Tag: environmental insurance

  • EPA adopts ASTM E1527-13 Standard

    environmental Strategist™, between the lines:  environmental Strategist™ research shows in excess of 50% of Phase I site assessments are inaccurate which supports the changes outlined below.

    Two changes outlined in the article below stood out to me and both deal primarily with, Who Are Your Neighbors?

    1.  Identifying potential for vapor releases, or the potential presence or migration of vapors associated with hazardous substances or petroleum products.
    2. Greater emphasis on conducting regulatory file reviews, particularly of adjacent properties, which may pose a concern.

    In other words you may not be a polluter but who are your neighbors and what if they are causing contamination to come onto your property.  Under Federal law the real estate owner is ultimately responsible for the environmental condition of their property.  Environmental insurance can protect real estate owners if third parties contaminate their property.

    EPA adopts ASTM E1527-13 Standard

    From: Allison Winter, ENN 
    Published January 6, 2014 09:35 AM

    EPA finalized a rule last week adopting the revised ASTM E1527-13 “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process” as a standard by which parties may comply with the “All Appropriate Inquiries” Rule, 40 CFR Part 312.

    In the United States, the Phase I ESA is a report prepared for a piece of property that identifies potential or existing environmental contamination liabilities. Phase I ESAs assess risks of ownership and are conducted in order to determine if a site may be contaminated from past spills, leaking underground storage tanks, or historical uses of the site, to name a few.

    American Society for Testing and Materials (ASTM) released the revised E1527-13 standard in November 2013, and now the EPA has announced that they will recognize it. However, the newly revised EPA rule does not delete reference to the previous ASTM standard, E1527-05, so as of now, both standards are acceptable.

    However, in the Federal Register notice finalizing the rule, EPA indicated that it does intend to propose an amendment to 40 CFR Part 312 removing reference to the E1527-05 standard. In its response to comments received on the new rule, EPA noted that it “… agrees with commenters that the revised ASTM E1527-13 standard includes improvements to the previous standard and its use will result in greater clarity for prospective purchases with regard to potential contamination at a property. Therefore, EPA recommends that environmental professionals and prospective purchasers use the ASTM E1527-13 standard.”

    Some changes to the standard include:

    •   Clarification to the definition of a Recognized Environmental Condition (REC). A REC is the presence or likely presence of any hazardous substances or petroleum products, in, on, or at a property.
    •    Addition of the term: “Controlled RECs”. Controlled RECs refer to contamination that has been remediated, but still may be the basis for ongoing or future land use or exposure control obligations
    • Identifying potential for vapor releases, or the potential presence or migration of vapors associated with hazardous substances or petroleum products.
    • Greater emphasis on conducting regulatory file reviews, particularly of adjacent properties, which may pose a concern.

  • Lead tests close downtown Helena DEQ building

    environmental Strategist™ (eS), between the lines:   Caught the fox in the hen house!

    I had an accountant many years ago and the first time I went into pick up my paper work for filing my taxes we spent some time getting to know each other.  During the conversation he told he never balanced his own check book.  I thought to myself do I want to depend upon someone with my finances who did not even perform the most basic of accounting functions, balancing your own check book?  Needless to say I switched accounts.

    When it comes to managing the environmental exposures impacting businesses, we need to be on the same page that in today’s business environment, government environmental regulation is just a bump in the road.  Private business understands to compete in today’s business environment, managing the environmental exposures impacting your operations has become part of “Best Practices”.

    Besides do you want to put your company’s future in the hands of someone that can’t follow the most basic of environmental principals, or what government regulation calls environmental due diligence.  Environmental site assessments (Phase I, Phase II…) are performed so you can determine if you are buying an asset or a liability.  Try getting a commercial property loan from a bank without evidence of environmental due diligence.    Not everyone is as fortunate as the Montana DEQ with access to the tax payers pocket book to take care of their lack of following their own environmental regulations.

    For more on managing your environmental exposures to drive growth and profits go to www.estrategist.com.

    eS Risk Management Strategy:  As this article points out the cost to investigate and test for environmental liabilities can get to be very expensive.  Just a few of the benefits of environmental insurance versus self insuring is environmental insurance can pay for claims investigations such a lead testing, medical screenings, along with third party bodily injury, first and third party business income, remediation costs, legal fees….  When it comes to managing and transferring a business’s environmental exposures there is just one question a business needs to answer.  Question:  Based upon our business model, are we better off transferring our environmental exposures for fractions of a cent on the dollar or self insure and wait until an environmental loss occurs and pay 100 cents on the dollar out of our pocket for claims management, legal fees, investigation costs, third party bodily injury, third party property damage, first party clean up….

    October 28, 2013 3:30 pm  •  By MATT VOLZ Associated Press

    HELENA – The state Department of Environmental Quality closed its downtown Helena building on Monday after finding lead levels up to 40 times higher than federal standards in ceilings throughout the former National Guard armory.

    The results have prompted testing of the air and surfaces in the building’s work areas to find out whether employees have been exposed to lead, DEQ director Tracy Stone-Manning said. The results are due Wednesday.

    “Out of an abundance of caution, we chose to close the building,” Stone-Manning said.

    The employees are on paid leave through Wednesday. They and former employees who worked at the location are being asked to take free blood tests to determine whether they have been exposed, Department of Administration Director Sheila Hogan said.

    Exposure to high levels of the toxic metal can result in lead poisoning, which can eventually lead to brain and kidney damage and anemia, according to the federal Centers for Disease Control and Prevention.

    Even low levels of exposure can damage an unborn child’s nervous system and affect behavior and intelligence, according to the CDC.

    DEQ officials are asking employees who were pregnant or nursing when they worked in the building to test their children.

    The state took over the building at the intersection of Last Chance Gulch and Euclid Avenue in 2002, and it now houses nearly 100 workers of the DEQ’s remediation division.

    The remediation division, which oversees investigations and cleanup of contaminated sites across the state, now finds itself looking for a temporary home while its own offices are tested for contamination.

    “The irony is not lost on us,” Stone-Manning said. “But the reason we are asking these detailed questions is because we are the DEQ and the remediation division.”

    It is unclear if or when the workers will return to the building. Even if the additional tests turn up acceptable airborne lead levels, the lead found in the initial tests above the ceiling tiles must be cleaned and abated, DEQ officials said in a memo to staff.

    The building was constructed in 1942 and housed a firing range for the Montana National Guard. The range was closed in 1994 and remediated for lead, Hogan said.

    But only the range was tested and cleaned, not the rest of the building.

    Medical screenings of field employees in August 2012 showed higher than average levels of zinc protoporphyrin, an indicator of possible elevated lead levels in the blood, in six to eight workers, DEQ spokeswoman Lisa Peterson said.

    Previous tests had been conducted from 1994 to 2009 in individual rooms after employees there reported health complaints, she said.

    “We have had employees inform us of symptoms, however, we have no evidence at this time that they were related to lead exposure,” Peterson said.

    Rather, DEQ officials identified lead testing as a “data gap” in their information, and this month’s initial tests were conducted as part of a plan to identify any and all environmental hazards in the building.

    The plenum, or the area above the ceiling tiles, was tested in 22 areas of the building on Oct. 16 and 18. On Friday, the results found lead dust levels higher than the federal standard for commercial properties of 40 micrograms per square foot in 14 of those 22 areas, according to a copy of the laboratory results.

    One area above the second-floor men’s bathroom tested for 1,600 micrograms per square foot, which is 40 times the federal standard.

    Stone-Manning said there are many questions still to answer, including why it took more than 10 years to find out about the potential lead hazards. She said officials will put together a scientific and historical analysis to answer those questions.

  • Brownfields: Revisions Could Protect More Buyers of Contaminated Property

    environmental Strategist™ (eS), between the lines:  For years eS has shared strategies on the tremendous opportunities Brownfields offer.  The basic purpose of Brownfields is to be economic multipliers by creating jobs and increasing tax revenue.  This is accomplished through redevelopment and / or enhancing a property that is underutilized due to actual or perceived contamination. 

    Since Brownfields are economic multipliers’ there are a variety of incentives for those redeveloping Brownfields.  Below is an overview and update on some Brownfield items.  Pay attention to what it talks about with Vapor Intrusion.  Vapor Intrusion is a huge exposure that just in the last few years has been getting more attention. 

    eS business opportunity:  As the Competitive environmental Intelligence (CeI) below starts out, “An improving economy is bringing more developers and investors back into the brownfields market”.

    Brownfields impact a variety of business professionals (attorney’s, bankers, accountants, insurance agents, realtors, engineers, contractors, municipalities, developers…) which means each of these business professionals can drive their growth with Brownfields.  To learn more about the opportunities Brownfields offer go to www.estrategist.com.

    The environmental insurance industry has created an entire menu of insurance products available for Brownfield projects.  The CeI below was written by an attorney.  As a general rule, to date, the vast majority of attorneys are not familiar with the environmental insurance products available to fill in gaps created by their legal contracts and environmental regulations.  After the fact, I have heard time and again about Brownfield projects not culminating due to the inability to secure financial assurances related to environmental liabilities.  This is what environmental insurance is designed to accomplish

     

     

    Brownfields: Revisions to EPA “All Appropriate Inquiries” Rule Could Protect More Buyers of Contaminated Property from Liability

    By Dustin Till – October 6, 2013

    An improving economy is bringing more developers and investors back into the brownfields market. As shovels turn dirt at what were once service stations, factories, and dry cleaners, developers and investors are again asking their environmental counsel how they can minimize or avoid liability for historic contamination on developable land. Into the mix comes EPA, which recently announced plans to revise its so-called All Appropriate Inquiry standard that lenders and developers, and their environmental counsel, use to assess whether a new property owner is exempt from liability under CERCLA, the federal Superfund law.

    In a Federal Register Notice published on August 15, 2013, EPA proposed to adopt a new ASTM International standard (ASTM E1527-13), which would revise the criteria used to satisfy the All Appropriate Inquiries requirement via a Phase I Environmental Site Assessment (ESA). The new standard changes certain definitions in order to better differentiate between traditional brownfield sites (e.g., sites with unremediated contamination), and former brownfields that have either been cleaned up to unrestricted levels, or that have obtained regulatory closure subject to engineering controls or land use restrictions. The proposed standard also emphasizes the assessment of the potential for vapor migration, so as to be more definite as to where it presents an environmental risk.

    In brief, ASTM E1527-13 makes three notable changes to the Phase I process, discussed in further detail below. It: 1) revises the definitions of Recognized Environmental Condition (REC) and Historical REC (HREC) and adds a new definition for Controlled Recognized Environmental Condition (CREC); 2) adds standards for evaulating the potential for vapor intrusion in a Phase I ESA; and 3) revises standards for regulatory file review.

    EPA’s proposed rule clarifies that a Phase I ESA consistent with the new ASTM E1527-13 standard is not the only option for satisfying the All Appropriate Inquiries requirement. Parties may continue to rely on the standards EPA developed in its 2005 All Appropriate Inquiries Final Rule. See EPA Issues “All Appropriate Inquiry Rule” to Promote Brownfield Redevelopment, Marten Law Environmental News (Nov. 9, 2005).

    EPA’s proposal is a direct final rule. The agency accepted public comments through September 16, 2013, and could still make some changes before the rule becomes effective on November 15, 2013.

    I. All Appropriate Inquiries – the Key to Three CERCLA Defenses

    CERCLA broadly imposes liability on current and past owners and operators of contaminated property, as well as other parties who generate and transport hazardous substances.[1] CERCLA liability is strict and is imposed without regards to fault. CERCLA’s unforgiving liability scheme ensures that “polluters pay.” At the same time, it imposes liability on innocent parties who have no connection with hazardous substance releases other than purchasing (often unwittingly) a previously contaminated site, or perhaps even worse, purchasing property with no historic use of chemicals that has been contaminated by hazardous substances migrating from a nearby parcel.

    As initially acted, CERCLA’s affirmative defenses to liability were limited to those releases caused by an act of God, an act of war, or a third party in certain circumstances. The third-party defense shields an otherwise liable party who demonstrates, among other things, that the contamination was caused solely by “an act or omission of a third party other than an employee or agent of the [landowner asserting the defense], or than one whose act or omission occurs in connection with a contractual relationship, existing directly or indirectly, with the [landowner] …”[2]

    Congress has amended CERCLA to add three additional liability exemptions for innocent landowners, contiguous property owners, and bona fide prospective purchasers. Each of those defenses turns on a showing that All Appropriate Inquiries were made prior to the purchase.

    A. The Innocent Landowner Defense

    The original third-party defense was largely useless to parties who purchased contaminated properties because purchasers will always have a contractual relationship with all predecessors in title by virtue of the deed.[3] Congress attempted to rectify this in the Superfund Amendments and Reauthorization Act of 1986 (SARA), which established the innocent landowner defense. The innocent landowner defense was intended to protect landowners who, in good faith, acquired property without knowledge of contamination.

    Congress implemented the innocent landowner defense by revising the definition of “contractual relationship” to exclude transfers of ownership of land where the owner acquires the land after the disposal of hazardous substances has occurred, and when the owner did not know, and had no reason to know, of the contamination.[4]  To establish that it did not know, and had no reason to know, about contamination, a party seeking to avail itself of the innocent landowner defense must demonstrate (among other things) that it undertook “All Appropriate Inquiries” prior to purchasing the property.[5]

    SARA, however, did not define what steps a prospective purchaser must take to satisfy the All Appropriate Inquiries requirement. The result – CERCLA’s ambiguous, and often elastic, liability scheme continued to make investors wary of redeveloping property that was – or even remotely might be – contaminated.

    B. The Contiguous Property Owner and Bona Fide Prospective Purchaser Defenses

    Congress again attempted to rectify the problem in 2002, when it passed the Small Business Liability Relief and Brownfields revitalization Act (the Brownfield Amendments). The Brownfield Amendments established new exemptions to CERCLA liability, including the contiguous property owner and bona fide prospective purchaser exemptions. Under the contiguous property owner exemption, property owners whose land is (or may become) impacted by contaminants migrating from neighboring parcels are exempted from liability, subject to a number of restrictions.[6] Under the bona fide prospective purchaser exemption, a land owner who acquires ownership of a facility and demonstrates that “all disposal took place before the purchase” is exempted from liability, again subject to an number of restrictions.[7]

    Like the innocent landowner exemption, the contiguous property and bona fide prospective purchaser exemptions turn on a showing that the landowner conducted All Appropriate Inquiries prior to purchasing the property. Recognizing that the requirement remained ambiguous and subject to varying judicial interpretations, Congress directed EPA to develop rules establishing the standards for All Appropriate Inquiries.

    II. EPA’s 2005 All Appropriate Inquiries Rule

    In 2005, EPA published its long-anticipated final rule establishing standards and practices for conducting All Appropriate Inquiry.[8] In general terms, the rule requires parties to investigate past uses and ownership of a property and visually inspect the property to identify conditions that indicate releases or threatened releases of hazardous substances.

    Relevant here, EPA’s rules provide that compliance with ASTM 1527-5 (“Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process”) and ASTM E2247-08 (“Environmental Site Assessments: Phase I Environmental Site Assessment Process for Forestland or Rural Property”) satisfy the All Appropriate Inquiries requirements.[9] Under the ASTM standards, the purpose of the Phase I ESA is to identify any and all Recognized Environmental Conditions (RECs), which are indications that a site is, or may be, impacted by hazardous substance releases.

    The Phase I must also identify “historical” Recognized Environmental Conditions (HRECs), which are environmental conditions that in the past would have been considered a REC, but which may or may not be considered a REC currently.

    Like EPA’s rules, the ASTM standards detail the steps that must be taken to identify RECs and HRECs, including interviews, record reviews, and site reconnaissance.

    III. EPA’s Proposed Amendments to the All Appropriate Inquires Standard

    EPA’s current rulemaking flowed from ASTM International’s decision to revise its standard for Phase I ESAs, i.e., ASTM E1527-05. Earlier this year, ASTM International approved its updated Phase I ESA standard, and submitted it to EPA for formal approval, including a determination that it is compliant with the All Appropriate Inquiries rule.

    ASTM E1527-13 makes three notable changes to the Phase I process: 1) revising the definitions of REC and HREC and adding a new definition for Controlled Recognized Environmental Conditions; 2) adding standards for addressing the potential for vapor intrusion in a Phase I ESA; and 3) revising standards for regulatory file review.

    A. RECs, HRECs, and CRECs

    First, the new standard revises the definitions of REC and HREC, and adds a new definition for Controlled Recognized Environmental Condition. These revisions will help developers and lenders distinguish between sites impacted by hazardous substance releases (or threatened releases), previously contaminated sites that have been cleaned up, and sites that have obtained regulatory closure despite the presence of residual contamination (i.e., sites subject to institutional or engineering controls).

    RECs

    The new standard first simplifies the definition of REC. REC is currently defined as:

    The presence or likely presence of any hazardous substances or petroleum products on a property under conditions that indicate an existing release, a past release, or a material threat of a release of any hazardous substance or petroleum products into structures on the property or into the ground, groundwater, or surface water of the property. The term includes hazardous substances or petroleum products even under conditions in compliance with laws.

    The proposed standard proposes to redefine REC as:

    The presence or likely presence of any hazardous substances or petroleum products in, on, or at a property due to the release to the environment; under conditions indicative of a release to the environment or under conditions that pose a material threat of future releases. De minimis conditions are not recognized environmental conditions.

    The revised definition has little in the way of substantive differences, but removes some ambiguity, and according to EPA, better comports with the objective of All Appropriate Inquiries as set out in EPA’s regulations.[10]

    HRECs & CRECs

    Under the current definition, HREC is intended to apply to releases that have been cleaned up and have received regulatory closure (for example, a No Further Action or NFA determination):

    An environmental condition which in the past would have been considered a REC, but which may or may not be considered a REC currently ….

    The definition, however, has caused some confusion – particularly in circumstances where regulatory closure was obtained with residual contamination remaining on-site, because such a scenario could arguably qualify as both a REC and a HREC. The revised definition clarifies that HRECs apply only to sites where contamination has been remediated to unrestricted residential use:

    A past release of any hazardous substances or petroleum products that has occurred in connection with the property and has been addressed to the satisfaction of the applicable regulatory authority or meeting unrestricted residential use criteria established by a regulatory authority, without subjecting the property to any required controls (e.g., property use restrictions, AULS, institutional controls, or engineering controls) ….

    The proposed standard also adds a new definition, Controlled Recognized Environmental Condition (CREC), which applies to sites with residual contamination that have been closed via risk-based criteria and may present future obligations for the landowner. CREC is defined as:

    A REC resulting from a past release of hazardous substances or petroleum products that has been addressed to the satisfaction of the applicable regulatory authority (e.g., as evidenced by the issuance of a NFA letter or equivalent, or meeting risk-based criteria established by regulatory authority), with hazardous substances or petroleum products allowed to remain in place subject to the implementation of required controls (e.g., property use restrictions, AULS, institutional controls, or engineering controls ….

    B. Vapor Intrusion

    The potential for vapor intrusion into buildings has been drawing increased regulatory scrutiny in recent years. EPA, for example, published earlier this year two draft guidance documents on addressing and mitigating vapor intrusion.[11] Lenders, in turn, have grown increasingly concerned about the potential impact on property value associated with vapor intrusion. The current ASTM standard is ambiguous on whether a Phase I Environmental Site Assessments should assess vapor intrusion risk. In order to resolve that ambiguity, the proposed standard has several changes intended to emphasize the assessment of vapor intrusion risk. For example, the proposed standard revised the definition of “migrate/migration” to specifically include vapor migration:

    [T]he movement of hazardous substances or petroleum products in any form, including, for example, solid and liquid at the surface or subsurface, and vapor in the subsurface.

    Furthermore, the new standard differentiates between the intrusion of vapors attributable to hazardous waste releases from non-scope indoor air quality issues that are not attributable to hazardous substance releases (e.g., naturally occurring radon).

    C. Regulatory File Review

    The proposed standard has a new section addressing regulatory file reviews, with an emphasis on reviewing regulatory files for adjacent properties. Specifically, the proposed standard states that if the target property or an adjacent parcel is identified in government records, the “pertinent regulatory files and/or records associated with the listing should be reviewed” based on the environmental professional’s discretion.  This requirement is intended to document the validity of information found from searches of agency databases. If the environmental professional decides that a regulatory file review is not warranted, it must justify that decision in the Phase I report.

    III. Conclusion

    Barring adverse public comments, the rule will go into effect on November 15, 2013, without further agency action. If adverse comments are received, EPA will withdraw the direct final rule, address the comments, and issue a new final rule.

    If you have any questions, please contact Dustin Till or any member of Marten Law’s Property Development practice group.

    [1] See generally 42 U.S.C. § 9607(a).

    [2] 42 U.S.C. § 9607(b)(3).

    [3] See, e.g., M&M Realty Co. v. Eberton Terminal Corp., 977 F. Supp. 683, 686 (M.D. Pa. 1997).

    [4] 42 U.S.C. § 9601(35)(A) (definition of “contractual relationship”).

    [5] 42 U.S.C. § 9601(35)(B) (definition of “reason to know”).

    [6] To qualify for the contiguous property owner exemption, the land owner must demonstrate that it: 1) did not cause or contribute to the release or threatened release; 2) is not potentially liable or affiliated with any other potentially liable party; 3) exercises appropriate case with respect to the release; 4) fully cooperates with efforts to respond to the release and restore natural resources; 5) complies with all land use controls and does not interfere with institutional controls; 6) complies with all information requests; 7) provides all legally required notices regarding hazardous substance releases; and 8) conducted all appropriate inquiry at the time of purchase and did not know or have reason to know of contamination. 42 U.S.C. § 9607(q).

    [7] The bona fide prospective purchaser exemption is quite similar to the contiguous property owner exemption. To qualify, the land owner must demonstrate that it: 1) made all appropriate inquiry; 2) exercises appropriate care with respect to any release; 3) fully cooperates with efforts to respond to the release and restore natural resources; 4) complies with land controls and does not interfere with institutional controls; 5) complies with all information requests; 6) provides all legally required notices regarding hazardous substance releases; and 7) is not potentially liable or affiliated with another potentially liable party. 42 U.S.C. § 9601(40).

    [8] Standards and Practices for All Appropriate Inquiry, 70 Fed. Reg. 66,070 (Nov. 1, 2005).

    [9] 40 C.F.R. § 312.11(a). EPA’s 2005 regulations initially allowed parties to comply with the All Appropriate Inquiries standard via ASTM E1527-5. EPA revised the regulations in 2008 to allow parties to also use ASTM E2247-08.

    [10] EPA’s regulations state that the “standards and practices set forth in this part for All Appropriate Inquiries are intended to result in the identification of conditions indicative of releases and threatened releases of hazardous substances on, at, in, or to the subject property.” 40 C.F.R. § 312.20(e).

    [11] EPA has not yet finalized these guidance documents: OWSER Final Guidance for Assessing and Mitigating the Vapor Intrusion Pathway From Subsurface Sources to Indoor Air – External Review Draft and Guidance for Addressing Petroleum Vapor Intrusion at Leaking Underground Storage Tank Sites – External Review Draft.

    – See more at: http://www.martenlaw.com/newsletter/20131007-all-appropriate-inquires-rule?utm_source=Marten+Law+News&utm_campaign=ba137c5111-Marten_Law_News_October_17_201310_16_2013&utm_medium=email&utm_term=0_ff00f67215-ba137c5111-222187793#sthash.VSX8cIQJ

  • Landlord Liable For NYSDEC Costs Responding to Vapors at Off-Site Properties

    environmental Strategist, between the lines: 

    Vapor intrusion is a major problem and to learn more about vapor intrusion just Google vapor intrusion or ASTM 2600.

    My focus in the article below is not the at fault party but the impacted innocent third parties in the way of the contamination plume.  The article talks about residences and business being impacted by vapor intrusion.

    Let me point out this is not a limited situation because in the United States we have in excess of 450,000 known leaking underground storage tanks causing this exact same problem.  How many tanks don’t we know about that are leaking?

    What if the party/s causing the contamination does not have the financial ability to compensate impacted innocent third parties for clean up, property damage, bodily injury, business interruption, defense costs…?  Environmental insurance can protect property owners if third parties contaminate their property.  So even if a property owner foolishly thinks they do not have an environmental exposure simply ask them who their neighbors are.  Keep in mind, in conducting a Phase I site assessment, they utilize a two mile radius search as a minimum to look for neighbors that can impact a subject property.

    When you start to understand that if you own property you can be impacted by third party contamination, all of a sudden, spending fractions of a cent on the dollar to transfers the exposures to an insurance carrier looks to be a pretty good investment to protect what to many may be the largest investment a property owner makes in their life time.

    Landlord Liable For NYSDEC Costs Responding to Vapors at Off-Site Properties

    April 26th, 2013

    A property owner was found liable under the New York Navigation Law for cleanup costs incurred by the New York State Department of Environmental Conservation (NYSDEC) responding to gasoline fumes that had migrated a quarter of a mile from the gas station. While the vast majority of the state’s costs were associated with the cleanup of soil and groundwater, it was the presence of the vapors that drew regulatory attention to this spill.

    In State of New York v Slezak Petroleum Products, 947 N.Y.S. 2d 189 (App. Div-3rd Dept 2012), the defendant leased its property in Amsterdam, New York to a gas station operator. In October 2004, gasoline fumes were detected in a warehouse located approximately one quarter mile from the gas station.  The NYSDEC conducted an investigation and determined that that the vapors from a gasoline spill had infiltrated nearby sewer lines and residences. After the USTs at the site failed a tightness test, the tanks were removed and holes were observed on the bottom. Further sampling confirmed the presence of extensive soil and groundwater contamination.

    When the defendant declined to undertake further investigation for financial reasons, NYSDEC retained a contractor to implement response actions. The NYSDEC determined that the groundwater flowed from the gas station towards toward the warehouse and affected residences. In addition, the highest concentrations of contaminated groundwater were consistently found in the monitoring wells at and immediate downgradient from the gas station. The petroleum detected in monitoring wells at the affected residences revealed minimally weathered gasoline and MTBE.

    After investigating other potential sources of the contamination, including two nearby gas stations, NYSDEC concluded that the defendant’s property was the source of the petroleum contamination causing the vapors at the warehouse and the affected residences. When the defendant again declined to take further action, NYSDEC implemented extensive remediation measures to remove the contamination at the gas station and mitigate the vapors at the affected business and residences.

    DEC filed a cost recovery action pursuant to article 12 of the Navigation Law along with penalties. The trial court granted DEC’s partial summary judgment that the defendant was strictly liable for all cleanup and removal costs and prejudgment interest, and entered a judgment for $937,233.53.

    The defendant appealed, arguing that there other discharges who had contributed to the contamination and that as a property owner who did not operate the gas station, it could not be held strictly liable as a discharger under the Navigation Law. The appellate court affirmed, noting that while liability for remediation costs cannot be premised solely on land or ownership of the tank system, owners who have “control over activities occurring on their property” and who had reason to believe that petroleum products were stored there could be liable as dischargers. The court then found it was it is undisputed that defendant was the owner of the contaminated site as well as the petroleum tanks and system from which the spill emanated, had control over the activities on and the use of its property, and was aware that petroleum products were stored in underground tanks and sold from its property. Because the defendant clearly had the “capacity to take action to prevent an oil spill or to clean up contamination resulting from a spill, the court said defendant was strictly liable as a discharger.