2014 bna due care and appropriate care
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Lessons Learned from BFPP Caselaw and Lessons Learned from BFPP Caselaw and Implications for Brownfield DevelopmentImplications for Brownfield Development
Lawrence SchnapfLawrence SchnapfLawrence SchnapfLawrence SchnapfSchnapf LLCSchnapf LLC
New York, NY 10128New York, NY 10128Larry@SchnapfLaw.comLarry@SchnapfLaw.com
www.SchnapfLaw.comwww.SchnapfLaw.com212212--876876--31893189
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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
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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
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CERCLA Defenses
Third Party
Innocent Landowner (ILO)
Bona Fide Prospective Purchaser (BFPP)
Contiguous Property Owner (CPO)
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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
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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
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BFPP
Pre-Existing Release
No Affiliation
AAI
Post-Closing Continuing Obligations
Appropriate Care
Cooperation
Compliance
Notification
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Allocation
Exercise of Due Care Element of Gore Factors
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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)
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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
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New York v Adamowicz
1985 County orders discharges to leaching pools to cease
managing partnership spends $1MM to clean-out pools and investigateout 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
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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
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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)
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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)
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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
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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
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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
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Environmental Conditions
Widespread lead and arsenic
Carcinogenic PAHs
Low pH conditions throughout site that mobilized metalsmobilized metals
Site covered with limestone run of crusher (ROC) in phases
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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
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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
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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
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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
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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
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District Court Findings of Law
Court rejects divisibility argument
Ashley response actions found consistent with NCP despite absence of formal agreement with EPA or stateEPA 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
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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%
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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
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Ashley is PRP
Ashley did not prove that no disposals occurred after its acquisition
Effort to discourage EPA from pursuing H & F was improper affiliationwas improper affiliation
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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
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Voggenthaler Contd
Unnotarized affidavit that County had disclosed PCE contamination.
AAI not required since contamination was in public records
9th Cir says unnotarized affidavit not establish the BFPP 9th 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
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Lessons
LLPs are legal defenses
State VCPs
Recommendations in Phase 1 Reports
DisclosureDisclosure
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
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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?
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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
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Brownfield Development Brownfield Development Implications: Project ScheduleImplications: Project Schedule
Site Control vs. Site OwnershipSite Control vs. Site Ownership
Lead time for assemblageLead time for assemblage
How long before constructionHow long before construction
Phased constructionPhased construction Phased constructionPhased construction
BFPP IssuesBFPP Issues
No disposals No disposals
Appropriate CareAppropriate Care
Phase 1 Recommendations Phase 1 Recommendations
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Diligence IssuesDiligence Issues--examine examine assumptionsassumptions
Historic operationsHistoric operations
Chemical and waste handling areasChemical and waste handling areas
SumpsSumps
SeparatorsSeparatorsSeparatorsSeparators
PipingPiping
Illegal or unknown disposalIllegal or unknown disposal
RailyardsRailyards
FiresFires
Riverfront property (NRD?)Riverfront property (NRD?)
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Various Environmental IssuesVarious Environmental Issues
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Asbestos in soilAsbestos in soil
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Pipe Under Loading DockPipe Under Loading Dock
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External sumpExternal sump
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Interior sumpInterior sump
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Sump pump outSump pump out
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Abandoned drainage Abandoned drainage
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Illegal discharge PointIllegal discharge Point
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Broken Pipe Discharging To RiverBroken Pipe Discharging To River
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Exterior Pit Exterior Pit
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Open PitOpen Pit
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Floor DrainFloor Drain
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Boiler With Friable AsbestosBoiler With Friable Asbestos
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Drums hidden in weedsDrums hidden in weeds
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Buried DrumsBuried Drums
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Abandoned Building IssuesAbandoned Building Issues
Drums, tanks, transformersDrums, tanks, transformers
UtilitiesUtilities
WinterizingWinterizing Bursting pipes and drumsBursting pipes and drums Bursting pipes and drumsBursting pipes and drums
SecuritySecurity Exterior lights, interior cameras, guards, Exterior lights, interior cameras, guards,
boardupsboardups
InspectionsInspections
Moisture (roof and windows)Moisture (roof and windows)
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Unsecured BuildingUnsecured Building
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Skate board rampSkate board ramp
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Gang GraffitiGang Graffiti
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Copper piping vandalismCopper piping vandalism
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Broken Window with Friable ACM and Broken Window with Friable ACM and DrumsDrums
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Snow in building from collapsed roofSnow in building from collapsed roof
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Ice in buildingIce in building
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Frozen chemical vatFrozen chemical vat
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Drums sitting in rainwaterDrums sitting in rainwater
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Drums in snowDrums in snow
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Corroding tanksCorroding tanks
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Overflowing Sump and Caustic Waste Overflowing Sump and Caustic Waste DrumsDrums
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Not Snow but corrosion from leaking ASTNot Snow but corrosion from leaking AST
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Leaking Battery acid Leaking Battery acid
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Vacant Land Becomes Dumping GroundVacant Land Becomes Dumping Ground
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Demolition/Construction Demolition/Construction IssuesIssues
Contaminated Debris (e.g., PCBs in concrete)Contaminated Debris (e.g., PCBs in concrete) LBP/ACMLBP/ACM M/E liquidationM/E liquidation Drums and waste disposalDrums 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 (nonWaste Brokers (non--owned site coverage)owned site coverage) RecyclingRecycling--remember remember Burlington NorthernBurlington Northern Phased ConstructionPhased Construction Fill MaterialFill Material
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Asbestos building debrisAsbestos building debris
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Dust SuppressionDust Suppression
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PCBPCB--contaminated Concrete Debriscontaminated Concrete Debris
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PCBs From Drained TransformersPCBs From Drained Transformers
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Other Significant Brownfield Other Significant Brownfield CaselawCaselaw
AMCAL MultiAMCAL Multi--Housing v Pacific Clay ProdsHousing 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 HoneywellU.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 BuildersBuilders, 655 F. Supp. 2d 473 (D. N.J. 2009), 655 F. Supp. 2d 473 (D. N.J. 2009)
Ford Motor Co v Edgewood PropsFord Motor Co v Edgewood Props., 2012 U.S. ., 2012 U.S. Dist. LEXIS 125197 (D. N.J. 8/31/12Dist. LEXIS 125197 (D. N.J. 8/31/12))
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