Can Someone Else Besides a Lawyer Determine Who Really Is Innocent? Technical Perspectives on Due Diligence and Environmental Assessments

Joseph Highland, Ph.D.

Editors' Summary: Although NEPA requires the preparation of an EIS for every major federal action significantly affecting the environment, federal agencies often decide in particular cases that compliance with NEPA is satisfied by preparation of EAs. The decision not to prepare an EIS is usually based on a finding of no significant impact. When an agency's threshold NEPA decision is challenged in court, what is the appropriate standard of review? The federal courts of appeals answer this question in at least two different ways: some circuits use the "arbitrary and capricious" standard, while others inquire into the "reasonableness" of the agency's decision. Several courts have expressed doubt that there is any genuine distinction between the rival standards, and the Supreme Court has so far declined to settle the issue. The author of this Article surveys the federal case law on this question, exploring the approach of each circuit and taking issue with those who maintain that the difference between the standards is illusory. The vital difference, the author argues, is that courts using the reasonableness standard are more likely to substitute their own judgment for that of the agency, while courts adopting the arbitrary and capricious standard tend not to second-guess an agency's decision. Because he sees an important difference between these two approaches, the author urges the Supreme Court to grant certiorari to resolve the circuit split.

Joseph Highland, Ph.D., is a Principal of ENVIRON Corporation in Princeton, New Jersey.

[18 ELR 10371]

The ENVIRON Corporation is a multi-disciplinary scientific and regulatory affairs consulting firm providing a broad range of services to clients concerned with the problems of human exposure to potentially hazardous substances in the environment. We offer expert counsel and technical assistance in toxicology, chemical risk assessment and risk management.

I would like to draw upon our three years of experience with ECRA¹ in New Jersey to discuss the technical problems that have arisen and to propose remedies for the legislature.

The ECRA statute in New Jersey was enacted in 1983 and took effect in the beginning of 1984. It basically requires that either a negative declaration be prepared or an adequate cleanup plan be prepared and implemented before the sale or shutdown of an industrial establishment can be completed. In essence, it demands proof that if hazardous materials were handled and problems arose, they either have been or will be cleaned up. Industrial establishments are defined by certain standard industrial codes, which deal primarily with those involved in the generation, manufacture, refining, transportation, treatment, storage, handling or disposal of hazardous substances — of which there is a list — or hazardous wastes.

One clear aspect of the ECRA process is that it takes time. The process takes two to four years for any large industrial facility. For small facilities, it may be somewhat shorter.

Let me discuss some of the steps that are involved and offer estimates of time required. Once ECRA is triggered, the first submission is due five days later. It is a general information submission, which asks for little more than the name of the facility, the types of permits that are in effect, and some general information that's readily available. A month later, the Site Evaluation Submission, including a sampling plan, is due. Its purpose is to examine what areas of environmental concern may exist, where hazardous substances that contaminate soils or groundwater may have been spilled, lost or leaked.

Next, a period of one to two months ensues in which the agency, in this case the Department of Environmental Protection (DEP), sends a checklist indicating whether the Site Evaluation Submission is complete or not. If it is, four to six months pass before a case manager is assigned and a site visit can be conducted. Thus, merely to get the process going, six to twelve months are required.

The latter part of this time frame is predicated on the ability to visit a site, conduct a sampling round, analyze the data, and develop a cleanup plan. The estimated time is sixteen to thirty-one months. In most large industrial sites on which we have worked, a first round of sampling is required to characterize the vertical degree of contamination, and second and third rounds are required to characterize the lateral extent of the contamination. For every additional round of sampling, six to twelve months should be added to the time frame.

So that the two-to-four year delay does not prevent the sale or shut-down of industrial establishments, the DEP has developed an Administrative Consent Order (ACO). By signing a consent order, one agrees to carry out certain tasks, such as the submission of these documents, generation of data, development of a cleanup plan, and completion of cleanup in accordance with DEP guidelines. In exchange, business transactions can close. Thus, there is a mechanism for avoiding the time delay, but the cost is that the seller must agree up front to a time table and a remedy that is not yet defined.

A number of people with whom we have worked have signed those ACOs; a number of others refuse, because they are unsure whether they will be able to implement an unknown plan. Because one must agree in advance to a cleanup as specified by the agency, it is an open-ended obligation. One must post a bond to guarantee that the cleanup will be done, and the Department evaluates the magnitude of that bond, which could be hundreds of thousands to millions of dollars.

With regard to the types of analyses that are conducted, one must typically sample soils on the site. For instance, there may be an area where there was drum storage; the Department will ask that a sample be taken underneath that storage area if the storage occurred while the area was unpaved. Additionally, there may be sediments in a creek that need to be sampled, or in a sewer pipe. There may be a need to place groundwater monitoring wells on-site to determine whether there has been vertical migration of contaminants either to a shallow aquifer or to a deep aquifer. (In one site in Newark we must contend with three water-bearing zones.) In addition, surface water, such as found in creeks and discharge pipes, must be sampled.

The Department has given some guidance on the types of areas that should trigger concern. Examples include underground tank storage areas and the lines associated with them, and fuel oil tanks that carry oil to boilers or burners. The Department will want to evaluate the integrity of the tank. If the tank is new, one may be able to employ a pressure test. If it is old, one may have to conduct borings around the sides of the tank. If the tank is out of use, one may choose to remove it and sample underneath it.

Transformers may have had PCBs in them, and are thus subject to concern and possible sampling. Another problem is asbestos insulation, often found inside buildings on pipe wrappings. We have one site where there was an entire ceiling of sprayed asbestos. The Department will either [18 ELR 10372] require that the material be removed and properly disposed of, or they will require that it be put in good repair. As for spills, we are currently working with a site where they kept written records of spills since 1981. In filling out the second ECRA submission, I had over fifteen pages of spill history. The site, located in Newark, has been in use for perhaps four decades. One can only imagine the extent of chemicals used and potential areas of spills at that site. Other areas of concern include waste disposal sites and waste-water lagoons, as well as any areas of discolored soil.

The sampling process, including analysis and interpretation of data, can cost a quarter of a million dollars for a medium size industrial site; for a larger industrial site, the cost may be half a million dollars or more.

Once one has characterized the site, including the lateral and vertical extent of contamination and the nature of the contaminants present, one must offer a cleanup plan. The state has prepared a list of guidelines to be followed in this regard. These guidelines are worth noting since they highlight some of the potential areas of concern with regard to the implementation of the statute.

There are different cleanup levels in soils and groundwater for different types of materials. For the first group — total petroleum hydrocarbons — there is a standard of 100 parts per million in soil, and one part per million in groundwater. Thus, if one has an underground storage tank that stored fuel oil and leaked, one must clean up the soils and groundwater in accordance with this stringent standard.

Another standard that must be met concerns metals. Lead, for instance, is assigned a standard of 100 parts per million in soil. Copper has a standard of 170 parts per million.

Those who work on either ECRA or Superfund sites need merely consider that the standard for volatile organic chemicals in soil is one part per million, and in groundwater, 10 parts per billion to recognize how strict these standards really are.

DISCUSSION

PARTICIPANT: Is it possible to measure, for example, one part per trillion — the standard for PCBs in water?

HIGHLAND: That is approximately the detection limit. With regard to petroleum hydrocarbons in water, the detection limit for the method now employed is one part per million. The permissible levels for PCBs in soil are now one-to-five parts per million. The agency originally started at the lower end of that grouping, and has now shifted to one-to-five, given the analytical variations that occur in trying to detect these materials in soil.

PARTICIPANT: Is the extremely low level for PCBs more reflective of the environmental danger or of the publicity that has surrounded them in recent years?

HIGHLAND: While the basis of these standards — and the mandate of the law — is to protect health and the environment, in some cases these numbers are driven by health concerns and in other cases they are keyed more to knownrural soil levels. In the case of metals, for instance, 100 parts per million of lead is not a health-based number; rather, it is a number that one would find in rural soils in New Jersey. On the other hand, the one part per trillion for water is premised on a lifetime of human consumption, and it is derived from carcinogenicity data for PCBs. At the one part per trillion level, among those who drink it, one additional cancer would occur per million people exposed over a lifetime.

In other areas, the health basis for the standards is less apparent, yet there is a great consequence to using these numbers. Often, remediation involves excavation of soil; as a result, one must remove more than is necessary, and one exhausts the alternative-siting capacity.

Technically, these numbers are not standards but guidelines. The state is supposed to publish standards under ECRA. Nonetheless, if one fails to meet these guidelines, one can expect a struggle to try to justify an alternative number. In effect, then, they are acting as standards, although they have never been published or received comment.

Once a site has been characterized and the type of contamination has been determined, a number of cleanup remedies are put into place. Underground tanks are often removed, either because they are old and not in use, or because they have been found to be leaking. Contaminated soils are often transported off-site for disposal. The cost in New Jersey now is approximately $ 150 to $ 200 a ton or cubic yard of soil if it is nonhazardous waste; if it is hazardous waste, the figure is multiplied about threefold. Perhaps the greatest expense of the ECRA cleanups has been off-site soil disposal.

The other major expense is groundwater treatment. Depending on the nature of the contaminants present, the scheme may involve air stripping, carbon filtration, or other methods.

PARTICIPANT: Do you have to make judgments on how much soil to take off, how deep to go?

HIGHLAND: Yes. One must put in enough soil borings to characterize the vertical and lateral extent. After the soil is removed, one must take post-excavation samples and show that the standard has been met.

PARTICIPANT: What types of facilities is the soil sent to?

HIGHLAND: If it is classified in the state as ID-27 or industrial waste, it can go to a municipal landfill. Thus, a lot of soils with oil in them are headed toward municipal landfills. If the soil is tested and found by ECRA standards to be a hazardous waste, then it is sent to a hazardous waste facility for disposal.

PARTICIPANT: Where are these facilities located?

HIGHLAND: There are none in New Jersey. We had a client who just sent 20,000 cubic yards to Amel, Alabama at the rate of about $ 450 per yard.

PARTICIPANT: How much of New Jersey is getting relocated?

HIGHLAND: Sites now exist where, if one followed the guidelines, the whole site would be relocated. To remove ten or twenty acres down to the water table would be extremely costly. In addition, where would one put it? One simply cannot get rid of that volume of soil. A problem that arises for clients who are not willing to sign the ACO is that there is enormous pressure to clean up the site quickly in order to preserve the underlying transaction. At smaller sites, while it may be a bitter pill to swallow, people dig up a fair amount of soil underneath a tank, send it away and are done with it. At the larger sites, however, deals are stalled because people will not cart away the site.

One of the rapidly growing problems is the cost and the feasibility of the remedy. As we run out of space, the cost [18 ELR 10373] rises, and several of our clients reject removal in any case because of future liability. We have a client who manufactured DDT in the 1940s. Whenever they had a bad batch they tossed it out the back window. Right now it would cost them $ 2.5 to $ 3 million to transport that soil to a disposal site. Even if that cost were acceptable, they simply would not do it, based on future liability. It has not moved to the groundwater; it is sitting in place under a paved area. This situation calls for a more novel remedy to be developed and applied. That takes more time, however, and meanwhile all transactions have come to an end.

PARTICIPANT: In an overall sense, what is gained by disposing of the soil off-site in a municipal landfill? Has it not simply been taken from one place and put down in another?

HIGHLAND: I think that there can be an environmental benefit to it. There are some sites where the contamination is sitting in a recharge area of the state. In southern New Jersey, in the Pine Barrens area, for example, the soil is quite sandy, and it would be unwise to leave that material in place. Whether the landfill provides adequate protection over time is another question. In some cases, at least, one could argue successfully that protection is enhanced. In other cases, it is less clear. There is question about the wisdom of moving some materials to any kind of landfill, secured or not.

PARTICIPANT: Is any distinction made in the state's policy and in the guidelines based on whether a site is in a recharge area?

HIGHLAND: The guideline is the same, although they might argue that they would be more vigorous in their enforcement in an area of recharge. However, I am working in areas of northern New Jersey that are not recharge, and the state is quite vigorous about the standard they want met. There is a provision in the law declaring that local conditions, ambient concentrations, must be considered.

PARTICIPANT: Might ECRA cause waste to be moved to a place where it is more harmful than where it originated?

HIGHLAND: It could. That is why some clients are hesitant to take that route for remediation.

PARTICIPANT: Has it been argued that in certain cases the hazards of on-site abatement are more dangerous than letting it be?

HIGHLAND: Regardless of the arguments made, the DEP's position, as a general rule, is that if one must wear protective clothing to carry out the remedy, then one should wear protective clothing and carry out the remedy. There is a fairly strict adherence to the guidelines.

There is one case of a Texaco Refinery where, in order to meet the standard of 100 parts per million petroleum hydrocarbons, it would literally have to close the refinery. In that case, the state has agreed to a cleanup plan that basically contains all contamination on-site through pumping and biodegradation. This novel solution works if the property is put to the same use as it has been in the past, and if the owner is willing to assume this obligation as part of the ongoing activities.

In other cases, someone will buy a site and plan to conduct new activities at the site. This purchaser does not want the former owner on-site churning soils and disrupting patterns of transportation by putting in wells and digging things up. Hewants a site he can use.

PARTICIPANT: What do you mean by degradation of the soil?

HIGHLAND: One can conduct biological degradation of the petroleum hydrocarbon in the surfical soils as an alternative to digging up the soil and carting it away.

I said at the outset that I wanted to try to raise some issues of concern that arise in terms of ECRA. The first is the basis of the ECRA guidelines. In my view, standards should be based on health and environmental risks. In addition, we should encourage the development of new and novel cleanup remedies. Also, there is a need for responsiveness to small business needs. Large corporations that are going through the process can often tolerate the time and cost involved. Small, mom-and-pop business operations, however, simply cannot withstand the time and costs without essentially losing the whole value of their business.

The problem may involve one leaking underground oil tank. I had a client in Trenton, New Jersey whose whole business was worth $ 63,000. They have spent a year and a half struggling with ECRA using high priced lawyers and consultants. If smaller businesses are going to be held responsible, their cases should be handled according to a swifter schedule.

Another problem that has arisen involves people who want to construct new facilities on old sites. Before they build a new building, they must make sure that the soil is cleaned up to ECRA guidelines. As a result, they may be precluded from using the site because it will take years before the building can be built.

Another issue is the financial hardship of some current landowners. Often a current landowner is not responsible for the contamination at the site. If it is a large company, they will conduct the cleanup and then sue the former owner for indemnification. But if it is a small company fighting a very large corporation, they are often financially unable to make the cleanup occur, and the process is stalled.

Let me briefly discuss the issue of health and environmental-based standards. The first standard on DEP's list is for TPHC, or total petroleum hydrocarbons. This standard includes anything from vaseline to fuel oil. The inherent hazard of those two materials, though, the toxicological risk, is quite different: fuel oil is significantly more dangerous.

We had a case in which a refinery had produced vaseline. If one followed the standard of 100 parts per million, the remedy would have required the excavation of soil to about six feet in depth for more than twenty-five acres. It was simply not a tenable remedy. In response, we conducted a health risk assessment, in which we examined the inherent hazard of the material, studied the geology and hydrogeology of the site, and developed an alternative standard for cleanup based on these factors. The Department accepted that alternative, and the magnitude of the cleanup was significantly diminished.

Another issue that will grow in importance concerns how the land will be used over time. In the first ECRA cases in which we used health risk assessment, the head of the ECRA division took the position that, since we could not know what the land would be used for in two hundred years, the cleanup would have to be adequate for any use. The strictest use would be as a day care center with a pica child. A pica child is one with a history of ingesting nonfood items, i.e., one who might eat soil. Clearly, a health risk analysis for that use yields a considerably different result than one for property that will remain in commercial or industrial use.

[18 ELR 10374]

In areas such as Newark or New Jersey's highly-industrialized Carney Peninsula, it is simply impracticable to hold every cleanup to a pica child standard. One solution might be to calibrate the standard to the next proposed use, and to take note of the fact that an area is zoned for industrial use.

PARTICIPANT: Can't one impose deed restrictions for pica?

HIGHLAND: It has certainly been considered. We have one client that planned to sell a property for $ 1.9 million. I advised them at the outset that the cleanup would exceed ten times that figure. They closed the facility nonetheless, and are now faced with millions of dollars of potential remedy and investigation costs. As a result, they are considering holding the building in perpetuity.

PARTICIPANT: Suppose one wanted to sell a piece of commercial property laden with asphalt, such as a shopping center, yet which depended upon continued use of that asphalt to retain its value?

HIGHLAND: Asphalt per se is not a toxic substance. If there is contamination under the asphalt, one might have to remove it for purposes of a cleanup.

Another problem that arises with respect to cleanup costs is that of evolving standards. One of the concerns with using health risk-based analysis is that new data may arise, changing the standard for cleanup. How should such a change be handled in terms of future transactions? Today it may be acceptable to have 1,000 parts per million of mercury; two years from now it may only be acceptable to have 100. What happens when the new seller wants to sell? Who cleans up that residual amount of mercury, and who pays for it?

PARTICIPANT: Regardless of the concentration of a hazardous substance in the soil, does it not cost the same to remove a given quantity?

HIGHLAND: If the standard becomes more strict, the cost per toxic equivalent ton increases, as lesser concentrations of hazardous material must now be incinerated, for example, rather than placed in a landfill.

In closing, let me mention one other issue that is worthy of consideration. ECRA poses a strong potential for hindering the purchase of old properties. Such sites are often targeted for demolition and the construction of new buildings, which in turn fosters the development of new industrial centers, promoting revitalization. For such reasons, despite ECRA's positive impact, a number of areas remain where changes will be necessary to allow the law to continue to be effectively implemented.

1. Environmental Cleanup Responsibility Act, N.J.S.A. 13: 1K6 et seq.