The Commodification of Phase I ESA’s and the Need for Innovation

Introduction

Individuals who read environmental site assessments (“ESAs”) in the early 1990’s as part of their job will likely remember the unevenness of recommendations and conclusions and the wide range in the quality of reporting.  During that time, as an in-house environmental engineer at a major law firm, I likely read more ESA reports from more environmental consulting firms than I care to remember.  To this day I still read my fair share of ESA reports from various consultants as part of my job.

Standardization

In the 1990’s there was a growing demand from users of ESA reports for some form of standardization.  Back then, and to this day, a potential buyer of a property and the associated lender used an ESA report to aide in determining the monetary risk associated with any environmental liabilities linked to a property.  The wide variety of styles, coverage, disclaimers, recommendations, and conclusions in ESA reports back in the early 1990’s made that task very hard.

More than one consultant in the 1990’s would try to absolve themselves of liability by merely stating the findings of the investigation and avoiding any recommendation or conclusions.  Others would include disclaimers that would essentially hold them blameless for all errors and or omissions.

The first standardized ESA reports that came across my desk conformed with the United States ASTM E1527 standard published in 1993.  The first Canadian ESA standard (Z768) was issued in 1994 by the Standard Council of Canada.

In Canada, the latest version of the CSA Z768 standard is what is used as starting point for conducting Phase I ESA’s.  A vast majority of ESA reports that I read begin quoting the CSA standard but with the added qualifying statement that the report is in “substantial conformance” with the standard.

Commodity

Currently, many of the major lenders in Canada have lists of approved consultants for ESA’s.  Any borrower can choose freely from the list and arrange for an ESA on a property.  Other organizations have similar lists.

The CSA Z768 standard combined with the lists of qualified consultants typically supplied by lending institutions has created, in my opinion, a commodification of Phase I ESA’s.  An unsophisticated and occasional user of environmental services would most likely choose a consultant to conduct a Phase I ESA based on price.

Sophisticated buyers of environmental services have their own favourite consultants.  To earn the trust of a regular user of ESA services, a consultant needs to be able provide a clear explanation of environmental liabilities and a strong justification for the need further investigation (i.e., Phase II ESA).  The exemplary consultant has the ability to uncover the less than obvious environmental liabilities.  All trusted consultants provide timely report in a cost-effective manner.

The advantage of the sophisticated buyers of ESA services is the experience gained from reading reports from dozens of different firms and knowledge of the revelations and oversights of each.  Even amongst sophisticated buyers, there is a level of commodification that exists as they would likely have anywhere from 4 to 5 firms (any maybe more) that they trust to do good work.

Differentiation

When being sold environmental services from consultants, I typically ask a consultant what differentiates them from their competitors with respect tot the conduct of a Phase I ESA.  In essence, I want them to articulate to me how their ESA work is superior to the competition.  The typical list of replies can be found in the table below.  Based on the majority of responses I receive, it is my conclusion that the consultants themselves are unknowingly conceding that they are selling a commodity service.  The differentiators they describe can apply to almost any firm that provides the service.

Table 1: Common Reasons Cited by Environmental Consultants for Choosing Them

“Cost effective”

“better”
“Fast turn-around time” “more effective”
“Use only experienced assessors” “more thorough”
“Experienced reviewers and supervising Staff”

“quality controls”

Innovation

So how can a consulting firm give clients what they want – more certainty on risk associated with a property – and differentiate the ESA service they provide?

I have found one consultant that I now work with has risen above the commodity Phase I ESA.  This consulting firm, through innovation, has gone beyond the bare minimum of a Phase I ESA that would conform to the CSA Standard and utilized technology to enhance the Phase I ESA.

A standard Phase I ESA requires only observation as part of the site visit portion of the ESA.  The use of intrusive testing is saved for a Phase II.  However, with the utilization of field instrumentation that is non-intrusive, an enhanced Phase I can provide much more information that a standard Phase I ESA.

The environmental consulting firm, Altech Consulting Group, uses magnetic surveys as a standard part of the its Phase I ESAs.  A magnetometer measures the magnetic potential underground through non-obtrusive means.  It can identify the presence of underground steel tanks or drums, and other ferrous buried objects (i.e. pipes).

Enhanced Phase I ESA – Seeing underground with the magnetic survey

By including a magnetic survey as a standard part of a Phase I ESA, Altech has more information from which to base its conclusions and recommendations.  It can utilize the information found from the magnetic survey along with historical data and interviews with persons knowledgeable of the property to have a stronger argument for the need for a Phase II ESA or not.

Chad Stewart, the head of the environmental investigation group at Altech stated “one of the biggest sources of environmental liability at the majority of sites is leaks from underground storage tanks or pipelines.  By including a magnetic survey as part of our Phase I ESA, we are in a much better position to state if further intrusive investigation is required.  Our approach saves the client time and money.”

As I said earlier, I have seen my share of ESA reports from numerous consultants.  Their a some that are very quick to recommend a Phase II ESA based on the limited information that only hints that a UST may have been present.  A vast majority of the subsequent Phase II findings reveal that there is no contamination.

Any means of bringing non-intrusive testing and measurement techniques into use for a standard Phase I ESA is a good thing in my opinion.  The more information that can be obtained during the Phase I ESA, the better the decision making on the need for a Phase II.

By not having to perform an unnecessary Phase II ESA, a client could save tens of thousands of dollars.  By performing a Phase II ESA based on information obtained from a magnetic survey that is a standard part of a Phase I ESA, a client could potentially save hundreds of thousands of dollars.

Ontario Legal Report: Thompson Fuels Ordered To Pay Costs

Article by Paula LombardiSiskinds LLP

The case of Gendron v. Thompson Fuels, related to a home furnace oil tank that developed a leak in December 2008. The leak caused damage to the Gendron’s home and the surrounding environment, including nearby Sturgeon Lake. The City of Kawartha Lakes cleaned up the Lake.

On July 17, 2017 the court released its decision on this matter, (2017 ONSC 4009) granting judgement in favour of Gendron against Thompson Fuels. The court appropriated 60% liability to Gendron and 40% to Thompson Fuels. The parties agreed that, based on the court’s findings, Gendron’s total damages were $2,161,570, and Thompson Fuels’ portion of those costs equalled $901,747 ($864,628 plus $37,119 interest). In that decision the court found that the two remaining defendants, the Technical Standards and Safety Authority (“TSSA”) and Les Reservoirs D’Acier De Granby Inc. (“Granby”) were not liable.

Closeup of an oil slick in water with fall colors in the grass on the shore

The parties were unable to agree on costs and requested that submissions on costs be deferred until the decision on the post-trial motions was released. On March 29, 2018 the Court ordered Thompson Fuels to pay Gendron’s costs on a partial indemnity basis in the amount of $473,000.00 (2018 ONSC 2079). In arriving at this amount, the Court considered the Gendron’s contributory negligence, the costs of various post-trial motions brought by the parties, the reasonableness of Gendron’s bill of costs, and the fact that neither party had beat its offer to settle.

The Court then awarded $150,000 in costs to TSSA as against Gendron and Thompson Fuels, who had cross-claimed against TSSA. The Court further ordered Gendron and Thompson Fuels to contribute $140,000 and $10,000, respectively. The Court also ordered Gendron and Thompson Fuels to pay equal shares of TSSA’s costs of $7,500.00 for the post-trial motions. In deciding to award only partial indemnity costs, the Court found that given TSSA’s limited involvement at trial, it did not require two lawyers to attend at trial. The Court also noted that even though Gendron’s action in negligence against TSSA had failed, the trial Court had found that the TSSA had not been “a model of efficiency or clarity” in its dealings with Gendron.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

This article was first published on the Siskinds Law Firm web site.

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About the author

Paula Lombardi is a partner of Siskinds LLP,  and practices in the areas of environmental, municipal, regulatory and administrative law.  Prior to joining Siskinds, Paula worked as an associate at a Bay Street law firm where her practice focused on occupational health and safety, environmental and regulatory matters.

Paula recently spent two years as in-house counsel for a major privately owned US corporation, whose owner is on the Forbes 500 list, and was responsible for all Canadian legal and business issues relating to the import and export of goods, transportation of hazardous materials, remediation of contaminated sites, construction of large infrastructure projects, regulatory compliance, NAFTA matters, and preparation of environmental assessments in the US and Canada.

Paula has a great deal of experience in: providing due diligence advice; dealing with contamination issues; handling of organic chemicals and hazardous wastes; obtaining environmental approvals; obtaining planning and development approvals; providing advice to municipalities; defending environmental prosecutions; and assisting companies with environmental and regulatory compliance. Paula has appeared before numerous administrative tribunals.

Despite Efforts to Roll-Back Other Program Requirements, U.S. EPA Administrator Scott Pruitt Continues to Prioritize Superfund Cleanups

by Van P. Hilderbrand, Jr. and Marian C. Hwang

 

 

U.S. Environmental Protection Agency (“EPA”) Administrator Scott Pruitt has made it clear that one of his top priorities during his tenure is to expedite cleanups at contaminated sites across the country. To achieve this goal while facing potential budget cuts, he has made several significant decisions over the last year to overhaul and restructure the Superfund cleanup program from within.

First, as we discussed in our earlier post, A New Budget, a New EPA Administrator, and New Uncertainty for Superfund Cleanups, Administrator Pruitt issued a memorandum on May 9, 2017 centralizing decision-making on major Superfund remedies to EPA headquarters. Specifically, final decisions on remedies exceeding $50 million are to be made by Administrator Pruitt or the Deputy Administrator, not by Regional Administrators. According to the memorandum, this change is designed to improve the remedy selection process by promoting increased oversight and accountability and by “enhancing consistency in remedy selection across states and the regions.”

Next, Administrator Pruitt specially convened an EPA Superfund Task Force on May 22, 2017. In our post, EPA’s Task Force Recommendations to Revamp and Expedite Superfund Cleanups and Process – A Welcome Change, we discussed the Task Force Report, issued on July 22, 2017, which identified 5 goals, 13 strategies, and 42 recommendations to (1) expedite Superfund cleanups; (2) re-invigorate responsible party cleanup and reuse; (3) encourage private investment; (4) promote redevelopment and community revitalization; and (5) engage partners and stakeholders. We have seen many of these recommendations realized, including the development and issuance of a priority list of Superfund sites targeted for immediate attention by Administrator Pruitt.

Recent EPA Realignment in Approval Process Sees the Administrator’s Role Expanding

Composite image map showing TRI facilities in blue and Superfund NPL sites in red

In a recent shift to expand the influence of the Administrator’s Office, Administrator Pruitt issued a second memorandum on April 26, 2018 clarifying that EPA’s Office of Land & Emergency Management and regional offices should “coordinate and consult with the Administrator’s Office early on when developing” other significant actions (in addition to remedies) related to costly Superfund cleanups. Such actions would include Amendments to Records of Decision (“ROD”) or Explanations of Significant Differences (“ESD”) that are projected to either increase the estimated cost of a remedy to greater than $50 million or are projected to increase the estimated cost of a remedy that is already greater than $50 million by any amount.

The memorandum also specifically notes that consultations should occur when developing Non-Time-Critical Removal Actions (“NTCRA”) estimated to exceed $50 million. As in the earlier 2017 memorandum, Administrator Pruitt says the additional coordination and cooperation will result in “more accountability and consistency throughout the EPA’s regions.” What this means for potentially responsible parties (“PRPs”) at large Superfund sites is that Administrator Pruitt will play an increasingly important role in the decision-making process.

Neither memorandum addressed any change in the role of the National Remedy Review Board (“NRRB”) and the interplay between the NRRB and the increasing oversight and decision-making role of Administrator Pruitt. The NRRB is an internal EPA peer review group that reviews and comments on remedial actions and NTCRAs costing more than $25 million. Questions remain whether the NRRB only reviews actions costing between $25 and $50 million, as not to impede Administrator Pruitt’s review, or do both NRRB and Administrator Pruitt review actions costing in excess of $50 million?

Uncertainty in the Superfund Program

This step comes amid increased turmoil and uncertainty in the Administrator’s Office and the Superfund program. Administrator Pruitt’s top advisor on the Superfund program and chairman of the Superfund Task Force, Albert “Kell” Kelly, resigned unexpectedly in early May, leaving questions regarding who will run the approximately $1 billion program. Further, Administrator Pruitt himself is facing numerous investigations into his own actions and ethical violations; causing many to wonder just how much longer he will be in his current job and whether he will see any of these policy changes implemented.

It is easy to see, therefore, why every decision from the Administrator’s Office comes under significant scrutiny. Many opponents believe these moves are simply ways to reduce costs and time in the cleanup process, and they question whether “expedited” cleanups actually mean less rigorous cleanups. In his first year or so, there are examples where Administrator Pruitt has approved strengthened measures and cleanup requirements at some sites, despite pushback from industry and companies involved in the cleanup, but there are also examples of site decisions that cast doubt on his ability to be independent and impartial. In any case, as long as Administrator Pruitt is in his current role, it is clear that the Superfund program will see continued change and that he will use the authority of that role to expedite cleanups.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.

This story is was first published on the Miles Stockbridge website.

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About the authors

member of Miles & Stockbridge Products Liability & Mass Torts Practice Group, Van P. Hilderbrand, Jr. focuses his practice on environmental litigation, regulatory compliance issues, and advising on the environmental aspects of business and real estate transactions. His work also includes consulting on renewable energy project development and project finance transactions, conducting due diligence and assisting with permitting issues. He represents clients in a wide range of industries, including energy, manufacturing, consumer products, pharmaceuticals, chemicals, transportation, technology and real estate.

Marian Hwang has been an environmental attorney with the Miles & Stockbridge since 1987 and chairs its Environmental Practice. The breadth of her experiences representing multinational and national clients enables her to develop practical solutions to complex issues, whether involving complicated real estate/corporate acquisitions or divestitures or commercial financing matters to complex multi-defendant toxic tort claims, litigation, and multi-facility compliance matters. Marian works extensively with and appears before Federal and State regulators, and courts, has been certified as a LEED Green Associate by the U.S. Green Building Council, and has served as outside national environmental counsel to the firm’s major clients.

 

Controlling cleanup costs for contaminated land

by Dr. Harm Gross, Western Investor

As reported by Dr. Harm Gross in the Western Investor, in British Columbia, the cost of contaminated site cleanup has grown steadily since the Contaminated Site Regulation became law on April 1, 1997. There are several reasons for this change, some of which are under the control of “persons responsible”, chiefly landowners.

An uncontrollable cost factor is the proliferation of regulations, which ballooned to an estimated 10,000 double-sided pages in British Columbia. On November 1, 2017, Stage 10 omnibus amendments to the CSR came into effect, changing concentrations deemed harmful for a broad range of contaminants and adding a significant number of new ones. This meant that work before that date would become non-compliant overnight, causing environmental consulting companies to rush over 100 submissions for a Certificate of Compliance before this deadline to grandfather their work and avoid additional costs for their clients.

Regulations pertaining to contaminated sites are not just evolving in British Columbia, but have seen substantial updates across Canada in recent years.

Saskatchewan’s updated Environmental Management and Protection Act came into effect in June 2015. This legislation thoroughly overhauled the old Act by introducing a new impacted sites registry and by providing the regulator with more power to order persons responsible to conduct site assessments.

New guidelines were also introduced in Alberta, where the regulator released a new Environmental Site Assessment Standard in March 2016.

Manitoba enacted amendments to the Province’s Contaminated Sites Remediation Regulation in April 2014. While the intended aim of these new regulations and guidelines is to move the focus towards results-based frameworks, any change and expansion of rules inevitably leads to uncertainty for stakeholders. Uncertainty particularly stems from the need of establishing precedent with the regulator when the new rules are applied in the real world. It is up to the consultant to successfully navigate their clients through the new reality and reduce uncertainty. The consultant’s knowledge of the regulations, and proficiency in correctly interpreting and applying new rules, can have significant impacts on the accuracy of cost estimates and actual costs for site assessments and remedial work.

Former bulk fuel storage leak, North Vancouver, BC

With regulations in flux and frequent changes in rules, the potential for lowering and accurately predicting costs for site remediation projects is thus of great interest to responsible persons. The potential savings by inviting an experienced review of proposed remediation plans can be significant. At one site the savings for a client was $15 million; more commonly, savings are in the 6-figure or low 7-figure range. Incorrect investigative work is the most frequent source of error. This ranges from faulty field techniques when sampling groundwater wells, through unfamiliarity with laboratory methods for distinguishing man-made from naturally occurring substances, to inadequate comprehension of the myriad environmental regulations. Investigating contaminants requires great care when the difference between contamination and no contamination is measured at the extremely low concentrations of parts per million in soil, or the even lower concentrations of parts per billion in water. We have seen numerous examples where mistakes have tarred a site.

The public sector is no less prone to erroneous estimations of remediation cost. In April 2014, the parliamentary budget officer reported that the federal government has underestimated the cost of cleaning up contaminated sites under its jurisdiction by at least $2 billion, putting the total liability for contaminated sites to almost $7 billion. This was due to the fact that many sites in the inventory had yet to be assessed. While it seems relatively self-evident that proper site investigations are a prerequisite and absolute must for cost estimates to be accurate, such oversights are unfortunately abundant in the private sector. All too often consultants provide flimsy cost estimates based on incomplete or deficient investigative data.

Businesspeople frequently complain about the irritation of unreliable cost estimates, and rightfully so – nowhere is this more prevalent than in the environmental consulting industry.

Technical experts are often loathe to accept responsibility for cost estimates for fear of finding undiscovered contamination, running into regulatory snafus or overlooking issues which later prove substantial.

Next Environmental has taken the unprecedented step of providing fixed price quotes for a comprehensive scope of work at each step of investigation or remediation, thus entirely eliminating the cost uncertainties for clients. This service, unique in the contaminated sites business, is possible due to the skillful application of regulatory proficiency to address the business needs of clients. Time will tell whether this cost control measure spreads to other firms.

This article was originally published in Western Investor.

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About the Author

Dr. Harm Gross is the owner and President NEXT Environmental Inc.  He is currently a Registered Professional Biologist (R.P.Bio) and an Approved Professional of the Contaminated Sites Approved Professionals Society (CSAP Society), and has a wealth of experience obtaining Ministry Instruments and other environmental certifications for NEXT’s Clients. NEXT provides environmental consulting services including investigation, remediation and risk assessment of contaminated property for clients throughout BC and Alberta.

 

U.S. Ninth Circuit Rules Military Contractor Liable on CERCLA Clean-up Costs

Written by: By Whitney Jones Roy and Whitney HodgesSheppard Mullin Richter & Hampton LLP

TDY Holdings, LLC brought suit for contribution under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) against the U.S. government relating to environmental contamination at TDY’s manufacturing plant. The district court granted judgment in favor of the government after a 12-day bench trial and allocated 100 percent of past and future CERCLA costs to TDY. On appeal, the Ninth Circuit held that the district court sharply deviated from the two most “on point” decisions regarding allocation of cleanup costs between military contractors and the U.S. government when it determined the cases were not comparable, clarified the applicability of those cases, and remanded the case to reconsider the appropriate allocation of cleanup costs between TDY and the U.S. government.

TDY (formerly known as Ryan Aeronautical Company) owned and operated a manufacturing plant near the San Diego airport

From 1939 through 1999, TDY (formerly known as Ryan Aeronautical Company) owned and operated a manufacturing plant near the San Diego airport. TDY’s primary customer was the U.S. government—99 percent of TDY’s work at the plant between 1942 and 1945, and 90 percent of the work thereafter was done pursuant to contracts with the U.S. military. The United States also owned certain equipment at the site from 1939 to 1979. Id. at 1006. Chromium compounds, chlorinated solvents, and polychlorinated biphenyls (PCBs) were released at the site as a result of their use during manufacturing operations. Id. In some cases, the government’s contracts required the use of chromium compounds and chlorinated solvents. Id. After passage of the Clean Water Act and other environmental laws classifying these chemicals as hazardous substances in the 1970s, TDY began environmental remediation and compliance at the site and billed the government for the “indirect costs” of that work, which the government paid. Id. at 1006–07. TDY incurred over $11 million in response costs at the site. Id. at 1007. Until the plant’s closure in 1999, the government reimbursed 90 to 100 percent of TDY’s cleanup costs at the site. Id. at 1007, 1010.

In 2004, the San Diego Unified Port District brought CERCLA claims against TDY. TDY and the Port District entered into a settlement agreement in March 2007 in which TDY agreed to cleanup releases at the site. TDY then brought suit for contribution under 42 U.S.C. § 9613(f)(1) and declaratory relief against the United States. Id. at 1007. The district court granted TDY’s motion for partial summary judgment declaring that the United States was liable as a past owner of the site under CERCLA. Id. After a 12-day bench trial on equitable allocation of costs, the district court held that the contamination caused by the hazardous substances at issue was attributable to TDY’s storage, maintenance, and repair practices, as well as spills and drips that occurred in the manufacturing process, rather than to the government’s directives to use the chemicals. Id. Accordingly, the district court allocated 100 percent of the past and future response costs for remediation of the three hazardous substances to TDY. Id. at 1008.

On appeal, TDY argued that the district court erred (1) when it allocated liability according to “fault”; (2) that the government’s role as owner rather than operator should not have been a dispositive factor in the court’s allocation, and (3) that the government should bear a greater share of response costs because it specifically required use of the chemicals at the site. Id. The court of appeals summarily rejected TDY’s first two arguments, but found that the district court did err in its analysis and application of binding authority on point: United States v. Shell Oil Co., 294 F.3d 1045 (9th Cir. 2002) and Cadillac Fairview/California, Inc. v. Dow Chem. Co., 299 F.3d 1019 (9th Cir. 2002). Id. at 1008–09. Shell Oil and Dow Chemical each produced products to support the U.S. military during World War II and incurred liability for contamination caused by hazardous chemicals that the government required to be used. In both cases, the Ninth Circuit affirmed the district courts’ allocation of 100 percent of cleanup costs to the government because “the contractors’ costs were ‘properly seen as part of the war effort for which the American public as a whole should pay.’” Id. at 1009.

The Ninth Circuit disagreed with the district court’s conclusion that Shell Oil and Cadillac Fairview were not comparable, but agreed that some deviation from their allocations were appropriate. Id. The Ninth Circuit agreed that the government exercised less control over TDY than it did over Shell Oil Co. or Dow Chemical. In support of this determination, the court noted that the government was an operator, rather than an owner, of TDY’s site, that the government-owned equipment was removed from the site 20 years before TDY ceased operations, and that TDY’s own practices at the site caused the contamination. Id. at 1010. Furthermore, the district court properly determined that “industrial operations undertaken for the purpose of national defense, standing alone, did not justify allocating all costs to the government.” Id.

However, the Ninth Circuit held that, in allocating 100 percent of cleanup costs to TDY, the district court failed to consider that the government required TDY to use two of the three chemicals at issue beginning in the 1940s, when the need to take precautions against environmental contamination from these substances was not known. Id. Furthermore, the Ninth Circuit determined that “[t]he court’s acknowledgement of the evolving understanding of environmental contamination caused by these chemicals, and TDY’s prompt adoption of practices to reduce the release of hazardous chemicals into the environment once the hazards became known, further undercuts the decision to allocate 100 percent of the costs to TDY.” Id. The district court also failed to consider the parties’ lengthy course of dealing through 1999, when the government paid between 90 and 100 percent of cleanup costs at the plant. Id. Although “a customer’s willingness to pay disposal costs . . . cannot be equated with a willingness to foot the bill for a company’s unlawful discharge of oil or other pollutants,” the Ninth Circuit nevertheless determined it should have been a relevant factor in the allocation analysis. Id.

This article was originally published on the Sheppard Mullin Real Estate, Land Use & Environment Law Blog

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About the Authors

Whitney Jones Roy is a litigation partner in firm’s Los Angeles office. Ms. Roy was recognized by Law360 as a “Female Powerbroker” and by the Daily Journal as one of the Top 100 Women Lawyers in California in 2014.  Ms. Roy has experience in all aspects of California and federal civil procedure through trial. She also defends her clients on appeal when necessary.  Ms. Roy also specializes in complex environmental litigation and related products liability litigation. Her expertise includes the Clean Air Act, CERCLA, RCRA, design defect, failure to warn, negligence, nuisance, and trespass.

Whitney Hodges is an associate in the Real Estate, Land Use and Natural Resources Practice Group in the firm’s San Diego office. She also serves on the firm’s Diversity and Inclusion Committee, Pro Bono Committee, Recruiting Committee, Energy, Infrastructure and Project Finance Team and Latin Business Team.  Ms. Hodges specializes in the representation of clients involved in real estate development. Her practice focuses on advising and representing major residential, industrial, commercial and mixed-use development projects, as well as Native American Indian tribes and renewable energy developers through all phases of the land use regulatory process and environmental compliance.

 

 

U.S. Eleventh Circuit Highlights Importance of Safety Training in Affirming Willful Violation of OSHA Standard

Author: H. Bernard Tisdale, Ogletree Deakins, Charlotte, North Carolina)

The Eleventh Circuit Court of Appeals recently had the opportunity to remind employers not to ignore training employees on safety.  Martin Mechanical Contractors, Inc. v. Secretary, U.S. Department of Labor, No. 17-12643 (March 27, 2018).

In late 2015, a heating, ventilation, and air conditioning (HVAC) contractor was installing an HVAC system on the flat roof of a warehouse in Georgia. The installation was to take place adjacent to several unguarded skylights covered only with plastic sheeting. While the onsite foreman had fall protection equipment in his truck, the employees did not wear any fall protection equipment while on the roof. These circumstances ended in tragically: one of the workers fell through a skylight and died as a result of his injuries.

The Occupational Safety and Health Administration (OSHA) cited the employer for a willful violation of 29 C.F.R. § 1926.501(b)(4)(i) for failing to protect its employees from falls. The administrative law judge concluded the supervisor’s actions supported a willful classification in that he demonstrated a “reckless disregard for the safety of his crew.” The employer appealed.

To support a willful classification, OSHA must show either (1) the employer knew of the standard and consciously disregarded it or (2) it exhibited such reckless disregard for the employees’ safety that the employer would not have cared that the conduct violated the standard.  Evidently, the supervisor claimed ignorance of the law, and the court analyzed whether the willful classification could be supported under the second standard.

Air conditioner units (HVAC) on a roof of industrial building

The court of appeals was unimpressed by the employer’s arguments. The court noted the supervisor was well aware of the danger posed by the unguarded skylights in that he warned his employees to be careful around them. The supervisor also testified it was his practice not to use fall protection equipment on flat roofs. The supervisor neither instructed anyone to wear fall protection equipment nor provided his employees with the fall protection equipment he had in his truck. Thus, the Court concluded, while the supervisor did not know of the standard’s requirements, he exhibited such reckless disregard for employee safety that he would not have cared that the conduct violated the standard.

This is where all employers may want to take heed. The court went on to observe that the supervisor’s “unfamiliarity serves, if anything, only to underscore the inadequacy of [the employer’s] training program. To hold that such inadequacy—and the resulting unfamiliarity—precludes classification of a violation as willful would perversely allow [the employer] to use its ineffective training as a defense against OSHA’s most serious charge.” The court upheld the willful classification.

Needless to say, a willful citation can have far-reaching ramifications for an employer—from tort liability and criminal penalties for the injury or death to inability to secure future work. While training may seem trivial and time consuming, doing it just might prevent a willful citation and possibly save a life.

This article was originally published on the Ogletree Deakins website.

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About the Author

Mr. Tisdale has wide experience in general civil and employment litigation. This experience ranges from advising clients on preventive measures to avoid formal charges and lawsuits, and representing clients before the United States Court of Appeals, to handling individual employment discrimination cases before the Equal Employment Opportunity Commission and the federal courts as well as handling wrongful discharge and other employment-related litigation in state and federal courts. He regularly represents employers on safety and health matters including advising and defending clients on OSHA compliance issues involving Federal OSHA and state plan states.  He regularly assists clients with contract disputes and non-compete and trade secrets advice and litigation. His experience also includes counseling clients on wage and hour compliance under the Fair Labor Standards Act and performing compliance audits under the FLSA, drafting and reviewing employment contracts and employment

How to Document Weights on Dangerous Goods/HazMat Transport Paperwork

International Air Transport Association (IATA), International Maritime Organization (IMO), Tile 49 of the U.S. Code of Federal Regulations (49 CFR), & Transportation of Dangerous Goods (TDG) Documentation

No one wants to talk about their weight. Ever. In the world of transport though, you have no choice. You are required to list on your transport paperwork some sort of weight, mass, or volume. The trick is to know which regulation requires what. Should be the net weight or gross weight? Is it per package or per packaging? Sadly, depending on the regulation, the answers to those questions may differ.

Before getting started, be sure you understand what all of those terms mean. I tend to default to the IATA regulations when it comes to definitions. These are found in Appendix A. Take note that these terms are also defined in the other regulations, too. In 49 CFR check in §171.9. For IMDG they are in 2 places – Volume 1, Chapter 1.2 and Volume 2, Appendix B. TDG defines them Part 1.4.

Definitions:

Package

The complete product of the packing operation consisting of the packaging and the contents prepared for transport.

Packaging

A receptacle and any other components or materials necessary for the receptacle to perform its containment function in conformance with the minimum packing requirements.

Means of containment

The road or railway vehicle, aircraft, vessel, pipeline or any other contrivance that is or may be used to transport persons or goods.

Net quantity (or weight)

The weight or volume of the dangerous goods contained in a package excluding the weight or volume of any packaging material; or the weight of an unpackaged article of dangerous goods (e.g. UN3166).

Gross weight (or gross mass)

The weight of a packaging plus the weight of its contents.

Now that we know or remember those specific terms, let’s see what each regulation has to say in regards to the paperwork. These are known as shipper’s declarations, dangerous goods form, shipping papers, or a transport document.

IATA – Section 8 Documentation:

For this regulation, a shipper needs to review §8.1.6.9.2. In particular, Step 6 paragraph (a) provides the information we need for our shipper’s declaration.  You are required to list the net quantity of dangerous goods in each package (by volume or weight as appropriate) for each item of dangerous goods that has a different UN/ID number, shipping name or packing group along with the appropriate units of measure.  Since this is an international regulation, those units must be in metric.

IATA does one step further. Certain entries of the Dangerous Goods List in the column for the maximum net quantity per package there will be the inclusion of the “G”. For example, look at ID8000 for Consumer Commodity or certain limited quantity listings. This “G” indicates the shipper must give the gross weight of each package. To avoid confusion for the carriers this “G” must also be included after the unit of measure.

IMDG – Chapter 5.4

Under IMDG, the weight description needed is in §5.4.1.5.1.  Here it says, the total quantity of dangerous goods covered by the description (by volume or mass as appropriate) for each item bearing a different proper shipping name, UN number or packing group shall be included. At the end of that section is the notation to specific the unit of measure and that abbreviations for those may be used.   Again, this is an international regulation, so the units must be metric.

Take note, the use of the word “shall” is a mandatory requirement.

49 CFR – §172.200 Subpart C for Shipping Papers:

In 49 CFR, or as most of us call it DOT, a shipper needs to read §172.202 paragraph (a) subparagraph (5) closely. Here you see the total quantity of the hazardous materials must be indicated (by mass or volume) and it must include an indication of the applicable unit of measure on a shipping paper. Interestingly enough, §171.10 says the unit of measure is to be compatible with international standards which is metric.

49 CFR lists the “customary” units in parentheses throughout but they are not the regulatory standard. We all know the US has yet to convert fully to the metric system. However, it is a good idea to make the changeover now when it comes to our hazardous materials’ shipping papers.

TDG – Part 3 Documentation:

Here a consignor (shipper) is in a unique situation.  Section 3.5 (1)(d) simply tells a consignor that for each shipping name, the quantity of dangerous goods and the unit of measure used to express the quantity must be on a shipping document.  It does go on to say the units used must be metric.  There is not a differentiation between net and gross mass for Canadian transport.

Keeping all of these requirements straight as a shipper making shipments via ground, air, ocean and between the US and Canada can be difficult. Notice I’ve included nothing about how explosives should be listed. They have their own set of rules in each regulation. Hopefully, this blog will clarify one part of your role as a shipper. If you ever have questions or find your self in need of training, reach to us today.

 

The article was first published on the Compliance Center website.

About the Author

Paula Reavis has the following degrees: BS in Science Education, BA in Chemistry, MA in School Counseling Certification.  She is also a National Certified Counselor.  Ms. Reavis has a teaching background and several years of experience in Hazard Communications. She is knowledgeable in HazCom2012, WHMIS (old/new), 49 CFR, IATA, IMDG and TDG. She started with the the Compliance Center in 2014, and is currently the Trainer. She is active in several associations including NACD, IHMM and SCHC where she served as chair of the Membership and Awards Committee. She is based in St. Louis, Missouri.

Court Rejects Environmental Consultant’s Third Party Claim Against Prior Owner/Occupants

by Stan Berger, Fogler Rubinoff

On March 22, 2018 the Ontario Superior Court of Justice in MVL Leasing Ltd. v CCI Group Inc. 2018 ONSC 1800 granted Rule 21 motions striking third party claims brought by an environmental consultant who was being sued by a purchaser of property for professional negligence and breach of contract. The lawsuit alleged that the plaintiff was led into closing the sale by the consultant’s Phase 1 and Phase 2 Environmental Site Assessments. The property turned out to be contaminated. The consultant in turn alleged that the contamination was caused by one or more businesses operated by the third parties. The consultant requested contribution indemnity from the third parties on 6 different grounds: nuisance, loss or damage caused by a spill pursuant to s.99 of Ontario’s Environmental Protection Act, the occupier’s duty under the Occupiers’ Liability Act to ensure the safety of persons entering upon the property, negligence, liability under the Negligence Act and unjust enrichment. The consultant argued that if found liable in the main action, it would have incurred pecuniary losses as a direct result of the spill, those damages being the plaintiff’s remediation costs and or the decrease in the property’s value.

Court’s Reasons for Rejecting the Third party Claims

The nuisance claim was rejected on the basis that the consultant did not own, occupy or possess the property, or any adjacent or nearby property impacted by the alleged contamination. The s.99 EPA claim was only available where the damages were directly caused by the spill and that was not the case. The occupier liability claim was rejected because the consultant suffered no damages as a result of entering the property in question. With respect to the negligence claim, the Court refused to impose a new duty of care upon the third parties. There was no proximity in the relationship between the consultant and the third parties. The potential economic harm to the consultant was not a reasonably foreseeable consequence of the alleged acts or omissions of the previous third party owners/occupiers. The Negligence Act claim was rejected on the basis that the consultant and the third parties did not meet the test under the Act of being concurrent tortfeasors for contribution and indemnity to be available. The plaintiff’s actual or potential causes of action against the consultant and the third parties were entirely different in nature. The damages allegedly caused by the third parties were different and discrete from those caused by the consultant. Finally, the unjust enrichment claim was rejected as the consultant had not pleaded any direct conferral of a benefit upon the third parties and the consultant had not suffered a corresponding detriment. If the consultant had incurred a detriment in the future by the plaintiff succeeding with its action, that detriment only related to the breach of contract and/or negligence of the consultant and the third parties were not parties to that relationship.

What can we take away from this Decision?

In order to sustain a third party claim against historic owners or occupiers of contaminated property, environmental consultants who are sued by a purchaser of contaminated property, will have to show that that the historic owners/occupiers were somehow responsible for or at least connected to the contractual breach or negligence which the purchaser alleges against the consultant.

This article was previously published by Fogler, Rubinoff LLP and can be found on the firm’s website.

About the Author

Stanley Berger is certified by the Law Society of Upper Canada as a specialist in Environmental Law.  He was called to the Ontario Bar in 1981.  He joined the law firm of Fogler Rubinoff in 2013.

 

SJC Clarifies Statute of Limitations for Contaminated Property Damage Claims but Raises Questions of Application

by Marc J. GoldsteinBeveridge & Diamond PC

Plaintiffs with property damage claims under the Massachusetts cleanup law have more time to bring their claim than might be expected under the three-year statute of limitations according to a recent ruling by the top Massachusetts court.  The Supreme Judicial Court ruled that the statute of limitations begins running when the plaintiff knows that there is damage to the property that is “permanent” and who is responsible for the damage, pointing to the phases of investigation and remediation in Massachusetts’ regulatory scheme as signposts for when a plaintiff should have that knowledge.  Grand Manor Condominium Assoc. v. City of Lowell, 478 Mass. 682 (2018).  However, the Court left considerable uncertainty about when the statute of limitations might begin for arguably more temporary property damages such as lost rent.

In this Google image, the Grand Manor condominium complex is visible at the center-right.

In this case, the City of Lowell owned property that it used first as a quarry and then as a landfill in the 1940s and 50s before selling the property in the 1980s to a developer.  The developer constructed a condominium project on the site and created a condominium association soon thereafter. As part of work to install a new drainage system in 2008, the contractor discovered discolored soil and debris in the ground.  Subsequent sampling indicated that the soil was contaminated and that a release of hazardous materials had occurred.  The condo association  investigated in early 2009, and MassDEP issued notices of responsibility to both the condo association as well as the city in May 2009.  The city assumed responsibility for the cleanup and worked the site through the state regulatory process known as the Massachusetts Contingency Plan (MCP).  In the city’s MCP Phase II and III reports in June 2012, it concluded that the contamination was from the city’s landfill operations, that it would not be feasible to clean up the contamination, and proposed a pavement cap and a deed restriction.

The condo association and many of its members filed suit in October 2012 for response costs under Chapter 21E, § 4 and damage to their property under G.L. c. 21E, § 5(a)(iii).  At trial, the jury awarded the plaintiffs response costs under Section 4 but found that the plaintiffs had failed to prove that their property damage claim was brought within the three-year statute of limitations for such claims under G.L. c. 21E, § 11A.  The Supreme Judicial Court took the case on direct appellate review.

Section 11A provides that an action to recover damage to real property “be commenced within three years after the date that the person seeking recovery first suffers the damage or within three years after the date the person seeking recovery of such damage discovers or reasonably should have discovered that the person against whom the action is being brought is a person liable…”  Quoting Taygeta Corp. v. Varian Assocs., Inc., 436 Mass. 217, 226 (2002), the Court summarized this as a requirement that the claim must be brought within three years of when plaintiff “discovers or reasonably should have discovered [1] the damage, and [2] the cause of the damage.”

The Court quickly agreed that “the damage” referred to in Section 11A was, for these purposes, the property damages of Section 5 and moved on to the plaintiffs’ contention that the limitations period should not run until they discovered or reasonably should have discovered that the damage was “permanent” or, in other words, not reasonably curable.  Until that time, they argued, they could not know if they had a property damage claim because the site could be fully remediated.

The Court examined the application of the statute of limitations in the context of the statutory scheme for investigating and remediating sites in Massachusetts.  The Court found that the primary purpose of Chapter 21E is to clean up environmental contamination and to ensure responsible parties pay for the costs of that cleanup.  As a result, the statute prioritizes “performance and financing of cleanup efforts, and then considers the calculation of property damage that cannot be cured by remediation and remediation cost recovery.”

In interpreting the statute of limitations, the Court crystalized the question as “whether the word ‘damage’ in § 11A(4) refers specifically to damage under § 5, that is, damage that cannot be cured and compensated by the cleanup and cleanup cost recovery processes defined by the MCP and §§ 4 and 4A, such that the limitations period does not begin to run until the plaintiff knows there is residual damage not subject to remediation and compensation.”  In order to have knowledge that a plaintiff has suffered damage that is not curable by the MCP remediation process, the MCP process must have run sufficiently to know that § 5 damages exist – that there is contamination that will not be addressed through remediation leaving the property at a diminished value.  Since the liable party is required to determine the extent of the damage in Phase II and evaluate available remedies in Phase III of the MCP, as the Court noted, “[i]t would make little sense to require the plaintiff to independently determine whether residual property damage exists prior to the completion of these reports.” As a result, the Court concluded that the statute of limitations did not start to run until the plaintiff became aware that the site would not be fully remediated in the Phase II and III reports in June 2012 months before they filed their lawsuit.  Exactly what constitutes full remediation remains to explored in further cases, as the range of outcomes from achieving background conditions, implementing deed restrictions, reaching temporary solutions, or even leaving just a few molecules of contamination left behind could impact this analysis.

The Court contended that this interpretation of the statute of limitations provides a “prescribed and predictable period of time” within which claims would be time barred, given that there are timetables associated with the production and submission of MCP Phase II and III reports.  Under normal circumstances, the Court expected that a plaintiff will know it has a claim within five years of notifying MassDEP of contamination.

Despite the Court’s pronouncement that it had provided predictability for these types of claims, the statute of limitations for non-permanent property damages, such as lost rental value, or for sites where there is a long-term temporary solution in place, remain uncertain.  Lawyers and clients evaluating how and when to bring claims for temporary and permanent damages will need to carefully evaluate a range of potential options in pursuing a preferred single case for property damage without unacceptable risk that an uncertain statute of limitation may have run.

The article was first published at the Beveridge & Diamond website.

Beveridge & Diamond’s Massachusetts office assists parties at all phases of contaminated sites, guiding clients through the MCP investigation and remediation process and prosecuting and defending claims in court for cost recovery and property damage.  For more information about this practice, contact Marc Goldstein or Jeanine Grachuk.

About the Author

Marc Goldstein helps clients resolve environmental and land use disputes and to develop residential, commercial, and industrial projects. He serves as the Managing Principal of Beveridge & Diamond’s Wellesley, Massachusetts office and the Chair of the firm’s Technology Committee.

Marc provides practical, cost-effective advice to clients with environmental contamination issues, whether those clients are cleaning up hazardous materials and seeking contribution from previous owners or adjacent landowners or facing claims under Chapter 21E or Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for their alleged role in contamination.

U.S. EPA’s Enforcement of the Lead-Based Paint Renovation, Repair and Painting Rule

By Dianne R Phillips, Holland & Knight

On March 28, 2018, the Office of the Inspector General (OIG) of the U.S. Environmental Protection Agency (EPA) issued a Project Notification indicating its plans to begin preliminary research to evaluate the EPA’s implementation and enforcement of the Lead-Based Paint Renovation, Repair and Painting Rule (RRP Rule). The RRP Rule, which is part of the federal Toxic Substances Control Act, is intended to ensure that owners and occupants of pre-1978 “target housing” and “child-occupied facilities” receive information on lead-based paint hazards before renovations begin, that individuals performing such renovations are properly trained and certified, and that renovators and workers follow specific lead-safe work practices during renovations to reduce the potential for exposure to lead. Although use of lead-based paint in dwellings was prohibited after 1978, EPA estimates it is still present in approximately 30 million homes across the United States. The RRP Rule is intended to protect children and others vulnerable to lead exposure due to the health effects associated with lead poisoning.

Enforcement of the RRP Rule, along with the other lead-based paint rules, has been a priority of EPA. For fiscal year ending 2017, according to EPA’s Oct. 27, 2017 press release from October 2016 through September 2017, EPA finalized 121 civil settlements for alleged violations of one or more of the three lead-based paint rules–the RRP Rule; the Lead Disclosure Rule; and the Lead-based Paint Activities Rule for abatements–and filed three complaints for ongoing actions. EPA and the U.S. Department of Justice also prosecuted one criminal case involving violations of lead paint laws and finalized two Clean Air Act settlements that included lead paint abatement projects in local communities. The OIG Project Notification indicates that the “objective for this project is to determine whether EPA has an effective strategy to implement and enforce the lead-based paint RRP.” Only time will tell what is meant by that.

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About the Author

Dianne R. Phillips is an attorney in Holland & Knight’s Boston office who concentrates her practice in litigation, regulatory, energy and environmental law. As former assistant general counsel for Suez LNG North America LLC (now known as Engie North America) and its wholly owned subsidiary, Distrigas of Massachusetts LLC, Ms. Phillips was involved in all aspects of regulatory compliance for the nation’s oldest, continuously operating liquefied natural gas (LNG) import terminal located in Everett, Mass., including safety and security. Her LNG experience includes advising clients with respect to specialized regulatory compliance under 49 C.F.R. Part 193 and NFPA 59A.