icemiller.com Sarah E. Lynn, Esq. Senior Counsel Ice Miller LLP 250 West Street Columbus, Ohio (614) Ohio Brownfield Conference 2016 Risk Mitigation Strategies April 6-7,

icemiller.com Firm Overview: Founded in 1910, Ice Miller has more than 300 lawyers located in offices in Chicago; Cleveland; Columbus; DuPage County, Ill; Indianapolis; New York; and Washington, D.C. Our attorneys help clients protect their interests and build an advantage with experience in a variety of practice areas including Environmental, Energy, Municipal Finance and Government Law. About Ice Miller LLP 2

icemiller.com Background and Experience with Brownfields Redevelopment: Assistant Attorney General for State of Ohio Early to mid-1990s Represented Ohio EPA in Environmental Enforcement Actions (civil and criminal) 1995 – Began private practice as environmental attorney 1994 – Ohio Enacted Voluntary Action Program 1999 – Served as member of Brownfields Redevelopment Working Group 1999 – Attended first National Brownfields Conference in Chicago Sarah E. Lynn 3

icemiller.com What do we mean by Risk Mitigation? Definition of Risk Environmental Harm (caused by release or threat of release of Hazardous Substance) Hazardous Substances in the environment cause harm to human health and the environment. Society via legislature, has determined that such harm should be prevented and/or addressed. Prevention of harm through threat of leads financial liability and other forms of financial loss. RISK DEFINED 4

icemiller.com Liability Defined State and Federal regulation of hazardous waste and hazardous substances imposes potential liability for contamination on landowner and others with property interest, even if they did not cause the original contamination. Federal Superfund Program or CERCLA: PRPs (those who are potentially responsibility parties) Liable until proven otherwise (counterintuitive?) Retroactive Joint and Several, Strict Liability RISK DEFINED 5

icemiller.com In Summary – We are talking about the Risk of Incurring Environmental Liability. Acceptable and Unacceptable Risk of harm defined by applicable Environmental Laws Unacceptable risk triggers liability for remediation Tangible Financial Loss Less Tangible: Damage to reputation and credibility RISK DEFINED 6

icemiller.com Who is at Risk? Future CERCLA Defendants (PRPs) Stakeholders (indirect consequences of Environmental Liability) Public Entities participating in Brownfields Projects Regulatory Authorities participating in Brownfields Projects RISK DEFINED 7

icemiller.com In Brownfields Context – Risk is an issue for: Landowners or future landowners or others with ownership interest in Real Property that is or could be subject to an environmental remediation action: Due to historic operations; or Where there are ongoing operations. Corporate Transactions involving Brick and Mortar/Property Real Estate Development Government – as property owners Government – providing grants, loans, incentives RISK DEFINED 8

icemiller.com Risk involved in exercise of “Police Power” RISK DEFINED Police Power is “lawyer speak” for the exercise of power to protect the public welfare by Local or State government. Local, State or Federal Grants/loans to encourage site redevelopment Government Exercising Eminent Domain to address blight or foreclosure for unpaid taxes 9

icemiller.com Risk Mitigation Tools and Strategies: To avoid environmental harm triggering liability; and To remove or lessen (i.e. mitigate) environmental harm and risk of liability. RISK MITIGATION STRATEGIES 10

icemiller.com Regulatory Programs to Encourage Brownfield Redevelopment Environmental Site Assessments (ESAs) Transactional/Contractual Protections Site use Restrictions Environmental Insurance RISK MITIGATION STRATEGIES 11

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icemiller.com Regulatory Programs Providing Environmental Liability Protection Ohio Voluntary Action Program Environmental Audit Protections Changes to Federal Law (CERCLA) Enacted in to Encourage Reuse and Redevelopment of Brownfields. A response to the Chilling Effect Associated with the Risk of Unlimited Environmental Liability. RISK MITIGATION STRATEGIES 13

icemiller.com Ohio Voluntary Action Program Program for identifying existing contamination and receiving protection against future environmental liability. Specific numeric cleanup standards vs. former command and control with no clear standards: “How clean is clean?” Codified the ability to use Risk-Based Standards/ Site Use Restrictions to achieve cleanup RISK MITIGATION STRATEGIES 14

icemiller.com Ohio Voluntary Action Program (Cont’d.) Clean-up of Property overseen by Certified Professionals (CP) (Private Environmental Consultants) not EPA. CP issues No Further Action Letter and if information and process supports it. Ohio EPA issues a Covenant Not to Sue (CNS) for the property. CNS “runs with the land”, becomes part of the title and can be transferred to new owner. RISK MITIGATION STRATEGIES 15

icemiller.com Changes in Federal Law Impediment to Brownfield Redevelopment: CERCLA (Joint and Several, Strict Liability). Enacted Protections for prospective purchasers of contaminated or potentially contaminated property. Bona fide Prospective Purchaser Protection if Phase I ESA Constitutes “All Appropriate Inquiry”. Importance: Protection against liability for later- discovered contamination. RISK MITIGATION STRATEGIES 16

icemiller.com Environmental Site Assessment - Francis Bacon Phase I and II Environmental Site Assessments CERCLA Protections Entry Point for Voluntary Action Program (VAP) Key component for Transactional Due Diligence RISK MITIGATION STRATEGIES 17

icemiller.com Transactional Due Diligence Business transactions involving the transfer of real estate, buildings (with or without ongoing operations) Phase I and II ESAs Transactional Due Diligence Checklist Review of permits/compliance history – ongoing operation RISK MITIGATION STRATEGIES 18

icemiller.com Contract Protections Contractual Risk Allocation Environmental Reps and Warranties Specific Representations and Promises in a Contract regarding Environmental Conditions, Prior Operations, or Compliance History which may be enforced in case of a breach. Environmental Indemnities Caveat: Indemnification deals with who pays for costs caused by future liability. It is generally not possible to legally transfer liability by contract. Indemnification: Ensure against bearing the financial burden of environmental liability. RISK MITIGATION STRATEGIES 19

icemiller.com Environmental Insurance Pollution Legal Liability Used to fill in gaps created by pollution exclusions found in most traditional property and casualty policies. Can cover cleanup costs for unknown environmental conditions. Cost Cap Covers remediation costs which exceed budgeted costs. Tailored to specific property transactions. RISK MITIGATION STRATEGIES 20

icemiller.com Activity and Use Limitations and Engineering Controls Site Use Restrictions which limit exposure to hazardous substances. Common example: Environmental Covenant/Restrictive Covenant (see ORC Sec ) Prohibit residential use, schools, day care, retail, etc. Limit permissible use to activities that are directly related to Industrial use. Are required to be recorded with the Title Often enforced by regulatory authority. Notice Provisions: No transfer of any interest in the property subject to restrictions without prior notice to potential new owner and to enforcement authority. RISK MITIGATION STRATEGIES 21

icemiller.com Activity and Use Limitations and Engineering Controls (Cont’d.) Groundwater use Restrictions VAP/Urban Setting Designation Engineering Controls which limit exposure hazardous substance. Examples: engineered cap; long-term groundwater pump and treat system. RISK MITIGATION STRATEGIES 22

icemiller.com Risk of Environmental Liability Categories of Stakeholders affected by Risk /Involved in Risk Analysis and Risk Mitigation Risk Mitigation Strategies include: Taking Advantage of Statutory Liability Protections Risk Assessment Phase I and II ESAs Transactional Due Diligence Contractual Risk Allocation Environmental Insurance Site Use Restrictions and Engineering Controls SUMMARY 23

icemiller.com QUESTIONS 24

icemiller.com Sarah E. Lynn, Esq. Senior Counsel Ice Miller LLP 250 West Street Columbus, Ohio (614) THANK YOU! 25

icemiller.com Sarah E. Lynn, Esq. Senior Counsel Ice Miller LLP 250 West Street Columbus, Ohio (614) Ohio Brownfield Conference 2016 Risk Mitigation Strategies April 6-7,