Peter Meyer's makes many interesting comments. we did not ask if the
BCP was the primary reason that a particular project went forward
because we know that each project has its own confluence of factors
that must occur before a project can become a viable real estate market.
However, it is fair to say that BCP has served to accelerate cleanups
at some sites process where a developer might have been tempted to implement a
so-called "self-directed" cleanup without state oversight. In other instances,
the BCP has helped developers decide to pull the trigger on a project
in an emerging area because the BCP would help to minimize some of the
risk. There have
I have been involved in two sites where several contract vendees walked
away and forfeited their deposits because of the uncertainty over the cleanup
costs and the complexity of the cleanup. My clients eventually were willing
to take on the risk but this was after a long process (in one case nearly
18 months) of hand-holding, explaining, analyzing and answering the
minutest of details and concerns about the possible environmental
risks.
I do not think Peter's insurance analogy about risks posed by small sites
is applicable. The insurers' reluctance to insure the smaller cleanups seems to
be more a function of an inability to obtain sufficient premiums to cover the
risks. There might be overruns on a $1MM remediation that are unacceptable
to the insurer because of the small premium it has charged to take on that risk
but those risks pale in scope and magnitude when compared to the risk a
developer takes on when environmental costs go from $5MM to $20MM due
to unexpected contamination or the complexity of cleanup that jeopardizes a
$200MM development.
Finally, I would like to return to the concept of the self-directed
cleanup. In my capacity as lender counsel, I have seen an alarming increase
in cleanups performed without regulatory oversight in states that do not
have licensed environmental professional programs because of
concerns over increased costs due to construction delays associated
with regulatory review. In my opinion, the environmental reporting
system is broken. CERCLA and most state cleanup laws refer to reportable
quantities (RQ) in a 24 hour period. However, the vast preponderance of
contamination now encountered is a result of historical spills so that it is
difficult to determine if there was a release in excess of a RQ. Thus, many
developers are advised that they have no obligation to disclose the
contamination and the cleanup is done under the radar screen.
I think it would be better if Congress and state legislatures required
reporting of contamination detected above the most stringent cleanup levels
regardless if a certain quantity was discharged or released over a period of
time. In that case, more sites would be reported and more quality cleanups
would be performed. The marketplace is full of environmental professionals (the
so-called "commodity shops") that will be happy to reach any conclusion a client
wants if they are willing to pay them to write the report.
In other environmental regulations, EPA has adopted technology-forcing
standards for discharges of pollutants into water and air yet when it came
to releases of hazardous substances, EPA's seemed to be in a race to
find the lowest common denominator when it adopted its all appropriate inquiry
rule. I continue to be astounded how purchasers and developers will
spend multi-million dollars on projects yet balk at spending several thousand
dollars to do an adequate site investigation.
To receive liability protection, a property owner should be required to
determine if their site is contamination and then at minimum, inform the
regulators so the public can be adequately protected. I think we need more
stringent reporting and sampling requirements to ensure that sites are being
adequately remediated and that property owners are deserving of their liability
relief.
Larry
Lawrence P.
Schnapf, Esq.
55 E.87th Street #8B
New York, NY 10128
212-756-2205
(office)
212-876-3189 (home office)
203-263-5212
(weekends)
212-593-5955 (fax)
LSchnapf@environmental-law.net
www.environmental-law.net
(website)