Lessons Learned from BFPP Caselaw and Lessons Learned from BFPP Caselaw and

Implications for Brownfield Development Implications for Brownfield Development

Lawrence Schnapf Lawrence Schnapf Lawrence Schnapf Lawrence Schnapf
Schnapf LLC Schnapf LLC
New York, NY 10128 New York, NY 10128
Larry@SchnapfLaw.com Larry@SchnapfLaw.com
www.SchnapfLaw.com www.SchnapfLaw.com
212 212--876 876--3189 3189
Elements for CERCLA Liability
Release
Includes disposal
Passive migration vs active disposal
Hazardous Substance Hazardous Substance
Facility
Response Costs
Remedial or Removal
Consistency with NCP
CERCLA Liable Parties
Current and Former Owners
Former at time of disposal
Current and Former Operators
Control Control
Former at time of disposal
Generators
Transporters
CERCLA Defenses
Third Party
Innocent Landowner (ILO)
Bona Fide Prospective Purchaser (BFPP)
Contiguous Property Owner (CPO)
Third Party Defense
Release Solely Caused by TP
No direct and indirect contractual relationship
ILO Exception to this element
Due care Due care
Precaution against forseeable acts or omissions
Innocent Landowner
Did not know or have reason to know
Exercise appropriate inquiry into past use and
ownership
Due Care Due Care
Precautions
Continuing Obligations
BFPP
Pre-Existing Release
No Affiliation
AAI
Post-Closing Continuing Obligations
Appropriate Care
Cooperation
Compliance
Notification
Allocation
Exercise of Due Care Element of Gore
Factors
Recent Due Care Caselaw
500 Associates, Inc v Vt American Corp., 2011
U.S. Dist. LEXIS 11724 (W.D.KY 2/4/11)
New York v Adamowicz, 2011 U.S. Dist. LEXIS
102988 (E.D.N.Y. 9/13/11) 102988 (E.D.N.Y. 9/13/11)
NYSEG v First Energy Corp, 2011 U.S. Dist. LEXIS
74216 (N.D.N.Y. 7/11/11)
Sisters of Notre Dame De Namur v. Garnett-Murray,
2012 U.S. Dist. LEXIS 78747 (N.D. Cal. 6/6/12)
500 Assoc v Vermont American Corp
1986 Purchase- Cursory ESA detects metals
(chromium)
1991ESA detects metals and VOCs
No disclosure
Sale falls through
1998 Enforcement Action
2002 KY ALJ Finds Joint Liability
2006 Ky Ct Appeal Holds No Due Care
no precautions when demolishing buildings
Left exposed soils
Failure to secure property
No disclosure to state
New York v Adamowicz
1985 County orders discharges to leaching
pools to cease
managing partnership spends $1MM to clean-
out pools and investigate out pools and investigate
1990- prtship takes title after T files bankruptcy
1994- declines DEC request to remediate site
DEC $4MM response costs
Ct finds no due care. LL had rt to access pty and
not new owner
NYSEG
Two MGP Sites
Cortland site- No due care
Owner engages in protracted negotiations with
NYSEG to sell property to remove gas holders.
Delays PRAP and cleanup
allows contamination to migrate.
$179K in past costs and pay 6.72% of future costs
Elmira-satisfied due care
Protracted negotiations but provided access to
NYSEG and cooperated
Significant BFPP Caselaw
Voggenthaler v Maryland Square LLC, 2013
U.S. App. LEXIS 15307 (9th Cir. 7/26/13)
Ashley II of Charleston V PCS Nitrogen, 2013
U.S. App. LEXIS 6815 (4th Cir. 4/4/13) U.S. App. LEXIS 6815 (4th Cir. 4/4/13)
3000 E. Imperial, LLC v Robertshaw Controls,
2010 U.S. Dist. LEXIS 138661 (C.D. Cal.
12/29/10)
Saline River Properties v Johnson Controls,
2011 U.S. Dis. Lexis 119516 (E.D. Mi. 10/17/11)
The Ashley Players
Planter Fertilizer & Phosphate Company/ Ross
Development (1906 to 1966)
Columbia Nitrogen Corp/PCS (1966 to 1972)
Holcombe and Fair (1987-2002) Holcombe and Fair (1987-2002)
Robin Hood II (1992 to present)
Allwaste Tank Cleaning (1989-2008)-2.99 acres
Ashley II (2003- 27.62 acres)
Ashley II(2008-2.99 acres)
Ashley Players Contd
Joint Venture Partners
Cherokee Investment Partners ($51MM)
Greenhawk Partners
Craig Briner
Jim Lumsden
Robert Clement
$28MM Line of Credit Lender- Bank of America
Invoices issued to Cherokee Investment
Partners/Ashley II and submitted to NC HQ
Site Operations
sulfuric acid manufactured in acid chambers and
piped to southern portion of facility to react
with phosphate rock
Pyrite ore used as fuel stock for sulfuric acid Pyrite ore used as fuel stock for sulfuric acid
Acid chambers lined with lead with hole in
bottom for cleanouts
Site Operations Contd
Pyrite slag used for road stabilization
Lead sludge from acid chambers rinsed onto land and
washed into ditches and marsh
Sulfuric acid leaks from piping Sulfuric acid leaks from piping
Fluorosilic acid and lead effluent discharged to ditches
1963 fire destroyed portion of acid plant
1971 storm damaged roof of new acid plant
Allwaste rinse water from cleaning bays held in sumps
and trenches prior to treatment and discharge
Environmental Conditions
Widespread lead and arsenic
Carcinogenic PAHs
Low pH conditions throughout site that
mobilized metals mobilized metals
Site covered with limestone run of crusher
(ROC) in phases
Environmental Investigations
GEL 1990 Report detects metals in test pits and
potential for contaminated stormwater.
Disclosed to RHCE but not DHEC
1992 H&F design detention plans w/o DHEC 1992 H&F design detention plans w/o DHEC
approval
1993-98 EPA PA/SI identifies need for
remedial actions
1996-2000 Ross begins selling assets and
distributes proceeds to shareholders
Environmental Contd
1999 H&F implement surface water
management plan to avoid removal action. Not
submitted to EPA for approval but EPA says
improved conditions
1999-2001 EPA RI
2002 EPA FS
8/2003 GEL Phase 1 incorporates FS
11/2003 Ashley notifies EPA of pending sale
and requests if EPA desires any cooperation
Environmental Contd
2004 GEL pre-design and characterization
2004 Responds to EPA Information Request
2006 Scott Freeman walks Allwaste site and observes
staining and debris piles
2007 Ashley grants EPA access 2007 Ashley grants EPA access
2007 GEL Investigation of Allwaste parcel
2008 GEL update
2008 PCS expert observes eroded ROC
2008 Ashley demolishes structures at Allwaste parcel
Environmental Contd
2008 Ashley does not follow its protocols for concrete
slabs
2008- Ashley removes debris piles
2008- Ashley sends letter to EPA on Cherokee 2008- Ashley sends letter to EPA on Cherokee
letterhead that:
pursuing claim agst H&F would discourage future
development
Emphasized its resources
Cost recovery action by Ashley should provide adequate
consideration to secure release of H&F
Environmental Contd
2009 evaluation of sumps and cracks of concrete
pads is later found to be insufficient by court
2009 Ashley removal action estimate is
$8.021MM $8.021MM
District Court Findings of Law
Court rejects divisibility argument
Ashley response actions found consistent with
NCP despite absence of formal agreement with
EPA or state EPA or state
Current operators do not need to direct
operations related to pollution to be liable for
response costs
Exercise of due care includes informing
authorities of discovery of contamination
Allocation
Ross 45% ($87.4K to Ashley)
PCS 30% ($58.3K to Ashley)
H & F 16%
RHCE 1% ($2K to Ashley) RHCE 1% ($2K to Ashley)
Allwaste 3%
Ashley 5%
Ashley BFPP defense
Investigation satisfied AAI
Ashley did not exercise appropriate care for
sumps,
debris pile debris pile
maintenance of ROC
Removal of pumps exacerbated conditions
Satisfied cooperation, compliance with requests
and access
Ashley is PRP
Ashley did not prove that no disposals occurred
after its acquisition
Effort to discourage EPA from pursuing H & F
was improper affiliation was improper affiliation
Voggenthaler Cast
Herman Kishner Trust (1968 to 2002)
Shapiro Bros. Investment Co. (1968-1984)
DCI USA, Inc (1984-2000)
Clark County School District (2001-2005)
PCE detected in the soil and groundwater PCE detected in the soil and groundwater
Off-site plume detected in 2003
Maryland Square LLC acquires 2005 and demolished dry cleaner
in 2006
PRP notices 2006
Residents lawsuit 2008
Voggenthaler Contd
Unnotarized affidavit that County had disclosed PCE
contamination.
AAI not required since contamination was in public
records
9
th
Cir says unnotarized affidavit not establish the BFPP 9
th
Cir says unnotarized affidavit not establish the BFPP
Consultant reviewed files, prepared report but not if the
consultant was EP or description of assessment
did not identify any steps to remove the contaminated soil or limit
the spread of PCE
NDEP forced to remediate contamination 6 years after building
demolished
Remanded
Lessons
LLPs are legal defenses
State VCPs
Recommendations in Phase 1 Reports
Disclosure Disclosure
Self-Implementing Nature of BFPP
Look For Sensitive Receptors
Exercise Extreme Care For Grading Actions
Discuss Remedial Schedule With Lender
Impact of Due Care on Apportionment
EPA Guidance
Revise Common Elements Guidance
What is Due Care/Appropriate Care
Meaning of No Affiliation
Revise BFPP Guidance Revise BFPP Guidance
Bring Back PPAs?
Phase 1 Recommendations
ASTM E1527
Opinion and Conclusion On RECs
RECs vs BERs
Sensitive Receptors Sensitive Receptors
Recommendations
Not Required
Make Sure Implement Recommendations
Coordinate Schedule With Lender
Brownfield Development Brownfield Development
Implications: Project Schedule Implications: Project Schedule
Site Control vs. Site Ownership Site Control vs. Site Ownership
Lead time for assemblage Lead time for assemblage
How long before construction How long before construction
Phased construction Phased construction Phased construction Phased construction
BFPP Issues BFPP Issues
No disposals No disposals
Appropriate Care Appropriate Care
Phase 1 Recommendations Phase 1 Recommendations
Diligence Issues Diligence Issues--examine examine
assumptions assumptions
Historic operations Historic operations
Chemical and waste handling areas Chemical and waste handling areas
Sumps Sumps
Separators Separators Separators Separators
Piping Piping
Illegal or unknown disposal Illegal or unknown disposal
Railyards Railyards
Fires Fires
Riverfront property (NRD?) Riverfront property (NRD?)
Various Environmental Issues Various Environmental Issues
Asbestos in soil Asbestos in soil
Pipe Under Loading Dock Pipe Under Loading Dock
External sump External sump
Interior sump Interior sump
Sump pump out Sump pump out
Abandoned drainage Abandoned drainage
Illegal discharge Point Illegal discharge Point
Broken Pipe Discharging To River Broken Pipe Discharging To River
Exterior Pit Exterior Pit
Open Pit Open Pit
Floor Drain Floor Drain
Boiler With Friable Asbestos Boiler With Friable Asbestos
Drums hidden in weeds Drums hidden in weeds
Buried Drums Buried Drums
Abandoned Building Issues Abandoned Building Issues
Drums, tanks, transformers Drums, tanks, transformers
Utilities Utilities
Winterizing Winterizing
Bursting pipes and drums Bursting pipes and drums Bursting pipes and drums Bursting pipes and drums
Security Security
Exterior lights, interior cameras, guards, Exterior lights, interior cameras, guards,
boardups boardups
Inspections Inspections
Moisture (roof and windows) Moisture (roof and windows)
Unsecured Building Unsecured Building
Skate board ramp Skate board ramp
Gang Graffiti Gang Graffiti
Copper piping vandalism Copper piping vandalism
Broken Window with Friable ACM and Broken Window with Friable ACM and
Drums Drums
Snow in building from collapsed roof Snow in building from collapsed roof
Ice in building Ice in building
Frozen chemical vat Frozen chemical vat
Drums sitting in rainwater Drums sitting in rainwater
Drums in snow Drums in snow
Corroding tanks Corroding tanks
Overflowing Sump and Caustic Waste Overflowing Sump and Caustic Waste
Drums Drums
Not Snow but corrosion from leaking AST Not Snow but corrosion from leaking AST
Leaking Battery acid Leaking Battery acid
Vacant Land Becomes Dumping Ground Vacant Land Becomes Dumping Ground
Demolition/Construction Demolition/Construction
Issues Issues
Contaminated Debris (e.g., PCBs in concrete) Contaminated Debris (e.g., PCBs in concrete)
LBP/ACM LBP/ACM
M/E liquidation M/E liquidation
Drums and waste disposal Drums and waste disposal
Animals Squatters (e.g., bats, endangered Animals Squatters (e.g., bats, endangered Animals Squatters (e.g., bats, endangered Animals Squatters (e.g., bats, endangered
species) species)
Waste Aggregators (destruction/disposal Waste Aggregators (destruction/disposal
certificate) certificate)
Waste Brokers (non Waste Brokers (non--owned site coverage) owned site coverage)
Recycling Recycling--remember remember Burlington Northern Burlington Northern
Phased Construction Phased Construction
Fill Material Fill Material
Asbestos building debris Asbestos building debris
Dust Suppression Dust Suppression
PCB PCB--contaminated Concrete Debris contaminated Concrete Debris
PCBs From Drained Transformers PCBs From Drained Transformers
Other Significant Brownfield Other Significant Brownfield
Caselaw Caselaw
AMCAL Multi AMCAL Multi--Housing v Pacific Clay Prods Housing v Pacific Clay Prods, ,
457 F. Supp. 2d 1016 (C.D. Ca. 2006) 457 F. Supp. 2d 1016 (C.D. Ca. 2006)
U.S. v Honeywell U.S. v Honeywell, 542 F. Supp. 2d 1188 (E.D. , 542 F. Supp. 2d 1188 (E.D.
Ca. 2008) Ca. 2008)
Bonnieview Homes Assoc v Woodmont Bonnieview Homes Assoc v Woodmont Bonnieview Homes Assoc v Woodmont Bonnieview Homes Assoc v Woodmont
Builders Builders, 655 F. Supp. 2d 473 (D. N.J. 2009) , 655 F. Supp. 2d 473 (D. N.J. 2009)
Ford Motor Co v Edgewood Props Ford Motor Co v Edgewood Props., 2012 U.S. ., 2012 U.S.
Dist. LEXIS 125197 (D. N.J. 8/31/12 Dist. LEXIS 125197 (D. N.J. 8/31/12))