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Environmental Law Update provides information on developments in environmental law as it applies to property, probate and trust matters. The editors of Probate & Property welcome information and suggestions from readers.
Thoughts on the New Millennium
With the new millennium here, it seems appropriate to make some predictions about what environmental issues may arise in real estate transactions. Twenty years ago, nobody cared much about whether the dirt under our deals was dirty. Ten years ago, every transaction seemed ready to founder on the shoals of environmental disaster. Today, real estate practitioners generally have figured out how to deal with environmental issues, but there are still enough surprises, or cases of first impression, to keep real estate and environmental lawyers on their toes. This column offers the author's guesses as to which environmental issues are likely to be hot-and which are not.
Underground Storage Tanks
USTs are ubiquitous. The petroleum products (and other chemicals) that have leaked from them have complicated many deals. Gasoline tanks had to come into compliance with stringent federal requirements in December 1998. Currently, there are no major regulatory compliance deadlines on the horizon.
Nevertheless, contamination that leaked from USTs over the past decades still lurks underground, largely undetected and often mi-grating to neighboring properties. Parties frequently detect that contamination when they perform an environmental audit in anticipation of a transaction. When the transaction is delayed, or when an innocent party must perform remediation, disputes ensue. The fallout from USTs will be around for years to come.
In the 1980s, Manhattan skyscrapers with asbestos in them sold for millions of dollars less than their asking prices, due to perceived health risks. Today, building owners and managers have learned how to manage intact asbestos in place. When the substance has to be removed, the cost of removal is no longer prohibitive. Asbestos phobia is largely a thing of the past.
Indoor Air Quality
Concerns over indoor air quality (IAQ) in commercial buildings have percolated through the industry for a number of years but have yet to become a stumbling block for many transactions. Proposed federal IAQ rules appear to have been relegated to regulatory limbo, and relatively few indoor air lawsuits have been filed. Still, with the increasing sophistication of instrumentation devices, it will be possible to discover greater numbers of chemicals, molds and other substances that can turn into airborne torts. Al-though IAQ issues are not likely to become widespread problems, they are not going to go away anytime soon.
Concern about the effects of lead paint on health-especially the health of children-has resurfaced as an important housing issue. With the implementation of the Title X lead-based paint disclosure requirements, and the more recent rule concerning the obligation of renovators, owners of housing must now comply with a considerable number of regulations. Although lead paint is unlikely to become as hot a topic as asbestos once was, property owners must still remain vigilant.
Redevelopment of contaminated properties continues apace, with more than half of the states having enacted brownfields statutes. For several years, proposed federal brownfields legislation has been enmeshed in the thicket of politics surrounding Superfund reauthorization, but that has not stopped many brownfields deals from moving forward without the benefit of a federal sign-off.
The concept behind most of the state brownfields programs is that private parties will not invest in contaminated properties unless and until they understand, and can quantify, their risks. Therefore, many brownfields programs permit potential purchasers to negotiate proposed cleanup levels with state regulators before committing to acquire a property.
Many brownfields programs incorporate the concept of risk-based corrective action. Risk-based cleanup requirements acknowledge that it is more important to clean sites where contamination actually could have a material environmental effect than sites where contamination poses no appreciable risk. In many urban areas, there are no sensitive receptors, groundwater has not been used as a source of potable water for decades and there is a history of contamination. In those cases, the brownfields programs acknowledge that requiring state-of-the-art cleanups will not have any appreciable positive environmental impact.
In theory, this concept makes sense. In practice, there are still likely to be disagreements between regulators and developers over appropriate cleanup levels. Expect brownfields development to continue to be a hot topic in coming years.
Environmental Law Update Editor: James B. Witkin, Linowes and Blocher, 1010 Wayne Ave., Silver Spring, MD 20910.