The odds of OSHA showing up at your worksite have increased for construction employers engaged in excavation and trenching.  OSHA recently announced an update to its National Emphasis Program (“NEP”) to prevent trenching and excavation collapses after a spike in construction fatalities.  The October 2018 update focuses on both increased enforcement and education activities by OSHA Area Offices.

The updated NEP instructs inspectors to initiate an investigation whenever they observe an open trench or excavation, regardless of whether or not a violation is readily observable.  These observations could be made during the course of the inspector’s work-day travels or during a routine inspection.  OSHA will also continue to conduct inspections based on employee complaints or referrals from third-parties, such as city inspectors or other governmental agencies.

The scope of the inspection will, in most cases, be limited to evaluating the hazards associated with the excavation.  However, if other violations are observed, the inspector can expand the scope of the inspection to address those other areas.

Pursuant to the updated NEP, OSHA Area Offices are required to develop and implement a “comprehensive excavation safety outreach program.”  The education outreach activities are likely to include:

  • News releases to disseminate information concerning the updated NEP;
  • Seminars on trenching and excavation safety for employer groups, trade associations and unions; and
  • Educational material on trenching and excavation safety for (i) licensing or other municipal agencies for distribution to employers when they request dig permits; (ii) utility and plumbing companies for distribution to employers; and (iii) industry association for distribution to members.

Employers are well advised to focus on maintaining a safe worksite by complying with OSHA’s standards on trenching as well as other applicable standards.  OSHA’s website has a wealth of information regarding trenching and excavation safety.

Property owners who suffer damages as a result of contamination must be aware of time limitations to recover damages.   A New Jersey appellate court recently upheld the rule that, unlike recovery of cleanup costs in contribution actions under the New Jersey Spill Compensation and Control Act, recovery of other damages under tort theories, such as lost sales, lost rental values and the like, remain subject to the six-year statute of limitations.  In 320 Assocs., LLC v. New Jersey Natural Gas Co., (A-1831-16T2) (June 29, 2018), the Appellate Division, upheld a lower court’s decision dismissing Plaintiff’s claims for money damages as untimely.

The owner of commercial property located near a New Jersey Natural Gas property sued the gas company for damages resulting from coal tar that had migrated onto the owner’s property.  The owner asserted common law claims against the gas company for negligence, per se negligence, strict liability, nuisance and trespass.  It sought damages for a lost sale and lost rental value as well as an order mandating the gas company to cleanup up both properties.

The Appellate Division determined that, since Plaintiff discovered the contamination in 2008, the six year statute of limitations barred all but one claim.  Only the nuisance survived for further fact finding because nuisance is considered ongoing so long as the nuisance can be abated.

The case is a reminder that property owners with common law claims need to be aware that, while environmental statutes permit claims for cleanup and cleanup costs without time limitations, other damages are not recoverable if they are asserted after the statutory limitations periods.

The Tax Cuts and Jobs Act of 2017 makes it harder to take tax deductions for some payments to governmental entities.  The change may impact settlements between private entities and federal, state and local environmental agencies.  In most cases, it will not affect environmental settlements between private parties.

Section 162(f) of the Tax Code has long prohibited deductions for fines and penalties paid to the government.  The new law makes the tests for deduction of certain payments to a governmental agency more stringent.  The amended Section 162(f) substantially limits the tax deduction available for (1) any settlement or other payments, (2) made to or incurred at the direction of a governmental entity, (3) related to a violation of any law or governmental investigation or inquiry into the potential violation of any law.

There is an exception to this rule, which allows a deduction for the following payments: (1) restitution, including remediation of property; or (2) an amount paid to come into compliance with a violated law or involved in an investigation or inquiry.  To be deductible, the payment has to be expressly identified under a court order or settlement agreement as a restitution or compliance payment.  This exception does not apply to amounts paid “as reimbursement to the government for the costs of any investigation or litigation.”

Under the statute, the limitation applies only to payments made to, or at the direction of, a governmental entity.  A deduction, therefore, remains available for remediation expenses paid to private parties without governmental direction.

Finally, a new provision under Sec. 6050X requires government agencies involved in settlements to report to the Internal Revenue Service (IRS) the portions of the settlement payment that are and are not deductible under Section 162(f).

Our tax and environmental groups can advise on the implications of the new law, including factoring into negotiations the potentially higher tax cost of government settlements and ensuring that the settlements reached are well-drafted and as tax-efficient as possible.

On February 12, 2018, the Trump Administration released its much-anticipated Infrastructure Plan. While the bulk of the more than 50-page document proposes a wide array of funding and reforms for various infrastructure programs, as well as ways to streamline and fast-track permitting for infrastructure projects, it also proposes changes to Brownfield redevelopment programs, including the federal Superfund law (CERLCA).  The plan seeks to incentivize the redevelopment of contaminated properties and address related legal and financial risks.

The proposed changes include allowing National Priorities List sites to be eligible for Brownfield revolving loan fund and grant programs, clarifying and expanding the liability protections for state and local governments that acquire contaminated properties through tax foreclosures and the like, expanding EPA’s authority to enter into administrative agreements with brownfield developers, and eliminating restrictions on funding for infrastructure projects that could be integrated with a remediation.  This would mean even more change at EPA, which has been busy implementing the Superfund Task Force Recommendations released last year.

 

 

New Jersey’s new governor signed an executive order yesterday directing his acting Department of Environmental Protection commissioner, Catherine McCabe, and Board of Public Utilities President Joseph Fiordaliso to begin negotiations with current state members of the Regional Greenhouse Gas Initiative (RGGI) to re-enter the program.  This order reverses former Governor Chris Christie’s 2011 action to withdraw New Jersey from the program.

RGGI, established almost 10 years ago in 2009, is the first mandatory market-based program in the United States to reduce greenhouse gas emissions.  At Governor Murphy’s direction, New Jersey will rejoin the cooperative effort among fellow northeastern states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont to cap and reduce carbon dioxide (CO2) emissions from the power sector.

What does that mean?  From the 30,000 foot view, it means fossil-fuel-fired electric power generators with a capacity of 25 megawatts or greater would be required to hold allowances equal to their CO2 emissions over a three-year control period.  The power plants can use allowances issued by any of the participating states, and can buy them at regional auctions or in secondary markets.  The regional cap on total CO2 emissions ratchets down 2.5% each year until 2020, theoretically relying on the regional market to drive prices and efficiencies.  Proceeds from the auctions are used to fund renewable energy and energy efficiency projects.

In the weeds, it means the Department of Environmental Protection drafting new regulations (presumably using RGGI’s Model Rules), participation in a complex and well-developed compliance and tracking system as well as the auctions and secondary markets, passing along costs and savings to consumers, periodic reviews and adjustments, entering cooperative memorandums, and more.  It may also mean more opportunities to promote solar, wind, and other renewable projects.

Overall, RGGI has been seen as a success, reportedly reducing power sector carbon emissions as much as 40% since 2005, while member state economies continued to grow.  There are, however, many ways to interpret the different data and forecast future impacts.  Nonetheless, New Jersey is on the path back to RGGI and we will be on the lookout for the implications, costs, and opportunities.  We are also keeping an eye on state legislation directing New Jersey to join the U.S. Climate Alliance, which Governor Murphy is expected to approve if it hits his desk.  The governor may also bypass the legislature and use the executive order route.  The U.S. Climate Alliance doesn’t come along with the same compliance commitments as RGGI, but it is another example of ramped up state- and regional-level actions to address climate change in reaction to the reduction in federal action.  The U.S. Climate Alliance was formed in direct response to President Trump’s withdrawal of the United States from the Paris Climate Accord.