Phase l Assessments for Tenants are the Hottest Environmental Issue in 2020

The hottest environmental topic for business in 2020, as a result of an amendment to the Superfund law for the first time making clear that tenants can qualify as bona fide prospective purchasers, protected from cleanup costs from the presence of hazardous substances on a property, is prospective tenants are now ordering Phase l Environmental Site Assessments to take advantage of the liability protections in the new law.

Buried in the more than 800 page Consolidated Appropriations Act signed on March 23, 2018 was Division N, the ‘‘Brownfields Utilization, Investment, and Local Development Act of 2018’’ (the BUILD Act).

The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA, commonly referred to as Superfund), 42 U.S.C. § 9601 et seq., provides an important liability protection, including from cleanup costs, for parties who qualify as bona fide prospective purchasers (BFPPs).

The potential applicability of the BFPP protection to a tenant who leases contaminated or formerly contaminated real estate has been the subject of debate for the decades since the CERCLA’s enactment. The cases interpreting CERCLA make clear that the mere execution of a lease does not necessarily make a tenant liable as an owner or operator under the law. But courts have acknowledged uncertainty regarding the potential liability of tenants under CERCLA including because a tenant may be an operator of the property as well as a responsible person, but tenants had previously lacked any express protection in the Superfund laws. A prospective tenant may now to seek BFPP treatment in the event of a future federal CERCLA cleanup action at the leased property or simply to ensure appropriate environmental stewardship of the property.

Such is a dramatically large issue with the economic contribution of real estate to the U.S. economy, when in any given year the vast majority of real estate transactions are leases and not contracts of sale. In 2020, an increasingly large number of prospective tenants, from commercial banks to sports apparel retailers and the defense industry are actively seeking protection from existing contamination before signing leases.

In 2002, as part of the Small Business Liability Relief and Brownfields Revitalization Act, the BFPP definition was amended to include the parenthetical phrase “(or a tenant of a person)” in the description of who can claim the BFPP defense, but there was no other direction on the treatment of tenants.

EPA then issued guidance in 2012 on the treatment of tenants as BFPPs, providing that a tenant could only derive it BFPP status through the property owner, and that status was limited to “so long as the owner maintains its BFPP status.” So while instructive, it provided little, if any, comfort to tenants.

This 2018 BUILD Act addresses the uncertainty dating to 1980, by amending CERCLA § 101(40) including by in subclause (II), by inserting ‘‘, by a tenancy, by the instruments by which a leasehold interest in the facility is created,’’ ..

And in that subsection, the term “bona fide prospective purchaser” has been amended to mean,

(ii) a person who (I) who acquires a leasehold interest in the facility after January 11, 2002; (II) who establishes by a preponderance of the evidence that the leasehold interest is not designed to avoid liability under this Act by any person; and ..”

Which has the macro effect of increasing the value of many commercial and industrial properties making reuse viable, obviating one of the longstanding criticisms of CERCLA, that the law limits urban redevelopment across America, and the micro effect of mitigating a tenant’s risk in an individual leasehold, by allowing a tenant to avoid CERCLA liability by any of the following three means:

One, establishing the landlord is a BFPP because that landlord completed the “all appropriate inquiries” as required by federal law (including with a Phase I ESA); or two, establishing that the landlord completed all appropriate inquiries, but later failed either with compliance or to complete additional requirements; or three, establish the tenant itself, as the BFPP, by completing all appropriate inquiries prior to acquiring the leasehold interest and maintaining compliance with the additional requirements, if any.

A tenant can now assert, without having to rely on the landlord’s status, the innocent landowner defense being protected from CERCLA liability including cleanup costs from the presence of a hazardous substances on the property.

In this new decade when cursed energy is “out” and dark energy is “in” Phase I ESAs ordered by prospective tenants are in.

As a pendent matter, when a Phase I ESA report exists, it may now as a result of the 2018 Build Act be material information, under state law, that a real estate broker is obligated to disclose to a prospective tenant.

Concomitantly, should the Phase I ESA reveal a recognized environmental condition, a tenant could seek protection as a “inculpable person” not liable for existing contamination under state Brownfield laws.

In 2020, prospective tenants in commercial and industrial properties are now ordering a Phase I Environmental Site Assessment.

When Trees Sue for their Own Environmental Preservation

In the new decade American environmental law will likely expand to include you being sued by the trees. I don’t mean being sued by the Lorax or someone else who “speaks for the trees” but rather the trees will have standing to sue to confront environmental degradation and the like.

This movement to empower nature is the single most impactful trend in environmental law.

This is much more than the currently proposed amendments to state constitutions, across the country, seeking to establish that every “person” has the right to a certain clean and healthy environment. Many of those bills do seek to establish that the state’s natural resources are the common property of every person, but they only expand standing for people.

A party to a lawsuit must have standing, that is they must be authorized to participate in the action. Standing means that a party has a sufficient stake in a controversy to be able to obtain judicial resolution of that controversy. Most state law traditionally has limited standing to a person that is “aggrieved” by an action or decision.

The idea that nature can have standing is not new. Justice William O. Douglas’ widely quoted dissent in the U.S. Supreme Court case, Sierra Club v. Morton, 405 U.S. 727 (1972) described that

public concern for protecting nature’s ecological equilibrium should lead to the conferral of standing upon environmental objects to sue for their own preservation. … So it should be as respects valleys, alpine meadows, rivers, lakes, estuaries, beaches, ridges, groves of trees, swampland, or even air that feels the destructive pressures of modern technology and modern life.”

And we are now seeing that legal doctrine legislatively implemented such that Mother Nature is now a proper person to pursue adjudication. In 2019, Toledo residents voted to approve the Lake Erie Bill of Rights, within the City’s charter “which include the rights of Lake Erie and its watershed to exist, flourish, and naturally evolve.”

This may be the first time in America that an ecosystem has been given the legal status of a “person.”

Under the amended City charter, the Lake Erie ecosystem may enforce its rights through an action prosecuted by the City or any resident in the name of the ecosystem.  Damages are the cost of restoring the ecosystem to its status previous to the acts that caused the injury. And significantly there is no defense for an issued permit or claim of preemption by other state or federal laws.

Drewes Farm Partnership filed a lawsuit in federal court the day after the charter amendment passed in an overwhelming voter referendum. The partnership’s complaint asks the court to declare the voter enactment unconstitutional on several grounds and also claims it violates a variety of state laws. The City of Toledo consented to a preliminary injunction and the case is proceeding. While any interpretation of the preliminary pleadings is premature, there is an argument that this type of creation of a new right is more correctly done at the state level (versus at by a city). Spurred by Toledo, it is possible Florida and New Hampshire will each give standing to nature, from the spotted owl to the polar bear, in 2020.

Most major current federal environmental laws were passed in the 1960s and 1970s, including the Clean Air Act, the Endangered Species Act, and the Clean Water Act, and it is unlikely the current government in Washington DC will enact any new sweeping environmental statutes. The planet is also not best protected by local and state government legislative bodies enacting hodgepodges of new statutes, including this year’s trendy legislation banning plastic from straws to bags, based on junk science and ignoring the key facts that the alternatives are not much better if not worse.

The courts, as a coequal branch of government can and are better to assume their proper role in enforcing tort law and more, to stop environmental harm done by bad actors.

So, now conferring standing on objects in nature, from lakes to trees, to sue for their own environmental preservation, an idea that has percolated for decades is gaining popularity and will in this new decade of the Roaring ‘20s be the order of the day. This rocket scientist thinking is the next step in American environmentalism. It is the opportunity to increase efficacy of existing court tested environmental laws, from modern statutes to the common law, many of which have hit bumps, by broadening who can enforce those laws without negatively impacting the current worldwide economic boom.

Thought leaders largely agree we need a better way of protecting the environment and enabling the trees to seek judicial redress is good public policy coming to a courtroom near you.

Top 10 Environmental Blog Posts for the Roaring ‘20s

As we begin the new decade of the Roaring ‘20s we are incredibly excited about the prospects for environmental law. We are supremely confident that our business philosophy of “environmental risk as an opportunity” remains right for the times.

This blog will continue in 2020 providing strategic intelligence on environmental law, including critical insights into sustainability and green building for the business community, .. not just for lawyers. As we look for news and insights into the trends that will impact the broader environmental industrial complex in 2020, I recall George Santayana’s warning, “[t]hose who cannot remember the past are condemned to repeat it.”

With that admonishment, as we look for environmental trends in 2020, here are my Top 10 most read blog posts from 2019, which compilation provides an interesting ranking by importance of the environmental issues of the day as self-selected for reading by viewers of the blog, in descending order from the most ‘opens’ in the first seven days after posting to the least (.. you can click on the title to link to the post):

179D Tax Deduction Brought Back to Life thru 2020

Brownfield Laws can Save Green Building and the Planet

Radon Caused More Than 21,000 Deaths Last Year

What You Can Say about RECs is Regulated by the FTC

LEED Offers Companies a Response to Declining Bird Populations

Tenants Order Phase l to Avoid Hazardous Substance Liability

LEED Prerequisite Now Prohibits Smoking Cannabis

Maryland Schools will No Longer be LEED Certified

Government to Allow Less Lead in Drinking Water

Nurdles are the Environmental Calamity of 2019

And this coming Monday I will post, “When Trees Sue for their Own Environmental Preservation,” about what may be the single most impactful new trend in the future of environmental law, proving there are creative thinkers in the field today (beyond this year’s trendy legislation banning plastic bags?!).

When selling to Gen Z is “out” and selling to Gen Alpha is “in” we know it is a new decade with even more and expanded options for our clients to benefit from “environmental risk as an opportunity.”

There is no doubt that the Roaring ‘20s portend to be a decade of both great economic prosperity and burgeoning environmental protection. I look forward to providing you with our law firm’s distinctive environmental edge in the coming years.

Happy 2020!

179D Tax Deduction Brought Back to Life thru 2020

This past Friday night while aboard Air Force One the President signed legislation reviving the 179D energy efficient commercial buildings tax deduction, providing an enormous and much needed boost to domestic green building.

Almost as compelling as the fictional undead being created through reanimation of a corpse, except here there were no zombies involved; it was Congress’ tax extenders bill bringing back to life $35 Billion of expired tax provisions and providing short term extensions to other expiring tax provisions. This post will not consider the tax breaks for racehorses and auto racetracks nor the reduction in taxes for domestic beer and spirts, instead it will focus on energy efficient commercial building.

Significantly, the Tax Extender and Disaster Relief Act of 2019 amended the Internal Revenue Code of 1986, providing, ..

SEC. 131. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.

IN GENERAL. – Section 179D(h) is amended by striking ‘‘December 31, 2017’’ and inserting ‘‘December 31, 2020’’.

EFFECTIVE DATES. – The amendment made by subsection (a) shall apply to property placed in service after December 31, 2017.

It is dramatic that this tax deduction was revived back to December 31, 2017 (.. when it last expired) and will remain effective through December 31, 2020.

The 179D commercial buildings energy efficiency tax deduction enables building owners to claim a tax deduction for installing qualifying systems and buildings. Tenants may be eligible if they make construction expenditures. If the system or building is installed on federal, state, or local government property, the 179D tax deduction may be assigned to the businesses primarily responsible for the system’s design or installation.

The 179D tax deduction had been in effect since January 1, 2006, but the systems and buildings must have been placed in service by December 31, 2017, which is when 179D expired, prior to this revival. Deductions are taken in the year in which systems and buildings are placed in service.

A tax deduction of $1.80 per square foot (i.e., this tax incentive is based on the area of the building not the dollar amount expended) is available to owners of new or existing buildings who install (1) interior lighting; (2) building envelope, or (3) heating, cooling, ventilation, or hot water systems that reduce the building’s total energy and power cost by 50% or more in comparison to a building meeting minimum requirements set by ASHRAE Standard 90.1-2007 for buildings and systems placed in service after January 1, 2017 (before that date ASHRAE 90.1-2001 was used). Energy savings must be calculated using qualified computer software, which program this firm can assist an owner select depending upon building type.

Many if not most new buildings in states where the adopted energy code is the 2015 IECC or later, will meet the required level of performance above the ASHRAE standard. And LEED 2009 as well as 4.0 projects will in the vast majority of instances qualify. This tax deduction also pairs well with many utility based incentives.

Be clear this tax deduction is broad and deep having application to many more than only building owners. For example, we have worked with sophisticated bidders on public construction projects (from schools and universities to military bases and transportation facilities) that have made their bids more competitive by factoring in the allocation for a designer that may include, “an architect, engineer, contractor, environmental consultant or energy services provider who creates the technical specifications” for a new public building or renovation that incorporates energy efficient upgrades. There are potentially many who are eligible to share in the $1.80 a square foot incentive.

Deductions of $0.60 per square foot are available in instances in which individual lighting, building envelope, or heating and cooling systems that partially qualify by meeting certain target levels or through an interim lighting rule issued by the IRS.

It is curious that this extender was not supported by USGBC, AIA and others under the misguided belief that 179D was too generous and easy to qualify for?

In a related matter, the tax extenders of 2019 also will significantly advantage green home construction, reviving an also expired tax code provision,

SEC. 129. ENERGY EFFICIENT HOMES CREDIT.

(a) IN GENERAL. – Section 45L(g) is amended by striking ‘‘December 31, 2017’’ and inserting ‘‘December 11 31, 2020’’.

(b) EFFECTIVE DATE. – The amendment made by this section shall apply to homes acquired after December 31, 2017.

This credit (.. better than a deduction) is equal to $2,000 per unit for qualified owner occupied or rental dwelling unit meeting specified energy savings standards.

Bringing back to life the dormant 179D tax deduction will not bring about the zombie apocalypse (.. I’m fairly confident?) but it will revive the moribund U.S. green building industrial complex, including finally and decisively jumpstarting the greening of existing buildings.

Moreover, given that buildings use more than 40% of energy in the U.S., this tax incentive can benefit not only an individual building owner, but given the concomitant one-third of all greenhouse gas emissions coming from those buildings (more than any other sector in the economy), also save the planet.

This law firm regularly works with owners, tenants and others in securing green building incentives. If we can assist you with the 179D deduction or otherwise do not hesitate to contact Stuart Kaplow.

Maryland Schools will No Longer be LEED Certified

In response to legislation enacted by the Maryland General Assembly in 2018, overriding a veto by the Governor, commencing last week new public school building no longer has to be LEED certified or the like.

This is a major change in public policy for the Old Line State that has required by law that all new state funding building be third party certified as green for more than a decade, resulting in 161 LEED certified pre K through 12 public schools. But no longer ..

Existing State Finance and Procurement Code Section 4-809(f) was amended adding new section (6), providing in relevant part, the Maryland Green Building Council shall:

“(6)  develop guidelines for new public school buildings to achieve the equivalent of the current version of the U.S. Green Building Council’s LEED (Leadership in Energy and Environmental Design) Green Building Rating System Silver rating or a comparable rating system or building code as authorized in Section 3-602.1 of this article without requiring an independent certification that the buildings have achieved the required standards.”

The import of the new statute is that new public school buildings (which has been interpreted to be pre K through 12 and not university dormitories or community college classrooms) need no longer be third party certified as a green building such as LEED, Green Globes or the like.

Be aware, there is another compliance path where a building could be built to comply with the 2012 International Green Construction Code, however, no public building in Maryland has ever accomplished that alternative compliance path because it is suggested as amended by the state the IgCC is unbuildable (but the Maryland Department of Labor may in 2020 consider approving for use the 2015 or 2018 IgCC, which may result in a viable alternative for school construction?).

The Maryland Green Building Council, a government body not affiliated with the USGBC, sought input over the past year in implementing the law from the public and stakeholders, including input from local education agencies responsible for most school construction in the state.

At its October 16, 2019 meeting the Maryland Green Building Council recommended for approval, the following guidelines,

The school shall be designed and constructed to meet requirements of the Maryland High Performance Green Building Program with the exception of obtaining an independent, third-party certification as an element of one of the proprietary rating systems described in the Program. The architect or engineer of record shall indicate in the construction documents, the selected high-performance rating system used for design and construction with which, the project is compliant. The LEA may obtain a Letter of Opinion from an Independent Third Party to be submitted as a compliance document in accordance with Appendix B of the Program.”

On November 13, 2019, the Secretary of the Maryland Department of General Services “approved” that recommendation. It was circulated last week as now effective.

Significantly, the new mandatory guidelines expressly provide the local school system “may” obtain a letter of opinion from an independent third party evidencing that the new school building was designed to satisfy and then constructed meeting the requirements of LEED or Green Globes as modified by the state.

We anticipate that most local school systems will take advantage of obtaining that third party opinion that it has complied with the law that the school building be so designed and constructed. Schools are greet at educating young people, but not expert in constructing buildings, green or otherwise and local education agencies are not interested in taking on the risk of constructing a building that will not meet the still mandated LEED or Green Globes standard.

That is, as much as I personally believe in third party certification, it is clear from conversations with local education agencies that in nearly all instances they will determine to take advantage of the new guidelines and not pursue LEED or Green Globes “certification” but they will construct a “certifiable” building and obtain an opinion of counsel or otherwise that the building complies with the law. The guidelines actually expend more words on the subject of “independent third party letter of opinion” than anything else, including not only that the opinion giver can not be a member of the project team but even specifying the form of opinion letter.

This law firm will issue those opinions of counsel to local education agencies in Maryland.

As described in a blog post I penned in 2016, Lawyer’s Opinion Matters in Green Building, this law firm has been regularly called upon to give legal opinions that a green building is LEED certified, certifiable or otherwise ‘really’ a green building. In fact, we gave our first legal opinion on a LEED certified public building in Maryland in 2002.

Public school construction is a big deal in the state. Maryland House Speaker Adrienne A. Jones recently announced that school construction was her number one priority in the 2020 General Assembly session and she proposed funding an extra $2.2 Billion over two years for local school systems (e.g., in FY 2019 the state approved over $412 Million for local school building). Last week, Maryland Governor Larry Hogan proposed the legislature approve $3.8 Billion in new school building over five years. Whatever is ultimately enacted and both proposals rely on anticipatory revenue bonds, a fiscally risky scheme (funded by casino taxes), it is clear that Maryland is going to be constructing a lot of new public school building in the coming years and that building will not be LEED or Green Globes certified, but rather designed and constructed to be LEED or Green Globes certifiable.

The trend of constructing certifiable versus actually certifying a green building is gathering speed and breadth across the nation. That movement is described by some as the backward march of civilization, but is better characterized as a return to the organic LEED as a voluntary standard without government dictating green building.

This law firm will offer counsel and advice on revising bidding and contract documents to advantage the new guidelines and will issue opinions of counsel to local education agencies across Maryland that their new public school buildings are LEED or Green Globes certifiable and, as such, comply with Maryland law.

In the interest of disclosure, I am a gubernatorial appointee to the Maryland Green Building Council. I abstained from the vote on the guidelines.

2018 IgCC is Not in Use Anywhere. A Detailed Analysis of Why?

The 2018 International Green Construction Code was released on November 8, 2018 but more than a year later, it has not been adopted anywhere.

The 203 page document available from the ICC for sale to the public, .. click here for a free read only copy of the 2018 IgCC, is an entirely new standard and bears little, if any relationship to earlier IgCC versions.

Which at first blush might appear to not necessarily a bad thing, given that the IgCC, first published in 2009, has only been adopted, in whole, but mostly in part, in maybe 17 jurisdictions, out of the more than 4,400 code adopting jurisdictions across the U.S., so there was room for wider adoption of a 2018 IgCC.

For purposes of this blog post highlighting the significant changes in the 2018 IgCC, that new code will be contrasted with the 2012 IgCC and not the 2015 version, which last version we are only aware a single jurisdiction has adopted.

Which is all surprising to many because the prior versions of the IgCC were ideally suited to be edited and revised for use as a voluntary compliance code promoting sustainability and energy efficiency, for specifications in contract documents, for college and professional school textbooks and curricula, and the like; but, were admittedly not ideal for use in a regulatory setting for the compulsory certification of green buildings and construction related materials, which is all but beyond dispute given that only 17 places have adopted the prior versions IgCC.

Many code officials have concluded the 2018 IgCC is not a good building code, green or otherwise. The drafting process was widely criticized resulting in a document that has never been enacted anywhere, and likely should not ever be adopted as code. It has been widely characterized as an unbuildable code.

The previous versions of the IgCC were developed utilizing ICC’s respected Code Development Process as part of the ICC Family of Codes. But arising from a 2014 confidential agreement signed by the U.S. Green Building Council, International Code Council, ASHRAE and the Illuminating Engineering Society “to collaborate on the development of future versions of Standard 189.1, the IgCC and the LEED green building program,” the ICC was only responsible for Chapter 1, Scope and Administration of the 2018 IgCC (.. be aware the American Institute of Architects dropped out of the secret society was not a party to the final code release?). The remainder of the code is the substantive content that is the 2017 edition of ANSI/ASHRAE/ICC/USGBC Standard 189.1 for the Design of High Performance Green Buildings Except Low-Rise Residential Buildings. Note, the 2017 edition of Standard 189.1 incorporated 75 separate addenda to the 2014 edition (so it is also in large part new). The ASHRAE process for approving standards may well work for standards, but the insular groups of subject matter environmental zealots that created the 2017 189.1 did not create a code that has garnered any market acceptance.

But draw your own conclusions: This 2018 IgCC contains requirements that address site sustainability, water use efficiency, energy efficiency, indoor environmental quality, materials and resources, and construction and plans for operation.

The 2018 IgCC applies to “1. New buildings and their systems. 2. New portions of buildings and their systems.” and significantly “3. New systems and equipment in existing buildings.” Sec 101.3.1.

The scope of the code then does not apply to single family dwellings or multifamily dwellings of three stories or fewer. The provisions in Appendix J for residential and multifamily construction apply only when expressly adopted, providing for an option for incorporating residential building using the ICC 700 National Green Building Standard.  Continue Reading

Greenbuild was Proof Positive that LEED is Thriving

The just completed 2019 Greenbuild International Conference and Expo in Atlanta is absolute proof that the LEED green building rating system, with more than 100,000 projects registered and certified, is thriving.

The theme of this year’s Greenbuild was “A New Living Standard,” that everyone, regardless of background or circumstance, deserves a safe and healthy place to call home.

And much of the underlying messaging was about how to talk about green building to those outside of the green tent, shifting from a narrative focused on statistics to a foundation in storytelling. This is a huge positive including not using ‘less inclusive words’ like “global warming” that are politically divisive, in favor of ‘words that work’ like “climate related risks” that describe real world conditions.

As it is each year, the very best thing about this 18th Greenbuild is the people.

The thousands of like minded people gathering in one place is more than just an opportunity to see old friends, it is one huge coterie of green building thought leaders. And that cerebral synchronicity leads to the single best marketing opportunity each year across the green building industrial complex.

Greenbuild is “the” target rich environment for green people. The photo above is some of those green people, friends from Lorax Partnerships, one of the very best green building consulting firms.

The print media, including the New York Times, wrote about the progressive keynote by President Barack Obama, where he described the most compelling issues of the day as “climate change” and “global economic inequality,” however, many viewed giving the stage to a political leader, an alienating figure, had the effect of unnecessarily creating tribes, flying in the face of USGBC’s new stated messaging about avoiding the less inclusive?

However the most talked about topic by those in attendance may have been before the conference formally began, the summit on Tuesday about the RELi rating system addressing resilience (.. yes, one of the words that work) at the building scale.

There are hundreds of education sessions, but the Expo floor is always the most dynamic place at the convention and among the most enlightened of the vendors and trade groups was the National Asphalt Paving Association booth not only providing a practical guide on how asphalt pavements can help owners earn LEED credits, but also information on successes the industry is having with urban heat island effect.

The Green Codes Breakfast was a terrific fast paced 30,000 feet view of the statutes, regulations and codes that have driven the success of LEED through mandates and incentives. I will pen a blog post about the failings of 2018 IgCC and green codes next week.

There was a lot announced for Arc including the free to use “Arc For All” data base.

While there was no announcement, the worst kept secret at Greenbuild is that USGBC is that the work on LEED v 5 (.. in lieu of v 4.2) will soon commence in earnest. Diametrically opposed views of the environment have shaped different visions for the future of LEED. With v 4 and v 4.1, USGBC moved toward a belief that we are using more than our planet has to give and we must drastically cut back and use less energy, water, and …, but some are concerned that there are vestiges of that neo-Luddite view in the new announced LEED Positive, USGBC’s vision statement for regenerative building. That opposition to new technology overtook the longstanding precept by the founders of USGBC that LEED was a science based engineered solution to the environmental problems of the day. A new version not later than 2021, not an update of what exists today, correcting that imbalance, is essential not only for the domestic market acceptance of LEED, but also for mankind to fare well on our increasingly crowded Earth.

To those who find fault with Greenbuild, including that it is not the huge convention it was in years past, and I have been attending USGBC green building conventions since 1994 (.., yes, pre Greenbuild), I suggest the Churchill quote, “democracy is the worst form of government, except for all the others” is analogous.

If you want timely updates on the most widely used green building program in the world or if you want to market among the once a year business opportunity with a green building industry that is LEED certifying 2.6 million square feet daily, attend Greenbuild in 2020. There will be a Greenbuild in Bengaluru, India, one in Dublin, another in Mexico City; and, I will see you at Greenbuild in San Diego on November 3 – 6, 2020.

PFOA Contamination is Found in 49 States

Two weeks ago, New York Attorney General Letitia James commenced a civil suit against the nation’s largest chemical manufacturers and several firefighting foam makers for what the complaint alleges is contamination of water supplies across the state with PFOAs, averring strict liability for public nuisance, strict products liability for defective products, strict products liability for failure to warn, and seeking restitution.

That lawsuit is in addition to the hundreds of PFOA suits pending across the country, including three class actions certified last month. And many more people are expected to seek judicial redress in the coming years.

Adverse health impacts from PFOA are being policed by the marketplace and enforced by the rule of law through these common law state tort liability suits.

Per and polyfluoroalkyl substances are a group of more than 4,000 man-made chemicals that includes PFOA, PFOS, GenX, and many other chemicals. PFOAs have been manufactured and used in a variety of industries around the globe, including in the United States since the 1940s and have been the most extensively produced and studied of these chemicals. PFOAs are very persistent in the environment and in the human body, meaning they don’t break down, accumulating over time, and as such have been referred to ‘forever chemicals’ making them an emergent environmental priority.

The EPA reports, “there is evidence that exposure to PFAS can lead to adverse health outcomes .. studies indicate that PFOA can cause reproductive and developmental, liver and kidney, and immunological effects in laboratory animals, .. and have caused tumors in animal studies.”

A peer reviewed study cited approvingly by the EPA describes 99.7% of Americans have a detectable PFOA in their blood!

Significantly, concentrations of PFOA in the U.S. population’s blood have declined since 1999 by 25%, from an average of about 4 parts per billion, in large measure in response to litigation, including a widely publicized 2000 court ruling that forced the major U.S. producer to for the first time share all documentation related to PFOA. Manufactures began exiting the marketplace and with EPA’s 2010 PFOA Stewardship Program where eight participating companies agreed to gradually phase out the manufacturing of the chemicals by 2015, new production of PFOA in the U.S. has been cut dramatically.

But make no mistake that while new production has been greatly reduced, PFOA products exist widely from fire fighting foam on boats, including U.S. Navy vessels to stain and water repellent fabrics as well as a variety of construction materials. Troubling to some is that green building programs, including LEED’s Materials & Resources credits do not track or even take into account PFOA.

Some suggest the U.S. government is complicit in the wrongdoing, including when the principal sources of PFOA pollution in groundwater are military bases and civilian airports where the federal government specified fire fighting foam containing PFOA. But possibly the larger issue is that the federal government and the states failed to regulate this space, at all, including never determining PFOA to be a hazardous substance, when regulation could have provided protections for the public and the environment while providing predictability to the manufacturers.

But this is not a U.S. problem alone. Populations in nearly all industrialized nations have a PFOA blood level of at least 2 parts per billion and PFOAs are still being produced in many countries.

In the U.S. there are no federal drinking water nor other regulatory standards for PFOA; although there are more than two dozen bills pending in Congress that portent to regulate this space. Earlier this year the EPA issued “Draft Interim Recommendations” to address groundwater contaminated with PFOA, including articulating EPA’s lifetime health advisory standard for PFOA of 70 parts per trillion. But the majority of states do not have PFOA laws or regulatory actions on the books. And just last week a New Hampshire court granted a preliminary injunction stopping that state from enforcing its strict new limits on PFOA (i.e., 12 parts per trillion) in response to claims that the rule, not based on good science was rushed without adequate public comment.

Activated carbon and reverse osmosis are both used to treat PFOA in drinking water (.. and you should filter your drinking water), but arguably neither remove the harmful chemicals, rather relocating or diluting the PFOA; hence the term forever chemicals. But last week, the U.S. Air Force together with partners Clarkson University and GSI Environmental conducted a test using an “enhanced contact plasma reactor, a closed system utilizing water, electricity and argon gas to degrade PFOS and PFOA in minutes.” This technology may in the future make treatability and actually removing PFOA from the environment realistic.

If we are going to be good ancestors, our lofty responsibility to humanity as observed by Jonas Salk, it is critical that there be more and better science about PFOAs including methodologies to minimize adverse health effects, as these forever chemicals accumulate in human beings across the planet.

Today, adverse health impacts from PFOAs can most efficiently be recognized by the marketplace and enforced by tort law in state courts, redistributing resources from those who engage in risky business activities manufactured dangerous products to those who are damaged; in lieu of some new, after the fact, one size fits all top-down government regulation in this class of chemistry, like the flawed EU measures to ban more than 4,000 chemicals in the PFOA class beginning July 4, 2020.

Adverse health impacts from PFOA should be policed by the marketplace and enforced by existing tort law.

And beyond the ordinary filter on the potable water in your home (.. and yes, you should be filtering your drinking water), a carbon filter should remove most PFOA from your drinking water (.. a Brita, a ZeroWater or the like will be efficacious) or otherwise any NSF P473 certified filter.

As a fun aside the 2019 movie, Dark Waters, is a legal thriller about attorney Robert Bilott, who exposed much of what is known today about PFOA.

What You Can Say about RECs is Regulated by the FTC

Businesses who generate renewable energy, say, by using solar panels, but sell the Renewable Energy Credits (RECs) for the renewable energy they generate shouldn’t claim they “use” renewable energy. The Federal Trade Commissions has advised that such a claim would be deceptive.

The guidance from the FTC is not new, but as renewable energy becomes more prevalent, increasingly businesses are making claims about their green energy. This guidance from the FTC may seem counterintuitive, but it is consistent with the longstanding position of the federal agency.

The Federal Trade Commission issued revised “Green Guides”, 16 CFR Part 260, in 2012 that are intended to help ensure that claims made by businesses about the environmental attributes are truthful and non-deceptive under Section 5 of the FTC Act, 15 U.S.C. 45.1. The Guides are administrative interpretations of the law. Therefore, they do not have the force and effect of law and are not independently enforceable. The FTC, however, can and has taken action under the Act if a business makes an environmental claim inconsistent with the Guides

Among the relevant language in the Green Guides is, §260.15 Renewable energy claims,

(d) If a marketer generates renewable electricity but sells renewable energy certificates for all of that electricity, it would be deceptive for the marketer to represent, directly or by implication, that it uses renewable energy.

That express language is clear. But if there was any doubt as to what is intended that uncertainty is assuaged by the following explanatory example provided in the Green Guides,

Example: A toy manufacturer places solar panels on the roof of its plant to generate power and advertises that its plant is “100% solar-powered.” The manufacturer, however, sells renewable energy certificates based on the renewable attributes of all the power it generates. Even if the manufacturer uses the electricity generated by the solar panels, it has, by selling renewable energy certificates, transferred the right to characterize that electricity as renewable. The manufacturer’s claim is therefore deceptive. It also would be deceptive for this manufacturer to advertise that it “hosts” a renewable power facility because reasonable consumers likely interpret this claim to mean that the manufacturer uses renewable energy. It would not be deceptive, however, for the manufacturer to advertise, “We generate renewable energy, but sell all of it to others.”

Despite that being the law, the environmental industrial complex regularly articulates that buying RECs can create market demand for clean energy sources. In describing LEED credit NC-v4 EAc7: Green power and carbon offsets, a U.S. Green Building Council associated vendor claims, “the benefits of renewable energy are well understood by the general public, and so pursuing this credit can help you advertise your commitment to environmental responsibility.” That statement is problematic and the related advertisement requires caution to not run afoul of the FTC.

This is not simply an instance of Detective Pikachu being “in” while True Detective is “out” but is about the FTC and state attorneys general policing environmental claims sua sponte. Moreover, there have been claims by tenants against landlords arising from green power that would not pass FTC muster.

There is concern that the Green Guides not only go too far but have not kept pace with the marketplace and need to be corrected and updated where today some of the guidance results in the federal government inhibiting truthful marketing in the misguided name of the FTC being a policeman wielding prior restraint in the name of truth in advertising.

As renewable energy, including onsite solar installations, become more common so too will questions about what can be claimed about that green power and those installations.

An HREC is Not a REC in a Phase I Environmental Site Assessment

I review a large number of Phase I environmental site assessments, and year in, year out, the largest number of questions I field are about Historical Recognized Environmental Conditions.

The environmental professionals who perform those assessment generally do not take heed of Eduardo Galeano’s quote, “History never really says goodbye. History says, ‘see you later.’”

By way of background, a Phase I environmental site assessment is the process of evaluating a property’s environmental conditions and assessing potential liability for contamination. And one might assume that since the EPA issued rule, for what constitutes all appropriate inquiries, provides that ASTM International Standard E1527-13 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process is consistent with the requirements of the EPA rule and can be used to satisfy the statutory requirements, there would be few, if any, questions, .. just follow ASTM E1527-13!?

However, both because of the very large number of Phase I environmental site assessments conducted each year and the huge dollar implication of the associated real estate transactions when prospective purchasers are seeking protection from potential liability under the Comprehensive Environmental Response, Compensation, and Liability Act (the Superfund law) as an innocent landowner, a contiguous property owner, or a bona fide prospective purchaser, there are questions. And the most frequently asked questions I field are about Historical Recognized Environmental Conditions.

ASTM E1527 – 13 describes an Historical Recognized Environmental Condition as ..

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 use criteria established by a regulatory authority, without subjecting the property to any required controls.”

Some context is likely useful. A Recognized Environmental Condition (a REC) is “the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property: (1) due to any release to the environment; (2) under conditions indicative of a release to the environment; or (3) under conditions that pose a material threat of a future release to the environment.”

And an Historical Recognized Environmental Condition is distinct from the Controlled Recognized Environmental Condition (a CREC) which applies to an environmental condition on a site that has received regulatory closure but are still subject to controls. A CREC is a subset of a REC.

Significantly, an Historical Recognized Environmental Condition is not a REC. To be clear an Historical Recognized Environmental Condition is not a recognized environmental condition for the purposes of a Phase I environmental site assessment.

It is almost that simple. For a past REC to be determined an Historical Recognized Environmental Condition, the release or other condition must have been previously cleaned up or now meet current regulatory standards without clean up.

Additionally, in the event of prior regulatory intervention related to the condition, that the final action not require use restrictions or engineering controls (restrictions on using water for drinking or a cap or the like).

A good example of an Historical Recognized Environmental Condition that is very common is when a regulatory agency issues a “no further requirements” determination as an UST is properly abandoned in place.

And to be an Historical Recognized Environmental Condition, the condition must meet current regulatory standards.

Note, some conditions identified as an Historical Recognized Environmental Condition under the prior version ASTM E1527-05 will no longer meet this determination under the revised express language of current, 2013, version ASTM E1527-13.

Again, an Historical Recognized Environmental Condition (an HREC) is not a Recognized Environmental Condition for the purposes of a prospective purchaser seeking protection from potential liability under CERCLA.

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