The Monitor: A Terradex Blog

Financial Health Monitoring of Institutional Control Property Owners

The long term success of Institutional Controls (ICs) and cleanup remedies is often only as strong as the financial health of new property owners.   This is why, along with its classic suite of land monitoring, Terradex LandWatch now monitors the financial health of contaminated property owners.

When new owners take over IC sites or residually contaminated sites, the old owners (a.k.a. divested owners) and regulators depend on the new owner to properly manage the property or, in ASTM parlance, perform continuing obligations.  But if new owners run out money, ICs and engineering controls can fail and other recognized environmental conditions (RECs) can wreak inadvertent health impact.  The foreclosure process can wipe out recorded “deed restrictions,” and thereby generate a regulatory conundrum for the responsible parties and regulators who relied on their durability.   Financial failure of a property owner potentially exposes even the most careful divested property managers to “comeback” liability and could trigger the need for regulators to act.  Even the best laid remedial plans can unravel when an owner enters financial distress.

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Where is the Water Well? The Competing Interests of Homeland Security and Environmental Health

Can you find the location of a water well in on a governmental mapping system? The answer is maybe – and it varies nationwide. A strong tension between the environmental health protection and safeguards for homeland security controls whether you will find that water well.  Environmental health protection invites for more  transparency in water well locations to aid vulnerability assessments from spill sites, while homeland security management invites hiding the well locations for fear that terrorist would know their locations to affect an assault.  How can we balance the environmental health and security threat, and determine if we have the proper policy course?  Why is there so much variance nationally?

The North Carolina mapping system as an example of where the tensions have competed, and  have limited the potential of a promising public mapping service.  The Public Water Supply Section of the North Carolina Department of Natural Resources maintains an interactive web map that shows water wells juxtaposed with contaminated sites.

Terradex’s stake in this discussion is toward maintaing the effectiveness of our duties of helping assure long term safety around contaminated sites. Greater transparency, or at least permission to view,  would facilitate Terradex’s environmental health stewardship functions by permitting a routine view of whether water wells have been installed, or shifted from dormant to active.  At Terradex, we believe the benefit to public health protection warrants reconsidering the current paradigm that favors masking well locations,  and establishing a mechanism to increase transparency to those serving to protect environmental health.

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USEPA Congratulates ASTM Task Group for Completed Guidance on Continuing Obligations

The ASTM Task Group that guided and debated building Standard Guide for Identifying and Complying With Continuing Obligations was congratulated by the USEPA Office of Brownfield and Land Revitalization.  David Lloyd on behalf of the Brownfield Office and  the entire USEPA sent his congratulations in an August 1 letter to Terradex asking that this be extended to the ASTM Task Group.  A copy of the letter may be viewed at this link.

At Terradex, we found the engagement by both the Brownfield Office and the Office of Site Remediation and Enforcement integral to the building a better guide.  Already, a focus shift is underway whereby this guidance by ASTM in conjunction with policy by the agency itself will bring greater clarity in expectation for landowners as well as start setting practice norms to increase institutional control effectiveness.

BNA Insider Reports on ASTM Guide Publication

The Bureau of National Affairs (BNA) within their Environmental Due Diligence Guide featured an Insider’s Perspective on the ASTM released guide for Continuing Obligations.  Terradex is grateful for BNA’s coverage of this guide and especially the attention provided by their reporter Mary Ann Grena Manley. This coverage by BNA builds the understanding of landowners as they appreciate how continuing obligations are straightforward. In time the guides will bring comfort and predicatability to those developers who undertake Brownfield redevelopment.  Terradex looks forward to working with BNA to structure a webinar in the Fall of 2011.  Read the article below.

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ASTM Publishes Continuing Obligations Guide

After years in the making and on the heels of two recent court decisions addressing “appropriate care,” ASTM published E2790-11, the “Standard Guide for Identifying and Complying With Continuing Obligations.”

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Panel at Brownfields 2011 to Discuss Emerging Trends of IC Stewardship

A group of institutional control experts and state and local government experts, in a roundtable setting, will describe and compare thoughts about emerging trends in the IC institution, and particularly IC monitoring and stewardship, during an upcoming educational session at Brownfields 2011 – April 4th at 1pm.

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Tracing the Evolution of the Phrase “Continuing Obligations”

A new “CERCLA Continuing Obligations” discussion group recently began in Linkedin – actually its a subgroup within the “Environmental Issues in Business Transactions” discussion group that Larry Schnapf manages.  Given this, it seemed right to quickly review how the phrase “continuing obligations” came into being and where its heading.

It started with CERCLA’s Brownfield Amendments.  However,  the phrase “continuing obligations” appears nowhere in the Amendments or in CERCLA generally.  Rather, the Amendments list post-purchase requirements that must be shown “by a preponderence of evidence” in order to successfully assert CERCLA defenses made newly available in the Amendements – namely, the Bona Fide Prospective Purchaser Defense, the Contiguous Property Owner Defense, and the Innocent Landowner Defense (which was actually modified from the pre-Amendments version).

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Michigan Amends Statute to Add New Institutional Control Continuing Obligations

For years, Michigan’s cleanup laws have set forth a fairly novel approach aimed at protecting new “nonliable” purchasers of contaminated property.  The legal and regulatory regime involves a characterization of the pre-purchase contamination as well as post-puchase “due care” procedures.  Last month, in December 2010, Michigan added institutional control (IC) compliance and management obligations to the list of required “due care”  procedures.

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Court Finds “Appropriate Care”

In 3000 E. Imperial, LLC, Plaintiff, v. ROBERTSHAW CONTROLS CO, et al. Defendants, No. CV 08-3985 PA, 2010 U.S. Dist. Lexis 138661 (C.D. Cal. Dec. 29  2010), a Federal District Court in California found a contaminated property purchaser to have exercised “appropriate care” and, in turn, to have satisfied the Bona Fide Prospective Purchaser (“BFPP”) defense when they excavated underground tanks soon after learning that the tanks contained hazardous substances. This decision comes on the heels of Ashley II (finding the purchaser did not exercise “appropriate care”), which I wrote about earlier this week.

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Ashley II Court Addresses the BFPP Defense

In the years I’ve spent helping to draft a Continuing Obligations Guide as part of the ASTM E50 Committee, my colleagues and I have often acutely noted (and perhaps lamented) that no court has ever directly addressed CERCLA’s Bonafide Prospective Purchaser (“BFPP”) defense.  Well now there’s a case.  In Ashley II of Charlseston LLC v. PCS Nitrogen, Inc. v. Ross Development Corp. et al. (D. South Carolina, Oct. 13, 2010) Civ. Action No. 2:05-cv-2782, a Federal District Court in South Carolina analyzed the BFPP defense – and particularly the “appropriate care” element.  There, the court ultimately found that while Ashley II of Charleston LLC (“Ashley”) properly performed all appropriate inquiries (“AAI”) before it bought the  Columbia Nitrogen Site, after the purchase they failed to exercise “appropriate care.”

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