Case Study of How NOT to Run a Voluntary Cleanup Program

Voluntary Cleanup Agreement

Around mid-March, PLJ decided to bring in an outside environmental attorney knowledgeable in brownfields matters, Ken Cavalier, to advise it on environmental legal matters and negotiate a voluntary cleanup agreement with DEC, if that seemed appropriate.  And by the way, PLJ advised their new attorney, the closing was scheduled for April 1^st (April Fool’s Day seemed a fitting—albeit rapidly approaching—date).  This date was later extended somewhat in conjunction with the bankruptcy proceedings in which Deadwood Realty was now involved.

Mr. Cavalier contacted Mr. Suave and was assured that this Site was “a good candidate for a VCP agreement.”  He was told there were two key things DEC required.  First, the volunteer must clean up any source that is causing an offsite impact.  (There was no evidence, and it seemed little possibility, of such an impact—provided it could be shown that the North Forks municipal well was not being impacted.)  And, second, the cleanup volunteer would need to clean up the site for whatever its intended purpose was.  He saw “no indoor air problem,” and viewed the required cleanup as consisting primarily of “pumping out the septic tanks” and maybe putting in some “passive vent tubes.”  It would also be necessary to confirm that the current dry cleaners was on the municipal sewer system (it was) and to dye-test the floor drain, if any (there were two—both connected to the municipal sewer).  A potential Work Plan would need to be prepared to incorporate in the Agreement.  He said he felt “real comfortable with the technical end of this” and encouraged Mr. Cavlier to contact DEC’s regional attorney, Thomas Truehart in Lakota, NY, and DEC’s “head attorney” in Albany, Chauncey O’Shaughnessy.  Mr.Suave.indicated that an Agreement could probably be concluded in about 60 days—allowing 30 days to negotiate it and another 30 days for public comment.

After filling out and submitting a VCA application form and conducting initial conversations, attorneys Cavalier and Truehart were able to negotiate a mutually satisfactory Agreement in about 15 days.  This Agreement was signed by brother Luciano of PLJ on April 29, 1996 (or thereabouts).  Mr. Suave hand-carried it to Albany where it was signed a day or two later by DEC Commissioner Gepetto.  Notice of the Agreement was published in the Environmental Notice Bulletin and public comments were solicited through June 8, 1996.  As of June 21^st, no comments had been received.

[Author’s aside: Under new VCA procedures expected to be promulgated by DEC in early 2002, voluntary cleanup agreements will no longer be negotiable, but will be available only on a take-it or leave-it basis.  Also, since at least 1999, under DEC’s unpublished internal procedures, a VCA applicant might not even be notified of its eligibility to participate in the program for up to 45 days after submitting an application.  Although the time required to negotiate an agreement would be cut to zero once the take-it or leave-it form of agreement is adopted by DEC, it will still be necessary to develop a Work Plan to incorporate in the agreement.  Separate Work Plans may be needed for VCAs that include both Investigation and Remediation.  By the time internal and external “consistency reviews” are completed to ensure that no stray thoughts or unauthorized ideas are allowed to intrude—but at the same time allowing senior officials to insert their own favorite research topics—any time savings gained by eliminating frivolous input from the cleanup volunteer will have been more than offset by the wisdom elicited from a long list of DEC and DOH bureaucrats, scientists, and philosophers.  The Governor’s reform legislation proposes to allow 60 days for DEC to review the applicant’s eligibility and to require DEC to make a “best effort” to review the proposed Agreement within 60 days.]  

The 1996 VCA for Dilapidated Plaza was fairly typical of the several dozen VCAs finalized during the first few years of the Voluntary Cleanup Program.  It set forth as one of its goals, to “release the Volunteer and its successors and assigns, under the conditions set forth in [the] Agreement, from any and all claims, actions, suits, and proceedings… by the Department…, which may arise under any applicable law as a result of the Existing Contamination.”  Notwithstanding the presence of this Existing Contamination, DEC determined that the response action agreed upon under the VCA “will be in compliance with the ECL and will not… expose the public health or the environment to a significantly increased threat of harm or damage.”

The VCA expressly contemplated that PLJ “intend[ed] to purchase the Dilapidated Plaza, including the Site and implement a two-phased cleanup (“Response Program”), in preparation for and in conjunction with the renovation (and possible demolition) of the existing structures on the property for continued commercial use.”  The Department-Approved Work Plan (set forth as Exhibit B to the VCA) called for two phases of response action.  “Phase I,” consisting of locating and removing contaminated soils and structures behind the shopping plaza building, was to begin immediately.  “Phase II” was to come into play “[i]f the laundry/dry cleaning building is to be demolished ….”  It was to include appropriate disposition of in-building tanks and piping and of underground structures not readily accessible while the building was in place.  (These work plan “phases” are referred to herein in quote [“ ”] marks to clearly differentiate them from Phase I and II Environmental Site Assessments or stages of construction or development.) 

Once DEC was satisfied that “the Response Program was completed in compliance with the Work Plan and Department-approved design,” it was required to provide [“shall provide”] Volunteer (for each Phase of the Response Program, upon its completion) with a separate written “clean site notification” letter that is attached to this Agreement and incorporated in this Agreement as Exhibit ‘C’ agreeing… to release, covenant not to sue, and forbear from bringing any action, proceeding, or suit against the current or future owners of the Site or any person having any interest in the Site, including Volunteer, for the further investigation and remediation of the Site based upon the release or threatened release of any Existing Contamination.  The Agreement specifically reserved DEC’s right to pursue legal action against “parties that were responsible under law before the effective date of this Agreement to address the Existing Contamination.”

DEC was given the authority to revise the agreed-upon Exhibit B Work Plan in two (and only two) circumstances.  The first circumstance was if, during the public comment period on the proposed Agreement, DEC received information indicating that the Response Program was “not sufficiently protective of human health for the reasonably anticipated commercial uses of the Site ….”  DEC could then seek to renegotiate the Work Plan with the Volunteer.  (In this case, no such information was received during or after the comment period.) 

The second circumstance (“reopeners”) related to changed environmental conditions or new information (or to fraud by the Volunteer or the Volunteer’s failure to implement the Agreement to DEC’s satisfaction).  In such cases, DEC reserved the right to require further investigation or remedial action—but only if the changed conditions or new information indicated that Site conditions or the Response Program is “not sufficiently protective of human health for the reasonably anticipated commercial uses of the Site …..”  Note that there was no reopener for new DEC rules or procedures adopted after the fact.

The DEC-approved Work Plan (VCA Exhibit B) contemplated that additional remediation might be required in two (and only two) circumstances.  Under ¶ A.3.b. of the “Phase I” Work Plan, where a release from a hazardous substance-containing tank was determined to have occurred, “appropriate soil sampling beneath and adjacent to the tank” would be required “to determine if a ‘Source Area’… [was] present.”  If a “Source Area” were found, it would have to be “remediated.”   Similarly, under ¶A.7. of the Phase I Work Plan, if soil gas readings of VOCs at locations behind the shopping plaza building and in the former septic leachfields identified any “Source Areas,” they would have to be “remediated.”  “Source Area” (as used in Exhibit B) was defined, for the specific purposes of the VCA, as “any focal point of known oil or hazardous substance contamination at levels which currently, or reasonabl[y] have the potential to, adversely affect human health or cause any significant off-Site impact, as determined by the Department.”   (Emphasis added.)  The concept of “significant threat to the environment” has been defined by DEC in the context of inactive hazardous waste sites at 6 NYCRR § 375-1.4.  “The mere presence of hazardous waste at a site or in the environment is not a sufficient basis for a finding that hazardous waste disposed of at a site constitutes a significant threat to the environment.”  6 NYCRR § 375-1.4(c).

 ¶ III.A. of the VCA specified that DEC was to review reports and other submittals by the Volunteer “to determine whether [the report] was prepared, and whether the work done to generate the data and other information in the submittal was done, in accordance with this Agreement and generally accepted technical and scientific principles.”  (Emphasis added.)  Although DEC “[might] request Volunteer to modify or expand the submittal,” it could do so only to the extent that “the matters to be addressed by such modification or expansion are within the specific scope of work as described in the Work Plan.”  ¶ III.A.2.a. (emphasis added).  Any disapproval of a submittal by DEC had to be communicated to the Volunteer in writing (within 30 days of receipt of the submittal, except for the final environmental report and certification where the response time was 60 days), and DEC had to “specify the reasons for its disapproval.”  The Volunteer was entitled to regard a submittal as approved if “no notification or reasonable request for extension is received from the Department within the indicated timeframes ….”  

The only reference to the New York State Department of Health (DOH) in the 1996 VCA was a requirement (p. 11) that copies of required communications and submittals be sent to the Director of the DOH Bureau of Environmental Exposure Investigation in Albany, in addition to required copies to DEC.  DOH was not a party to the Agreement.  And nothing in the Agreement expanded the terms of the required Work Plan to include additional requirements imposed by DOH.  Although it is true that, not being a party to the VCA, DOH was not bound by the terms of the VCA, it was presumably limited to the authority conferred by its enabling legislation. 

PLJ, although it had no way of knowing it at the time, was off on a wild ride for the next seven-and-a-half years (ultimately to extend to June 2003) in the course of which the VCA was virtually ignored and DEC and DOH officials seemed to be in competition with one another to add to PLJ’s investigation and cleanup burdens.