Maine DEP Issues PFAS in Products Concept Draft Rule

The Maine DEP’s PFAS in Products Program has released its long-awaited Chapter 90 concept draft language (the “PFAS in Products Rule”) for implementation of Maine’s recently-amended “PFAS in Products Law.” The concept draft provides additional details on sales prohibitions for products and product components containing intentionally added PFAS, along with criteria DEP will require as part of forthcoming Currently Unavoidable Use (“CUU”) proposals for products or product categories with upcoming sale prohibitions in the State.

The release of the concept draft of the PFAS in Products Rule was made as part of an informal outreach process through which DEP is soliciting public input. Comments are due August 30, 2024; DEP plans to proceed with formal rulemaking later this fall.

“Currently unavoidable use” is defined in Maine’s PFAS in Products Law as a use of PFAS that DEP has determined by rule to be “essential for health, safety or the functioning of society and for which alternatives are not reasonably available.” See 38 M.R.S. § 1614.

Notably, under the concept draft the Department will only consider CUU proposals submitted between 18 and 36 months in advance of an applicable sales prohibition. Thus, absent an exemption to this timeframe, it does not appear DEP will entertain any CUU proposals for the following products or product categories containing intentionally added PFAS with sales prohibitions set to take effect on January 1, 2026:

• cleaning products
• cookware products
•  cosmetic products
• dental floss
• juvenile products
• menstruation products
• textile articles
• ski wax
• upholstered furniture

Similarly, it appears DEP would not begin to consider CUU proposals for artificial turn and outdoor apparel for severe wet conditions not otherwise accompanied by a PFAS disclosure—the next two product categories with sales bans set to take effect January 1, 2029—until January 1, 2026 at the earliest.  

Individuals with comments on or concerns regarding the concept draft are encouraged to e-mail DEP’s PFAS in Products Program at PFASproducts@maine.gov. 

Preti Flaherty's Environmental Practice Group is closely monitoring Maine DEP's efforts regarding PFAS-related matters. Contact Kevin Osantowski or David Van Slyke if you have any questions on this topic.

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Preti Flaherty attorneys David Van Slyke and Kevin Osantowski contributed to this article.

Biden Administration’s Intent to Designate PFOA and PFOS as CERCLA Hazardous Substances

On January 10, 2022, the U.S. Environmental Protection Agency took a significant step towards fulfilling a Biden Administration goal of bringing per- and polyfluoralkyl substances (“PFAS”) under the regulatory purview of the Comprehensive Environmental Response, Compensation & Liability Act (“CERCLA”) by submitting to the White House Office of Management and Budget a formal plan to designate two PFAS compounds – perfluorooctanoic acid (“PFOA”) and perfluorooctanesulfonic acid (“PFOS”) – as hazardous substances.

The EPA’s submittal of the proposed rule to the OMB comes after years of delay and several resets to its prior efforts to designate PFAS compounds as hazardous substances under CERCLA and triggers a 90-day review period. Provided the OMB does not take issue with EPA’s proposed rule, at the conclusion of the 90-day review period EPA can publish it in the Federal Register for public comment. Barring setbacks, the EPA could issue a final rule in the summer of 2023. This timeline matches what the Agency laid out in its October 2021 PFAS roadmap.[1] Once implemented, the final rule is likely to trigger a cascade of regulatory requirements including but not limited to release reporting. As the EPA noted in its Fall 2021 Statement of Regulatory Priorities, a hazardous substance designation “would require facilities across the country to report on PFOA and PFOS releases that meet or exceed the reportable quantity assigned to these substances [so as to] enable federal, state, tribal, and local authorities to collect information regarding the location and extent of releases.”[2] The final rule would also permit the EPA and other agencies to seek cost recovery or contribution for costs incurred in connection with cleanup of PFOA and PFOS contamination, as well as subject sites that are or were previously listed on the National Priorities List as Superfund sites to additional review for concerns related to PFAS contamination.

The recent action is yet another indication of the strong desire by the Biden Administration to implement an aggressive federal regulatory framework to address PFAS contamination. Time will tell whether and to what extent federal and state regulatory agencies are willing to utilize any forthcoming hazardous substance designations as a basis for re-engaging potentially responsible parties to fund and/or perform additional remedial measures at Superfund sites to address existing PFAS contamination.

PretiFlaherty attorneys Kevin Osantowski and Jeff Talbert contributed to this article.
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[1] See Office of Land and Emergency Management, PFAS Strategic Roadmap: EPA’s Commitments to Action 2021-2024, U.S. EPA, https://www.epa.gov/pfas/pfas-strategic-roadmap-epas-commitments-action-2021-2024#olem (last visited Jan. 12, 2022).

[2] See Office of Information and Regulatory Affairs, Fall 2021 Unified Agenda of Regulatory Actions: EPA Statement of Priorities, Executive Office of the President, https://www.reginfo.gov/public/do/eAgendaMain (last visited Jan. 12, 2022).

Massachusetts Department of Revenue Finalizes Brownfields Tax Credit Regulations (830 CMR 63.38Q.1), Effective July 9, 2021

The Massachusetts Department of Revenue (DOR) has finalized brownfields tax credit regulations, effective July 9, 2021.

The Massachusetts brownfields tax credit was established in 1998 by the “Act Relative to Environmental Cleanup and Promoting the Redevelopment of Contaminated Property” (Stat. 1998, c. 206). The “Brownfields Act,” as it is generally known, also included amendments to Mass. Gen. Laws Chapter 21E (the Massachusetts Oil and Hazardous Material Release Prevention and Response Act) and thus created financial incentives and liability relief for parties undertaking brownfields development projects. Now codified as M.G.L. c. 62 §6(j) and M.G.L. c. 63 §38Q, brownfields tax credits are based on “net response and removal costs” incurred by a qualifying taxpayer or nonprofit organization during the redevelopment of a qualifying “brownfield” site. Reflecting the close relationship between the credit and activities undertaken pursuant to Chapter 21E, “net response and removal costs” are defined as “expenses paid by the taxpayer for the purpose of achieving a Permanent Solution or Remedy Operation Status in compliance with Chapter 21E.”

Since 1998, DOR has issued numerous Technical Information Releases and Directives that have served as guidance for those seeking to obtain brownfields tax credits. These regulations are the first effort by DOR to codify its practices and are the culmination of a process begun in 2020 when DOR published a “working draft” of the regulations. In an email to stakeholders on July 8, 2021, DOR announced the effective date of the regulations (July 9, 2021) and also that it would be issuing “a revised administrative procedure for the program.”

DOR’s announcement also provided the following summary of the changes to the brownfields tax credit program:

Regulation

• Scope of Review on Appeal – For partial appeals, DOR will review only the denied portion of an application; the approved portion of an application will only be reviewed if there was a material misrepresentation or omission.
• Denial Explanation – DOR will provide an explanation for each credit denial.
• Asbestos Eligibility – DOR will deem asbestos removal costs to be generally eligible as long as the soil immediately under the building is contaminated and the building’s demolition was required in order to achieve a permanent solution.
• Multiple Releases – For purposes of determining whether an applicant’s costs equal or exceed 15% of the assessed value of the property (as is required to become eligible for the credit), an applicant may aggregate net response and removal costs over a 3-year period when there are multiple contaminated sites on one property.
• Effective Date of Regulation – By its terms, the regulation will go into effect when it is made public on July 9, 2021.

Subregulatory Guidance

• Intake Timeline – When an application is submitted, DOR will contact the applicant within 30 days to notify them of which examiner has been assigned to the case and to outline the application review process.
• Intake Narrative – To accelerate DOR’s initial review, applicants will be directed to provide a narrative explaining why submitted costs are eligible.
• Review Process Updates – Applicants will receive a status update from the examiner assigned to their case every 60 days.
• Expedited Timeline – An expedited process will be established for lower-dollar, less complex BTC projects, i.e. those worth $250K or less. Such applicants will be contacted within 7 days and will receive updates every 30 days.
• Appeals Timeline – DOR has established a timeframe for the processing of appeals. The stages of the process are as follows:

1. Appeal is initiated. This occurs when the Office of Appeals receives the appeal.
2. Initial Scheduling Letter sent. Within 30 days of Stage 1.
3. Complete Appeal filed by Applicant. Within 60 days of Stage 1.
4. Opening Conference held. Within 90 days of Stage 1.
5. Information and Document Requests (IDRs) issued and answered. These are to be issued by the Appeals Officer within 60 days of the Opening Conference (Stage 4) and are to be answered by the Applicant within 30 days after they were issued.
6. Formal Scheduling Letter sent (if no settlement has been reached). Within 60 days after all IDRs have been answered.
7. Formal Hearing held. No later than 60 days after the Formal Scheduling Letter has been issued.
8. Formal Letter of Determination issued. 60 days after the Formal Hearing. If the appeal is complex, this stage may be extended by an additional 90 days.

Many provisions in the proposed regulations reflected DOR practices that have challenged developers of brownfields properties in the past. The provisions that DOR highlighted in its announcement suggest that some, but not all, concerns expressed during the public comment process have been heeded. For example, while asbestos removal costs may now be eligible as an expense “paid for the purposes of achieving a Permanent Solution or Remedy Operation Status in compliance with Chapter 21E,” the new appeals procedure suggests that DOR may continue to attempt to “second guess” decisions made by a claimant’s LSP regarding the nature and scope of remediation. Nonetheless, brownfields tax credits will remain a significant incentive for developers of impacted properties. These new regulations only underscore the importance of considering brownfields credits eligibility in the initial stages of planning a brownfields development project.

Court Rejects DOJ’s Efforts to Block Private Parties’ Use of SEPs in Clean Air Act Case

Earlier in the year, Preti Flaherty’s Environmental Law Blog highlighted that DOJ’s Environment & Natural Resource Division (ENRD) announced a significant policy change that severely limited the use of Supplemental Environmental Projects (SEPs) in federal environmental settlements. The policy was formalized in a March 12, 2020 memorandum issued by Assistant Attorney General (AAG) Jeffrey Clark.   

After AAG Clark’s new policy was issued, we noted that one of the open questions was the fate of environmental projects in citizen suit settlements. Would the United States now object to private party settlements if they included SEP-like projects?

We did not have to wait long for an answer. Last summer, DOJ did just that when it opposed a settlement between the Sierra Club and Detroit Edison (DTE) in a long-running Clean Air Act case. United States and Sierra Club v. DTE Energy Company and Detroit Edison Company, 10-cv-13101 (E.D. MI). Under the agreement, lodged separately from the consent decree with the U.S. in the same case, DTE agreed to perform environmental projects to benefit communities in Southeast Michigan. DOJ challenged the settlement, arguing that the side deal was illegal because it would override its enforcement discretion on the appropriate relief in the case—i.e., its decision not to include these environmental projects in its own settlement with DTE. 

On December 3, the district court in Michigan finally issued its long-awaited ruling on the Sierra Club-DTE settlement. Noting that DTE and Sierra Club were simply parties to a “private contract,” the Court squarely rejected DOJ’s argument that the side deal encroached on its enforcement discretion or otherwise undercut the federal settlement. And significantly, the Court shot down the underpinning of Clark’s SEP prohibition, finding that the projects at issue would achieve “an enormous environmental benefit that is fully consistent with the goals of the CAA.” 

As a practical matter, the Court’s ruling is perhaps not surprising in light of the fact that DTE said it would abide by the side deal regardless of what happened—and noted that the projects would provide “significant benefits to a valued local community.” But it was a significant ruling nonetheless, especially coming just two weeks after DOJ was in front of another court—in Conservation Law Foundation v. Barr, Case 1:20-cv-11827-ADB (D. Mass.)—defending the rationale behind Clark’s SEP policy and arguing that private parties had no Article III standing to challenge it in a brief before a district court in Massachusetts.  U.S. Brief

Whether or not the Massachusetts plaintiff prevails in invalidating the policy ultimately may be a moot point. The reality is that the policy is probably already on its last legs, as the Biden administration is almost certain to undo it. So, to answer the last question posed by our earlier blog: the Clark SEP policy looks destined to be a short blip rather than a long-term change in the use of a settlement tool that had been popular among federal enforcers, states, NGOs and businesses alike for more than 40 years.

PretiFlaherty attorneys James Beers and Jeff Talbert contributed to this article (assistance from William Donaldson).

Issues in CERCLA Mediations Involving Many Parties

CERCLA cases often include mediations, either court-sponsored or party-initiated, as a mechanism to achieve allocation of liability for the costs of environmental cleanup at the subject Superfund site.  Because these cases often include many potentially responsible parties (“PRPs”) numbering in the scores or hundreds or more, the mediation process can be complex, lengthy and expensive.  Careful attention to the structure and sequence of the mediation process components is critical for achievement of a timely, successful, and cost-effective mediation outcome.

The impetus driving the timing of the mediation is often a critical determinant of what can be accomplished in a many-party CERCLA mediation.  Typically, the driving event is either an impending negotiation with EPA or the state environmental agency over performance of a response action at the site or a court deadline such as a pending trial date.  The particular deadline is likely to determine the extent to which a cash-out settlement, a pay-as-you-go settlement, or an interim allocation is to be available as a mediation outcome.  These deadlines are, of course, subject to varying degrees of strictness.  However, as with most other mediations, the ability to successfully conclude many-party CERCLA mediations depends heavily upon the notion that opportunities to achieve favorable outcomes will expire with the mediation deadline.  

The presence or absence of prior motions practice on liability-related issues is typically an important factor in these mediations.  The mediating parties benefiting from earlier court decisions press the “law of the case” argument in their party-specific mediations.  Of course, the mediating parties disadvantaged by prior decisions distinguish their facts from the prior decisions and assert their likelihood of achieving a more favorable decision when their motions are decided.  These issues, either addressed or unaddressed in prior motions practice, provide a large portion of the subject matter of individual party mediations in the overall mediation process. 

In cases involving mediations between PRP Settling Party Participating Groups (“PRP Group”) and not-yet-settled PRPs, the forcing mechanism may be a “most-favored nation” provision that promises that no subsequent settling parties will receive more favorable settlement terms than those achieved by parties settling during the mediation.  In practice, these provisions can be a two-edged sword, because members of the PRP Group may have received such provisions when they settled before the mediation.  This can have the effect of drastically limiting the ability of the PRP Group to compromise on issues that it has previously addressed in settlements with its members.  

As a result, the not-yet-settled PRPs often experience considerable frustration in attempting to reach compromises on these “previously settled” issues that differ from the resolution reached in the intra-PRP Group negotiations.  For example, a not-yet-settled PRP may experience fierce resistance from the PRP Group in seeking differing terms of the allocation between classes of PRPs such as waste generators and transporters.  The PRP Group would be reluctant to re-negotiate those terms internally (to match the terms sought by the mediating party) among its members who had previously come to resolution on them and had incorporated the result into the existing most-favored-nation provisions applicable to Group members.  The mediator must insist in such negotiations that the PRP Group is transparent about the terms of its most-favored-nation provisions in order to provide the mediating parties with a clear assessment of the difficulties in addressing these terms. 

The sequence of mediation activities is also a critical determinant of success and efficiency in many-party CERCLA mediations.  Most CERCLA mediations include PRPs from several or all of the CERCLA classes of PRPs – owners, operators, generators and transporters.  In order to achieve an overall resolution in which each party knows its specific share, either in absolute or relative terms, of the overall allocation, it is necessary for each class of PRPs to receive a collective allocation for that class and it is necessary for each class of PRPs to be able to negotiate its relative share with the other classes of PRPs. 

Accomplishing PRP class allocations is likely to require the mediator to conduct subordinate mediations to establish the class allocation of the respective PRP classes to determine the remaining shares to be allocated among the other PRP classes.  Of particular note, the owner and operator shares are essential and often quite controversial.  There is commonly considerable antipathy between the other PRP classes and the owners and operators, due to disaffection with owners’ and operators’ management of wastes at the facility.  This disaffection may require a comprehensive airing of the facility operations in the context of the mediation to establish a basis for agreement on the owner-operator shares.  This, in turn, may depend upon prior discovery and disclosure of information about facility operations.  Similarly, negotiations between the generator and transporter classes on issues such as which party selected the disposal site may require prior discovery and disclosure about transactional details.  Again, the mediator must endeavor to assure transparency of available information to facilitate these inter-class mediations.  It is also necessary for the mediator to develop a critical path of issue resolution to determine the most efficient sequence for the subordinate mediations.  This can be a tricky determination given that negotiating leverage may accrue to PRP classes whose issues are resolved early in the process.

Finally, the cost-effectiveness, and apparent cost-effectiveness, of the mediation process is heavily influenced by the sequence of subordinate mediations.  As in most mediations, each party desires to have the opportunity to fully air its case and its issues directly with the mediator.  In many-party CERCLA mediations absent subordinate mediations addressing issues common to PRP classes, these individual mediations could become very repetitive and parties with later mediation sessions could conclude that their issues were not subject to full airing if they had been resolved in prior party-specific mediations.  In particular, later-mediating parties whose time with the mediator is limited due to prior resolution of their respective issues may feel cheated of their opportunity to mediate and may feel that they did not get their moneys’ worth from the mediation.  It is important for the mediator to communicate the results and the contents of prior subordinate mediations to all of the parties so that they can be confident that their individual issues were fully represented and heard in the prior mediations.  Mediating parties in individual mediations can thereby be aware of the considerable resources already expended on resolution of their specific issues.

                                     

Preti Flaherty attorneys E. Michael Thomas and Jeff Talbert contributed to this article.