The New York Times had an article discussing the filing of the liquidation plan for what remains of General Motors.

When General Motors filed for bankruptcy back in June 2009, the "valuable" assets were sold to a new entity pursuant to a 363 Sale that became the new GM. The remaining assets consisting of contaminated and surplus facilities remained with Motors Liquidation Corp (MLC). According to the article, many of the 90 sites are contaminated and will be placed into an environmental trust that will be responsible for remediating and then selling the sites to developers. The article goes on to say that the Trust will be funded with $536MM of TARP money from the Treasury Dept along with an additional $300MM for demolition and security. 

A trustee has not yet been selected to manage the trust.  In the interests of full disclosure, I have been one of the candidates under consideration for the trustee position and therefore am limiting my comments to publicly available information. However, the plan of liquidation is a public document that is available from the United States Bankruptcy Court for the Southern District of New York. 

The federal government has indicted John Steffen of defrauding The Business Bank of St. Louis by pledging brownfield tax credits as collateral on a loan, then selling them to use the proceeds for other projects

The indictment alleges a Steffin entity pledged a $1.42 milllion in brownfield tax credits as collertal for a $1.11 million loan from The Business Bank of St. Louis to convert a hotel to condos. The indictment says that Steffen then sold $827,415 of the credits in December 2007 for other projects without The Business Bank's knowledege.

The bank eventually recovered $775,000 of the proceeds, most of which was paid by the City of St. Louis ($500,000) and by Environmental Operations, the company Steffen had hired to do the cleanup ($200,000). Steffen himself paid $25,000 of the settlement, according to the indictment. 

If convicted, Staffen could face a maximum penalty of 30 years in prison and fines up to $1 million.

For more detail, go to: http://www.stltoday.com/news/local/crime-and-courts/article_3ee197b4-a6f2-11df-af40-0017a4a78c22.html 

Back in January, the City of New York and the New York City School Construction Authority (SCA) reached an agreement with the EPA Region 2 Office regarding the assessment and remediation of polychlorinated biphenyls (PCB) Caulk in public school buildings.

Under the Consent Agreement and Final Order which  was entered under the authority of the Toxic Substance Control Act, NYC agreed to implement a pilot study to determine the extent that PCBs may exist in caulking at five schools. 

Preliminary results from the first three schools that were tested all found elevated levels of PCBs indoor air. The final results will be posted on the Board of Education website. Copies of the approved workplan and the consent order are also available at the website.

 http://schools.nyc.gov/Offices/SCA/Reports/EPA/default.htm

Four out of five people who have returned health surveys report respiratory problems in a central Wyoming community where some residents say gas drilling has polluted their water wells, an environmental group said Wednesday. See article at: http://trib.com/news/state-and-regional/article_6c6455fd-930e-5db9-ab04-9b62d0e4f48a.html

In another post, I discussed the recent decision of the Vermont Supreme Court holding that a purchaser could rely on a negligently prepared phase 1 to assert the state innocent purchaser defense. In an earlier round of litigation, the lower court had ruled that the foreclosing bank that held title for seven months was not liable because the state had failed to prove that there had been a release during the time that the bank held title.

In State v Howe Cleaners, the property had been used as a dry cleaner from 1974-1996. The property was then conveyed to purchaser who converted it to a bakery. When the bakery failed, Granite Savings Bank and Trust (Granite) foreclosed and sold the property seven months later to a pizzeria. The sale was "as is" and before acquiring the property, the purchaser reviewed a phase 1 prepared for the bank.

Sometime after taking title, an EPA inspector spoke with former employees of the dry cleaner and visited the property. When he raised some floor boards, he observed two tanks in the crawl space that had apparently been used to store PCE and that had leaked.

Vt then implemented response actions and sought cost recovery under the state Waste Management Act. The state argued that the successor to Granite, TD BankNorth, was liable as a person who owned the site at the time of a release. TD BankNorth argued it could not be liable because the state did not have any evidence that there had been a release during its ownership. The state responded that it did not have to prove there was a new release but simply migration of an initial release.

The trial court found that the CERCLA caselaw was not dispositive because liability under CERCLA was triggered by ownership at time of "disposal" whereas liability under the state Waste Management Act was linked to a "release". Moreover, the court found that the state definition of release was narrower than CERCLA and seemed to require an actual spill or discharge during ownership.

Because there was a triable issue of fact if there was a release during the ownership of the bank, the court denied the bank's motion for summary judgment. The bank then sought to depose the state's expert on the timing of the release. However, the state refused to make its expert available. After several conferences with the court, the state still declined to make its staff available. As a result, the court issued a sanction prohibiting the state from introducing evidence of the timing of the release which effectively resulted in judgment for the bank.

The case illustrates the importance of understanding the scope of the state superfund or hazardous waste law as well as the extent of the secured creditor exemption. In other states, the bank could have been liable as a past owner and the failure of its consultant to identify the tanks could have exposed the bank to liability.

For years, lawyers and environmental consultants have puzzled over the meaning of the indoor air exclusion of CERCLA. The definition of release excludes  any releases which (1) results in exposure to persons solely within a workplace and  (2) with respect to a claim which such persons may assert against their employer.

This was a puzzling provision since it refers to exposure to persons yet CERCLA does not provide any remedy for personal injury. Over time, the second clause of the exclusion was ignored so that many consultants came to believe that indoor was not covered by a phase 1 unless the client specifically requested such coverage. Indeed, ASTM E1527 provides that indoor air quality along with radon, lead-based paint and asbestos are  non-scope items.

Adding to the confusion is that ASTM E1527 also provides that a recognized environmental condition can include releases into building structures. The uncertainy over the indoor air exclusion was largely ignored until EPA and state remedial programs began focusing on vapor intrusion. Now that vapor intrusion is increasingly becoming a popular tool for toxic tort lawyers, environmental consultants are growing concerned that they may become subject to malpractice actions or breach of contract actions for failing to assess VI during their phase 1 reports.

While doing research on my upcoming article "Playing Poker With Pollution" which calls for revising the CERCLA reporting obligations and  sampling of RECs for owners to satisfy their AAI obligations, I came across language in the preamble to the original section 103 reporting obligations that appears to shed light on the meaning of the indoor air exclusion.

According to EPA, the indoor exclusion was a relic of an earlier House bill that had contemplated that CERCLA would provide a remedy for personal injury. Apparently this section was left in the legislation after Congress decided to drop the provision providing for a remedy for personal injury due to exposure to releases of hazardous substances.  This also explains the second clause of the exclusion referring to workers compensation claims. The old bill would have provided relief to person injured in the workplace from releases of hazardous substances unless they could file a workers compensation claim to avoid duplicate claims.

So, the answer to the decades-long answer is that releases of hazardous substances into indoor air should be covered by phase 1 reports. Of course, whether the applicable standard is the OSHA PELs or levels established for state remedial programs is a discussion for another post.

Anyone who works with CERCLA is undoubtably aware that petroleum is excluded from the definition of hazardous substances. Because if this so-called petroleum exclusion, parties that incur costs to remediate petroleum contaimination are generally unable to seek recovery of their costs under CERCLA.

Back in the 1980s, a number of creative plaintiffs tried to argue that they should be able to seek contribution or cost recovery under CERCLA for the cleanup of gasoline USTs because the gasoline contained listed CERCLA hazardous substances such as lead or benzene. However, EPA issued guidance that the petroleum exclusion applied to refined oil that contained hazardous substances that were added during the refining process. However, EPA said that if the petroleum became contaminated during use, it would no longer fall within the petroleum exclusion. This is why used oil recycling facilities have been able to be listed on the NPL.  

This brings us to the Deepwater Horizon spill. The  crude oil coming from the well would certainly fall within the petroelum exclusion. However, once it reached the surface, it has been treated with dispersants, often times in contravention of EPA instructions. The oil washing up on beaches and in shorelines or marshes is currently being addressed by BP as part of its obligations under the Oil Pollution Act (OPA).  However, property owners who discover oil contaminated with chemicals perhaps because it has been driven inland from a tropical storm would in theory have a basis to seek recovery of their costs for remediating this contaminated oil.  

Thus, property owners who find oil on their property that they suspect came from the Deepwater Horizon event should sample the constituents of the oil to see if the oil is contaminated with CERCLA hazardous substances. Such evidence could be used as a bargaining chip to incentivize BP or its partners to perform a remedial action, or to file a an action under CERCLA. 

Some state superfund laws include petroleum within their scope. Since OPA does not pre-empt state or common law, owners of property contaminated with petroleum can seek redress under those laws.