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.

Editor: James B. Witkin, Linowes and Blocher, 1010 Wayne Ave., Silver Spring, MD 20910.

Real Estate and Environmental Enforcement

Real estate practitioners have become used to dealing with environmental issues on an increasingly regular basis. Although many may not exactly relish the technical aspects, they know how to review Phase I assessments and draft documents allocating environmental liability between buyers and sellers.

Still, many lawyers remain unaware that their real estate clients' activities impacting the environment may result in criminal penalties or significant civil fines. In recent years, there has been a significant rise in the number of environmental enforcement actions against parties in the real estate industry, resulting in increasingly higher monetary penalties and even prison time. No longer are these sanctions reserved for the midnight dumpers and the rotten apples of the chemical industry.

A myriad of environmental laws can affect the ownership and management of real property, including the Clean Air Act; the Clean Water Act; the Resource Conservation and Recovery Act; the Comprehensive Environmental Response, Compensation and Liability Act (Superfund); the Residential Lead-Based Paint Hazard Reduction Act of 1992 (Title X); and various state laws. The applicability of each statute generally depends on the present and past uses of the property. Almost all of the statutes contain criminal provisions. Whether or not the regulatory agency seeks civil or criminal penalties for violations will depend on the severity of the violation, including intent and resulting harm.

For example, the government has brought numerous criminal cases against parties involved in illegal asbestos removal and disposal. This April, EPA Administrator Browner and Attorney General Reno held a joint press conference, covered by the major networks and newspapers, to announce the indictment of three men for conspiring to hire homeless workers to illegally remove asbestos. Noting that asbestos is contained in almost all buildings constructed before 1950, Browner stated EPA's intent to investigate and prosecute individuals who remove asbestos without following Clean Air Act and OSHA procedures.

Use of Untrained Personnel

Governmental agencies have brought other cases when untrained or vulnerable persons were used to remove asbestos. In Pennsylvania, the supervisor of the Red Bank Valley Schools was convicted of violating the Clean Air Act for using untrained individuals, including teenagers, to remove asbestos-containing materials from a high school. The supervisor faces a maximum sentence of up to five years in prison and/or fines up to $250,000.

Real estate developers and owners have faced criminal prosecution as well. A corporation that owned an apartment house in Brooklyn pleaded guilty to violating the Clean Air Act because it used untrained workers to remove asbestos, and an individual whose family owned the building was arrested and charged as well. The corporation agreed to pay a $75,000 fine and hire an asbestos expert to inspect all of its buildings and remove the asbestos lawfully, if necessary. The owner of another building was fined $30,000 and sentenced to 2 1/2 years in prison for directing his employees to remove asbestos to fulfill an obligation to a prospective purchaser.

Development Risks

The development of raw land can also lead to environmental enforcement action. Last year, Maryland developer James J. Wilson was sentenced to 21 months in prison with one year supervised release and fined $1 million for knowingly filling a wetland without a permit. His two corporations were fined $3 million, placed on five years probation and ordered to implement a wetlands restoration and mitigation plan. The convictions were overturned by the Fourth Circuit after a finding that the Corps of Engineers failed to properly prove its jurisdiction.

Nevertheless, this is not the first time that the Corps has sought high fines and restoration for filling wetlands without a permit. The definition of wetlands is very broad, and clients must be advised that the govern-ment is serious about prosecuting developers who do not comply with applicable law.

Lead-Based Paint Problems

Although not all violations of environmental laws result in criminal sanctions, the civil penalties that the government may impose can be painful as well. In January 1998 EPA issued a guidance document clarifying its enforcement policy for violations of Title X's disclosure requirements related to lead-based paint in pre-1978 housing. Violations can lead to civil and criminal penalties of up to $11,000 per violation.

EPA has begun bringing enforcement actions under Title X in earnest. On July 29, 1998 it announced that it had assessed penalties totaling $439,725 against four parties (two landlords in Philadelphia, a realty firm in Oklahoma and the U.S. Navy in Texas) for failure to disclose to their tenants information on lead-based paint. Steven A. Herman, EPA's Assistant Administrator for Enforcement and Compliance, said:

EPA will continue to take action against violators of the [Title X] disclosure rule, an important public right-to-know initiative. There is no more serious environmental problem in America's older homes than lead-based paint. . . . EPA has made extensive efforts to educate the real estate community on the requirements of the disclosure rule, and we will take strong enforcement action against violators. epa-press@valley.rtpnc.epa.gov.


These increasingly common stories indicate that real estate practitioners who ignore the criminal and civil penalties of environmental laws do so at their peril.

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