1 Mission Impossible: Redeveloping the Most Complex Brownfield Sites The Legal Perspective Brownfields 2006 November 15, 2006 James B. Witkin Linowes and Blocher LLP 7200 Wisconsin Avenue, Suite 800 Bethesda, MD

2 All Appropriate Inquiry at Difficult Sites  Enhanced liability protections for bona fide prospective purchasers (BFPPs) under the 2002 Brownfields Amendments  BFPP status dependent on performing “all appropriate inquiry” (AAI)  Anticipate defending BFPP status At some point EPA or a third party might challenge BFPP status

3 All Appropriate Inquiry at Difficult Sites  Consultant must perform and should document adherence to AAI standard Document “Environmental Professional” status of consultant Include references to AAI in consultant’s contract/scope of work Include references to AAI in Phase I report See Appendix X4 to ASTM Standard E for recommended format

4 All Appropriate Inquiry at Difficult Sites  Phase I/Phase II Issues AAI requirements for Phase Is Timing issues where both Phase I and Phase II are needed

5 All Appropriate Inquiry at Difficult Sites  Limits of AAI: “Non-Scope Considerations” ASTM E , Section 13 lists exclusions Asbestos Radon Mold Lead-based paint; lead in drinking water Wetlands Endangered species

6 Environmental Consultant Issues  Under BFPP rules, AAI errors can have major impacts  Review contracts with environmental consultants Limitations on liability Representations as to qualifications Use caution where consultant contracted with a third party (e.g., lender or prior prospective purchaser) Contract review particularly important

7 Environmental Consultant Issues  Consultants’ and contractors’ errors and omissions insurance Amount Term Prior claims

8 Windfall Liens  Added to CERCLA in 2002 Brownfields Amendments 42 U.S.C. § 9607(r) Guidance Document: Interim Enforcement Discretion Policy Concerning “Windfall Liens” Under Section 107(r) of CERCLA  Liens only can be imposed at properties where EPA has unrecovered response costs

9 Windfall Liens  Amount of lien equals increase in FMV of property attributable to EPA’s response action Lien generally will reflect increase in FMV attributable to EPA actions after BFPP takes title EPA acknowledges $1 spent may not increase FMV $1 Battle of the appraisers?

10 Windfall Liens  Means of resolving windfall liens Comfort letter Resolution document BFPP pays BFPP performs cleanup Limited precedent DOJ approval needed where EPA site costs exceed $500K  Reflects EPA’s conflicting goals of assisting brownfields redevelopment vs. recovering costs

11 Windfall Liens  Issues for brownfields developers Determining whether EPA expended funds on a site Calculation of FMV increase Assuring compliance with BFPP status Time/effort needed in negotiating a windfall lien waiver document

12 Cleanups At Sites with Federal and State Oversight  The challenge of combining mandatory and voluntary programs Differing approaches and philosophies RCRA vs. state VCPs Carrots vs. sticks  Investigation methodologies  Cleanup standards  Public notice/involvement

13 Cleanups At Sites with Federal and State Oversight  Timing  Differing legal standards at closure Liability release Re-openers