August Mack Newsletter | November, 2017

Moving Towards Closure on Legacy Properties
by Kent Johnson

It has been nearly 40 years since Love Canal ushered in the reality of dealing with environmental issues on legacy properties.  Love Canal also triggered a number of regulations related to how hazardous substances and pollutants are defined and who should be responsible for clean-up obligations, namely the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). To put that year into context of environmental regulations, let’s consider that the EPA was just 10 years old at the time (formed in 1970), and major regulations pertaining to waste disposal, chemical manufacturing and water pollution were just enacted; starting in 1976 with the Resource Conservation and Recovery Act (RCRA) and Toxic Substances Control Act (TSCA) with the Clean Water Act of 1977 shortly behind.  Most would agree this era birthed the environmental industry that has grown up before our eyes the past 30+ years.              

Over my past 23 years in consulting, I have seen the profession mature much like watching a child mature into adulthood (I can say this having raised 4 kids!).  It is my observation that during this time we:

  1. Grew Smarter.  Real Estate deals that were once DOA now get done because we learned to better quantify and understand environmental risk.
  2. Became more creative.  When there were no liability protections for people who wanted to buy “brownfield” sites, we found a way to give them liability protection through amendments to existing laws, namely the Brownfields Act of 2002 which amended CERCLA and provided the Contiguous Landowner and Bona Fide Prospective Purchaser defenses.
  3. Learned to compromise.  After years of digging up contamination and hauling off site to a landfill, remediation plans and regulatory oversight evolved to be more agreeable to leaving contamination in place and managing risk through institutional and engineering controls. 
  4. Gained perspective into the reality that sites with environmental legacies are assets to be put to use and not liabilities to be left to flounder.                

Yet in spite of all this maturing, there is still work to be done if one considers that 50% of corporate America’s $1-2 trillion dollar real estate holdings are thought to be devalued due to environmental impacts. Simplistically, these sites fall into two categories: Sites that are currently seeking “closure” in any number of state or federal regulatory programs and sites that are yet to start be discovered or disclosed.  My experience with the former is that progress towards closure can be influenced by several factors (more on that later).  My experience with the latter is that eventually the other shoe will drop (I’ll save that for another article)!

Let’s Talk Closure

Whether you are about the start the process or are somewhere in the closure continuum, there are some things to be mindful of to keep sites moving towards closure.  These notes are observations made over my career in dealing with sites that have progressed at various speeds along their path to closure. 

  1. Sites with a Driver Move Faster.  What is driving the closure? It is quite likely that the only driver at the time was to comply with a reporting obligation to the governing environmental agency. This reporting of a release would have set in motion the site characterization, remediation planning and implementation phases of the closure process.  There are thousands of sites somewhere in this closure continuum and those that have a driver for closure move faster. Not to go negative here, but the threat of fines, penalties and lawsuits can be a driver.  However, such drivers will rarely get you to closure quickly. The best driver for these sites is redevelopment.  Unfortunately, most sites languish due to a line of thinking that nothing can be done until closure is complete or that a sharing of environmental information is too risky.  This is simply not true.  First, sites get developed all the time with lingering environmental liabilities left to manage and public and private stakeholders like economic development, lenders, developers, brokers and civic leaders are often the best ally when it comes to turning a community liability into an asset.  Second, information on a site in a regulatory program is public record so the information is already out there.  State and Federal regulators have thousands of sites on their plates.  Drivers in a regulatory closure seems to elevate and expedite reviews and approval of these oversight agencies to keep a redevelopment project moving. 
  2. Don’t Get Lost in the Weeds.  Whether just starting the closure process or somewhere in the process, it is easy to get lost in the weeds.  We are talking sites/issues that can take decades to close.  The challenge is that the project stays constant but the people, or, people’s attention to the project, can change.  Project managers leave – at the regulatory agency and consulting firm, people retire – perhaps the lead attorney or the in-house employee who oversaw the site closure activities. This can result in a cycle of picking up where others left off and progress can stall. It is always a good idea to revisit where you are in the process. Have thresholds for contaminant of concerns changed since the closure process started?  Has anyone taken the time to evaluate how contaminant levels have changed at the site?  Perhaps the advancement of risk assessments and the practice of implementing institutional and engineering controls moves the site towards closure under the existing conditions. At the completion of this article, I will have it proofread by others. Why?  Because after reading it repeatedly, I know I am missing details and errors. I just cannot see them. It takes a fresh set of eyes to see what I may be missing.  These projects are no different – sometimes they need a new perspective and a fresh set of eyes that can take a holistic review of the state of affairs to evaluate if your closure strategy of yesterday still applies today. Fortunately, the data and report trail of these sites makes it easy for such a review to take place. 
  3. Find the Right Team. It is critical that responsible parties assemble a team of professionals that are able to navigate the regulatory and technical issues these sites present. This means finding a local attorney and environmental consultant with experience in closing sites with the local regulatory agency. Local representation will make communication with the regulatory agency easier as typically both sides will be familiar with one another.  Local representation can also be helpful in identifying other key local team members like qualified developers, commercial real estate brokers and governmental affairs experts that can offer assistance with the local issues that will affect redevelopment. More importantly, the team should be likeminded when it comes to a closure strategy. You would not want to have a legal and technical approach of being reactive to the regulatory agency when you could be more proactive with work activities while still maintaining agency contact and communication. For example, some state programs are voluntary programs. The benefit of being in a voluntary program is that you can control the pace of work and not necessarily wait for agency approval around every corner.  As previously stated, regulatory agencies are full of projects and their timeline for review and approval of every work activity can take time to complete. During this time, there is nothing that would stop a responsible party from continuing site work and moving closer to closure. 

The point of all this is simply to raise awareness for those who face dealing with legacy sites.  I realize it is not all as simple as this article made it sound. I realize the best team and best strategy does not always win or get you to the end result faster. I am simply suggesting we change the dialog when it comes to these sites. Instead of being burdened by their environmental liabilities, we should shift our focus to evaluating their redevelopment potential.  After all, are these not parcels of real estate?  The last time I checked, the real estate market was doing pretty good! It just so happens developing these sites means one has to account for the environmental issues and the environmental industry today is more equipped to help with that part of the equation than any other time in our history. Also, there have been so many success stories that stakeholders no longer fear environmental challenges. This opens the potential for these sites to be considered. Perhaps you recently inherited a site from a departing coworker that has been on the books for years or perhaps you have been working on the same site your entire career.  Before you consider keeping the same closure strategy, or, before riding off into retirement with things still open, perhaps it is time to take a fresh look at your approach, your team, and at redevelopment.  You may identify some driver or environmental change that allows a site to move from a liability to an asset. 


Kent Johnson is the Transaction Program Development Manager with August Mack Environmental, Inc. in the Indianapolis office. He has more than 20 years experience with extensive knowledge regarding Brownfield site investigation and remediation, Phase II subsurface investigation, Underground Storage Tank (UST) removal and closure, groundwater monitoring sampling programs, asbestos and lead investigations and management, as well as indoor air quality investigations. Kent can be reached at 317.916.3177 or via e-mail at kjohnson@augustmack.com.


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