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Environmental Issues Affecting Real Estate Smu Cox Real Estate Law Class


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Environmental issues affecting transactions involving real estate

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Environmental Issues Affecting Real Estate Smu Cox Real Estate Law Class

  1. 1. Environmental IssuesAffecting Real Estate SMU Cox School of Business Real Estate Law March 8, 2012 by: Sally A. Longroy y g y
  2. 2. Overview RCRA / Texas SWDA CERCLA / Texas SWDA Brownfield Redevelopment St Storm Water Management W t M t Floodplains and Wetlands Asbestos & Lead Endangered Species Trends – Sustainable Development
  3. 3. 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”
  4. 4. Trinity River Audubon Center
  5. 5. Trinity River Audubon CenterEFFORT TO HAUL IT OUT?City sCity’s Expert Report Estimated:  12 year excavation process  146,000 truckloads of materials  Semi trucks must enter/exit every 3 minutes with 15 pieces of h i t ith i f heavy construction equipment operating 8 hours per day $107,000,000.00
  6. 6. Trinity River Audubon CenterThe $77 Million Order
  7. 7. Trinity River Audubon Center Over 100 soil borings/landfill gas monitoringpoints Over 90 test pits 22 Groundwatermonitor wells 9 Surface water/sediment samples Bi-weekly/quarterlymethane monitoring
  8. 8. Trinity River Audubon Center 130,000 cywaste relocatedon-site 1,400,000 cyimported fill
  9. 9. Trinity River Audubon Center
  10. 10. Trinity River Audubon Center
  11. 11. CERCLA / Texas SWDA Goal - Clean up of hazardous substances Liability –  Status liability - PRPs  Joint and several  Strict  Retroactive  Perpetual
  12. 12. CERCLA / Texas SWDA Liability  Lender protections  Petroleum exclusion
  13. 13. CERCLA / Texas SWDA CERCLA Defenses  Innocent Landowner  Contiguous Property Owner  Bona fide Prospective Purchaser p Requires “All Appropriate Inquiry”  ASTM E1527-05 – consistent with final rule on AAI  Codified at 40 CFR Part 312
  14. 14. CERCLA / Texas SWDA Why Perform Assessment?  Set transaction condition √ Liability allocation √ Remediation conditions  Who pays?  Who runs the show?  Permitted uses?  How clean?  Who’s the long-term caretaker? √ Construction-related issues  Lender requirements  Asset valuation
  15. 15. CERCLA / Texas SWDA Recognized Environmental Conditions AIA Components Co po e s  Records review  Site reconnaissance  Interviews with owners, occupants, operators and state and local regulatory agencies  Report  Qualified environmental professional
  16. 16. CERCLA / Texas SWDA AAI Does Not  Radon Cover:  Mold  Petroleum  Municipal solid waste  Asbestos in buildings b ildi  Wetlands  Lead-based paint  Threatened and endangered  Lead in drinkingg species water  Archeological and  Indoor air cultural pollution/vapor intrusion  Regulatory compliance
  17. 17. CERCLA / Texas SWDA If REC → Phase II Invasive sampling of  Soil  Ground water  Surface water  Sediment
  18. 18. Brownfield RedevelopmentTexas Risk Reduction Program Remedy Standard A  Self Implemented  Meets critical PCLs  No physical or institutional controls
  19. 19. Brownfield RedevelopmentTexas Risk Reduction Program Remedy Standard B  Prior TCEQ approval required  Meets critical PCLs  Physical and institutional controls may be used
  20. 20. Brownfield Redevelopment Goal – get environmentally impaired p p properties back on the market Manage CERCLA and other environmental risks
  21. 21. Brownfield RedevelopmentTexas Voluntary Cleanup Program Remediate to meet Texas standards Certificate of Completion – releases future owners and lenders from liability to Texas Must apply before taking title Must apply before performing remediation
  22. 22. Brownfield RedevelopmentTexas Innocent Owner/OperatorProgram Immune from liability if  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
  23. 23. Brownfield RedevelopmentTexas Innocent Owner/OperatorProgram IOP Certificate of Completion confirms eligibility IOP Certificates are not transferable
  24. 24. Brownfield RedevelopmentTexas Municipal Setting Designation City ordinance restricts potable use of groundwater Eliminates exposure pathway so may  Lower cleanup standards  Reduce investigation/remediation requirements  Reduce costs TCEQ certifies the ordinance
  25. 25. Lake Highlands Town Center
  26. 26. Release Reporting Storage tank systems Non-tank releases  “Whenever an accidental discharge or spill occurs from an activity or at a facility which causes or may cause pollution . . . “
  27. 27. Storm Water ManagementTypical Problems – Construction Extensive siltation and sediment deposits p Excessive storm water discharges Storm water relocates hazardous substances from industrial run-off
  28. 28. Storm Water ManagementClean Water Act NPDES Program g  Regulates discharge of any pollutant from any point source to navigable waters TPDES Program
  29. 29. Storm Water ManagementConstruction General Permit What’s regulated What s  Large construction activities  Disturbs > 5 acres  Small construction activities  Disturbs > 1 acre  Part of larger “common plan of development” p
  30. 30. Storm Water ManagementConstruction General Permit Storm Water Pollution Prevention Plan File Notice of Intent (NOI) Pay Fee Post Construction Site Notice with NOI Construction File Notice of Termination
  31. 31. Storm Water ManagementEnforcement Government enforcement – EPA priority CWA citizen suits  Failure to obtain permit  Ongoing violation of a permit Trespass nuisance negligence claims Trespass, nuisance,
  32. 32. Floodplains Land subject to inundation by the 100-year flood Designated by FEMA maps Regulated at local level
  33. 33. Wetlands Areas inundated or saturated by surface or g ground water at a frequency and duration q y sufficient to support a prevalence of vegetation typically adapted for life in saturated soil conditions d il di i
  34. 34. WetlandsRapanos v. United States (2006) Scalia, Renquist, Thomas, and Alito Opinion:  J i di ti only over relatively Jurisdiction l l ti l permanent, standing or continuously flowing bodies of water forming streams, oceans, rivers, and lakes, AND  Wetlands with a continuous surface connection thereto
  35. 35. WetlandsRapanos v United States (2006) v. Kennedy Opinion:  Jurisdiction over water or wetland if it possesses a “significant nexus” to waters that are navigable i f t or th t t th t i bl in fact that could reasonably be so made  Significant nexus - wetlands alone or wetlands, in combination with similarly situated lands in the region, significantly affect the chemical, physical and biological integrity of traditionally navigable water
  36. 36. WetlandsRapanos v United States (2006) v. Stevens Souter, Ginsburg, and Breyer Stevens, Souter Ginsburg Dissent:  Jurisdiction extends to the outer limits of the commerce power
  37. 37. WetlandsEPA and USACE Memorandum Follow Kennedy Opinion Jurisdiction:  T diti Traditional navigable waters l i bl t  Relatively permanent, non-navigable tributaries of traditional navigable waters  Wetlands d ec y adjace to bo , e a ds directly adjacent o both, even if no continuous surface connection
  38. 38. WetlandsEPA and USACE Memorandum Case-by-Case Significant Nexus Evaluation  Non-navigable tributaries - NOT relatively permanent l i l  Wetlands adjacent to non-navigable tributaries - NOT relatively permanent  Wetlands adjacent to, but not directly abutting, abutting relatively permanent tributary
  39. 39. WetlandsTexas § 401 Certification TCEQ certifies § 404 permit complies with Texas water quality standards Tier I  Small project  Checklist - incorporates all applicable BMPs Tier II – Individual certification Imposes regional conditions on NWPs
  40. 40. Asbestos TSCA  Production, use, disposal Clean Air Act  Air emissions (NESHAP) Concern - friable asbestos and some non- friable
  41. 41. AsbestosDemolition and Renovation Texas Asbestos Health Protection Rules  Asbestos survey  Remove all ACM before demolition or renovation, with certain exceptions Municipal ordinances
  42. 42. AsbestosConstruction Industry OSHA – worker health and safety  No exposure in excess of PELs  Work practices  Training  Medical surveillance
  43. 43. Lead-Based Paint 1977 - CPSC ban 1996 - Lead Paint Disclosure Regulations 2010 - Lead Renovation, Repair and Painting Rule
  44. 44. Endangered Species Act Prohibits any action that results in a "taking" of a listed species, or adversely g p , y affects habitat Plants and animals US Fish & Wildlife  1500 endangered species  300 threatened species
  45. 45. Trends Greenhouse Gas Regulation  Massachusettes v. EPA (2007)  GHG Reporting Required (9/09)  Endangerment finding ( g g (12/09) )  Regulation of GHGs under CAA (3/10)  Tailoring Rule (5/10)
  46. 46. Trends Sustainable Development  Green Buildings  LEED  Energy Star gy  Municipal requirements  Land planning
  47. 47. Trends Trends Thank You! Th k Y !Questions & AnswersQ Presented by: Sally A. Longroy