MSEA’s Quarterly Meetingmseca.org/media/2016-09-29_-_Gillay.pdf · 9/29/2016 · •Perform a Phase I ESA, BUT: –What is purpose? –Carefully & critically asses the HREC/CREC/REC

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entity other than the intended recipient(s), and may not be reproduced, in any form, without the express written consent of the author or presenter. The information on this page is intended for informational purposes only and shall not be

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MSECA’s Quarterly Meeting: Environmental Solutions Related to Real Estate Seminar

Survival Guide to Manage Environmental Transactional Risks

September 29, 2016

David R. Gillay, Esq.

CONFIDENTIAL © 2014 Barnes & Thornburg LLP. All Rights Reserved. This page, and all information on it, is confidential, proprietary and the property of Barnes & Thornburg LLP,

which may not be disseminated or disclosed to any person or entity other than the intended recipient(s), and may not be reproduced, in any form, without the express written consent of

the author or presenter. The information on this page is intended for informational purposes only and shall not be construed as legal advice or a legal opinion of Barnes & Thornburg LLP.

Firm Overview

• Full service AmLaw 100 firm with more than 600 attorneys in 13 offices strategically located across the U.S.

• 78th largest firm in the U.S. by number of attorneys (National Law Journal)

• More than 70 former in-house counsel working as partners and of counsel.

• More than 50 practice areas, including corporate law, labor and employment, litigation, real estate, environmental, government services, corporate tax, and more.




Office Locations

• Barnes & Thornburg has 13 offices across the country, including: – Atlanta

– Chicago

– Dallas

– Delaware

– Indiana

– Los Angeles

– Michigan

– Minneapolis

– Ohio

– Washington, D.C.




Substantive Overview

• Seller Perspective

• Buyer Perspective

• VI Driver

• TCE Revolution

• Recommendations




Seller Perspective

• Conduct an internal audit for compliance and environmental contamination

• Invoke A-C Privilege and Audit Privilege

• Conduct a Compliance Audit

• Carefully assess the Compliance Audit

– consider Self Reporting to avoid fines/penalties

– develop risk management plan




Environmental Assessment

• Conduct a streamlined (draft) Phase I ESA

– Carefully asses the RECs and develop a strategy to address those RECs

– Track down historical CGL policies

– Track down prior ownership history

– Locate As-Builts and Facility Drawings




Environmental Investigation

• If you end up with a subsurface investigation:

– Understand reporting obligations

– What is purpose of investigation?

– Sample depths, sampling methods (CSM)

– Type of potential contaminant should shape work




Closure

• If you end up seeking regulatory closure:

– What program should I consider? Is a purely voluntary cleanup an option?

– Use of an ERC or other IC

– Long Term or post-closing obligations in the form of a ICIAP/IC Plan/Site Management Plan/Stewardship

– Funding and financial assurance




Buyer’s Perspective

• Consider a Compliance Audit

• Perform a Phase I ESA, BUT:

– What is purpose?

– Carefully & critically asses the HREC/CREC/REC /de minimis determinations of the EP

– Significant data gaps?

– Quality of the file review

– VEC

• Get recommendations in a separate cover letter.




Liability Protections

• 2002 Brownfield Amendments to CERCLA (haz substances) + 2009 HEA (petroleum):

– Innocent Landowner (rare)

– Contiguous Property Owner (contaminated aquifer policy)

– Bona Fide Prospective Purchaser (“BFPP”)

– Self implementing; judge is ultimate decision maker; affirmative defenses




Liability Protections • Basic Elements to these Defenses:

– All appropriate inquiries or AAI [Phase I ESA]

– Continuing obligations [ASTM 2790 – first generation]

– No affiliation with PRP

• Key distinctions: – CPO performed AAI and had no reason to know of

contamination, contamination migrated on-site

– BFPP performed AAI and knows of contamination at the time of purchase




Liability Protections

• BFPP Post-closing obligations (among others): – Provide access to those conducting response actions [AND]

– Take reasonable steps to: (a) stop any continuing release

(b) prevent any future threatened release; and

(c) prevent or limit any human, environmental, or natural resource exposure to any previously released hazardous substance

• What does this really mean?




Post-Closing Strategy

• Seek funding from Seller

• Obtain appropriate environmental insurance

• Seek regulatory closure

• Obtain a Comfort Letter from the IFA Brownfields Program (pros/cons)

• Create & Implement a CO Plan

• Why …




Vapor Intrusion Drivers

• If you have the potential for a volatile PC:

– Sample GW at correct interval

– Soil classification (New VI screening levels)

– Preferential pathways should bias sampling

– Paired indoor air/subslab implications

– Spatial and temporal variables

– SOIL GAS implications




Soil Gas Conundrum

v v




TCE Revolution

• If you have or may have TCE:

– potential for litigation (3 class actions)

– develop a decision matrix

– consider real time sampling options

– Indoor air survey/checklist

– Background issues

– Preemptive mitigation




Recommendations • If appropriately managed, the VI pathway will not kill your

deal, chill your redevelopment project, or delay your closure goals. – Develop a VI play book and clear communication protocols

– VI pathway is complex and science is evolving but you can successfully navigate to closure with cost effective and practical approaches

• Understand when and where a CO Plan is necessary to maintain landowner liability protections.

• New tools allow cost effective management (mitigation)




Questions

Please contact:

David R. Gillay, Esq.

Chair, Remediation, Redevelopment & Environmental Transactional Diligence

(317) 231-7474 or (317) 946-9267

[email protected]

mailto:[email protected]

Documents

MSEA’s Quarterly Meetingmseca.org/media/2016-09-29_-_Gillay.pdf · 9/29/2016 · •Perform a Phase I ESA, BUT: –What is purpose? –Carefully & critically asses the HREC/CREC/REC