Environmental IssuesEnvironmental IssuesAffecting Real Estate

SMU Cox School of BusinessReal Estate Law

March 8, 2012

b y :Sally A. Longroyy g y

Overview

RCRA / Texas SWDA CERCLA / Texas SWDA CERCLA / Texas SWDA Brownfield Redevelopment

St W t M t Storm Water Management Floodplains and Wetlands Asbestos & Lead Endangered Species Trends – Sustainable Development

RCRA / Texas SWDA

Waste management - “Cradle-to-grave” Allows EPA to address releases from

underground storage tanks Injunctive relief available if “imminent and

substantial endangerment”

Trinity River Audubon Center

Trinity River Audubon Center

EFFORT TO HAUL IT OUT?City’s Expert Report Estimated:City s Expert Report Estimated:

12 year excavation process146,000 truckloads of materialsSemi trucks must enter/exit every 3

i t ith 15 i f hminutes with 15 pieces of heavy construction equipment operating 8 hours per dayhours per day

$107,000,000.00

Trinity River Audubon Center

The $77 Million Order

Trinity River Audubon Center

Over 100 soil borings/ landfill gas monitoring pointspoints Over 90 test pits 22 Groundwater monitor wells 9 Surface water/ sediment samplessediment samples Bi-weekly/quarterly methane monitoring

Trinity River Audubon Center

130,000 cy waste relocated on-site

1,400,000 cy imported fill

Trinity River Audubon Center

Trinity River Audubon Center

CERCLA / Texas SWDA

Goal - Clean up of hazardous substances Liability – Liability –Status liability - PRPsJoint and severalJoint and severalStrictRetroactivePerpetual

CERCLA / Texas SWDA

LiabilityLender protectionsLender protectionsPetroleum exclusion

CERCLA / Texas SWDA

CERCLA Defenses Innocent Landowner Innocent Landowner Contiguous Property Owner Bona fide Prospective Purchaserp

Requires “All Appropriate Inquiry”ASTM E1527-05 – consistent with final

rule on AAICodified at 40 CFR Part 312

CERCLA / Texas SWDA

Why Perform Assessment?Set transaction condition

√ Liability allocation√ Remediation conditions

Who pays? Who pays? Who runs the show? Permitted uses? How clean?How clean? Who’s the long-term caretaker?

√ Construction-related issuesLender requirementsLender requirementsAsset valuation

CERCLA / Texas SWDA

Recognized Environmental Conditions AIA ComponentsCo po e sRecords reviewSite reconnaissance Interviews with owners, occupants,

operators and state and local regulatory agenciesregulatory agencies

ReportQualified environmental professional

CERCLA / Texas SWDA

AAI Does Not Cover:

Radon Mold

Petroleum Asbestos in

b ildi

Municipal solid waste

Wetlandsbuildings Lead-based paint Lead in drinking

Wetlands Threatened and

endangered speciesg

water Indoor air

pollution/vapor

species Archeological and

culturalpollution/vapor intrusion Regulatory

compliance

CERCLA / Texas SWDA

If REC → Phase II Invasive sampling of SoilSoilGround waterSurface waterSediment

Brownfield RedevelopmentTexas Risk Reduction ProgramTexas Risk Reduction Program

Remedy Standard ARemedy Standard A Self ImplementedMeets critical PCLsNo physical or institutional controls

Brownfield RedevelopmentTexas Risk Reduction ProgramTexas Risk Reduction Program

Remedy Standard BRemedy Standard BPrior TCEQ approval requiredMeets critical PCLsPhysical and institutional controls may

be used

Brownfield Redevelopment

Goal – get environmentally impaired properties back on the marketp p

Manage CERCLA and other environmental risks

Brownfield RedevelopmentTexas Voluntary Cleanup ProgramTexas Voluntary Cleanup Program

Remediate to meet Texas standardsRemediate to meet Texas standards Certificate of Completion – releases future

owners and lenders from liability to Texasowners and lenders from liability to Texas Must apply before taking title Must apply before performing remediation Must apply before performing remediation

Brownfield RedevelopmentTexas Innocent Owner/OperatorTexas Innocent Owner/Operator Program

Immune from liability if Property contaminated by release or Property contaminated by release or

migration from off-site source or sources, and

Did not cause or contribute to the source or sources of the contamination

Brownfield RedevelopmentTexas Innocent Owner/OperatorTexas Innocent Owner/Operator Program

IOP Certificate of Completion confirms eligibilityeligibility

IOP Certificates are not transferable

Brownfield RedevelopmentTexas Municipal Setting DesignationTexas Municipal Setting Designation

City ordinance restricts potable use of groundwater

Eliminates exposure pathway so mayLower cleanup standardsReduce investigation/remediation

requirementsReduce costs

TCEQ certifies the ordinance

Lake Highlands Town Center

Release Reporting

Storage tank systems Non-tank releases Non-tank releases “Whenever an accidental discharge or

spill occurs from an activity or at aspill occurs from an activity or at a facility which causes or may cause pollution . . . “

Storm Water ManagementTypical Problems – ConstructionTypical Problems Construction

Extensive siltation and sediment depositsp Excessive storm water discharges Storm water relocates hazardous Storm water relocates hazardous

substances from industrial run-off

Storm Water ManagementClean Water ActClean Water Act

NPDES ProgramgRegulates discharge of any pollutant

from any point source to navigable waters

TPDES Program

Storm Water ManagementConstruction General PermitConstruction General Permit

What’s regulated What s regulatedLarge construction activities

Disturbs > 5 acres Disturbs > 5 acres Small construction activities

Disturbs > 1 acre Disturbs > 1 acrePart of larger “common plan of

development”p

Storm Water ManagementConstruction General PermitConstruction General Permit

Storm Water Pollution Prevention Plan File Notice of Intent (NOI) Pay Fee Post Construction Site Notice with NOIPost Construction Site Notice with NOI Construction File Notice of Termination File Notice of Termination

Storm Water ManagementEnforcementEnforcement

Government enforcement – EPA priorityGovernment enforcement EPA priority CWA citizen suitsFailure to obtain permitFailure to obtain permitOngoing violation of a permit

Trespass nuisance negligence claimsTrespass, nuisance, negligence claims

Floodplains

Land subject to inundation by the 100-year flood

Designated by FEMA maps Regulated at local level Regulated at local level

Wetlands

Areas inundated or saturated by surface or ground water at a frequency and duration g q ysufficient to support a prevalence of vegetation typically adapted for life in

d il di isaturated soil conditions

WetlandsRapanos v. United States (2006)Rapanos v. United States (2006)

Scalia, Renquist, Thomas, and Alito Opinion:

J i di ti l l ti lJurisdiction only over relatively permanent, standing or continuously flowing bodies of water formingflowing bodies of water forming streams, oceans, rivers, and lakes, AND

Wetlands with a continuous surface connection thereto

WetlandsRapanos v United States (2006)Rapanos v. United States (2006)

Kennedy Opinion:Jurisdiction over water or wetland if it

possesses a “significant nexus” to t th t i bl i f t th twaters that are navigable in fact or that

could reasonably be so madeSignificant nexus wetlands alone orSignificant nexus - wetlands, alone or

in combination with similarly situated lands in the region, significantly affectlands in the region, significantly affect the chemical, physical and biological integrity of traditionally navigable water

WetlandsRapanos v United States (2006)Rapanos v. United States (2006)

Stevens Souter Ginsburg and BreyerStevens, Souter, Ginsburg, and Breyer Dissent:Jurisdiction extends to the outer limits

of the commerce power

WetlandsEPA and USACE MemorandumEPA and USACE Memorandum

Follow Kennedy Opinion Follow Kennedy Opinion Jurisdiction:T diti l i bl tTraditional navigable watersRelatively permanent, non-navigable

tributaries of traditional navigabletributaries of traditional navigable waters

Wetlands directly adjacent to both, e a ds d ec y adjace o bo ,even if no continuous surface connection

WetlandsEPA and USACE MemorandumEPA and USACE Memorandum

Case-by-Case Significant Nexus EvaluationNon-navigable tributaries - NOT

l i lrelatively permanentWetlands adjacent to non-navigable

tributaries NOT relatively permanenttributaries - NOT relatively permanentWetlands adjacent to, but not directly

abutting relatively permanent tributaryabutting, relatively permanent tributary

WetlandsTexas § 401 Certification§

TCEQ certifies § 404 permit complies with Texas water quality standards

Tier ISmall projectChecklist - incorporates all applicable

BMPs Tier II – Individual certification Imposes regional conditions on NWPs

Asbestos

TSCA Production, use, disposal Production, use, disposal

Clean Air Act Air emissions (NESHAP) Air emissions (NESHAP)

Concern - friable asbestos and some non-friablefriable

AsbestosDemolition and RenovationDemolition and Renovation

Texas Asbestos Health Protection Rules Texas Asbestos Health Protection Rules Asbestos survey Remove all ACM before demolition or Remove all ACM before demolition or

renovation, with certain exceptions Municipal ordinancesMunicipal ordinances

AsbestosConstruction IndustryConstruction Industry

OSHA – worker health and safety OSHA – worker health and safety No exposure in excess of PELsWork practicesWork practicesTrainingMedical surveillance

Lead-Based Paint

1977 - CPSC ban 1996 - Lead Paint Disclosure Regulations 1996 - Lead Paint Disclosure Regulations 2010 - Lead Renovation, Repair and

Painting RulePainting Rule

Endangered Species Act

Prohibits any action that results in a "taking" of a listed species, or adversely g p , yaffects habitat

Plants and animals US Fish & Wildlife1500 endangered species1500 endangered species300 threatened species

Trends

Greenhouse Gas Regulation Massachusettes v. EPA (2007)Massachusettes v. EPA (2007) GHG Reporting Required (9/09) Endangerment finding (12/09)g g ( ) Regulation of GHGs under CAA (3/10) Tailoring Rule (5/10)

Trends

Sustainable DevelopmentGreen BuildingsGreen Buildings

LEED Energy Stargy

Municipal requirementsLand planning

TrendsTrends

Th k Y !Thank You!Questions & AnswersQ

P r e s e n t e d b y :Sally A. Longroy