There were 207 responses to the survey. Listed below are the key survey findings:

• The majority of respondents collect samples from the middle of the well screen using low-flow sampling for all contaminants.
• Samples for metals analyses are predominantly filtered in the field.
• Groundwater is generally not analyzed if free product is present in the well at the time of sampling.
• Approximately one-third of the respondents have collected samples from the same well using different sampling techniques, and more than half of these respondents indicated that the data is consistent between methods.
• Three-quarters of the survey participants have been asked "How's the fishing?" and "Find any oil yet?" during sampling activities. The most interesting comment received from survey participants described an attorney who drank gasoline-contaminated groundwater directly from a bailer at a site, ostensibly to prove that the site groundwater was not harmful. (Maybe we'll need to have a follow-up survey to address Health and Safety!)

Click here to see a summary report on the survey results. All questions are listed with accompanying percentages of responses chosen. Click here to see select informative and interesting comments. The survey results will be shared with MassDEP.  

The LSPA Loss Prevention Committee's Review of FY '13 Notice of Audit Findings - Risk Assessment

The LSPA's Loss Prevention Committee (LPC) has started reviewing MassDEP's fiscal year 2013 Notices of Audit Findings (NOAFs). This year the LPC plans to provide a short article for each category of NOAFs, with the main takeaways and observations.

The 2013 NOAFs were organized into seven categories: Notices of Activity and Use Limitations, vapor intrusion (VI)/closure, non-aqueous phase liquids, risk assessment, nature and extent, remedial systems, and downgradient property status. Risk assessment was the first category of NOAFs reviewed by the LPC. The LPC included the category of risk assessment because of the important relationship between risk-related issues, such as calculating exposure point concentrations (EPCs), and characterizing the nature and extent of contamination.

From this review, the LPC has identified the following key considerations for your next opinion supported by a risk assessment:  

1. Background: Yea or Nay?
   Several NOAFs found insufficient evidence provided to exclude one or more metals as constituents of concern (COCs) from the risk assessment. In one case, lead was excluded as a background condition based on the presence of coal/coal ash/wood ash; however, MassDEP noted that the historical use of the site as a dump could also be a source. For another site, arsenic was excluded as background; MassDEP found this inappropriate because similarly elevated arsenic levels were not detected at other sites in the vicinity, and the former use of the site could have been a potential source. These NOAF findings demonstrate that a solid technical justification should be provided when excluding COCs from a risk assessment. MassDEP cited its Technical Update on Background Levels of Polycyclic Aromatic Hydrocarbons and Metals in Soil as a resource for evaluating background.       
      
2. Back to the Future: Risk Assessment and Vapor Intrusion.
   The combination of vapor intrusion and risk assessment continues to rear its ugly head in a number of NOAFs across both 'space' (MassDEP Regions) and 'time' (date of MCP submittal). Specifically:    
   

   • In one NOAF, MassDEP indicated that certain contaminants should not have been excluded from consideration as COCs due to inadequate justification that they were not related to the release.
   • Several NOAFs called out issues with how EPCs were calculated for the vapor intrusion pathway.
   • With respect to evaluating exposures for current uses, MassDEP generally said that modeling was inappropriate to calculate EPCs and that direct measurements of indoor air should be obtained. For evaluating potential exposures for future residential use of a commercial building, in relation to an RAO filed in 2004, MassDEP stated that direct measurements of indoor air were inappropriate for use as EPCs and modeling should be used.
   • MassDEP found limitations in data sets used to calculate EPCs for some sites, including: 1) indoor air samples not collected during winter conditions, 2) use of calculated average concentrations as EPCs rather than 95th UCLs or maximums, and 3) indoor air EPCs estimated using an average concentration of results from multiple groundwater monitoring wells.

    

   Overall, because MassDEP continues to look closely at VI sites, it may be advisable to carefully consider using conservative approaches to evaluating this pathway.

    
3. Think about laboratory analytical reporting limits.
   More than one NOAF noted that laboratory reporting limits for analyses of environmental samples exceeded applicable standards, including reportable concentrations for soil or groundwater, Method 1 Standards, or Threshold Values for Vapor Intrusion. In such cases, it was MassDEP's view that these data were not appropriate for evaluating the effectiveness of response actions and/or assessing risk. As presented in MassDEP's REDUA guidance, it is generally desirable to achieve reporting limits below applicable standards. If you have questions about this, your laboratory can be a helpful resource to provide guidance about the feasibility of achieving certain reporting limits.     
        
4. Don't forget the critters.
   In one NOAF, MassDEP listed several deficiencies relative to the evaluation of ecological risk. MassDEP stated that the number and spatial distribution of sediment samples collected from an adjacent river were not adequate to provide representative spatial distribution to support a Response Action Outcome (RAO). In addition, sediment samples were not analyzed for some of the COCs identified in soil at the site, which may have migrated into nearby sediment. While concentrations of some contaminants in sediment exceeded sediment Threshold Effects Concentrations, the RAO indicated that a Stage II Ecological Risk Assessment was not necessary, in part because the exceedances were in a small area that did not represent a "potentially significant exposure." MassDEP rejected this rationale, indicating that these values could not be screened out by citing the "Area-Based Screening for Sediment Contamination" guidance. If a site has potential environmental receptors that could be impacted by a release, one should carefully consider one's approach to sampling (number, spatial distribution, analyses), and whether a Stage II is necessary. 
           
5. Method 3 is here, have no fear!
   NOAFs were issued for two sites where a Method 1 risk assessment was conducted to support a Class A RAO, but the EPCs as calculated exceeded an applicable Method 1 standardand therefore did not demonstrate No Significant Risk. In each case, MassDEP conducted its own risk assessment using Method 3 and concluded that these EPCs could be used to demonstrate NSR. Because NSR had been achieved, MassDEP did not require additional work. Further, MassDEP did not issue Notices of Noncompliance in these cases. A Method 1 approach may be more straightforward; however, an LSP should consider whether the site could benefit from a Method 3 approach.

Those who follow the Massachusetts Brownfields Tax Credit program know that 2013 was a year that began with many challenges - but not only did the tax credit program survive, the year ended on a positive note. The program continues to be one of the state's best incentives for economic redevelopment and environmental cleanup, especially in economically distressed areas (EDAs) where both are needed most.

Before describing the latest news, it may be helpful to summarize the program, its history, and how it works. My sense is that most LSPs have an awareness of the program, and many are familiar with the basics, but few truly understand the finer points necessary to make full use of its power. This article will not attempt to delve into detail, but will instead present a general overview for those interested in learning more about the tax credit.

First, the basics: The Brownfields Tax Credit provides a tax credit (literally, a credit to be applied against one's Massachusetts income taxes due, dollar for dollar) based on the amount of eligible costs spent remediating a Massachusetts Contingency Plan (MCP) site. The credit offered is 50% of the eligible costs incurred, or 25% for sites with an Activity and Use Limitation (AUL). This difference provides an incentive for remediation to unrestricted standards. The credit is available only to property owners or operators. To qualify, an applicant has to demonstrate that it meets the basic eligibility criteria:

• Site must be located in an economically distressed area (EDA)
• Site must be used for commercial/business purposes
• Site has reached a Permanent Solution or Remedy Operating Status (ROS) within the MCP
• The cost of MCP response actions exceeds fifteen percent of the value of the property prior to MCP closure      

To provide some perspective on the 2013 changes, a discussion of the program's history is in order.

BROWNFIELDS ACT

By the mid-1990s, the liability scheme inherent in M.G.L. c. 21E - strict liability for property owners and operators, regardless of fault - had produced predictable results. Buyers shied away from problem properties, those with known or suspected contamination. Open-ended liability, high costs, and the taint of contamination led many to look elsewhere; many properties, especially in older urban areas, had become "untouchable" and blighted the surrounding areas, precluding these areas from reaching their full potential.

Chapter 206 of the Acts of 1998, the law formally entitled An Act Relative to Environmental Cleanup and Promoting the Redevelopment of Contaminated Property, but more commonly known as the "Brownfields Act," promulgated a variety of liability protections and financial incentives. This law was designed to promote both economic redevelopment and environmental cleanups, especially of these "brownfields" - properties where contamination, real or perceived, affected or limited the future use of the site.

Among the law's elements were several new liability protections available to particular types of parties:

• Eligible Persons
• Eligible Tenants
• Downgradient Property Owners
• Secured Lenders
• Redevelopment Authorities and Community Development Corporations (CDCs)

The concept of the "eligible" person or tenant is a key concept of the Brownfields Act. Eligible Persons are defined as owners or operators who did not cause or contribute to contamination at the site and who did not own or operate the site at the time of the contamination. The incentives and liability protections contained in the law are only available to Eligible Persons. In this way, the law intends to mitigate the high costs (legal and financial) that often prevent an impaired property from being redeveloped by offering incentives and protection to new, "innocent" owners.

The law also created the Brownfields Covenant Not to Sue (CNTS) Program, whereby the Attorney General of the Commonwealth of Massachusetts can offer additional liability protections beyond what the Brownfields Act itself provides.

Finally, the law set forth several financial incentives including, among others:

• the Brownfields Redevelopment Fund (BRF), operated by MassDevelopment, which makes loans and grants to certain parties to be used for site assessment and cleanup costs;
• the Brownfields Redevelopment Access to Capital (BRAC) program, operated by BDC Capital, which subsidizes the purchase of environmental insurance; and
• the Brownfields Tax Credit, operated by the Department of Revenue (DOR), which offers a credit against state taxes for certain sites once they reach a Permanent Solution or ROS.

BROWNFIELDS TAX CREDIT

The Brownfields Tax Credit described in the 1998 Brownfields Act first became available on January 1, 1999, and originally required that response action begin by August 5, 2001. Tax credits could be earned based on any costs incurred between August 1, 1998 and January 1, 2005. In 2000, both of these dates were pushed out two additional years; a second two-year extension was passed in 2003. Additional major changes occurred in 2006.

In 2006, not-for-profit organizations were first allowed access to the program. At the same time, credits were made transferable, allowing them to be sold, greatly expanding the value of the program for everyone. Previously, many recipients did not have a sufficient tax appetite to utilize the credits or had complicated tax situations/ownership structures that minimized the usefulness of the credit to many potential applicants. Today, there is a vibrant secondary market, which allows any tax credit recipient that cannot benefit by using the credit to offset its income, premium, or excise tax to sell excess credits for cash.

As a result of the 2006 legislation, another significant change occurred: no longer was the credit simply claimed by taxpayers on Schedule BC and subject to audit and possible denial after the fact. Now, rather, an application had to be reviewed by the Commonwealth's Department of Revenue (DOR); if the application was approved, a certificate was issued. DOR also created procedures for the transfer of credits. The rules implemented by DOR that year were patterned after the procedures DOR used for its other transferable credits, notably the film tax credit.

PROCEDURAL CHANGES (POLICY DIRECTIVE)

Over the next several years, as awareness and familiarity of the tax credit program grew, the number of credits issued and cost of the program increased markedly, from a handful of credits per year to scores of credits totaling tens of millions of dollars per year. Therefore, starting in about 2011 DOR began tightening some of its interpretations. By late 2012, continued evolution in the review protocols found applications being subjected to a higher level of scrutiny and requests for more detailed backup, the combination of which led to longer timeframes between an application submission and the receipt of an approval, as well as increase in application denials. By early 2013, DOR essentially stopped processing applications while it undertook a review of its procedures in anticipation of more significant rule changes. While some observers believed the goal of DOR's efforts was to reduce the number and dollar value of credits issued, the stated objective was simply to "clarify" the rules.

The outcome of DOR's review was the release of a draft Policy Directive on April 5, 2013, containing several clarifications (changes) to the rules and protocols that had been in place for several years. The DOR proposals would change:

• who could receive credits,
• the application procedures,
• which projects qualified, and
• the transferability of the credits to be issued.    

The most controversial aspect of the proposal was DOR's intent to apply these changes retroactively, that is, to all "pending and future" applications. This retroactive application was important because DOR had held up the review of applications for several months. The changes as proposed would have denied credits to dozens of applications that had been filed in the prior year but that had yet to be processed.

In response, several LSPs, attorneys, and other practitioners involved with the tax credit program led a campaign to mobilize interested parties in providing feedback during the public comment period on the draft Policy Directive. Click here to read the LSPA's letter. The goal of the effort was to improve the language of the proposed changes, to ensure the availability of the credit to qualifying projects, and to make any changes prospective in nature so that those applications already in the pipeline were reviewed in accordance with the rules in place at the time of the application. This effort was partially successful. In October 2013, DOR issued final rules that were somewhat modified in response to the comments provided; however, of the four major proposals, three were applied retroactively. One change, requiring an application within five years of the RAO or ROS, became effective for all applications submitted on or after April 5, 2013.  

Among the major changes was the creation of the concept that a "proper" application occurs in the tax year in which the Permanent Solution or ROS is originally filed with MassDEP. DOR's goal is to encourage prospective recipients to submit applications in a timely manner. Currently, those who wait to submit applications will be subject to a more complicated review process (including the need to submit revised tax returns) for applications submitted in the three years after the Permanent Solution or ROS, or will lose credits, partially or completely, if applications are filed in the fourth and fifth years after the Permanent Solution or ROS. After the fifth year, no credits will be available.

Other changes in the new policy concern which costs qualify. For sites that are in ROS, only the costs spent to reach ROS count. Costs incurred maintaining ROS will be recoverable only if and when the site eventually reaches a Permanent Solution and only then if the incremental costs exceed the fifteen percent threshold. Money spent to perform additional response actions at a site that previously has attained a Response Action Outcome (RAO) will qualify only to the extent that those costs are geared toward a Permanent Solution or to remove an Activity and Use Limitation. Several other changes were targeted toward limiting the use of the tax credit by non-profit groups.

The overall effect of the 2013 Policy Directive will be to restrict credit availability and encourage applicants to file in a timely manner. While it may appear on the surface that the rules are now clearer than before, in fact a significant degree of gray area remains that makes it difficult for many people to file complete and accurate applications that maximize recovery.

EXTENSION

A second and arguably more important and positive change to the program occurred in July 2013. The Fiscal Year 2014 Budget extended the Brownfields Tax Credit program for an additional five years, averting the entire loss of the program, which had been scheduled to end on January 1, 2014. Under current rules, the Brownfields Tax Credit now will remain available where the taxpayer "commences and diligently pursues" the completion of response actions by August 5, 2018, and includes eligible costs incurred through January 1, 2019.

The extension offers certainty to developers who often make decisions on projects that will not be completed for several years. Under prior practice, the program was beset by continued uncertainty and was kept alive only by two-year extensions, which were often not sufficient to incentivize developers to make decisions for longer-term projects.

The LSPA and individuals provided testimony and support for the extension and worked with lobbyists to make sure our voice was heard, to the benefit of the profession and our clients.

APPEALS PROCESS

A third change to the tax credit program took place in December 2013 with the publication of AP 636 - Appeal Process for Denial or Partial Denial of Applications for Massachusetts Brownfields Tax Credit.

This administrative procedure (AP) establishes a 30-day limit for appeals and only applies to those applications that have been denied (or reduced) during the review process. Failure by the applicant to respond within the 30-day window could be fatal to an appeal. The AP also prescribes certain procedures that must be followed to appeal the denial or partial denial. The AP notes that the Appellate Tax Board (ATB), the normal route for continued appeals beyond DOR itself, is not specifically authorized to rule on Brownfields Tax Credits.

SUMMARY

The Brownfields Tax Credit emerges from 2013 somewhat bruised and battered, but still remains one of the best programs the state offers to those who find themselves spending money to address pre-existing contamination or contamination that they did not cause. The program is the best of its kind nationally, and a study commissioned by NAIOP, the Commercial Real Estate Development Organization, demonstrated that the money lost from the state treasury is recovered many times over through increased economic development. LSPs and others in the environmental cleanup marketplace in Massachusetts should be aware of the program and how its use can help to offset the significant costs required to properly remediate impaired properties. Enlisting specialized expertise may be a means to ensuring maximum recovery through this program.

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Before I gave up split-spoon samples for law books, I often tried to limit my employer's contractual liability for site reviews, investigations and remedial designs involving oil and hazardous materials. I argued that liability was appropriately limited (to insurance proceeds, the amount of the contract, the time for bringing a claim, etc.) given the inherent difficulties and uncertainties in detection, quantification and treatment of subsurface contaminants. Later, as an attorney for companies hiring environmental consultants, my approach shifted to arguing why my client should be forced to accept arbitrary limitations on recovery under a contract when substandard consulting services are provided. In contracts, as in life, what you see depends on where you're standing.  

In Massachusetts, contract-related damage claims are governed by a six-year statute of limitations as codified in Section 2 of Chapter 260 of the Massachusetts General Laws. Any such claim must "be commenced only within six years next after the cause of action [i.e., breach of contract] accrues." Failure to bring the claim within the limitations period risks having that claim dismissed by the Court upon defendant's motion. Where the limitations period has been exceeded, plaintiffs customarily take refuge in the so-called Discovery Rule which "tolls" the start date of the limitations period until the prospective plaintiff knows or should know that injury under the contract has occurred.   

Disputes in court as to when the plaintiff knew or should have known of its injury abound in the environmental/G.L. 21E context. In common practice, the Discovery Rule applies in any of three general situations: (1) where the wrong was previously "inherently unknowable to the injured party"; (2) where the alleged wrongdoer breached some duty of disclosure unknown to the injured party; or (3) where the wrongdoer concealed the cause of action through some affirmative act done with the intent to deceive. See Albrecht v. Clifford, 436 Mass. 706 (2002).  The discovery rule has been specifically applied in breach of contract claims "involving the rendering of professional services where a client would not be expected to retrace the professional's steps nor be able necessarily to recognize the professional negligence should the client come across it." Int'l Mobiles Corp. v. Corroon & Black/Fairfield & Ellis, Inc., 29 Mass. App. Ct. 215, 222 (1990). 

The facts of the Shahin case are straightforward. Shahin, as a trustee of a Trust owning property, retained I.E.S. in connection with sale of the property to "conduct environmental testing and other services" pursuant to an I.E.S drafted contract.   Substantial investigation and remediation work was performed. The contract limited the Trust's ability to file a claim against I.E.S. to no later than one year after the date of the contract. When MassDEP issued a Notice of Noncompliance ("NON") for the site approximately three years later, Shahin filed a multiple count complaint against I.E.S including alleged non-performance under the contract. In part because it was too early in the litigation process to disprove the merits of Shain's non-performance claim, I.E.S. sought summary judgment in its favor on procedural grounds by arguing that Shahin failed to bring the case within the one year limitations period established in the contract. Shahin argued that it could not have known of the noncompliance until after that one year period had run, and thus sought to defeat I.E.S's Motion on the basis of the Discovery Rule. The Superior Court agreed with I.E.S. and dismissed the case.

Shahin appealed. Before the Appeals Court heard the case, the Creative Playthings Franchising, Corp. decision was issued by the SJC, rejecting contractually-shortened limitations which do not allow for application of the Discovery Rule. I.E.S. sought to preserve its summary judgment award by the lower court by arguing that, even if the Discovery Rule had applied, Shahin's claim would still fail under the contract since it was brought more than a year after he had obtained actual knowledge of the injury. The Appeals Court found that accepting this reasoning would require it to essentially rewrite the contract to introduce a new start date of the contractually-stated limitations period (i.e., one year from the date of actual knowledge by the client), something the court did not believe it had the authority to do. The Appeals Court thus overturned the lower court's summary judgment for I.E.S., and remanded the case back to the lower court for, using common court parlance, further proceedings consistent with the higher court's opinion. A petition for rehearing was denied and, as neither party sought further review from the SJC within the allowable period, the precedential value of the decision will stand for now. As of this writing further litigation in the lower court on the merits of the claim has not been scheduled.

Based on these decisions, blanket time restrictions on contract claims against service companies/consultants are unlikely to withstand judicial scrutiny. This is especially true in the environmental context where difficulties associated with identification of subsurface or "hidden" contamination and the inherent delays in MassDEP oversight, auditing and enforcement are prevalent. However, restrictions on time periods for bringing a claim which respect the Discovery Rule (e.g., that run following when the client learned or reasonably should have learned of its potential claims) are not so suspect and can provide, if the client assents to them in a contract, a valid way to limit the liability period for contract actions. Providers should consider adding such terms, in appropriate format, to their contracts if they wish to shorten the period during which they are subject to potential claims.

As many of you know, MassDEP's regulatory reform initiative for the Bureau of Waste Site Cleanup will include the consideration of green remediation (a.k.a. greener cleanups) elements when conducting MCP response actions. On November 25, 2013, ASTM International released its long anticipated "Standard Guide for Greener Cleanups E2893-13 (Guide). This voluntary Guide intends to encourage greener cleanups at contaminated sites by describing a process for evaluating, implementing, documenting and reporting activities to reduce the environmental footprint of cleanups while working within the applicable regulatory framework and satisfying all legal requirements. The Guide will serve as a valuable resource in supporting MassDEP's regulatory objectives for MCP response actions.

In addition to Massachusetts' efforts, the United States Environmental Protection Agency (USEPA) is recommending that all of its regional offices and Office of Solid Waste and Emergency Response (OSWER) programs facilitate and encourage the use of the ASTM Greener Cleanup Standard Guide in the implementation of cleanups overseen by its programs. See the OSWER Assistant Administrator's memo posted at http://www.epa.gov/oswer/greenercleanups/basic.html and http://www.epa.gov/oswer/greenercleanups/standard.html. 

USEPA's OSWER's cleanup programs have also developed many tools, resources, and other strategic documents to help meet its greener cleanup objectives including the recently added quick reference fact sheet titled "Green Remediation Best Management Practices: Materials and Waste Management." A copy of the fact sheet can be found at: www.clu-in.org/greenremediation.

SREC II

Back in August 2013, I wrote about the Massachusetts Department of Energy Resources (DOER's) plans to create a new solar carve-out incentive program, known as SREC II, for an additional 1,200 MW solar PV development goal supported by the Patrick Administration. The program will include incentives that favor development of solar PV on Brownfield and eligible Landfill properties. Draft regulations for the SREC II program were recently issued for public comment. Copies of the draft regulations can be found here: SRECII

CLEAN ENERGY DEVELOPMENT COMPLIANCE ASSISTANCE

As a reminder, if you are currently involved in a renewable energy project on contaminated land or have been approached by a prospective project developer with such interest and need additional help or support or just want additional information on the CERP, please let me know. I would be happy to provide additional compliance assistance.

Thomas M. Potter

Clean Energy Development Coordinator

Bureau of Waste Site Cleanup

MassDEP, One Winter Street, 6th Fl, Boston, MA 02108 | 617-292-5628, Thomas.Potter@state.ma.us

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