In Flexdar, the court provided so much more than a simple holding, despite this being the fourth case where it found coverage based on interpretation of the pollution exclusion.  Importantly, it explained exactly why Indiana has “gone in a different direction” than many other states.  The court looked back to its reasoning in prior decisions and pointed out that taking the exclusion language literally, “eliminates practically all coverage, yielding, in our opinion, untenable results.” Just about anything can act as an “irritant or contaminant”– words used in the pollution exclusion. The court also refused to take a case-by-case, situational approach which involves having courts and policyholders determine whether the exclusion should be upheld for “traditional” environmental contamination.  The ”concept of what is a ’traditional’ environmental contaminant may vary over time and has no inherent defining characteristics.”

Insurers must specifically define the term “pollutants” if they want any chance of avoiding coverage. In Indiana, all doubts are resolved against the insurer because “insurance companies write the policies, we buy their forms or we do not we do not buy insurance.”   This is a message we have heard before and now it is supported by detailed reasoning and discussion of our significant CGL coverage cases.

How explicit would an insurer have to be in its definition of “pollutants” for the exclusion to apply under Indiana law and possibly prevent certain coverage?  The case law suggests this is quite a tall order.  The court did refer to an insurer’s 2005 description of “pollutants.” The term was defined with detailed and ever-changing published lists of regulatory contaminants.  Of course, we will have to wait and see how that definition of “pollutants” is interpreted in Indiana at the appellate level. It was not at issue before this court.

In the meantime, for the older, and not so old “pollutants” terms in many CGL policies, the ambiguity often means coverage for policyholders saddled with environmental liabilities. Indiana’s highest court “see[s] no reason to abandon settled precedent.”

Author: Jamie B. Dameron (bio)

Phone: 317.464.1591

Email: jdameron@bamberger.com

Available Funding

Finding money to assess the condition of a Brownfield property can be challenging.  Applying for available Brownfield assistance is one way to get started.  According to Indiana Finance Authority, about $100,000 in “Auto Section Initiative” funding is still available for Phase I and II Site Assessments at eligible Brownfields.  The money may be used for a wide variety of assessment activities.  The funds are available to private and public applicants that have idle, abandoned, and closed facilities related to the downsizing of the automotive manufacturing sector.  Awards to private entities require a percentage match ranging from 10-25%, depending on the amount of the award.  Although environmental assessments completed through this type of funding are often only the first or second step in a cleanup process, they may provide the data and information needed to understand and document the environmental condition.  Armed with some environmental information, it is much easier to discuss redevelopment options with stakeholders and secure funding from responsible parties and the insurance companies of the past polluters.  IFA also points out that Indiana’s
Revolving Loan Fund has some money for zero-to-low interest loans to fund the cleanup of hazardous substances or petroleum sites.  Again, there is an application process and it is always a good idea to call the IFA to talk about the project before applying.  These loans are also available to public and private entities.   Lastly, the USEPA has money for Brownfields, with application deadlines at different
times of the year. The major funding round is usually in the fall for disbursement the spring of the following year.  If you start planning now, you have a better chance of being ready and positioned
for the fall application submittal.  Along with help from the Indiana Brownfield’s staff, the Indiana applicants are great at getting a big chunk of the federal dollars.

State Issued Comfort Letter

We all want prospective purchasers and lenders to look at Brownfields for redevelopment opportunities, so we need to help them get over the perceived or actual environmental liability hurdle.  Even when legacy environmental conditions present no exposure risks to the new user, it can take time to get that “No Further Action” letter from the agency regulating the cleanup or risk assessment.  After the NFA letter is in your hand, and you think “that’s it, we’re done,” your attorney, the plain language of the NFA letter, and the law should leave you with the thought that the liability
door will remain at least cracked open.  Obtaining a ”Comfort Letter” from the state can offer additional assurance and put prospective purchasers and lenders at ease. A Comfort Letter is just that, a letter from the state that explains a specific environmental liability exemption in law or policy and how it applies to the property and you.  With the additional clarity, many find they can get comfortable with the existing environmental condition and move forward with the transaction.

Whether it is funding or potential liability that is holding up your redevelopment opportunities, there are valuable tools and resources available to assist both public and private entities.  Grants and Comfort Letters are tools that help many communities and businesses realize new uses for blighted or underused properties known as Brownfields.

Author: Jamie B. Dameron (bio)
Phone: 317.464.1591
Email: jdameron@bamberger.com

Reuse

Indiana has many abandoned or underused properties due to an actual or perceived environmental condition, also known as Brownfields. Indiana communities know that despite a property’s great location, bottom-dollar price, existing infrastructure, and available work force, it takes closing the loop on the environmental unknowns to attract businesses to Brownfield properties.  In the 2011 grant round, EPA awarded Indiana communities over $5 million—more than any other state in the Region– for environmental assessments at Brownfield properties. Your community may have a real estate opportunity at a prime location where the environmental unknowns have already been identified or even addressed.  The Indiana Finance Authority also has funding available for below-market interest rate loans at cleanup sites.  Additional information on funding and financing Brownfield Redevelopment and success stories are available through the Indiana Finance Authority.

Recycle

Waste and left over raw material handling and disposal are costly to business and improper waste handling may lead to costly environmental cleanup.  Through Indiana’s Recycling Market Program, a total of $500,000 in grant funds has been made available for businesses interested in purchasing equipment for remanufacturing recyclable materials into products or feedstocks.   A 50% match is required and the deadline to apply is September 26, 2011. Additional information and the application may be found through the Recycling Market Development Program’s website.

Author: Jamie B. Dameron (bio)
Phone: 317.464.1591
Email: jdameron@bamberger.com

In addition to paying civil penalties, the company is required to implement enhanced compliance efforts under the Clean Air Act’s leak detection and repair (LDAR) program.  EPA’s LDAR regulations require periodic monitoring of process equipment and other structures, particularly pipe joints, pump seals, valves, and flanges, to detect and repair air pollution leaks, including leaks of hazardous air pollutants.  Many manufacturers find LDAR to be an expensive, labor intensive monitoring program.

Manufacturers who identify and prioritize monitoring, maintenance and documentation requirements under environmental regulations are likely to be better positioned during a regulatory inspection.  Record keeping violations are an easy target.  Given EPA’s stepped up enforcement under its 2011-2015 Strategic Plan, now is the time to allocate resources and get these tasks checked off the housekeeping to-do list.

Author: Jamie B. Dameron (bio)
Phone: 317.464.1591
Email: jdameron@bamberger.com

Her prepared statement is available at http://yosemite.epa.gov/opa/admpress.nsf/0/EBC9CF14B126FB318525784F006AF60B.

Air, water, chemical and waste regulations are expanding.  Environmental operations requirements including stringent limits on discharges or releases of “pollutants” into the environment may affect certain agricultural operations.  EPA’s own “Ag Center,” with the support of the USDA, has been organized to help communicate environmental regulations impacting farming operations.  There is a great deal of useful information available on-line through the Ag Center.  A quick count shows over 80 documents and links concerning environmental issues faced by farmers and livestock producers.  Such a communication effort reflects a regulatory reach into agriculture that is certainly not a myth.   

For example, EPA continues targeting concentrated animal feeding operations (CAFO’s) as part of a national enforcement initiative focused on stormwater runoff issues.   Through focused enforcement efforts, EPA is locating and inspecting small and medium CAFOs which may be “discharging pollutants” into surface waters without the required Clean Water Act permit.

Author: Jamie B. Dameron (bio)
Phone: 317.464.1591
Email: jdameron@bamberger.com

In this seminar, Bamberger’s Jamie Dameron will discuss issues facing manufacturers and other businesses.  She will cover topics including the 2011 Environmental Enforcement Priorities and staying in front of compliance requirements.  She will also talk about how contamination cleanup efforts are funded through run-of-the-mill business insurance and how to bring others to the table to help with the cleanup costs.

Also speaking will be Doug Welp, member of Bamberger’s manufacturing team and co-chair of the firm’s litigation team.  Doug will talk about what to expect when environmental matters make their way to the courtroom.  Topics include responding to a complaint, the discovery process and records retention issues.

The seminar will be held at the Bamberger Conference Center on the 10th floor in the Hulman Building. Breakfast will be provided.  If you’d like to attend this informative seminar, please RSVP by Wednesday, March 9, 2011 by calling 812.452.3567 or email us at rsvp@bamberger.com.

Author: Kim Jewell (bio)
Phone: 812.452.3588
email: kjewell@bamberger.com

In this seminar, Bamberger’s Jamie Dameron will discuss issues facing manufacturers and other businesses.  She will cover topics including the 2011 Environmental Enforcement Priorities and staying in front of compliance requirements.  She will also talk about how contamination cleanup efforts are funded through run-of-the-mill business insurance and how to bring others to the table to help with the cleanup costs.

Also speaking will be Doug Welp, member of Bamberger’s manufacturing team and co-chair of the firm’s litigation team.  Doug will talk about what to expect when environmental matters make their way to the courtroom.  Topics include responding to a complaint, the discovery process and records retention issues.

The seminar will be held at the Bamberger Conference Center on the 10th floor in the Hulman Building. Breakfast will be provided.  If you’d like to attend this informative seminar, please RSVP by Wednesday, March 9, 2011 by calling 812.452.3567 or email us at rsvp@bamberger.com.

Author: Kim Jewell (bio)
Phone: 812.452.3588
email: kjewell@bamberger.com

A recent case shows that in certain circumstances, landlords that own contaminated property are not necessarily on the hook for certain environmental claims.  In Martinsville, Indiana, a tenant spilled the dry cleaning solvent PCE during six or so years of operations, and the PCE migrated to the neighbor’s off-site property through the groundwater, soil and into indoor air.  The neighbor sued the landlord–the property owner at the time tenant operated and spilled the PCE.   The lower court denied the neighbors claims against the landlord and the case was appealed.  On the nuisance count, the Indiana Court of Appeals looked to a 1909 case to guide its decision on whether the landlord was liable to the neighbor for its tenant’s release of regulated chemicals into the environment.  

In Indiana, the long-established, general rule for landlord liability is whether the landlord had “actual knowledge” of tenant’s nuisance.   Showing “actual knowledge” requires direct evidence, which is not always easy or cheap to come by.  The case illustrates how it can be difficult to prove “actual knowledge” in environmental contamination cases.

The following facts in Neal v. Cure,—N.E.2d—, 2010 WL 4782240, No. 49A04-0908-CV-468 (Ind. Ct. App. November 24, 2010), did not convince the Indiana Court of Appeals that the landlord had “actual knowledge” of the tenant’s environmental nuisance:

• Tenant’s drums of PCE and waste oil out in the open;
• Landlord knowing that PCE was used on the property by tenant;
• Landlord visiting the property, seeing drums and declaring that tenant was a “sloppy housekeeper;” and
• Landlord’s awareness of a spill of PCE in 1991, where the landlord was told “it didn’t amount to anything.”

None of these facts were direct evidence that landlord knew the activities of the tenant had created contamination amounting to a nuisance.

The affected neighbor suing the landlord suggested that Indiana should adopt a “knew or should have known standard” that some other states use instead of Indiana’s “actual knowledge” standard.  The court declined, citing the 1909 case and explaining that the Indiana decisions are clear:  a landlord will only be liable for a tenant’s nuisance if 1) the character of the business itself is a nuisance, 2) landlord knew about the nuisance and could stop it but failed to do so, or 3) landlord consents to the maintenance of the nuisance.   The neighbor did not argue that the dry cleaning operation was a nuisance just by its character, and the neighbor could not prove that the landlord had actual knowledge of the tenant’s nuisance.  In fact, the neighbor’s claims against landlord in trespass, nuisance, negligence, and under Indiana’s Environmental Legal Action statute were all denied by the court because of landlord’s lack of actual knowledge or involvement in tenant’s activities which caused the environmental contamination.  

There are many circumstances when a property owner is liable to third parties, including the state, due to contamination migrating from his property and impacting others.   A landlord defending certain claims from neighbors can look to Indiana law established since 1909 and further explained in 2010 to evaluate potential liability resulting from a tenant’s environmental nuisance.

Author: Jamie B. Dameron (bio)
Phone: 317.464.1591
Email: jdameron@bamberger.com

In this seminar, Bamberger’s Jamie Dameron will discuss issues facing manufacturers and other businesses.  She will cover topics including the 2011 Environmental Enforcement Priorities and staying in front of compliance requirements.  She will also talk about how contamination cleanup efforts are funded through run-of-the-mill business insurance and how to bring others to the table to help with the cleanup costs.

Also speaking will be Doug Welp, member of Bamberger’s manufacturing team and co-chair of the firm’s litigation team.  Doug will talk about what to expect when environmental matters make their way to the courtroom.  Topics include responding to a complaint, the discovery process and records retention issues.

The seminar will be held at the Bamberger Conference Center on the 10th floor in the Hulman Building. Breakfast will be provided.  If you’d like to attend this informative seminar, please RSVP by Wednesday, January 26, 2011 by calling 812.452.3567 or email us at rsvp@bamberger.com.

Author: Kim Jewell (bio)
Phone: 812.452.3588
email: kjewell@bamberger.com

In this seminar, Bamberger’s Jamie Dameron will discuss issues facing manufacturers and other businesses.  She will cover topics including the 2011 Environmental Enforcement Priorities and staying in front of compliance requirements.  She will also talk about how contamination cleanup efforts are funded through run-of-the-mill business insurance and how to bring others to the table to help with the cleanup costs.

Also speaking will be Doug Welp, member of Bamberger’s manufacturing team and co-chair of the firm’s litigation team.  Doug will talk about what to expect when environmental matters make their way to the courtroom.  Topics include responding to a complaint, the discovery process and records retention issues.

The seminar will be held at the Bamberger Conference Center on the 10th floor in the Hulman Building. Breakfast will be provided.  If you’d like to attend this informative seminar, please RSVP by Wednesday, January 26, 2011 by calling 812.452.3567 or email us at rsvp@bamberger.com.

Author: Kim Jewell (bio)
Phone: 812.452.3588
email: kjewell@bamberger.com