Environmental Liabilities New Risks and Solutions Cynthia J. Bishop Gardere Wynne Sewell, LLP Dallas, Texas A&WMA Annual Conference June 27, 2007

What’s Hot in Environmental Law? What to look for when acquiring property New options to clean up property Potential pitfalls when trying to recover cleanup costs from others Potential new liability when operating a facility

Acquiring Property The Due Diligence Standard Why do due diligence? –Innocent purchaser protection –Bona fide Purchaser protection –Adjacent landowner protection What type of protection? –Defense Under CERCLA –But CERCLA excludes petroleum New EPA All Appropriate Inquiry (“AAI”) regulations effective November 1, 2006 (40 CFR ch. 312) ASTM E ? ? ?

Not properly signed by Environmental Professional. –‘‘[I, We] declare that, to the best of [my, our] professional knowledge and belief, [I, we] meet the definition of Environmental Professional as defined in § of this part.’’ ‘‘[I, We] have the specific qualifications based on education, training, and experience to assess a property of the nature, history, and setting of the subject property. [I, We] have developed and performed the all appropriate inquiries in conformance with the standards and practices set forth in 40 CFR Part 312.’’ Acquiring Property The Due Diligence Standard Initial Problems

Report must include one of the following opinions: –“We have performed a Phase I Environmental Site Assessment in conformance with the scope and limitations of ASTM Practice E 1527 of [insert address or legal description], the property. Any exceptions to, or deletions from, this practice are described in Section [ ] of this report. This assessment has revealed no evidence of recognized environmental conditions in connection with the property,” or –“We have performed a Phase I Environmental Site Assessment in conformance with the scope and limitations of ASTM Practice E 1527 of [insert address or legal description], the property. Any exceptions to, or deletions from, this practice are described in Section [ ] of this report. This assessment has revealed no evidence of recognized environmental conditions in connection with the property except for the following: (list).” Acquiring Property The Due Diligence Standard Initial Problems

Shifting burden from Environmental Professional to buyer/client Data gaps –As required in §312.21(c)(2) of the final rule, the report should document and discuss significant data gaps that affect the ability of the environmental professional to identify conditions indicative of releases or threatened releases. Coming Soon –Vapor intrusion Acquiring Property The Due Diligence Standard Initial Problems

Due Diligence Issues

New Cleanup Options Municipal Setting Designation (TX) Urban Setting Designation (OH) –Restriction on groundwater use via City ordinance or restrictive covenant –Eliminated groundwater pathway –Notice

Collecting Cleanup Costs from Others Options –State common law (trespass, negligence, nuisance, contribution) –State statute (not available in all states) –RCRA (imminent and substantial endangerment) –CERCLA (non-petroleum)

Collecting Cleanup Costs from Others Recent problems with CERCLA –No recovery if you clean up voluntarily –No recovery if you clean up under State order –No recovery if you clean up under RCRA order –No recovery if you clean up under settlement with EPA without 107 order or CERCLA lawsuit first Before Atlantic Research:

Collecting Cleanup Costs from Others –No recovery if you clean up voluntarily –No recovery if you clean up under State order After Atlantic Research (June 11, 2007): – Recovery if you clean up under RCRA order? – Recovery if you clean up under Consent Decree or Unilateral Administrative Order with EPA without 107 order or CERCLA lawsuit first???

New Concerns for Operations Public Nuisance General Remedy = abatement of nuisance Types of nuisance litigation Asbestos Tobacco Firearms Lead Paint Greenhouse gases Public nuisance = emission of hazardous air pollutants “in such amounts and at such concentrations that may cause or contribute to or are likely to become injurious to health such that over time the risk of cancer may be increased by one (1) case in one (1) million or chronic disease in sensitive persons will be likely” Automakers City of Houston

Conclusion Greater scrutiny for Phase I ESAs New Hope for Risk-based Cleanups All is right again for CERCLA (almost) Look out for nuisance

Gardere Wynne Sewell LLP Cynthia J. Bishop 3000 Thanksgiving Tower 1601 Elm Street Dallas, TX Phone: Fax: