Real Property & Environmental Law Alert

Real Property & Environmental Law Alert

Transactional Real Estate, Development/Redevelopment & Environmental Law

New York Court of Appeals Upholds Municipal Authority to Ban Fracking

Posted in Environmental & Green Issues

New York’s highest court dealt a blow to the hydrofracking industry on June 30 when it upheld, in a consolidated opinion in Matter of Wallach v. Town of Dryden and Cooperstown Holstein Corp. v. Town of Middlefield, the authority of municipalities to use their zoning powers to ban hydrofracking. The Court of Appeals held that provisions on the towns’ zoning ordinances that prohibited hydrofracking anywhere within their borders were not preempted by the “supersession clause” of the state’s Oil, Gas and Solution Mining Law (OGSML). That clause, said the Court, prevents municipalities from regulating the “how” of hydrofracking but does not bar them from limiting “where” it can take place.

Hydrofracking – or, more properly, hydraulic fracturing — uses pressurized fluids injected into wells to fracture underground rock formations and liberate natural gas trapped within the rock. The Marcellus Shale formation, which extends over a number of states including New York, contains significant amounts of gas, and therefore has attracted intense interest from energy companies. At the same time, concerns have been raised about hydrofracking’s environmental impacts, especially those related to chemicals in the pressurized fluids. Those types of concerns led the Town of Dryden, a rural community in Tompkins County, and the Town of Middlefield, which includes part of the Village of Cooperstown in Otsego County, to amend their zoning plans to ban hydrofracking. (Both towns argued that their zoning plans already banned hydrofracking because they did not list it as a permitted use.) The appellants, companies with interests in leases that would have permitted exploring and developing natural gas through hydrofracking, challenged the ordinances, arguing that they were preempted by the OGSML’s supersession clause. They failed in the trial court and the intermediate appellate court, and then presented their arguments to the Court of Appeals.

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NJDEP Clarifies Obligation to Remediate Contamination from Historic Pesticide Use

Posted in Development/Redevelopment

The New Jersey Department of Environmental Protection has more formally confirmed the scope of the responsibility to address historic pesticide use on commercial and industrial properties: namely that a party need not remediate historic pesticide use unless there is a land use change to residences, schools, child care centers and playgrounds. On June 20, 2014, the NJDEP published an additional notice for Response Action Outcomes, the written determination by a Licensed Site Remediation Professional that a remediation is complete, which specifically permits completion of a remediation without investigation of contamination from historic pesticide use. The notice would only apply to contamination from the application of such pesticides to, for example, a former orchard or farm, but not contamination from a discharge caused by the mixing, manufacturing or other handling of such chemicals. NJDEP approval is not required for an LSRP to use this notice.

This action by the NJDEP essentially adopts the recommendations contained in the final report of the Historic Pesticide Contamination Task Force issued during March 1999. That report recommended that former agricultural areas should be remediated prior to site development or if intensively used by children, but stopped short of broadly mandating such action for all sites that have already been developed. While remediating parties have previously relied on the recommendations of the task force, this RAO notice now eliminates any uncertainty about the necessity to remediate contamination from historic pesticide use on sites that have already been developed for commercial and industrial uses and will continue to be used for such purposes.

David A. Brooks is a Director in the Gibbons Real Property & Environmental Department.

New York Legislators PASS Extension of State Brownfield TAX CREDITS

Posted in Environmental & Green Issues

In the waning hours of this year’s legislative session, the New York State Assembly and Senate have passed identical bills extending the sunset date for tax credits under the New York State Brownfield Cleanup Program from December 31, 2015 to March 31, 2017. To qualify for such credits, sites must obtain their Certificates of Completion from the New York State Department of Environmental Conservation (DEC) by the sunset date.

As indicated in prior blogs, the Governor’s office and the Legislature have struggled mightily over the past several months to reach consensus on a comprehensive reform package for the Program. Their respective proposals contained many elements, including changing the definition of “brownfield site,” tightening eligibility standards for tangible property (development) tax credits, and establishing a streamlined cleanup program for sites not seeking tax credits.

Ultimately, consensus on exactly how to reform the Program proved elusive. The picture was complicated by the Assembly’s insistence on additional funding for Superfund cleanups and the Environmental Remediation Program, which the Governor has resisted for budgetary reasons.

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New Jersey Department of Environmental Protection Proposes New Rules Aimed at Streamlining Coastal Permitting Process

Posted in Environmental & Green Issues

On June 10, 2014, the New Jersey Department of Environmental Protection (“DEP”) introduced a series of proposed technical revisions to land use rules — via a 1,055 page proposal — designed to encourage redevelopment in coastal areas decimated by Hurricane Sandy. DEP Commissioner Bob Martin — who also served on Governor Christie’s Red Tape Review Commission, which was launched in 2011 to streamline regulatory processes across state government — explained that “[t]hese revisions will add clarity to our regulatory processes and provide better predictability in the regulatory process.”

One of the most significant developments that would flow from the NJDEP’s proposed revisions is the consolidation of the New Jersey Administrative Code’s Coastal Permit Program Rules (at N.J.A.C. 7:7) and Coastal Zone Management Rules (at N.J.A.C. 7:7E) — which are presently both relied on by the NJDEP to implement three separate New Jersey laws governing the use and development of the State’s coastal resources, namely: (1) the Coastal Area Facility Review Act (CAFRA), N.J.S.A. 13:19-1 et seq.; (2) the Wetlands Act of 1970, N.J.S.A. 13:9A-1 et seq.; and (3) the Waterfront Development Law, N.J.S.A. 12:5-1 et seq. — into one chapter of the Administrative Code (at N.J.A.C. 7.7).
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Gibbons Real Property & Environmental Practices Highlighted by Chambers USA

Posted in Environmental & Green Issues, Transactional Real Estate & Leasing

The Gibbons Real Property & Environmental Department, and seven of its attorneys, were among the 10 Gibbons practice areas and 27 individual attorneys ranked in the 2014 edition of the Chambers USA Guide to America’s Leading Lawyers for Business. Gibbons has appeared in the Chambers guide since its inception, and, for the past three years, Gibbons has also contributed the state overview for the New Jersey section of the publication. The firm’s Environmental Department ranked in Band 1 and Real Estate ranked in Band 2. Chambers annually rates the nation’s leading business lawyers and law firms through comprehensive interviews with top companies, attorneys, and business executives, plus extensive supplementary research.

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The EPA Seeks to Regulate Carbon Emissions from Existing Power Plants

Posted in Environmental & Green Issues

On June 2, 2014, the Environmental Protection Agency (“EPA”) introduced new rules – via a 645 page proposal – designed to reduce the emission of carbon and other greenhouse gases (“GHGs”) from existing power plants. Although this is the first time the EPA has proposed such standards, the EPA claims that it is empowered to do so under the ambiguous provisions set forth in Section 111(d) of the Clean Air Act (“CAA”), 42 U.S.C. § 7411(d).

Under the EPA’s proposed rules, each state is given autonomy to cut existing power plants’ GHG emissions as it sees fit through a combination of utility efficiency programs, renewable energy procurement, on-site pollution controls, and regional cap-and-trade programs. Collectively, the states will be required to reduce such emissions by 30 percent by 2030, as measured from 2005 emission levels. The reduction requirements for each state vary, and are based on factors such as each state’s reliance on fossil fuels and its ability to transition to cleaner energy. New Jersey and New York will each be required to reduce their emission rates by more than 43 percent from 2012 levels.

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New York State Bar Association Environmental Law Section Releases Comments on Brownfield Program Reform Proposals

Posted in Environmental & Green Issues

The Environmental Law Section of the New York State Bar Association has released its Report and Recommendations regarding the proposed extension and reform of the New York State Brownfield Cleanup Program (“BCP” or “Program”).

The Report and Recommendations were prepared by the Section’s Brownfield Task Force, co-chaired by David J. Freeman and Lawrence P. Schnapf. The Task Force spent several months reviewing the proposals for reforming the Program made in Governor Andrew Cuomo’s budget bill and draft bill circulated by the staffs of the Senate and Assembly Environmental Conservation Committees.

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Second Circuit Holds That CERCLA’s “Act of War” Defense Shields Owners and Tenants from Cleanup Liability for Dust Created By Towers’ Destruction on 9/11

Posted in Environmental & Green Issues

In the first decision of its kind, the Second Circuit on May 2, held that the September 11, 2001, attacks on the World Trade Center were “acts of war” for purposes of the affirmative defense for such acts contained in the onerous liability provision of the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Accepting the arguments raised by Gibbons and other firms representing the owners and tenants of the buildings (and the airlines whose planes were hijacked), the Court found that even though they were not committed by uniformed military forces of a nation-state, the attacks were nevertheless acts of war for CERCLA purposes (though not necessarily in other legal contexts) because they (1) were “indistinguishable from military attack in purpose, scale, means, and effect,” (2) were recognized as acts of war by both the President and Congress, and (3) “wrested from the defendants all control over the planes and the buildings, obviated any precautions or prudent measures defendants might have taken to prevent contamination, and located sole responsibility for the event and the environmental consequences on fanatics whose acts the defendants were not bound by CERCLA to anticipate or prevent.”

The Second Circuit found that the September 11, attacks “wrested from the defendants all control over the planes and the buildings, obviated any precautions or prudent measures defendants might have taken to prevent contamination, and located sole responsibility for the event and the environmental consequences on fanatics whose acts the defendants were not bound by CERCLA to anticipate or prevent.” 

The unusual litigation began in the Southern District of New York in 2008, when the owner of a hotel located near the World Trade Center site sued the buildings’ owners and tenants, and the airlines whose planes were hijacked, for cleanup costs it had incurred when it transformed a 12-story office building into a 19-story hotel. According to the complaint, during the course of the project federal and state authorities required the developer to remove from the building’s interstitial spaces so-called “WTC Dust,” consisting of fine particles containing several hazardous substances that were dispersed through the neighborhood when the buildings collapsed. Seeking to recover its costs, the developer invoked Section 107 of CERCLA, which imposes strict liability for cleanup costs on (among other parties) the owners and operators of facilities from which hazardous substances are released. Gibbons and fellow defense counsel successfully moved to dismiss the complaint on the grounds that the plaintiff had failed to plead essential elements of a CERCLA claim and had filed its complaint after CERCLA’s limitations period had expired. On the plaintiff’s appeal, the Second Circuit remanded the case to the district court for consideration of the “act of war” defense. When the district court again ruled in the defendants’ favor, the case returned to the Second Circuit.

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U.S. Supreme Court Gives Downwind States Breathing Room Under the Clean Air Act

Posted in Environmental & Green Issues

On April 29, 2014, in EPA, et al v. EME Homer City Generation, LP, the United States Supreme Court ruled in favor of the US Environmental Protection Agency (“EPA”) and its controversial “Transport Rule” which curbed nitrous oxide and sulfur dioxide emissions in 27 upwind states. The Supreme Court held it was appropriate to defer to EPA’s expertise in crafting a method of implementing the Clean Air Act’s (“CAA”) “Good Neighbor” provision to reduce pollution from upwind states onto their downwind neighbors.

EPA has defined ambient air quality standards and has determined certain areas that do not attain the required level to protect the public health. Those states in which the air quality does not provide the required level of protection have to submit a State Implementation Plan (SIP). In the SIP, the state must consider the effect of its emissions on downwind states’ ability to meet attainment standards, 42 U.S.C. 7401 et seq. This is the so-called Good Neighbor Provision of the CAA. Id. at 7410(a)(2). EPA rejected the SIPs for 27 upwind states under the Good Neighbor Provision of the CAA.

EPA drafted the Cross-State Air Pollution Rule, also called the Transport Rule, to curb nitrous oxide and sulfur dioxide in 27 upwind states in terms of their effect on downwind states. Upwind States and industries filed suit against the EPA alleging that the EPA’s action exceeded its authority. The DC Circuit agreed with the plaintiffs. The Supreme Court reversed agreeing with the EPA. EPA v. EME Homer City Generation, LP.

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New York State Brownfield Cleanup Act Reform: The Saga Continues

Posted in Environmental & Green Issues

New York State Brownfield Act reform did not survive the crush of last-minute negotiations over the State’s 2014-15 budget. The Governor’s office, the Senate, and Assembly each introduced their own proposals for accomplishing needed reforms but were not able to reach consensus on a path forward.

The attached article reviews the differences among the Governor’s, the Senate’s and the Assembly’s proposals on such key issues as: 

  • extending the expiration date for brownfield tax credits;
  • revising the definition of “brownfield site”;
  • restricting tangible property tax credits;
  • redefining costs eligible for tax credit treatment; and
  • establishing a new, streamlined program for sites not seeking tax credits.

The article discusses the merits of the respective proposals and makes suggestions as to how these differences might be resolved.

David J. Freeman is a Director in the Gibbons Real Property & Environmental Law Department.
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