What You Don’t Know About Phase I’s Can Cost You

Phase I Environmental Site Assessments (Phase I’s) are widely used by purchasers of property and lending institutions providing capital for the purchase. A Phase I can provide valuable information about past uses of the property that assists purchasers and lenders in making informed decisions. In many instances, however, once the Phase I is received and reviewed, it is put in a file and forgotten, even when the Phase I reveals that the property may be contaminated. This is a mistake made by those who do not understand the true purpose behind a Phase I and do not realize that it is only one piece of a larger puzzle. Unfortunately, such ignorance can be costly. Continue reading “What You Don’t Know About Phase I’s Can Cost You”

The Sackett Decision —A Major Victory for Property Owners

The Environmental Protection Agency (EPA) has acknowledged the precedential effect of the landmark Sackett case and wisely decided to expand the decision’s reach beyond the Clean Water Act to a designated group of actions similar to the one at issue in that case. For many, though, the expansion does not go far enough.

In Sackett v. EPA, 132 S.Ct. 1367 (2012), the United States Supreme Court provided a major victory to landowners seeking pre-enforcement review of compliance orders issued under the Clean Water Act. The Supreme Court decision in Sackett changed the entire review framework.

The Sacketts placed dirt and rock on about a half-acre of their property, which the EPA claimed contained wetlands. EPA sent a compliance order to the Sacketts, requiring the Sacketts to, among other things, immediately undertake activities to restore the lot in accordance with an EPA-created Restoration Work Plan and to provide EPA access to the lot and to all records and documentation related to the conditions at the lot. EPA warned the Sacketts that a failure to comply could result in penalties of $37,500 per day, plus a like amount for a failure to comply with the compliance order.

Prior to this decision, the Sacketts would not have an opportunity to contest this order in court unless and until EPA sought to enforce it judicially or sought penalties for the underlying violation. The Supreme Court made clear that judicial review was available under the Administrative Procedure Act (APA) because the compliance order was a “final agency action for which there is no other adequate remedy in a court.” 5 USCA §704. Based on the Supreme Court’s review of the compliance order and APA, the compliance order was deemed a ‘final agency action for which there is no other adequate remedy in a court.’ As a result, the Sacketts were allowed to seek judicial review of the compliance order under the APA.

The EPA has now extended the logic of the Sackett ruling to other ‘final agency actions’ under different statutes. Bowing to reality and saving litigants countless legal battles, EPA issued a memorandum, dated March 21, 2013, in which it advised its regional offices that ‘administrative enforcement orders’ contain language notifying the recipient that judicial review of the order is available. Specifically included in the scope of the new policy are:

  • FIFRA, Section 13: Stop Sale, Use, or Removal Orders
  • CAA, Sections 113(a)(5) and 167: Stop Work Orders
  • CAA, Section 113(a): Administrative Compliance Orders
  • SDWA, Section 1414: Administrative Compliance Orders
  • SDWA, Section 1431: Emergency Compliance Orders
  • EPCRA, Section 325(a): Administrative Compliance Orders
  • RCRA, Sections 3008(a) and 9006(a): Administrative Compliance Orders
  • RCRA, Section 3008(h): Interim Status Corrective Action Orders
  • RCRA, Section 9003(h): Corrective Action Orders

However, there are several very important regulatory decisions that are not included. First, jurisdictional determinations issued by the EPA or the Army Corps of Engineers are not included. In Belle Co., LLC v. U.S. Army Corps of Engineers, a Louisiana district court ruled that Sackett does not extend to such determinations, but the decision is under appeal to the U.S. Court of Appeals for the 5th Circuit. Second, notices of violation (NOVs) under the Clean Air Act were excluded probably because an NOV does not order or compel any type of action. Third, imminent and substantial endangerment orders issued under RCRA Section 7003 are not included. Finally, orders under CERCLA are specifically excluded from judicial review. 42 USCA 9613(h).

Despite the exceptions, acknowledging judicial review of agency decisions is a step in the right direction for those who receive such an order. Ironically, though, it may also mean that any such order will be able to withstand judicial review. As the EPA will know that it may be challenged, it is most likely to ensure that the facts and evidence are available in the record to support the order.

Environmental Issues Facing Auto Dealers

Automotive dealerships face numerous challenges in the current economic climate.An ongoing challenge, in good times and bad, is ensuring that environmental liability and the associated costs are minimized as much as possible so that capital is are not needlessly expended.The risk of liability may be minimized by taking several pro-active steps.

Limiting Liability for Past Contamination

It should not come as a surprise that the owner of an automotive dealership will be held liable for spills and releases of spent solvents, used oil, gasoline, or other pollutants or contaminants into soil, surface water, or groundwater that occur when the owner is in control of the property.Compliance with the regulations and good housekeeping, discussed in greater detail below, may limit the risk of these spills or releases.Unfortunately, however, environmental practices or controls were not as stringent in the past as they are today.Spills and releases of pollutants that occurred many years ago continue to persist today in soil and groundwater at or under the property. Continue reading “Environmental Issues Facing Auto Dealers”

Arranger Liability Under CERCLA

The U.S. Supreme Court recently clarified ‘arranger’ liability under CERCLA in Burlington Northern & Santa Fe Railway Co. v. United States, 556 U.S., May 2, 2009. This case has significance for any seller of an unused and useful product, such as pesticides, herbicides, solvents, or other chemicals, that may also be classified as a hazardous substance. The pertinent portion of the case focuses on Shell’s liability for its sale of a product, in this case, a pesticide, to a company where the pesticide was leaked and spilled onto the ground during transfers of the pesticide between the delivery trucks, tanks, and other equipment. Continue reading “Arranger Liability Under CERCLA”