SPCC applicability depends on many considerations and will likely include an evaluation of: total “oil” storage volume capacity, container types and sizes, and specific locations of “oil” storage; exempt storage and exempt substances; and the lay of the land .  As you might guess from all the “oil” quotes, the definition of oil for SPCC is broad: ”oil of any kind or in any form including, but not
limited to, petroleum, fuel oil, sludge, oil refuse, and oil mixed with wastes other than dredged spoil and oily mixtures.” The definition covers non-petroleum oils, synthetic oils, animal fats, oils and greases and vegetable oils. One exemption is clear, EPA has carved out certain milk and milk products storage from SPCC.  The term ”Waters of the U.S.” is also broader than one might
expect.  The legal definition is subject to interpretation based on Supreme Court rulings, regulations and technical guidance.

SPCC guidance, checklists and other forms have been developed by both the EPA and your local Farm Bureau to help farmers understand the regulatory analysis and compliance steps. Some
operators, especially those with an oil storage capacity of 10,000 gallons or more are finding it helpful to engage an environmental professional early in the process.  With this extension, farmers will have more time to determine if SPCC applies to operations, and if necessary, develop, certify, and implement the plan required by the SPCC rule.

Author: Jamie B. Dameron (bio)
Phone: 317.464.1591
Email: jdameron@bamberger.com

Reuse

Indiana has many abandoned or underused properties due to an actual or perceived environmental condition, also known as Brownfields. Indiana communities know that despite a property’s great location, bottom-dollar price, existing infrastructure, and available work force, it takes closing the loop on the environmental unknowns to attract businesses to Brownfield properties.  In the 2011 grant round, EPA awarded Indiana communities over $5 million—more than any other state in the Region– for environmental assessments at Brownfield properties. Your community may have a real estate opportunity at a prime location where the environmental unknowns have already been identified or even addressed.  The Indiana Finance Authority also has funding available for below-market interest rate loans at cleanup sites.  Additional information on funding and financing Brownfield Redevelopment and success stories are available through the Indiana Finance Authority.

Recycle

Waste and left over raw material handling and disposal are costly to business and improper waste handling may lead to costly environmental cleanup.  Through Indiana’s Recycling Market Program, a total of $500,000 in grant funds has been made available for businesses interested in purchasing equipment for remanufacturing recyclable materials into products or feedstocks.   A 50% match is required and the deadline to apply is September 26, 2011. Additional information and the application may be found through the Recycling Market Development Program’s website.

Author: Jamie B. Dameron (bio)
Phone: 317.464.1591
Email: jdameron@bamberger.com

In addition to paying civil penalties, the company is required to implement enhanced compliance efforts under the Clean Air Act’s leak detection and repair (LDAR) program.  EPA’s LDAR regulations require periodic monitoring of process equipment and other structures, particularly pipe joints, pump seals, valves, and flanges, to detect and repair air pollution leaks, including leaks of hazardous air pollutants.  Many manufacturers find LDAR to be an expensive, labor intensive monitoring program.

Manufacturers who identify and prioritize monitoring, maintenance and documentation requirements under environmental regulations are likely to be better positioned during a regulatory inspection.  Record keeping violations are an easy target.  Given EPA’s stepped up enforcement under its 2011-2015 Strategic Plan, now is the time to allocate resources and get these tasks checked off the housekeeping to-do list.

Author: Jamie B. Dameron (bio)
Phone: 317.464.1591
Email: jdameron@bamberger.com

Her prepared statement is available at http://yosemite.epa.gov/opa/admpress.nsf/0/EBC9CF14B126FB318525784F006AF60B.

Air, water, chemical and waste regulations are expanding.  Environmental operations requirements including stringent limits on discharges or releases of “pollutants” into the environment may affect certain agricultural operations.  EPA’s own “Ag Center,” with the support of the USDA, has been organized to help communicate environmental regulations impacting farming operations.  There is a great deal of useful information available on-line through the Ag Center.  A quick count shows over 80 documents and links concerning environmental issues faced by farmers and livestock producers.  Such a communication effort reflects a regulatory reach into agriculture that is certainly not a myth.   

For example, EPA continues targeting concentrated animal feeding operations (CAFO’s) as part of a national enforcement initiative focused on stormwater runoff issues.   Through focused enforcement efforts, EPA is locating and inspecting small and medium CAFOs which may be “discharging pollutants” into surface waters without the required Clean Water Act permit.

Author: Jamie B. Dameron (bio)
Phone: 317.464.1591
Email: jdameron@bamberger.com

A recent case shows that in certain circumstances, landlords that own contaminated property are not necessarily on the hook for certain environmental claims.  In Martinsville, Indiana, a tenant spilled the dry cleaning solvent PCE during six or so years of operations, and the PCE migrated to the neighbor’s off-site property through the groundwater, soil and into indoor air.  The neighbor sued the landlord–the property owner at the time tenant operated and spilled the PCE.   The lower court denied the neighbors claims against the landlord and the case was appealed.  On the nuisance count, the Indiana Court of Appeals looked to a 1909 case to guide its decision on whether the landlord was liable to the neighbor for its tenant’s release of regulated chemicals into the environment.  

In Indiana, the long-established, general rule for landlord liability is whether the landlord had “actual knowledge” of tenant’s nuisance.   Showing “actual knowledge” requires direct evidence, which is not always easy or cheap to come by.  The case illustrates how it can be difficult to prove “actual knowledge” in environmental contamination cases.

The following facts in Neal v. Cure,—N.E.2d—, 2010 WL 4782240, No. 49A04-0908-CV-468 (Ind. Ct. App. November 24, 2010), did not convince the Indiana Court of Appeals that the landlord had “actual knowledge” of the tenant’s environmental nuisance:

• Tenant’s drums of PCE and waste oil out in the open;
• Landlord knowing that PCE was used on the property by tenant;
• Landlord visiting the property, seeing drums and declaring that tenant was a “sloppy housekeeper;” and
• Landlord’s awareness of a spill of PCE in 1991, where the landlord was told “it didn’t amount to anything.”

None of these facts were direct evidence that landlord knew the activities of the tenant had created contamination amounting to a nuisance.

The affected neighbor suing the landlord suggested that Indiana should adopt a “knew or should have known standard” that some other states use instead of Indiana’s “actual knowledge” standard.  The court declined, citing the 1909 case and explaining that the Indiana decisions are clear:  a landlord will only be liable for a tenant’s nuisance if 1) the character of the business itself is a nuisance, 2) landlord knew about the nuisance and could stop it but failed to do so, or 3) landlord consents to the maintenance of the nuisance.   The neighbor did not argue that the dry cleaning operation was a nuisance just by its character, and the neighbor could not prove that the landlord had actual knowledge of the tenant’s nuisance.  In fact, the neighbor’s claims against landlord in trespass, nuisance, negligence, and under Indiana’s Environmental Legal Action statute were all denied by the court because of landlord’s lack of actual knowledge or involvement in tenant’s activities which caused the environmental contamination.  

There are many circumstances when a property owner is liable to third parties, including the state, due to contamination migrating from his property and impacting others.   A landlord defending certain claims from neighbors can look to Indiana law established since 1909 and further explained in 2010 to evaluate potential liability resulting from a tenant’s environmental nuisance.

Author: Jamie B. Dameron (bio)
Phone: 317.464.1591
Email: jdameron@bamberger.com

Development work at most construction sites involving an acre or more requires a Clean Water Act permit under EPA’s storm water rules because of the increase in runoff and erosion. The storm water carries “pollutants” away from the site to nearby waters.  The main “pollutant” at a construction site is sediment, but other debris, pesticides and any chemicals that can be picked up by storm water flowing over the land can also impact water quality.   In Indiana, the Department of Environmental Management administers the storm water rules and approves permits.

There is certainly a cost to comply with the Clean Water Act—it starts with the permit application and Storm Water Pollution Prevention Plan.  Then compliance management and reporting are required.  During the work, best management practices must be implemented to prevent storm water discharges.  Whatever the cost, the Beazer settlement illustrates that storm water compliance at construction sites is a bargain when compared to a potential enforcement action that is part of a national regulatory initiative.

Author: Jamie B. Dameron (bio)
Phone: 317.464.1591
Email: jdameron@bamberger.com

Since the Indiana Supreme Court’s Kiger decision in 1996, CGL insurers have funded numerous regulated environmental cleanups for businesses of all types.  In American States Insurance Co. v. Kiger, 662 N.E.2d 945 (Ind. 1996) the court imposed a standard on insurance companies that makes Indiana one of the most favorable jurisdictions for environmental defense and indemnity insurance coverage.  Even though CGL policies have “pollution exclusion” clauses, the policy language in the exclusion and other parts of the policy is often vague when applied to the specific contaminant cleanup.  In Indiana, that vagueness and the associated ambiguity mean contract interpretation favoring coverage for the policyholder. Since Kiger, subsequent cases have refined and provided further guidance on a host of coverage considerations.  Yet, even with the many challenges by the insurers over the years, the legal interpretation in Kiger continues to apply to many CGL policies and the result is insurance funded environmental cleanup work.

Consider the recent case West Bend Mutual Insurance Company v. United States Fidelity and Guaranty Company, et al., 598 F.3d 918, 922-924 (7th Cir. 2010).  Although the U.S. Court of Appeals for the Seventh Circuit held that the specific policies at issue in that case would not cover the environmental cleanup, its denial of coverage was based on policy language different and more explicit than that in Kiger.  Indeed the standard articulated by the court was “the Kiger requirement for explicit contracts.”  Most CGL policies, even those issued well after Kiger, still had pollution exclusion clauses that do not meet the explicit standard and are interpreted under Indiana law to provide coverage for environmental cleanups.  A case issued in November of 2010, confirmed that coverage for environmental cleanup existed in policies dated 1997 to 2002.  The court confirmed coverage regardless of an added endorsement that provided the pollution exclusion “applies whether or not such irritant or contaminant has any function in your business, operations, premises, site or location,”  State Automobile Mutual Ins. Co. v. Flexdar, Inc. and RTS Realty, No. 49A02-1002-PL-00111 (Ind. Ct. App. November 22, 2010).

Businesses and property owners looking to maximize value and address environmental cleanup requirements may want to take a look at insurance.  Coverage considerations vary with the facts of each situation; however, the insurance coverage law in Indiana continues to benefit many policyholders remediating environmental contamination.

Author: Jamie B. Dameron (bio)
Phone: 317.464.1591
Email: jdameron@bamberger.com

In KB, The Indiana Court of Appeals reversed the lower court’s ruling and allowed a home builder’s negligence claim against a former manufacturer who had contaminated the off-site groundwater.  The court explained its reversal on the negligence claim and further explored why the home builder did not have trespass or nuisance claims against the polluter.

KB, the adjacent property owner and home builder, sought damages for Rockville’s contamination of the groundwater at KB’s property.  Rockville and predecessors contaminated the groundwater with TCE, a common and toxic solvent, released during operations from 1969 through 1993.  Rockville stopped using the TCE and removed the product from its property in 1993.  At about the same time, environmental investigations revealed the TCE contamination at Rockville’s property, and by 1997, evidence showed that contamination had migrated “through all of” the off-site, adjacent property later purchased by KB. 

In 1999, KB purchased lots at the adjacent property for residential development.  KB did not perform any environmental due diligence; however, the seller of the off-site property executed affidavits indicating that the property was not contaminated. Investigations a few years later further confirmed that TCE had migrated off-site in the groundwater from Rockville’s property and flowed under KB’s lots, but the seller did not disclose that information to KB.  It wasn’t until 2005, when KB performed its own investigation that it learned of the TCE contamination at its property. 

Trespass requires a showing that 1) plaintiff owned the land at the time of the trespass and 2) the entry onto land was illegal. The Court of Appeals agreed that the trespassing activity ended well before KB owned the adjacent property.  TCE was used or released at Rockville’s property before 1993, had spread under all of the adjacent property by 1997, and KB did not have ownership of the adjacent property until 1999.   The court explained that KB simply did not own the land at the time of the contaminant migration, and therefore, KB did not have a trespass claim.

The nuisance claim also failed based on the timing and characterization of the polluting activity.  The Court of Appeals denied KB’s nuisance claim on grounds different than those relied upon by the lower court.  The lower court dismissed the nuisance claim under the reasoning that damages to KB’s property were not “foreseeable as a matter of law.”   The appellate court disagreed outright and held that “it is undisputable that the environmental damage to KB’s property is precisely the type of harm that a reasonable person would foresee from Rockville’s release of dangerous pollutants.” 

Instead, the Court of Appeals focused on the remedy, which is to “abate or enjoin the nuisance” where a nuisance claim is “designed to cease or lessen the defendant’s continued offensive behavior.”  The question then becomes, what is the nuisance causing behavior when the manufacturer is long gone and no longer owns or operates the property?  In Gray v. Westinghouse, 624 N.E.2d 49 (Ind. Ct. App. 1994), where capacitors in a dump caused PCB contamination in groundwater, the court held that the polluting party may be held liable for nuisance even if it does not own or operate the property where “the nuisance originates.”  However, the court noted that Gray did not discuss the facts that 1) the contamination was caused before plaintiff occupied the adjacent land and 2) the dumping activity had stopped years before plaintiff filed his claim.  

In KB, the court determined that “Rockville’s release of chemicals to the ground caused the harm,” and “Rockville’s contamination of the property ceased in 1993.”   In the words of Chief Judge Baker, “under these circumstances, KB has failed to show that a nuisance existed or was ongoing that could be abated or enjoined.  Put another way, the damage has already been done, and KB’s cause of action against Rockville sounds in negligence.”  It is not clear if the court considered the fact that the plume had migrated through the KB property by 1997, as it did in the trespass claim or if it is limiting the offending behavior in the nuisance claim to Rockville’s on-site releases of TCE to the ground.

With the polluting activity over and the environmental damage done, KB is still left with its negligenceclaim.  KB claimed that Rockville’s negligent conduct caused the contamination and that Rockville was negligent in failing to stop the contamination from migrating.  The Court of Appeals reversed the trial court’s finding that the economic loss doctrine precludes KB from pursuing its negligence claim.  KB did not have any contract with Rockville and did not assert any product liability type claim, so the economic loss doctrine could not bar the negligence action.  The court remanded the negligence cause of action for trial.

KB and Gray, create some uncertainty with environmental trespass and nuisance claims against a polluter who is no longer spilling, dumping or using the contaminant at the property where the nuisance originated.   The cases show that understanding technical evidence involving the pollution migration and the nature of the polluting activity are critical in evaluating how a court may consider the timing of the trespass and the duration of the nuisance causing behavior.

Author: Jamie B. Dameron (bio)
Phone: 317.822.6787
Email: jdameron@bamberger.com

Jamie assists with environmental compliance and advises clients seeking regulatory closure of cleanup sites.  Jamie’s background makes her well-suited to develop solutions to facilitate real property transactions by minimizing environmental liabilities.  Additionally, she helps landowners to minimize cleanup costs by maximizing cost recovery from state funds, responsible parties and insurance.  She also represents clients in administrative appeals, insurance coverage cases and cost recovery litigation.

In addition to her legal training and prior practice experience, Jamie is also an Indiana Licensed Professional geologist with ten years of technical environmental experience.  As an environmental consultant in Indiana and Ohio, she managed environmental cleanups in Kentucky, Missouri, Illinois, Ohio, Indiana and Michigan involving RCRA, CERCLA and state voluntary and UST programs.  Jamie can be reached at 317-822-6787.

Author: Terry G. Farmer (bio)
Phone: 812.452.3543
Email: tfarmer@bamberger.com