This document summarizes several key environmental issues that can affect real estate transactions and development projects. It discusses regulations pertaining to waste management (RCRA/Texas SWDA), hazardous substance cleanup (CERCLA/Texas SWDA), and brownfield redevelopment. It also covers stormwater management and permitting requirements, protections for floodplains and wetlands, asbestos and lead regulations, the Endangered Species Act, and emerging trends around greenhouse gas regulation and sustainable development.

1. Environmental Issues
Affecting Real Estate
SMU Cox School of Business
Real Estate Law
March 8, 2012
by:
Sally A. Longroy
y g y

2. Overview
 RCRA / Texas SWDA
 CERCLA / Texas SWDA
 Brownfield Redevelopment
 St
Storm Water Management
W t M t
 Floodplains and Wetlands
 Asbestos & Lead
 Endangered Species
 Trends – Sustainable Development

3. RCRA / Texas SWDA
 Waste management - “Cradle-to-grave”
 Allows EPA to address releases from
underground storage tanks
 Injunctive relief available if “imminent and
substantial endangerment”

4. Trinity River Audubon Center

5. Trinity River Audubon Center
EFFORT TO HAUL IT OUT?
City s
City’s Expert Report Estimated:
 12 year excavation process
 146,000 truckloads of materials
 Semi trucks must enter/exit every 3
minutes with 15 pieces of h
i t ith i f heavy
construction equipment operating 8
hours per day
$107,000,000.00

6. Trinity River Audubon Center
The $77 Million Order

7. Trinity River Audubon Center
 Over 100 soil borings/
landfill gas monitoring
points
 Over 90 test pits
 22 Groundwater
monitor wells
 9 Surface water/
sediment samples
 Bi-weekly/quarterly
methane monitoring

8. Trinity River Audubon Center
 130,000 cy
waste relocated
on-site
 1,400,000 cy
imported fill

9. Trinity River Audubon Center

10. Trinity River Audubon Center

11. CERCLA / Texas SWDA
 Goal - Clean up of hazardous substances
 Liability –
 Status liability - PRPs
 Joint and several
 Strict
 Retroactive
 Perpetual

12. CERCLA / Texas SWDA
 Liability
 Lender protections
 Petroleum exclusion

13. CERCLA / Texas SWDA
 CERCLA Defenses
 Innocent Landowner
 Contiguous Property Owner
 Bona fide Prospective Purchaser
p
 Requires “All Appropriate Inquiry”
 ASTM E1527-05 – consistent with final
rule on AAI
 Codified at 40 CFR Part 312

14. CERCLA / Texas SWDA
 Why Perform Assessment?
 Set transaction condition
√ Liability allocation
√ Remediation conditions
 Who pays?
 Who runs the show?
 Permitted uses?
 How clean?
 Who’s the long-term caretaker?
√ Construction-related issues
 Lender requirements
 Asset valuation

15. CERCLA / Texas SWDA
 Recognized Environmental Conditions
 AIA Components
Co po e s
 Records review
 Site reconnaissance
 Interviews with owners, occupants,
operators and state and local
regulatory agencies
 Report
 Qualified environmental professional

16. CERCLA / Texas SWDA
 AAI Does Not  Radon
Cover:  Mold
 Petroleum  Municipal solid
waste
 Asbestos in
buildings
b ildi  Wetlands
 Lead-based paint  Threatened and
endangered
 Lead in drinkingg
species
water
 Archeological and
 Indoor air
cultural
pollution/vapor
intrusion  Regulatory
compliance

17. CERCLA / Texas SWDA
 If REC → Phase II Invasive sampling of
 Soil
 Ground water
 Surface water
 Sediment

18. Brownfield Redevelopment
Texas Risk Reduction Program
 Remedy Standard A
 Self Implemented
 Meets critical PCLs
 No physical or institutional controls

19. Brownfield Redevelopment
Texas Risk Reduction Program
 Remedy Standard B
 Prior TCEQ approval required
 Meets critical PCLs
 Physical and institutional controls may
be used

20. Brownfield Redevelopment
 Goal – get environmentally impaired
p p
properties back on the market
 Manage CERCLA and other environmental
risks

21. Brownfield Redevelopment
Texas Voluntary Cleanup Program
 Remediate to meet Texas standards
 Certificate of Completion – releases future
owners and lenders from liability to Texas
 Must apply before taking title
 Must apply before performing remediation

22. Brownfield Redevelopment
Texas Innocent Owner/Operator
Program
 Immune from liability if
 Property contaminated by release or
migration from off-site source or
sources, and
 Did not cause or contribute to the
source or sources of the contamination

23. Brownfield Redevelopment
Texas Innocent Owner/Operator
Program
 IOP Certificate of Completion confirms
eligibility
 IOP Certificates are not transferable

24. Brownfield Redevelopment
Texas Municipal Setting Designation
 City ordinance restricts potable use of
groundwater
 Eliminates exposure pathway so may
 Lower cleanup standards
 Reduce investigation/remediation
requirements
 Reduce costs
 TCEQ certifies the ordinance

25. Lake Highlands Town Center

26. Release Reporting
 Storage tank systems
 Non-tank releases
 “Whenever an accidental discharge or
spill occurs from an activity or at a
facility which causes or may cause
pollution . . . “

27. Storm Water Management
Typical Problems – Construction
 Extensive siltation and sediment deposits
p
 Excessive storm water discharges
 Storm water relocates hazardous
substances from industrial run-off

28. Storm Water Management
Clean Water Act
 NPDES Program
g
 Regulates discharge of any pollutant
from any point source to navigable
waters
 TPDES Program

29. Storm Water Management
Construction General Permit
 What’s regulated
What s
 Large construction activities
 Disturbs > 5 acres
 Small construction activities
 Disturbs > 1 acre
 Part of larger “common plan of
development”
p

30. Storm Water Management
Construction General Permit
 Storm Water Pollution Prevention Plan
 File Notice of Intent (NOI)
 Pay Fee
 Post Construction Site Notice with NOI
 Construction
 File Notice of Termination

31. Storm Water Management
Enforcement
 Government enforcement – EPA priority
 CWA citizen suits
 Failure to obtain permit
 Ongoing violation of a permit
 Trespass nuisance negligence claims
Trespass, nuisance,

32. Floodplains
 Land subject to inundation by the 100-year
flood
 Designated by FEMA maps
 Regulated at local level

33. Wetlands
 Areas inundated or saturated by surface or
g
ground water at a frequency and duration
q y
sufficient to support a prevalence of
vegetation typically adapted for life in
saturated soil conditions
d il di i

34. Wetlands
Rapanos v. United States (2006)
 Scalia, Renquist, Thomas, and Alito
Opinion:
 J i di ti only over relatively
Jurisdiction l l ti l
permanent, standing or continuously
flowing bodies of water forming
streams, oceans, rivers, and lakes,
AND
 Wetlands with a continuous surface
connection thereto

35. Wetlands
Rapanos v United States (2006)
v.
 Kennedy Opinion:
 Jurisdiction over water or wetland if it
possesses a “significant nexus” to
waters that are navigable i f t or th t
t th t i bl in fact that
could reasonably be so made
 Significant nexus - wetlands alone or
wetlands,
in combination with similarly situated
lands in the region, significantly affect
the chemical, physical and biological
integrity of traditionally navigable water

36. Wetlands
Rapanos v United States (2006)
v.
 Stevens Souter, Ginsburg, and Breyer
Stevens, Souter Ginsburg
Dissent:
 Jurisdiction extends to the outer limits
of the commerce power

37. Wetlands
EPA and USACE Memorandum
 Follow Kennedy Opinion
 Jurisdiction:
 T diti
Traditional navigable waters
l i bl t
 Relatively permanent, non-navigable
tributaries of traditional navigable
waters
 Wetlands d ec y adjace to bo ,
e a ds directly adjacent o both,
even if no continuous surface
connection

38. Wetlands
EPA and USACE Memorandum
 Case-by-Case Significant Nexus
Evaluation
 Non-navigable tributaries - NOT
relatively permanent
l i l
 Wetlands adjacent to non-navigable
tributaries - NOT relatively permanent
 Wetlands adjacent to, but not directly
abutting,
abutting relatively permanent tributary

39. Wetlands
Texas § 401 Certification
 TCEQ certifies § 404 permit complies with
Texas water quality standards
 Tier I
 Small project
 Checklist - incorporates all applicable
BMPs
 Tier II – Individual certification
 Imposes regional conditions on NWPs

40. Asbestos
 TSCA
 Production, use, disposal
 Clean Air Act
 Air emissions (NESHAP)
 Concern - friable asbestos and some non-
friable

41. Asbestos
Demolition and Renovation
 Texas Asbestos Health Protection Rules
 Asbestos survey
 Remove all ACM before demolition or
renovation, with certain exceptions
 Municipal ordinances

42. Asbestos
Construction Industry
 OSHA – worker health and safety
 No exposure in excess of PELs
 Work practices
 Training
 Medical surveillance

43. Lead-Based Paint
 1977 - CPSC ban
 1996 - Lead Paint Disclosure Regulations
 2010 - Lead Renovation, Repair and
Painting Rule

44. Endangered Species Act
 Prohibits any action that results in a
"taking" of a listed species, or adversely
g p , y
affects habitat
 Plants and animals
 US Fish & Wildlife
 1500 endangered species
 300 threatened species

45. Trends
 Greenhouse Gas Regulation
 Massachusettes v. EPA (2007)
 GHG Reporting Required (9/09)
 Endangerment finding (
g g (12/09)
)
 Regulation of GHGs under CAA (3/10)
 Tailoring Rule (5/10)

46. Trends
 Sustainable Development
 Green Buildings
 LEED
 Energy Star
gy
 Municipal requirements
 Land planning

47. Trends
Trends
Thank You!
Th k Y !
Questions & Answers
Q
Presented by:
Sally A. Longroy