ENVIRONMENTAL PROGRAMS THAT HELP REDEVELOPMENT

Transcription

1 11 th Annual Land Use Planning Law Conference Hyatt Regency Hotel, Austin April 12-13, 2007 ENVIRONMENTAL PROGRAMS THAT HELP REDEVELOPMENT Patrick J. Larkin Partner Strasburger & Price, LLP 901 Main Street, Suite 4400 Dallas, TX (214)

2 A. The Problem B. Contrast in state and federal environmental laws C. State [and local] environmental programs that encourage redevelopment

3 The Problem Environmental Liability Laws Discourage Property Transfer And Thus, Redevelopment CERCLA is the model for environmental liability laws CERCLA imposes strict, joint and several liability on two main categories of persons: (1) The current owners or operators of a facility where there is a release or threatened release of hazardous substances; and (2) The owner or operators of such a facility at the time the hazardous substance was disposed of. New owners Unavoidably assume old liabilities Must rely on indemnity to offset govt./private claims

4 The Problem (cont d) CERCLA liability requires very high transaction costs to: 1) Cut-off government cost recovery claims (Prospective Purchaser Agreement) 2) Avoid new liability for innocent purchasers or offsite owners (Contiguous Property Owner Policy) 3) Allocate residual Third Party risks among buyers (judicially approved settlement/contribution protection)

5 Contrast State v. Federal Liability CERCLA Federal Environmental Liability Low [Current] Administration Enforcement Priority Great Uncertainty re: private ability to bring claims Burdensome to resolve liability & structure buyer protections IN CONTRAST: State Programs Clear Private Right to Enforce high priority risk Lower Transaction Costs to Resolve Liability manageable cost [Most] State Closures are NOT second-guessed By EPA (confirm state/epa MOU) Implications o give finality for state AND federal liability State liability is an urgent, but manageable risk CERCLA liability-avoidance is NOT a good use of resources. 1) CERCLA liability = low risk of EPA/Private Enforcement 2) CERCLA liability = high cost to resolve State Programs are CRITICALLY important

6 State Environmental Programs That Encourage Redevelopment Basic Problem Continues High Costs of Resolving Liability means Redevelopment Property Sits Still Texas Environmental Laws Provide Developers, Cities, and Innocent Sellers With Powerful Redevelopment Tools VCP IOP DCRP MSD

7 Texas Voluntary Clean-up Program (Tex. H&S Code et seq.; 30 TAC ) Benefits Statutory immunity during work (owners can stop hiding) EPA also agrees to defer enforcement Release of TCEQ cleanup claims for future owners/lenders No Further Action letter for RP EPA semi-formally bound by TCEQ release/closure decisions Eligibility Only exclusions are: Current enforcement sites (flexible) Hazardous waste permit sites Partially remediated sites (flexible)

8 Texas Voluntary Clean-up Program (Tex. H&S Code et seq.; 30 TAC ) (con td) Tips So: Buyers must join VCP app. pre-closing/close after COC Large/complex sites can use PRA/staged cleanups finality and certainty are provided scope and pace of cleanup commitments can be controlled

9 Texas Innocent Owner Program (Tex. H&S Code et seq.;30 TAC ) Benefits TCEQ will confirm no liability status for property adjacent to pollution source No ongoing duty of care for Innocent Owners (cf. CERCLA 9607(q)) Allows sale of polluted but Innocent property Polluter may discourage litigation by mitigating property damages Eligibility Innocent property must show (a) source is offsite and (b) no contribution from onsite operations separate delineation is possible but technically complex Cannot get IOPC for parcel subdivided from RP parcel Tips Providing an IOPC could mitigate all property damages where residential use and GW use are not foreseeable

10 Dry Cleaner Remediation Program (TEX. H&S Code ; 30 TAC ) Benefits DCRP pays for up to $5M of corrective action for dry cleaner sites DCRP financed by registration fees and fees on dry cleaner solvent TCEQ cannot compel eligible persons to undertake corrective action Eligibility Owner of operating dry cleaning facility Owner or former owner of dry cleaner real property Deductible of $5,000 per site must be met, TCEQ then responsible for corrective action

11 Dry Cleaner Remediation Program (TEX. H&S Code ; 30 TAC )(cont d) Compare DCRP and VCP Owner s Costs: 1) DCRP: First $5000 only 2) VCP: All corrective action costs plus State oversight Form of Closure: Key Issues 1) DCRP: No Further Action letter (Owner exempt at ranking) 2) VCP: Certificate of Completion (future owners released at closure) Non-DCRP chemicals involved? Does NFA letter v. VCP Certificate affect financing?

12 Municipal Setting Designations (TEX. H&S CODE ; (No TAC Regulations).) (cont d) Eligibility & Benefits If: Public water supply available No GW-to-surface impacts No water wells within ½ mile City/water utility support well prohibitions Then: No GW investigation costs No GW treatment costs No perpetual monitoring costs VCP final certificate for Purchaser

13 Municipal Setting Designations (TEX. H&S CODE ; (No TAC Regulations).) (cont d) Process: See MSD paper at Tips: Redevelopment due diligence checklist should now evaluate site eligibility for MSD if City has MSD track record, clear sign that worst case environmental risks are limited to soil management

14 Summary VCP: Finality and certainty for buyers IOP: Certainty for offsite owners & damage mitigation for RPs DCRP: New value for Dry Cleaner Sites [strip malls] MSD: Groundwater Cleanup only if Groundwater is Needed

15 Questions? Patrick J. Larkin Strasburger & Price, LLP 901 Main Street, Suite 4400 Dallas, TX (214)