This document provides an overview and introduction to environmental law for real estate development projects. It discusses the key federal and state environmental agencies, major environmental laws such as CERCLA, RCRA, the Clean Water Act, NEPA, and CEQA. It also covers how environmental issues typically arise in real estate development, including during due diligence, entitlements/development, and litigation. Due diligence involves Phase I and Phase II environmental site assessments to identify contamination issues and compliance with "all appropriate inquiry" rules to assert defenses to liability. Negotiation strategies with sellers, agencies, and insurers can help developers mitigate environmental risks.

1. USC RED 562
Legal Issues In Real Estate Development
Introduction to Environmental Law
Emily Murray
Allen Matkins Leck Gamble Mallory & Natsis LLP
Eddie Arslanian
ENVIRON International Corporation
March 21, 2012

2. INTRODUCTIONS/CLASS OUTLINE
• Introductions
• Presentations
• Environmental Law Overview
• Environmental Consultant Perspective
• Mock Case Study

3. ENVIRONMENTAL AGENCIES
Federal
• Environmental Protection Agency (EPA)
California
• California EPA
• Regional Water Quality Control Boards (RWQCB)
• Department of Toxic Substances Control (DTSC)
Local Level
• Local City and County Departments

4. ENVIRONMENTAL LAWS - FEDERAL
• Comprehensive
Environmental
Response,
Compensation, and
Liability Act (CERCLA)
• Liability
• EPA Enforcement
• Private Party Cost
Recovery

5. ENVIRONMENTAL LAWS - FEDERAL
• Resource
Conversation and
Recovery Act
(RCRA)
• Disposal of
waste and
hazardous
waste

6. ENVIRONMENTAL LAWS - FEDERAL (CONT.)
• Clean Water Act
• Liability
• Permits
• National Environmental
Protection Act (NEPA)
• Endangered Species Act

7. ENVIRONMENTAL LAWS - STATE
• Hazardous Substances Account Act – State
Superfund
• Hazardous Waste Control Law (Cal-RCRA)
• Porter-Cologne Water Quality Control Act
• California Environmental Quality Act (CEQA)
• Common Law

8. WHEN DO ENVIRONMENTAL ISSUES ARISE?
• Pre-Purchase
• Due Diligence
• Contract Negotiation
• Entitlements /
Development
• CEQA / NEPA
• Remediation
• Litigation

9. DUE DILIGENCE – PURPOSE AND FORM
• Purpose:
• Know what you’re buying
• Protect yourself from liability
• Comply with the law
• Satisfy lending institutions
• Form:
• Phase I / Phase II Investigation

10. DUE DILIGENCE PURPOSE: DEFENSES TO LIABILITY
• Adjacent Landowner
• Innocent Landowner
• Release precedes ownership
• All appropriate inquiry; did not know or have
reason to know of contamination
• Cooperation and access
• Bonafide Prospective Purchaser
• Release precedes ownership
• All appropriate inquiry; knew of contamination
• Cooperation and access

11. DUE DILIGENCE FORM: PHASE I AND II
•ASTM Standard
•Satisfies “all
appropriate inquiry”
requirement
•Phase I
•Phase II
Source: Marc Defoe, 2003; SF Bay Regional Water Control
Board, Brownfields)

12. PROTECT YOURSELF: NEGOTIATE YOUR DEAL
• Indemnification
• Shift liability to seller, other liable parties
• Price reduction
• Allocate responsibility for cleanup activities

13. PROTECT YOURSELF: NEGOTIATE WITH AGENCIES
• “No Further
Action” Letter
• Comfort Letter
• Prospective
Purchaser
Agreements

14. PROTECT YOURSELF: INSURANCE
• Insurance

15. ENVIRONMENTAL LAW: OTHER CONCERNS
• Entitlements / Development
• CEQA / NEPA
• Remediation
• Litigation

16. CONTACT
Emily Murray
Partner
Allen Matkins Leck Gamble Mallory & Natsis
(213) 955-5584
emurray@allenmatkins.com