Are Soil & Groundwater Environmental Investigations privileged?

Often, we encounter inquiries from colleagues or clients, asking whether they can engage a consulting firm or lawyer for an environmental site investigation, expecting to receive a confidential report. While this request may seem straightforward, it is based on the erroneous assumption that the data and information generated by the consultant’s efforts will, in all instances, be legally privileged, especially if the consultant is retained through by an attorney.

As environmental lawyers or consultants, in many situations we can navigate and exploit certain legal protections such as the attorney-client privilege and the attorney work product privilege when interpreting data. However, it’s essential to note that the data itself revealing actionable soil and/or groundwater contamination levels may not be shielded. Please remember the public policy concern that governs the privilege analysis is protecting the public’s health and safety from potential chemical contaminant exposure, not protecting the financial interests of individuals. This higher standard must guide our actions.

Historic Releases – Exempt?

Please review California Health & Safety Code Section 25359.4. On the surface, it would appear that only owners or operators would have a duty to report a release of a “reportable quantity” of a hazardous substance into the environment.

The penalty provision of the statute provides that the owner of property on which a reportable release has occurred, and any person who releases or causes a reportable release, shall be liable. The penalty is $25,000 for each violation and for each day that a violation continues if they fail to submit a written report to the California Department of Toxic Substances Control (“DTSC”) within 30 days of discovery of the release.

Reporting Obligations

However, the Code reporting obligation is a broad one. It covers all sales, leases and rentals of contaminated property once the contamination is discovered. Please also review California Health & Safety Code Section 25359.7. This section provides, in pertinent part:

“(a) Any owner of nonresidential real property who knows, or has reasonable cause to believe, that any release of hazardous substance has come to be located on or beneath that real property shall, prior to the sale, lease, or rental of the real property by that owner, give written notice of that condition to the buyer, lessee, or renter of the real property.”

Section 25359.7 of the California Health & Safety Code applies equally to tenants, such that “any lessee or renter of real property who knows or has reasonable cause to believe that any release of a hazardous substance has come or will come to be located on or beneath that real property shall, within a reasonable period of time . . . following the discovery by the lessee or renter of the presence or believed presence of the hazardous substance release, give written notice of that condition to the owner of the real property or to the lessor under the lessee’s or renter’s lease or rental agreement.”

DTSC’s Fact Sheet Update & Timing

What is a “reportable quantity” as the term is referenced in Section 25359.4? It’s either the quantity of a hazardous substance established in Part 302 of Title 40 of the Code of Federal Regulations, or “any quantity of a hazardous substance that is not reportable “but that may pose a significant threat to public health and safety or to the environment.”

Obviously, this definition is very broad. And you may have questions. If so, we recommend referring to DTSC’s Fact Sheet Update, January 2008, entitled “Reporting Nonemergency Hazardous Substances Releases,” including the guidance section “Commonly Asked Questions.” There you will learn that if you receive a report that indicates that groundwater is contaminated with hazardous substances which may have been released at the site due to operations previously conducted at a facility there, a “written report is required within 30 days of discovery because groundwater has been impacted.”

The DTSC Fact Sheet provides several pertinent real world “what if” scenarios for you to consider. It’s important to review these scenarios and then talk with someone more knowledgeable than yourself…to clarify your legal position.

In the DTSC’s Fact Sheet, you will also learn it is DTSC’s position that “consulting firms are required to report non-emergency releases.” As such, if the client has a duty to report, the client’s consultant usually does also. As such, whether the consultant was working through a lawyer becomes irrelevant if the hazardous release at issue “pose[s]a significant threat to public health and safety or to the environment.”

Is There a Way Around This Stuff?

A colleague has pointed out at least one potential loophole. It would appear that a prospective purchaser, pursuant to a purchase agreement, could agree to not to disclose the results of any investigation to: a) the seller or b) any regulatory agency as part of the contract to allow their investigation to occur to determine if the buyer wants to move forward with the purchase. In that instance, the buyer’s consultant would have the same reporting duties as the party retaining the consultant. Since the buyer won’t have any reporting duties, neither will the buyer’s consultant. If the buyer retains the consultant, no reporting duty will exist if the results are not disclosed to the seller. In actual truth, we are not completely certain that this loophole really would work in a situation where it is clear that an actual hazardous release presents an imminent and substantial threat to health or the environment.

Another Consideration

One rule of thumb: If the geographic footprint you are concerned with has already been reported to the California Office of Emergency Services (OES) or the local emergency response agencies, you are probably not required to report the property again. We say probably – each situation is different – there is no blanket amnesty from regulatory reporting requirements.

Keep in mind that the operative issue is protection of the public health and safety from unknown contaminant exposure – not protection of your pocketbook, or your client’s; there is clearly a higher standard.

When in doubt, report the incident – it’s defensible. There is no penalty for reporting twice.

Murray Sinclair is founder and principal of Murray M. Sinclair & Associates, where he has practiced environmental law for more than 30 years. Co-author Bart B. Sokolow, D.Env., P.E., President of Environmental Advisors, Inc., has advised various industries with respect to environmental matters for nearly 30 years. Sinclair and Sokolow are also co-authors of “How To Avoid Environmental Litigation – Second Edition” The basic text of this article is excerpted from Chapter IV of the book.