Title: [CPEO-BIF] Voluntary Cleanup vs. CERCLA
I'm glad you found our schmooze entertaining as well as informative :)
The reason we spent so much time on current owners/future sellers of property is because the problem is what to do about the thousands of contaminated sites for which there is not likely to be any transaction in the foreseeable future.
I agree with julie that the BFPP defense does help brownfield sites that are ready to go to a transaction. However, this is an "incremental" improvement that is not going to result in remediating the thousands for contaminated site that have no willing owners.
I also agree with Barry that an inflexible, enforcement driven (or as he termed it "stalinistic") approach will not result in greater volume of cleanups both for the reasons that barry mentioned but also because of staffing constraints. State regulatory agencies never had and certainly won't have going forward sufficient case managers to handle any significant increase in contaminated sites that would need oversight.
Both the market-based approach (brownfields) or pure enforcement model cannot begin to address the swath of contaminated sites that are only known to the owners and their professionals (lawyers and consultants). If we don't believe these thousands of sites pose a risk to human health, then we might as well shutdown our brownfield funding programs and divert the money to solving breast cancer.
The reason we have thousands of contaminated sites that remain unremediated as we approach the third decade of CERCLA is because the owners do not have to report the legacy contamination. They can literally sit on these sites until they are ready to sell while contamination is migrating. Meanwhile, owners who decide to investigate and report contamination out of a sense of moral obligation or aspirational goal are penalized because the market will price that property as being contaminated while the unknown contaminated site is priced as if it is clean.
If the owners were forced or incentivized to investigate and disclose the contamination, pressure from community groups or lawsuits would force the properties to be investigated to determine the extent of the public health risk and then be remediated to address that risk.
What I am proposing is a third way or "third rail" as the case may be to expedite the legacy sites that dominate our universe of contaminated sites using disclosure or transparency to bring attention to those sites WITH appropriate incentives/protection to those owners who Lee Hoffman aptly termed "The Poor Schmuck" (bought property early in the CERCLA regime before diligence was a common practice and was not an active polluter).
On a big picture level, I propose that EPA use the so-called "lasting provision" of CERCLA 103 to announce that all current property owners have 12 months to investigate suspected or previously identified RECs at their properties. In exchange, they would be treated as BFPPs. We give amnesty to tax cheats, why not try a one-time amnesty to non-active polluters...
An alternative approach that might be more manageable would be for EPA to apply its audit policy to such owners to accomplish the same goal.
The rest of the issues we discussed at the panel and that I have raised in the past I view as mechanisms to achieve these goals. These include;
* licensing EPs and requiring them to disclose RECs (we learned at the program that several states impose reporting obligations on EPs but the specific reportable event varies by state);
* amending AAI to require sampling of RECs;
*requiring state brownfield programs to be delegated under CERCLA 128 to ensure minimum requirements and consistency;
*uploading of phase 1 and phase 2 reports on public databases (we learned some states do this and I would flag this as a BMP);
*EPA issue guidance interpreting what actions can be considered to be "due care" or "appropriate care" which would enable innocent landowners or BFPPs to maintain their landowner protections; and
*EPA clarify that the secured creditor exemption does NOT apply to banks that securitize loans since they are not holding indicia of ownership primarily to PROTECT security interest but to SELL a loan.
Schulte Roth & Zabel
919 Third Avenue
New York, NY 10022
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Sent: Sat Nov 21 03:36:12 2009
Subject: Re: [CPEO-BIF] Voluntary Cleanup vs. CERCLA
The discussion at the conference was very interesting (an
entertaining), but not totally on point. The issue of voluntary
cleanup vs, superfund type cleanup, as was the original issue at
Gowanus, was only touched upon briefly. But it was in this
discussion that developers along the canal stated that they would back
out of development projects if Gowanus was named a Superfund site.
The debate shifted to disclosure requirements, and to some extent,
whether property transactions should be protected at the cost of
public health protection. These are important issues, to say the
least. In my opinion the proponents of more stringent disclosure
requirements (Larry and Lenny) were essentially turning the concept
of due diligence on its head: that is, instead of due diligence on the
buyers side, proponents would have stiffer requirements for due care
and disclosure on the part of owners and responsible parties. In my
opinion, proponents are seeking a substantial cultural/value change.
I am not opposed to it. On the other hand, the proponent of the
protection of the market-driven system (Barry) made some important
points that can't be overlooked. That is, if money dries up for
transactions at Brownfield sites, they will sit idle, as they did once
So the real problem is how can we develop a policy that has two goals
in mind: 1) to not unduly burden property owners (economically and
legally), and 2) protecting public health to the fullest extent
practical. The way that I see it now, neither goal is being fully
met. (I recognize that I have simplified a complex legal, economic,
and environmental issue, and I apologize to the panelists if I've
misrepresented their positions.) I am hoping that this dialogue
On Nov 18, 2009, at 3:33 PM, Lenny Siegel wrote:
> Yesterday, at the Brownfields conference in New Orleans, we had a
> lively panel discussion that addressed, among other things, state
> requirements for public disclosure and involvement under voluntary
> cleanup programs? When (if ever) do members of the public -
> particularly site neighbors - learn about releases of hazardous
> substances? Are regulatory requirements met?
> Tell the list what happens in your state.
> Lenny Siegel
> Executive Director, Center for Public Environmental Oversight
> a project of the Pacific Studies Center
> 278-A Hope St., Mountain View, CA 94041
> Voice: 650/961-8918 or 650/969-1545
> Fax: 650/961-8918
> Brownfields mailing list
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