Contamination Reporting Revisited

November 2011Newsletters In the Zone

Two years ago, in this newsletter, we reported on a case in which the Pennsylvania Department of Environmental Protection asserted that a site purchaser who had ultimately taken title was obligated to report historic groundwater contamination found during the initial investigation of the property. In that case, the purchaser had found elevated levels of petroleum-related chemicals in connection with his “due diligence.” In depositions taken during that case, PADEP personnel stated that, upon taking title, the purchaser became an “owner” of the property, required to report the results of his groundwater investigation.

This column prompted many comments, including from DEP personnel. Ultimately, there was never a resolution of the reporting issue in that case.

The interest in reporting is spreading, however. The Delaware Department of Natural Resources and Environmental Control (DNREC) is proposing to codify reporting requirements. In its recently proposed Regulations Governing Hazardous Substance Cleanup, the DNREC has proposed that any person owning or operating a facility who has received information indicating a release of hazardous substances into the environment over health levels must notify the DNREC of the release within 60 days. This proposal has attracted significant attention from the regulated community, which primarily cite the chilling effect it will have on property investigations. Presumably, this issue will be resolved in Delaware during the regulation-making process.

Pennsylvania law will not be definitive, as the statutory scheme is not as clear. The PADEP’s position conflicts with the interpretation of many private practitioners. In a recent transaction, joint legal counsel made a series of phone calls to PADEP personnel. They confirmed that in any enforcement action, the PADEP will use all of the legal mechanisms at its disposal, including alleging that reporting is required for historic releases.

The Pennsylvania and Delaware developments remind us that thought is required regarding the needs of parties for information during property and business acquisitions. Any investigations should be tailored to meet the information needs of the involved parties. Also, an educated, experienced review of any testing plans should be a basic requirement before testing. Finally, all parties should realize there is a possibility that anything found will need to be reported and remediated.

For more information, please contact Philip Hinerman at 215.299.2066 or [email protected].

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