More BUSTR Updates Pending

As we posted last week, the Bureau of Underground Storage Tank Regulations (BUSTR) were updated last fall to allow current landowners to address certain BUSTR releases under the Ohio Environmental Protection Agency's (OEPA) Voluntary Action Program or the "VAP".  [Don't you just love all these acronyms?]  Below is a brief summary of some other rule changes that will soon take effect and pending legislation.

 

1. BUSTR Rule 13 -- Correct Action Rule

BUSTR amended its Corrective Action Rule (Rule 13) to equate an OEPA Covenant Not to Sue to a BUSTR NFA. This amendment takes effect July 1, 2012 (OAC 1301:7-9-13(R)(3)).  If the CNS is not upheld then BUSTR will revoke the NFA.

2.  BUSTR Rule 19 -- Operating Training

 

Operator training requirements are specified for 3 types of classes:

• Class A Operator - Upper Level Manager
• Class B Operator - Field Supervisor
• Class C Operator - Hourly Worker

No later than August 1, 2012, owners and operators of UST systems must designate, per site, the Class A, B and C operators.  No later than August 8, 2012, all designated Class, A, B and C operators must be trained. Proof of training must be provided to the fire marshal upon request.  There is a three year inspection cycle.

Each UST system or group of UST systems at a facility must have a Class A, Class B and Class C operator designated. The operators can be trained according to their classification with Class A operators having the most extensive training. Training programs may be held by the State of Ohio or a third party that has received prior state approval. There are currently 14 approved trainers for Ohio's UST program.

 

Due to high turnover rate and volume of Class C operators, BUSTR accepts training of Class C operators by a trained Class A or Class B operator.

 

No later than August 1, 2012, owners and operators of UST systems must designate, per site, the Class A, B and C operators. No later than August 8, 2012, all designated Class, A, B and C operators must be trained. Proof of training must be provided to the fire marshal upon request. There is a three year inspection cycle.

 

See OAC 1301:7-9-19.

 

3.  BUSTR Rule 12 - Out of Service Tanks

 

Effective July 1, 2012, Rule 12 will allow for longer out of service periods under an approved permit. (See OAC 1301:7-9-12)  If an owner or operator can demonstrate compliance with various release prevention requirements (including having a certificate of coverage from the Petro Board) during the out of service period, a closure assessment will not be required.

4.  Senate Bill 294

 

New legislation known as Senate Bill 294 has been proposed to further expand "Class C Release" situations where a current landowner can address a BUSTR release under OEPA's VAP. This new exception, if it becomes law, addresses those situations where there is a viable responsible party who refuses or is not otherwise addressing the BUSTR release and a volunteer wants to step in and address the release under the VAP. This volunteer can do so, provided...

 

• the person conducting the voluntary action is not the responsible party for the BUSTR release;
• The BUSTR release is addressed in conjunction with a non-BUSTR regulated release of hazardous substances or petroleum; and
• an escalated enforcement action has not been initiated (i.e., the fire marshal has not issued an enforcement order or made a referral to the Ohio Attorney General's office).

 

Keep in mind that these provisions and the ones discussed by my colleague, Steve Richman, last week, apply to individual releases not sites nor particular tanks. BUSTR does not classify a whole site as a Class C release. This can be problematic when a site has multiple releases or has had multiple sets of tanks.

 

For the volunteer to participate in the VAP, the release must be an identified release, meaning an environmental assessment of some type (closure, Tier 1 or Phase 2) showing contamination above BUSTR action levels must have been performed and that data has been submitted to BUSTR. The volunteer may arrange for the environmental assessment and then submit it to BUSTR.

 

Current owners beware--If there are any out of service USTs on your property that have been in use in the past few decades and there have not been any environmental assessments conducted on these USTs to see if there has been a release then you may be a responsible party under Ohio law.

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CLE Update: ALI ABA Land Use Institute

The American Law Institute - American Bar Association is sponsoring the Land Use Institute: Planning, Regulation, Litigation, Eminent Domain, and Compensation on Wednesday through Friday, August 8-10, 2012.  The institute is cosponsored by the Center for Urban Redevelopment Education (CURE), Florida Atlantic University.  The institute program will be held in Chicago, Illinois at the Millennium Knickerbocker Hotel.

Click here for more information or phone 1-800-CLE NEWS.
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Clean-Up of UST Tanks Now Possible under Ohio EPA’s VAP program when Responsible Party is Bankrupt/Deceased/Financially Unable

Cleaning up an environmental site in Ohio can be confusing at best, due to the number of regulatory agencies who may have jurisdiction. This is especially true at a site that contains underground storage tanks as well as other contaminants.

Basically, the Bureau of Underground Storage Tank Regulation (“BUSTR”) regulates petroleum and hazardous substances stored in underground storage tanks (and cleaning up contamination from same). There are a few exemptions to these regulations:

• Heating oil tanks used for heating on the premises (permit/inspection done by local fire department. Ohio EPA regulates any release).

• Farm and residential tanks smaller than 1,100 gallons (permit/inspection done by local fire department. Ohio EPA regulates any release).

• Abandoned tanks of unknown owner, origin and contents (permits issued through local fire department or SFM/Code Enforcement Bureau).

• A list of hazardous substances that are regulated for tank removal are found in OAC 1301:7-9-03. Clean-up of these are not regulated by BUSTR. Several other exceptions are listed in the rules themselves.

The coveted “piece of paper” sought from BUSTR after a tank removal and clean up is known as a “No Further Action Letter”(“NFA”) indicating BUSTR is satisfied with the tank removal and clean up (associated with the tank).

Cleaning up a hazardous substance not associated with a tank, however, is governed by the Ohio EPA. Those seeking “finality” (at least from Ohio EPA) and absolution regarding an “environmentally challenged site” often go through the steps required in Ohio EPA’s Voluntary Action Program (“VAP”). The VAP Program was created to give individuals/companies a way to investigate possible environmental contamination, clean it up if necessary, and receive a promise from the State of Ohio that no more cleanup is necessary.

The coveted “pieces of paper” applicable to a non-tank related clean-up are: 1) No Further Action letters that are actually prepared by a Certified (Environmental Consultant) Professional (after investigation and clean up to VAP standards) and then blessed by the Ohio EPA; and 2) “Covenants Not To Sue” (“CNTS”) issued by the Ohio EPA. CNTSs are basically written assurances that no further action would be required (regarding cleaning up the hazardous substance(s) in question) recorded in the applicable county recorder’s office.

The problem with dealing with multiple agencies is simply time and money. The BUSTR NFA would not cover, for example hydraulic oil not associated with an underground storage tank (“UST”), and the Ohio EPA’s CNTS would not cover USTs and contamination from the tanks. Accordingly, the property owner would have to “go through both doors” to get a “blessed as clean” site.

The good news is that the Ohio legislature partially remedied this problem last fall (with HB 152) for instances where a responsible party is deceased, bankrupt or financially unable to clean up a release from an UST. If any of the foregoing apply, the UST is said to be a “Class C UST”.

HB 152 basically provides that Class C USTs/releases can be cleaned up under Ohio EPA’s VAP program, without completing a BUSTR clean up first. The UST still must be removed per BUSTR regulations, but the soil assessment and clean up can be performed under the VAP.

While HB 152 is a step in the right direction, the law does not go far enough. All clean ups associated with USTs should be able to utilize the VAP program.


For More information from Ohio EPA, click on the following link:

 BUSTR Class C Releases are Now Eligible for the VAP

CLE Update: Clearing Title to Distressed Real Estate

HalfMoon LLC is sponsoring a seminar titled "Clearing Title to Distressed Real Estate" on Wednesday, May 2, 2012.  The seminar will be held at the Holiday Inn Columbus/Worthington, 7007 North High Street in Worthington, Ohio.  Registration begins at 8:00 am ET, with the seminar beginning at 8:30 am and ending at 4:40 pm.

For more information or to register online, go to http://www.halfmoonseminars.com/.
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Supreme Court of Ohio “Knows It (“Excessive Noise”) When They Hear It”

In a 7-0 decision, the Supreme Court of Ohio in State v. Carrick, Slip Opinion No. 2012-608 held that a provision in Ohio’s disorderly conduct statute (R.C. 2917.11(A)(2)) that prohibits “recklessly causing inconvenience, annoyance or alarm to another by making excessive noise” is not unconstitionally void for vagueness.

Many municipal ordinances as well as commercial leases contain clauses prohibiting “excessive” or “unreasonable” noise. Since, at first glance, a seemingly subjective standard would be too vague to enforce or too hard to prove, most of us do not turn down our music or muzzle our pets. After the Carrick case, we may need to be more sensitive.

The Carrick case involved a citation issued to Jason Carrick for violating the Ohio Disorderly Conduct Statute as a result of loud music, particularly “booming bass” emanating from Mr. Carrick’s home. Several neighbors, 100’-200’ away complained not only about loud music, after 11:00 P.M., but that the bass caused the windows on their homes to vibrate. After three warnings, Mr. Carrick was cited and convicted of disorderly conduct in violation of R.C. 2917.11 (A)(2). He appealed to the Ninth District Court of Appeals (Wayne County) on the grounds that the statute was unconstitionally void for vagueness. The Ninth District upheld the the Statute, so Mr. Carrick appealed to the Supreme Court of Ohio.

Citing other cases, the Supreme Court of Ohio in Carrick stated that a statute could be struck down as “unconstitutionally vague” if “an individual of ordinary intelligence would not understand what he/she is required to do under the law”. Put another way, Mr. Carrick would have had to prove, beyond a reasonable doubt “that the statute was so unclear that he could not reasonably understand that it prohibited the acts in which he engaged.”United States v. Harris, 347 U.S. 612, 617 (1954). The Court claimed Mr. Carrick had to have understood what was expected because the R.C. 2917.11(A)(2) contained an objective standard; only “excessive” noise was prohibited. This author is not so sure how reasonable it is to consider “excessiveness” or “unreasonableness” an objective standard, but the Court thought so, especially because the statute also enumerated “specific” factors (“inconvenience, annoyance or alarm”) with which to judge the level of the disturbance.

In attempting to “objectify” a somewhat subjective analysis, the Court in Carrick sought guidance from its earlier decision in Columbus v. Kim, 118 Ohio St. 3d 93, 2008-Ohio-1817. The Columbus v. Kim case involved a Columbus ordinance prohibiting residents from harboring “an animal who emits sounds that are unreasonably loud…and …of such character, intensity and duration as to disturb the peace and quiet of the neighborhood”. Finding the Kim case analogous, the Court in Carrick again reasoned that “unreasonably loud” constitutes an objective standard, and since there were specific factors to gauge the level of the disturbance (character, intensity and duration), the Columbus ordinance, like R.C. 2917.11(A)(2) would not be “void for vagueness”.

Neither R.C. 2917.11(A)(2), nor the Court in Carrick provides guidance as to how much inconvenience, annoyance or alarm constitutes “excessive noise”. Nor does the Columbus ordinance provide guidance as to how long and how intense animal noise must be to be “unreasonable”. Perhaps all we can take away from State v. Carrick is: 1) the Supreme Court of Ohio has a track record upholding noise ordinances; and 2) “playing music at a late hour at such a volume that it keeps the neighbors from sleeping, causes windows to vibrate on a house a
quarter mile away, and prompts numerous calls of complaint to authorities” will be enough for the Supreme Court of Ohio to know unreasonable/excessive noise when they hear it, just as United State Supreme Court Justice Potter Stewart knew pornography when he saw it. (See Jacobellis v. Ohio, 378 U.S. 184 (1964)).

CLE Update: Shale Drilling and Hydraulic Fracturing

The American Bar Association is sponsoring the following live video webcasts on May 8, 2012:

Shale Drilling and Hydraulic Fracturing: A Primer for Non-Specialists, from 10:30 am to 12:30 pm ET ($199); and

Shale Drilling and Hydraulic Fracturing: Advanced Critical Issues, from 2:00 pm to 6:15 pm ET ($299).

If registering for both webcasts, the combined tuition is reduced to $399.

Click here for more information.

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Deeds 101: General Warranty Deeds vs Limited Warranty Deeds

When purchasing real property, you may find a reference in the purchase agreement to the seller providing buyer with a general warranty deed or a limited warranty deed and wonder what's the difference between the two. When a property owner is transferring real property by any warranty deed, the owner (or grantor) is proving a warranty about the validity of title that is being conveyed to the 'grantee'.

An owner transferring property by way of a general warranty deed is providing a warranty to the buyer (the grantee) for any and all prior problems with title, not just title issues that occurred during the owner's period of ownership.  On the other hand, when transferring property to a grantee/buyer by way of a limited (or special) warranty deed, the owner is limiting the warranty to the period during which the owner owned the property.

A general warranty deed form is addressed at Ohio Revised Code section 5302.05.  A limited warranty deed form is addressed at Ohio Revised Code section 5302.07.

When an owner insists on using a limited warranty deed, it is worth questioning the basis for that demand. It's not unheard of in a commercial real estate transaction setting to have the owner insist on a limited warranty deed as a matter of company policy for property sales. However, a buyer would want to confirm that is the only reason. After all, an owner may know of potential title issues with the property that predate the owner's ownership that the owner doesn't want to be on the hook for.

This is where a thorough title exam and title insurance can save the day.  If the title search is clean and the transaction is otherwise a good deal, then accepting a limited warranty deed for the property transfer may be worth the risk.
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Michigan Passes Nonrecourse Mortgage Loan Act

On March 29, 2012, Michigan's Governor approved legislation passed by the state's house and senate and known as the Nonrecourse Mortgage Loan Act, which takes effect immediately.

A summary provided by Legislative Analyst Patrick Affholter on the Michigan Senate's web site summarized the Nonrecourse Mortgage Loan Act as follows:

• Prohibit a post closing solvency covenant from being used as a nonrecourse carveout or as a basis for any claim against a borrower, guarantor, or other surety on a nonrecourse loan.
• Specify that a noncompliant provision in loan documents would be invalid.
• Specify that the Act would not prohibit a loan secured by a mortgage from being fully recourse to the borrower or guarantor, if the loan documents did not contain nonrecourse provisions.

 "Nonrecourse loan" would mean a commercial loan secured by a mortgage on real property located in Michigan and evidenced by loan documents that do any of the following:

• Provide that the lender will not enforce the liability or obligation of the borrower by an action or proceeding in which a money judgment is sought against the borrower.
• Provide that any judgment in any action or proceeding on the loan is enforceable against the borrower only to the extent of the borrower's interest in the mortgaged property and other collateral security given for the loan.
• Provide that the lender will not seek a deficiency judgment against the borrower.
• Provide that there is no recourse against the borrower personally for the loan.
• Include any combination of those provisions or any other provisions to the effect that the loan is without personal liability to the borrower beyond the borrower's interest in the mortgaged property and other collateral security given for the loan.

"Nonrecourse carveout" would mean a specific exception, if any, to the nonrecourse provisions set forth in the loan documents for a nonrecourse loan that has the effect of creating personal liability of the borrower or a guarantor or other surety of the loan for all or some amounts owed to the lender, if specified events occur.

 

 "Post closing solvency covenant" would mean any provision of the loan documents for a nonrecourse loan, that relates solely to the solvency of the borrower, including a provision requiring the borrower to maintain adequate capital or have the ability to pay its debts, with respect to any period of time after the date the loan is initially funded. The term would not include a covenant not to file a voluntary bankruptcy or other voluntary insolvency proceeding or not to collude in an involuntary proceeding.

 

 Click here to access a copy of the Act.

 

EPA proposes new regulations regarding USTs

EPA regulations regarding underground storage tanks have been in place since 1988 and can be found at 40 CFR 280.  For the first time since then the EPA is proposing to revise these regulations.

 

Here’s what the EPA is proposing to do:

• Require implementation of additional secondary containment requirements for new/replaced tanks and piping;
• Provide for additional operating training requirements for UST system owners and operators (this will be phased in over a period of 3 years); 
• Add periodic operation and maintenance requirements for UST systems;
• Add new release prevention and detection methods and technologies; and
• Eliminate certain deferrals from regulations.

The stated purpose of these proposed regulations is to emphasize the proper operation and maintenance of UST equipment and to improve the prevention and detection of UST releases, a leading source of groundwater contamination.

 

Because many states also have their own UST programs, the EPA also proposes to update its approval requirements for the state programs to conform to the final federal regulations that are ultimately implemented.

 

The public comment period to the proposed revisions remains open until April 16, 2012. Click here for an overview of the EPA’s UST laws and regulations. Click here to access further information on the EPA’s web site regarding the proposed regulations.

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