Our approach to dealing with environmentally challenged real estate is a product of Norm Bernstein’s decades of experience as a Trustee at several Superfund sites, one of which is on EPA’s National Priority List, and if a transaction involves the acquisition of challenged real estate, an adaptation of our basic four step M&A deal approach (see our M&A practice area tab).
As a Superfund Trustee, Norm Bernstein coordinates the work of technical committees, oversees the day-to-day work of the Trust’s environmental engineers and screens all communications with the government. Norm’s understanding of the strengths and weakness of various technologies and the need to develop realistic cost projections for several of these sites under complex conditions has provided unique insight as to how much various matters are likely to cost. Moreover, our firm has developed its own model firm fixed price remediation contract. While each contract has to be tailored to its specific situation, the contract form that we have developed over the years requires the contractor to assume the risk of unknown conditions (with a few very narrow exceptions) and commit to achieving the required cleanup for a firm fixed price. The ability to apply for “change orders” is tightly limited. To prevent contractors from increasing the price to cover their risk, we use structured competitive bidding to drive the price down. In short, if you own or otherwise are potentially liable for contaminated property, we can help provide cost effective remedies and help landowners who have been trapped, typically by agreements negotiated by environmental engineers, into never-ending and unnecessarily elaborate “site management plans.”
In multi-party situations, Norm Bernstein has successfully developed allocation formulas that companies have accepted; and he has negotiated numerous cleanup agreements with regulators (and got them amended when needed). Where appropriate, we have successfully “pushed back” against unreasonable expansion of cleanup standards. For example, at one Superfund site, we successfully resisted imposition of a new cleanup standard for 1,4-dioxane. We did so by a combination of (a) showing that neither the toxicology nor EPA’s regulatory structure justified such a standard, and (b) at the same time agreeing that because 1,4-dioxane moves quickly in groundwater, it was reasonable to use it as a kind of “canary in the mine” – an early predictor of the direction of a groundwater plume – but nothing more.
In addition to helping with cost effective cleanups, we can also work with developers to take advantage of various Brownfield Cleanup programs which offer tax incentives to develop otherwise “underwater” properties. Similarly, we can help brokers avoid deal collapse when potential buyers are not willing to take an unquantified environmental risk. The key is to be able to quantify the risk.
If you already have or are thinking of acquiring environmentally challenged real estate, talk with us. Our extensive experience in dealing with these issues may be of benefit to you or your clients.