Written by Keith B. Walker, Cox, Castle & Nicholson
For developers seeking to convert historically agricultural or other rural sites into solar generation facilities, it is not uncommon for the environmental due diligence process to identify known or potential sources of environmental contamination. The approaches for addressing the actual or potential contamination, however, can vary greatly, and there are problem-solving approaches that can help keep the development on track and avoiding needlessly complicated regulatory processes.
Potential Contamination Sources
For example, underground or above-ground storage tanks that held gasoline or diesel for tractors and other farm equipment may be present, along with evidence of releases from the tanks. In addition, pesticides and arsenic- and lead-containing herbicides used in connection with agricultural use may be present in shallow soil, sometimes at high levels. Areas where these products were stored or mixed may have exceedingly high levels of pesticide and herbicide contamination from incidental releases of the agricultural chemicals. When farm equipment is maintained or serviced on-site, such as in a barn, chlorinated solvents also become a concern because, historically, they were often used for tool and parts cleaning. Without evaluating and addressing the potential or actual contamination prior to initiating earth movement activities, developers run the risk of being liable for a “disposal” of hazardous waste under federal and state law – essentially by taking dirty soil to clean areas (the old saw goes “dilution isn’t the solution to pollution”).
What should not be assumed, however, is that an actual cleanup is necessary, or that the presence of actual or potential contamination means needing to get a federal, state, or local environmental agency involved. Instead, if the areas of contamination or, using a softer term, “areas of concern” (“AOCs”) are identified, developers may have the option to simply leave the impacts in place, avoid disturbing the affected soil (thereby avoiding liability for hazardous waste disposal), and continue with their redevelopment work.
Defenses and Exemptions
The federal cleanup statute, the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), includes a specific defense to liability for cleanups provided the developer (1) performs “All Appropriate Inquiries” (40 CFR Part 312) on a pre-acquisition or pre-lease basis, as the case may be (essentially, by engaging a consultant to perform a Phase I Environmental Site Assessment); and then (2) exercises reasonable precautions by stopping any ongoing releases and avoids exacerbating existing contamination (again, for example, by not spreading it around). Many state environmental codes include similar defenses or exemptions. Consequently, purchasing contaminated land quite often does not mean that any actual cleanup is necessary. Although leaving contamination in place and working around it enables redevelopment of the land in question to proceed, exit considerations remain in relation to future divestiture scenarios, where the prospective purchaser will also have to become comfortable with leaving the contamination in place and working around it. With rural solar facilities, however, some developers have demonstrated little to no concern provided they understand they are not triggering cleanup liability simply by virtue of purchasing the land.
AOC Guidance and Recommendations
Guidance from federal and state agencies provides even further specificity regarding dealing with AOCs. Both the United States Environmental Protection Agency and, using California as an example, especially because its requirements for addressing contamination are quite often the most stringent in the nation, the California Department of Toxic Substances Control (DTSC) have issued guidance stating that (1) earth movement activities within AOCs do not create liability for a disposal of hazardous wastes (i.e., soil may be moved around within the AOCs – but contamination cannot be moved from within an AOC to an otherwise clean area); and (2) pre-approval from environmental agencies is not required for employing the AOC approach. Although the requirements under the guidance are detailed and must be carefully considered site-to-site by experienced environmental counsel, the gist of the guidance is that AOCs can be . . . worked around. With regulatory processes for addressing contaminated areas within California and other states now taking years and sometimes decades to complete, even for relatively simple sites, avoiding the need for regulatory oversight brings huge advantages, as does the lack of a requirement for pre-approval in relation to the AOC concept, which means you do not have to go to an agency and ask permission. As a result, developers can often proceed on a self-directed basis in regard to working around the AOCs.
In connection with employing the AOC approach, though, ounces of prevention are worth tons of cure if something unexpected occurs, including the possibility of an environmental agency subsequently taking interest in the site in question. To begin, developers should involve experienced environmental counsel and a proficient environmental consultant in order to ensure that adequate environmental assessment has been completed on the front end, so that the AOC approach is well-founded. In addition, as an easy and relatively inexpensive measure (usually costing a few thousand dollars to prepare), developers should have their environmental consultant work with environmental counsel to develop a Soil Management Plan (SMP) that will specify the protocol and procedures for working around existing AOCs and addressing contamination that may be discovered in previously-unknown AOCs. Besides the SMP helping the developer from exacerbating contamination and, thereby, losing defenses to liability under federal and state law, the SMP also provides a useful record for showing that the developer properly implemented the AOC approach so that it can show it is not liable for disposing of hazardous wastes. In addition, pursuant to an SMP, there are often opportunities for off-hauling contaminated soil on a self-directed basis and without regulatory oversight, such as in cases where removal of the contamination source is particularly helpful to redevelopment and the amount of soil is not excessive.
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.
About the Author
For 15 years, Keith Walker has practiced environmental law. His main form of expertise is in brownfield redevelopment and complex remediation and human health risk mitigation projects in the context of federal, state and local regulatory compliance in order to obtain the much sought-after “No Further Action” letters. His practice also involves the performance of extensive environmental risk management in the pre-acquisition, financing and development phases. In addition, his work includes cost recovery litigation in both state and federal court.