maximum award of $50,000 per recipient. 
Under the program, the sites that are identified by development authorities are entered into the Pennsylvania Brownfields Directory which is an online database that works as a multi-listing for brownfields. Since 1999, 40 organizations have received grants and 243 sites have been added to the Brownfields Directory. 
Pennsylvania Brownfield Grants Help Waterfront Brownfield Project
The Department of Community and Economic Development (“DCED”) recently awarded two Land Recycling grants to the Bristol redevelopment authority that will be used to redevelop a 40-acre site along the Delaware River. The DCED issued a $100,000 grant for an environmental assessment of the site and an $862,000 cleanup grant.
The property is comprised of several former industrial sites that were used as shipyard during World War I and other manufacturing operations until 1986 when the property was abandoned. The development along Radcliff Street will be divided into two parcels. On the north end of the site will be an age-restricted development consisting of 14 single-story condominium units. The property also will include commercial development in a second phase. 
Pennsylvania Issues New “Growing Greener” Grants
The Pennsylvania DEP recently a new round of “Growing Greener” grants to help communities to develop innovative water and sewer infrastructure technology. The grants may be for a maximum of $100,000 and can be used to variety of watershed projects, including installing stream buffers; fencing streams; treating or eliminating acid mine drainage; restoring wetlands; reclaiming abandoned mines and plugging abandoned oil and gas wells; watershed assessments; and education programs as well as design and construction costs for making improvements to existing drinking water and sewage-treatment facilities.
Projects are evaluated on how they address existing environmental and/or public health problems and the resulting benefits that can be achieved, the degree of technological advancement the project represents, the ability of the technology to go beyond compliance and the stage of planning and permit approvals as well as overall funding commitment.
During the first round of Growing Greener grants, DEP awarded $6,165,358 to watershed organizations, local governments and educational institutions in the 12-county northwest region of the state. 
The state Infrastructure Investment Authority (PENNVEST) also recently approved $24.7 million in low-interest loans and $1.7 million in grants for 13 drinking water, wastewater and storm- water projects to serve communities in nine counties under the “Growing Greener'' initiative. These grants were targeted at three prohibitively expensive projects to bring them within the financial reach of their customers.
Pennsylvania Brownfield Cleanups Completed
The Pennsylvania DEP recently announced the completion of cleanups at a number of brownfield sites. More than 16,000 tons of contaminated soil was removed from a 5.5-acre site in Upper Moreland Township that had been formerly used to build and weld steel tanks. The current owners of property plan to construct a 35,000 sq.-foot appliance store. 
The Titusville Redevelopment Authority recently signed leases with three tenants as the first phase of development at Titusville Opportunity Park. The agency had purchased the 190-acre site from Armco Steel in December 1998. The cleanup involved consolidation and grading of two landfills, removal of PCB transformers, pickle/acid vats and building dust. New wetlands were also constructed to reduce the impact of runoff from the closed landfills. When fully leased, the park will still have 600,000 square feet. 
A cleanup has also been completed at a Plymouth Township property that had been used by a steel company for over 70 years. The cleanup of the 6.7-acre site included the excavation of approximately 684 tons of contaminated soil and fill. A 28,000 square foot car dealership will relocate to the site.
Pennsylvania Approves First ‘Good Samaritan’ Project
In December 1999, Pennsylvania enacted the Environmental Good Samaritan Act which limits civil and environmental liability for landowners and volunteer groups who do reclamation or water treatment projects. Once an organization is accepted in the program, participants are not responsible for injuries or damage to workers or others in the project area, pollution caused by the project, or operation, maintenance or repair of any water treatment system.
Recently, the DEP approved the first mine reclamation project to be completed under the Environmental Good Samaritan Act. The project by the Mountain Watershed Association will reclaim an abandoned coal refuse pile in Saltlick Township. The group also will provide passive treatment to two abandoned deep mine discharges which will improving water quality in the Indian Creek watershed. The completed reclamation also will enhance a nearby public biking trail.

Wisconsin Issues First Reimbursements Under Dry Cleaner Fund
Two dry cleaners in Wisconsin have collected the state's first reimbursements from the Wisconsin's Dry Cleaner Environmental Response Fund (“DERF”) which was enacted in 1997. Under the DERF, the Wisconsin Department of Revenue collects a quarter license fee of 1.8% of gross receipts from dry cleaners and a quarterly fee on solvents sold from solvent suppliers. The Wisconsin Department of Natural Resources then distributes the reimbursements. Portions of the fund are allocated to response action categories such as immediate actions, interim actions, and site investigations/remedial actions.
DOT Announces $47 Million in Grants To Help Make Communities More Livable
The U.S. Department of Transportation recently announced that 80 projects totaling $47 million in 34 states would receive grants under the Transportation and Community and System Preservation Pilot (“TCSP”) program. The grants range from $83,950 to $3.7 million. The TCSP was authorized by the Transportation Equity Act for the 21st Century (TEA-21). 
TCSP funds provide funding for planning and implementing strategies that: 1) reduce the environmental effects of transportation; 2) improve the efficiency of current transportation systems; 3) provide efficient access to jobs and centers of trade; 4) reduce the future number of costly public infrastructure investments; and 5) identify private sector development strategies that will achieve these goals. The TCSP grants can be used to examine transportation strategies that relate to brownfields redevelopment, such as planning access to redeveloped brownfields sites, upgrading existing urban transportation systems, and connecting local community
EPA Enters into Prospective Purchaser Agreements
The Salem Baptist Church entered into a prospective purchaser agreement (“PPA”)  with EPA to purchase and redevelop a substantial portion of the Pullman/Liquid Dynamics site in Chicago. The church proposes to utilize the former Pullman factory site to construct a campus consisting of a community center, a sanctuary, an administrative building, and a retail center.
The 25-acre site has been divided into three areas -- the Pullman Northern Area, the Pullman Southern Area, and the Liquid Dynamics Area.  The two-acre Liquid Dynamics Area was subjected to emergency removal actions in 1983 and 1990. In 1995, Region 5 implemented an Engineering Evaluation/Cost Analysis("EE/CA") as part of a CERCLA non-time-critical removal action at the Site. 
Under the PPA, the Salem Baptist Church will remove USTs and ACM in the Pullman Northern and Southern Areas and place a RCRA Type D cap over the entire Pullman portion of the Site. The development would consist of a combination of building foundations and pads, clay and soil covers, and asphalt and concrete parking areas. The EE/CA estimated that it would cost approximately $4 million to remove the USTs and ACM and cap the Pullman Northern and Southern Areas. Salem plans to reduce that cost by including parts of the construction project (i.e., site preparation, building pads, and parking surfaces) to reduce the cost of the cap. 
EPA also recently entered into a PPA with Renaissance Land Associates, LP, and Renaissance Land Associates Acquisition. The agreement would allow the purchasers to acquire title to approximately 5 acres of land  within the Crater Resources Superfund Site  located in King of Prussia, Pennsylvania. The purchasers plan to develop the Property for commercial  office uses. 
In exchange for the covenant not to sue, the purchasers will pay the United States $100,000 for partial reimbursement for past response costs incurred at the site. In addition, the purchasers will conduct any necessary sampling and cleanup of contamination located on the Property.

Ninth Circuit Rules that Passive Migration is Disposal Under CERCLA
The Court of Appeals for the Ninth Circuit joined the Fourth Circuit in holding that the definition of "disposal" under the CERCLA may include passive migration of hazardous substances .As a result of the decision in Carson Harbor Village Ltd. v. Unocal Corp, the owner and operator of a mobile home park may seek contribution from a  former site owner. 
In this case, the defendant operated a number of oil wells, pipelines, aboveground storage tanks, and production facilities from 1945 to 1983. Between 1977 and 1983, Carson Harbor Village Mobile Home Park (“Carson 1”) operated a mobile home park on portions of the property. In 1993, an environmental assessment performed as part of a mortgage refinancing revealed tar and slag in the 17-acre wetlands portion of the site. Soil samples detected elevated levels of petroleum hydrocarbons and lead. The plaintiff was unable to refinance property because of the environmental site assessment .
The plaintiff (“Carson 2”) submitted a remedial action plan (“RAP”)  proposing a cleanup level of 1,000 ppm total threshold limit concentration (“TTLC”) for lead to the Regional Water Quality Control Board (“RWQCB”). The RAP was approved by the RWQCB with a more stringent cleanup level of 50 ppm TTLC.  More than 1,000 tons of contaminated material was removed pursuant to the approved RAP.  After testing showed residual levels of lead within the established limits, the RWQCB issued a "no further action" letter. 
The plaintiff then filed a CERCLA contribution action against Unocal and  Carson I as a former owner at the time of disposal. Relying on decisions issued by the Second, Third and Sixth Circuits, Carson 1 argued that it was an intervening passive landowner who could not be liable as a former owner at the time of disposal because it did not actively dispose of any contaminants. U.S. District Court for the Central District of California granted the defendants' motions for summary judgment on the CERCLA cost recovery claim. 
The district court rejected the plaintiff's claim that the mere migration of contamination from the tar and slag material into the surrounding soil constituted disposal.  
The court also ruled that the plaintiff's CERCLA claims were not recoverable because the remedial action was not "necessary" to prevent an actual threat to human health or the environment. The court pointed to deposition testimony of the WQCB representative who said that he had not ordered the cleanup and that it was "very likely" that the RWQCB would not have required any remedial action if the plaintiff had simply reported the contamination and not proposed to do a cleanup. The RWQCB representative indicated the agency had merely accommodated the property owner's request for oversight of a voluntary cleanup.  The court concluded the cleanup was not “necessary” under CERCLA, but by the plaintiff’s desire to obtain refinancing.  Since the remedial action was not necessary, the court said the plaintiff was not entitled to recover its costs. 
On appeal, the Ninth Circuit specifically rejected the trial court rulings. The appellate court ruled that while a governmental cleanup order can certainly establish “necessity” under CERCLA, the absence of an order and the fact that remedial action may be voluntary does not establish that such action was not necessary.  The court said it was immaterial that the plaintiff performed the clean up "as part of an effort to secure financing”. So long as there was evidence that the contamination presented a palpable threat to human health or the environment, the remedial action could be considered “necessary”.  The court also said that because of limited resources, failure by a governmental agency to issue an order or take action regarding a reported release could not be construed as indication that the contamination did not pose a risk. The court also noted that the RWQCB representative had testified that the lead contamination from the tar and slag material presented a threat to both surface and groundwater, and that the RWQCB generally requires that something be done when such elevated levels of lead are found.  
Finally, the court also looked to the actions of the RWQCB as evidence that the agency believed the release posed a risk to the environment. The court observed that the RWQCB allocated resources for oversight, did not issue the NFA letter when it was originally requested, required a more stringent cleanup level than was proposed, and did not issue the NFA letter until the cleanup was satisfactorily completed.
Commentary: Many states have established state voluntary cleanup programs (“VCP”) which allow parties to perform cleanups with minimal oversight and do not require the cleanups to be performed in accordance with the National Contingency Plan (“NCP”). Parties who are interested in recovering their cleanup costs should ensure that the cleanup does comply with the NCP and may want to have the VCP agreement indicate that it is an administrative settlement under CERCLA to minimize the possibility that the volunteer could be precluded from bringing a contribution or cost recovery action.
EPA Approves Further Cleanup at Residential Community
The EPA recently selected a plan for a second phase of cleanup work to remediate creosote contamination at residential development in Manville Borough, New Jersey.  
This 137-acre residential community was built over a former railroad tie creosoting facility.  EPA will excavate an estimated 78,900 cubic yards of soil containing residual amounts of creosote from approximately eighty properties. The estimated cost of this cleanup plan is $28.5 million. 
The first phase of the cleanup was approved in September 1999 and involved the clean up of creosote buried in lagoons and canals under the development.  The cleanup plan also called for the purchase of 17 properties in the former lagoon and canal areas of the site.  Samples collected in 1998 also revealed elevated levels of creosote and hazardous substances in the surface soils of other 19 residential properties. EPA determined that applying topsoil, mulch, seed and sod at those residences would eliminate the any potential exposure at those residences. 
EPA is still investigating the extent of the contamination at a nearby shopping mall which was built in the location where the former creosoting plant existed. 
Commentary: This case illustrates the importance of due diligence on property that is intended to be used as residential property. The due diligence should not only examine the present condition of the property but also 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.
This case also demonstrates that developers need to evaluate the possibility of personal injury and property damage claims as well as cleanup costs when assessing the risks posed by a site. While there has been an increase in toxic tort suits and property damage claims filed by residents living near contaminated properties, federal PPA and most state Superfund or brownfield statutes do not insulate purchasers of contaminated property from liability for such claims. Purchasers of sites with institutional or engineering controls may face a heightened risk of liability if the controls do not effectively eliminate pathways of exposure. Purchasers will have to ensure that the institutional and engineering controls are functioning properly and should consider purchasing insurance policies that provide coverage for third party claims.
Consultant Review Costs Not Recoverable Under CERCLA
The Court of Appeals for the Third Circuit ruled last month that fees charged by a consultant for reviewing the progress of a cleanup at a superfund site cleanup were not response costs recoverable under CERCLA. In Black Horse Land Assoc. v. Dow Chemical Co, the Third Circuit noted that the only those response costs that are “necessary” and consistent with the NCP were recoverable. The court said those were expenses "directed at containing and cleaning up hazardous releases," However, in this case the court said  the consultant was hired by a prospective purchaser simply to review quarterly reports filed by the site owner who was cleaning up the property. The court observed that the consultant never "visited the property, monitored the contamination or the cleanup of the property, or gathered data related to the investigation or remediation of the property." As a result, the court concluded that neither the consultant nor the prospective purchaser was involved in the property cleanup and therefore the consulting fees did not relate to any remedial or response action at the site.

ENVIRONMENTAL CASES INVOLVING CORPORATE AND REAL ESTATE TRANSACTIONS

Third Circuit Rules SREA Applies Retroactively
In the first federal appeals decision to interpret the Superfund Recycling Equity Act (“SREA”), the United States Court of Appeals for the Third Circuit ruled Gould Inc. v. A & M Battery & Tire Service that the law applies retroactively to private contribution actions that were pending when the SREA was enacted on November 29, 1999. 
Commentary: SREA 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.
Corporate Officer Not Liable Under Responsible Corporate Officer Doctrine
The Indiana Court of Appeals recently ruled that the sole officer, shareholder, and director of a corporation was not personally liable under the responsible corporate officer doctrine. 
In Commissioner, Indiana Department of Environmental Management v. RLG Inc., a landfill was owner and operated by a corporation which had a single shareholder, officer and director. In 1993, the Indiana Department of Environmental Management (“IDEM”) filed a complaint against the company seeking civil penalties and injunctive relief requiring the company to comply with the state solid waste management regulations. The company entered into an agreement to remediate the site and submit closure and post-closure plans. After the company failed to comply with the agreement, the IDEM added the sole corporate officer as a defendant and obtained a default judgment against the company for  $3.1 million. 
The trial judge refused to hold the officer personally liable under the responsible corporate officer doctrine and the appeals court affirmed. The court said that to hold an individual liable under the doctrine, the plaintiff must establish that the person was in a position of authority to control or influence the activities, that there must be a nexus between the individual’s position and the violation, and that the individual actions or omissions facilitated the violation. The court held that even if it could infer from the officer’s position that the individual was in a position to influence his company's policies, there was no evidence of a nexus between his position and the violations, or his actions or inactions and the violations. The court said the individual could not be held liable solely on the basis of the position or title he held.
Bankruptcy Court May Not Incorporate State Settlement in Reorganization Plan
A federal district court for the eastern district of Texas ruled in Southern Pacific Transportation Co. v. Voluntary Purchasing Groups that a bankruptcy court may not approve a confirmation plan incorporating a CERCLA settlement between the debtor and a state environmental agency.  The ruling will allow PRPs to bring contribution actions against the debtor.
In this case, the defendant which was a non-profit agricultural cooperative owned and operated a Texas chemical plant which manufactured arsenic-based herbicides. Hazardous substances including arsenic were released at the site, contiguous properties owned by railroads, a nearby creek and residential properties. In 1988, the state ordered the defendant, the railroads and other PRPs to remediate the contamination. The defendant entered into a settlement with the state to address the on-site contamination. In 1994, the plaintiffs sued the defendant for personal injury, wrong death and property damage and the railroads filed CERCLA contribution and cost recovery actions.
The defendant then filed a voluntary chapter 11 reorganization petition and the railroads filed a proof of claim for $7.2 million for property damage claims. The bankruptcy court included the CERCLA settlement in the confirmation plan which effectively barred the plaintiffs from pursuing their claims. The plaintiffs appealed the confirmation of the plan arguing that only a federal district court was empowered to determine if the agreement was fair and reasonable under CERCLA. In particular, the plaintiffs said that the court must determine if the settlement fairly allocates liability under CERCLA which required the court to evaluate the potential liability of settlors and non-settlors under CERCLA. The district court ruled that the bankruptcy court did not have jurisdiction to address these issues.

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 Law Professor 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. We also offer 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 Lawrence 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.