CERCLA 107_r_ Windfall Lien

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CERCLA 107_r_ Windfall Lien Powered By Docstoc

   Brownfields are real property, the expansion,
    redevelopment, or reuse of which may be
    complicated by the presence or potential
    presence of a hazardous substance,
    pollutant, or contaminant.
   Implicitly the CERCLA and other
    environmental statutes lead to brownfields
    because of liability concerns
Lender Liability

   1996 Asset Conservation, Lender Liability
    and Deposit Insurance Protection Act
    codified the secured creditor exception to
    CERCLA liability so that Banks would make
    loans to STIGMA properties. BANKERS are
    very risk-averse.
Small Business Liability Relief and
Brownfields Revitalization Act,
January 2002 (Brownfields
Bona Fide Prospective Purchaser
CERCLA 101(40)

   Person that acquires ownership of a facility after
    January 11, 2002
   Disposal occurred prior to ownership
   Potential liability is based solely on the purchaser’s
    being an owner or operator of a facility
   May purchase with reason to know of contamination
   Must make all appropriate inquiries, exercise
    appropriate care wrt hazardous substances,
    cooperates with authorities, complies with requests,
    and has no affiliation with PRP
Contiguous Property Owner (107(q))

   Applies to property that is contaminated by a
    release from an adjacent property
   No owner/operator liability if the owner did
    not cause, contribute or consent to the
   Must not be affiliated with PRP
   Conducted all appropriate inquiry
Innocent Purchaser

   Must have bought the property without
    knowing or having reason to know of the
    contamination on the property
   Government entity that acquires facility by
    escheat, eminent domain or condemnation
   Inheritance or bequest
Common Elements

   Must not be affiliated with PRP
   Compliance with land use restrictions and
    institutional controls
   Taking reasonable steps
   Cooperation, assistance, access
   Compliance with information requests and
    administrative subpoenas
   Providing legally required notices
All appropriate inquiry

   Prior to 1997, common commercial practice
    for due care
   2002 Brownfield Act codified the ASTM-1997
    standard for Phase I ESA to be sufficient until
    EPA promulgates rule
   New Rule: October 2005
    –   Found ASTM-2000 to be legally insufficient and
        devised new procedures
    –   Effective as of November 1, 2006
Continuing Obligations

   Compliance with land use restrictions and
    institutional controls
   Take reasonable steps to address hazardous
    substances on property
   Cooperation, Assistance and Access
   Compliance with Information Requests and
EPA Comfort Letters

   No previous Federal Superfund Interest
   No Current Federal Superfund Interest Letter
   Federal Interest letter
   State Action Letter
CERCLA 107(r) Windfall Lien

   The lesser of EPA’s unrecovered response
    costs OR the increase in fair market value
    attributable to EPA’s remediation of the site.
   Applies to property that would be acquired by
    the “bona fide prospective purchaser” that
    was subject to EPA response
NYS Brownfield Act

   Contaminated sites
    –   threaten health and vitality of communities
    –   Contribute to sprawl development and loss of
        open space
   Policy is to encourage voluntary remediation
    of brownfield sites for reuse and
   With remedies that are fully protective of
    public health.
Applicants may be:

   Participant: PRP (owner/operator)
   Volunteer: Innocent purchaser, or
    prospective purchaser
   NO Bad Actors
Ineligible sites

   NPL sites
   Class I NYS Registry sites
   Class 2 NYS Registry sites (except for those
    owned by volunteers)
   Permitted RCRA sites
   Sites subject to any enforcement action (fed
    or state), cleanup order under Navigation
    Law (petroleum), etc.
Application Process

   Cleanup alternatives analysis: Future use
   I: Unrestricted use. Look up table for soil
    cleanup levels, but use of GW controls OK if
    GW is asymptotic
   II: Commercial/Industrial use. Look up table
    for soil cleanup levels, but use of GW
    controls OK. Restricted Residential - new
   III: Use of contaminant – specific soil
    standards consistent with DEC criteria using
    site-specific data
   IV: Site-specific cleanup levels related to
    intended use (residential, commercial,
    industrial) and intended site controls – same
    as now.
   Look-up tables vs. risk-based cleanup
   regulations adopted 11/14/2006
   Recall CERCLA standards: preference for
    treatment, permanent solutions, compliance
    with ARARs.
Certificate of Completion

   The ticket to tax benefits and liability
   25 issued in 2006, only 3 were unrestricted
Liability Limitations

   No liability to NYS “arising out of the presence of any
    hazardous waste in, on or emanating from the
    brownfield site, . . . At any time before the effective
    date of BCA”
   Reopeners:
           Non compliance with BCA requirements
           Fraud
           Changes in standards
           Change in site use that requires additional remediation
           Failure to develop property
Tax Credits (NYS)

   Brownfield Redevelopment Tax Credit: up to
          Site preparation costs (inc. legal fees!)
          Tangible property costs (buildings)
          On-site GW remediation costs
   Remediated Brownfield Credit for Real
    Property Taxes (varies – up to 100%)
   Environmental Remediation Insurance Credit
    (lesser of $30K or 50% cost of premium)
Criticism 1: Proposed Cleanup
Standards don’t protect children,
groundwater or natural resources

  –   The law requires 3 cleanup standards, the DEC
      made 6
  –   Ecological protected sites have better
      protections than sites where human/children
      exposure is likely
  –   DEC does not factor in potential vapor intrusion
  –   DEC does not consider off-site impacts
Criticism: Does not provide Complete
and Permanent Site Cleanups

   Cleanup standards are not protective enough -
    Should be all inclusive, not either ecological OR
    public health OR groundwater
   Undermines Law’s preference for Permanent
    Cleanup - Should not allow polluted background
    levels to guide Track 4 cleanup
   Weakens the Superfund and Environmental
    Restoration Program – slippery slope to consider
    land use in remedy selection. Should be predisposal
Criticism: Off-site testing and cleanup

   Volunteers are held to lesser responsibilities
    for off-site contamination
   DEC will handle off-site contamination, but
    regs. provide no guidance on how.
   Need requirements for vapor intrusion
    potential (VOC sites)
2005 Eligibility Guidance

   Limits definition of brownfield
   Adds criteria for determining eligibility that
    are not found in the statute
   2 challenges favored DEC so far