tools

GEC Newsletter— Fall 2004


In this Issue...

 

All Appropriate Inquiry Standards a Step Closer:

The Environmental Protection Agency's (EPA's) All Appropriate Inquiry (AAI) standards took a step toward implementation when the EPA administrator signed the proposed standards and practices recently. Since the new text has been printed in the Federal Register the 60-day comment period has started.

As GEC has indicated previously, it is unclear if the new AAI standard will significantly alter how due diligence investigations are conducted. Some lenders do not think the final version will differ significantly from the current ASTM Standard for Phase I Site Assessments that currently guide the due diligence process. Other lenders and lenders counsel seem to think the new AAI standard could significantly raise the level of effort required to complete due diligence, especially for those projects where there is a high likelihood of a release of oil or hazardous materials. The standard will also be raised if the due diligence work is being conducted in conjunction with securing covenants or liability relief from regulators, municipalities or other entities.

Based on our initial review, the level of effort described in the proposed regulations is not significantly different from that currently implemented using the ASTM standards for Phase I investigations. However, one addition is the requirement that the investigator evaluate the "relationship of the purchase price to the value of the property, if the property was not contaminated". Persons who conclude that the purchase price of the property does not reasonably reflect the fair market value of that property, if the property were not contaminated, should consider whether or not the differential in purchase price and fair market value is due to the presence of releases or the threatened releases of hazardous substances (See Section 312.29).

GEC will be reviewing the draft language and may submit a comment. We will certainly be keeping up to date with the development of the AAI standard.

Once the AAI language is finalized expect the American Society of Testing and Materials (ASTM) to revise their standard for Phase I investigations. On a related note - ASTM is currently circulating draft guidance for both asbestos assessment and readily observable mold conditions at commercial buildings. Comment is sought prior to October.

Massachusetts Labor Poster Change:

The labor poster regarding unemployment insurance was updated recently to remove a paragraph concerning training sessions that are no longer available. A free copy of the updated poster can be obtained at www.mass.gov, then click on "business", then type "labor posters" in the search box and scroll down to the unemployment insurance poster. You can print the poster and post it on your employee communications bulletin board.

Shipping Hazardous Materials:

Recent heightened security measures and increased budget allocations for Homeland Security anti-terror efforts are leading to increased auditing and enforcement. These efforts directly affect companies that ship hazardous materials or products containing hazardous materials and hazardous wastes, especially those being shipped by air. Regulations are very detailed and penalties are significant. Several of GEC's clients, not previously scrutinized by such regulations, find themselves under the microscope. It is critical to assure that you are familiar and in compliance with the regulations to avoid penalties and fines. GEC is currently completing facility audits and finishing annual employee training to assure compliance for our clients. Contact Neil Inglis, GEC's Environmental, Health and Safety Manager, at 781-356-9140 for more information.

SPCC Plans - Deadline Extended:

The deadline to amend existing Spill Prevention Control and Countermeasures Plans (SPCC), has been extended to February 17, 2006. Under the Clean Water Act, facilities with large quantities of petroleum products must have an SPCC Plan to prevent releases to the environment and have emergency procedures to manage accidental releases should they occur. For facilities in operation after August 16, 2002 the deadline for the creation of SPCC plans is August 18, 2006. Details may be found in 40 CFR 112, in the August 11, 2004 Federal Register, or call Neil Inglis at 781-356-9140.

Wetland Regulatory Re-evaluation:

In our June newsletter GEC summarized the more far-reaching changes that the Massachusetts Department of Environmental Protection (MADEP) has proposed to the Wetlands Protection Act Regulations. The Massachusetts Association of Conservation Commissions (MACC) recently reported that the changes might not be promulgated until late 2004 or early 2005 for two reasons: the large volume of responses and the overwhelming number of negative responses to the proposed changes.

MADEP has indicated to MACC that they will likely reconvene the Wetlands Advisory Committee in September, to interface with other government agencies and non-government parties and reexamine the proposed WPA regulation changes. Pending the results of the reevaluation hearings, MADEP may modify the proposed regulatory amendments.

Neither MADEP nor MACC has indicated specifically which elements of the regulations would be discussed. However, vocal members of MACC have indicated that reducing the "jurisdictional buffer" from 100 feet to 50 feet and making the abutter appeal more stringent and costly are two very problematic changes. It is MACC's opinion that increasing the fee for appealing from $50 to $500 is unfair and discourages citizens' interests. MADEP's position for increasing the fee for an appeal is to decrease the number of "frivolous" appeals. MACC feels that clear standards for work within buffer zones would decrease the number of appeals because acceptable activities and limits would be clearly spelled out.

Wetland Banking:

Wetland Banking, as described in a 1992 report by the Washington State Department of Ecology entitled Wetland Mitigation Banking, involves the off-site creation, restoration, and/or enhancement of wetlands to compensate for unavoidable adverse wetland impacts associated with development. With Governor Mitt Romney's recent signing into law of a wetland banking pilot program for the Taunton River Watershed, the concept is likely to be a hot topic of discussion.

Banking allows large wetland mitigation projects to compensate in advance for proposed negative wetland impacts. The concept of wetland mitigation banking is to identify degraded, filled, or drained wetlands and designate these sites as wetland banks. The wetland banks are managed by wetland specialists on a large scale thereby providing higher wetland functions and values over larger areas rather than fragmented smaller on-site mitigation projects. Restoration of wetland bank areas would generate credits that could be used as compensation for proposed, unavoidable losses permitted elsewhere. Currently, mitigation is conducted on a one-to-one basis, meaning one square foot of replication for one square foot of filling, generally at the proposed construction site. This has had mixed results over the years. Often, the project is completed well before the success or failure of the replication project is evaluated.

According to the program, developers are still required to minimize impacts to wetlands prior to being allowed to buy credit for off-site mitigation.

Some unanswered questions:

GEC will be watching the development of wetland banking and will certainly be able to provide insight regarding whether this is applicable to your project.

[September 2004]