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Environmental Law Issues In Real Property Disposal Transactions ECOS Meeting February 2005

Environmental Law Issues In Real Property Disposal Transactions ECOS Meeting February 2005. B.K. Schafer, J.D., LL.M. Senior Assistant General Counsel Real Property Division Office of the General Counsel General Services Administration bernard.schafer@gsa.gov 202-501-0255.

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Environmental Law Issues In Real Property Disposal Transactions ECOS Meeting February 2005

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  1. Environmental Law IssuesIn Real Property Disposal Transactions ECOS MeetingFebruary 2005 B.K. Schafer, J.D., LL.M.Senior Assistant General CounselReal Property DivisionOffice of the General CounselGeneral Services Administrationbernard.schafer@gsa.gov202-501-0255

  2. Federal Supply Service Federal Technology Service Public Buildings Service General Services Administration

  3. Public Building ServiceAcquisition & Management Regions Region 2New York Region 1Boston Region 8Denver Region 5Chicago Region 10Auburn Region 3Philadelphia Region 6Kansas City NCR Washington DC Region 1San Francisco Region 1San Francisco Region 7Ft. Worth

  4. Auburn Region 9San Francisco Region 7Ft. Worth Public Building ServiceDisposal Regions Region 1Boston Chicago NCRWash. D.C. Region 4Atlanta

  5. Property Disposal ProcessFederal Property Act & Federal Management Regulations40 USC 541 et seq. & 41 CFR 102-75 PublicSale Public BenefitConveyance FederalTransfer NegotiatedSale Excess TO ELIGIBLEPUBLIC BODIES FOR OTHERPUBLIC USES FAIR MARKET VALUE OFFERED TO PUBLIC & PRIVATE PARTIES BY AUCTION OR SEALED BID FAIR MARKETVALUE REQUIRED PROPERTY AVAILABLEFOR CERTAIN PUBLIC USESUP TO 100%DISCOUNT DETERMINED SURPLUSIF NOT TRANSFERREDTO ANOTHERFEDERAL AGENCY AGENCY REPORTS PROPERTYEXCESS TO GSA FORDISPOSITION • Correctional • Education • Historic • Homeless • Law Enforcement/Emergency Management • Park & Recreation • Public Health • Self Help Housing • Wildlife Conservation • Air, Sea and Transportation Ports ISDEA Donation:Surplus Property ISDEA Donation:Excess Property ISDEA Donation:Surplus Property

  6. Hazardous Substance Cleanup = CERCLA & RCRA Underground Storage Tanks (USTs) = RCRA & UST Lead Based Paint (LBP) = TSCA, RCRA & CERCLA Asbestos = CAA & CERCLA PCB Equipment = TSCA Historic & Cultural Resources = NHPA Endangered Species = ESA Wetlands & Floodplains = CWA & E.O. Environmental Planning = NEPA & CZMA Real Property Acquisition or Disposal Environmental Law Issues

  7. Fed to Fed Transfer of Property • CERCLA 120(h) does NOT apply – the transfer of federal property to a federal agency is viewed as passing the land from the left hand to the right. • All environmental liabilities (i.e., CERCLA, RCRA, UST, etc.) can be retained by old federal owner or assumed by the new federal owner (or a little of both). • In the past, the trend has been for current federal owner to clean property before actual transfer, and remain liable for discoveries after transfer. • Recent trend is current federal owner demanding a transfer now with a right of access post-transfer to continue to do cleanup (I.e., “early transfer”), or to insist on new federal owner picking up the cleanup obligation post-transfer.

  8. Transfer of Federal Property Under CERCLA • CERCLA 120 affects only transfers of federal property (i.e., the entire fee, not leases, etc.) to non-federal, non-PRP recipients. • CERCLA 120 says that only if you satisfy one of three provisions of CERCLA, can such property be transferred: • Timely Transfer: property has been studied or cleaned and found to be clean “enough;” OR a remedy is “constructed and installed” and, though not yet complete, is “operating properly & successfully” per EPA. • Early Transfer: property has not been cleaned but will be after the transfer by either the grantor or the grantee. • Clean Transfer: property has never had any releases -- hazardous substances OR petroleum -- and thus can be called “clean” and requires no cleanup (Note: “adjacent property” must be studied too).

  9. CERCLA 120(h)(3) Required Deed Provisions CERCLA Timely Transfer • Disclose Hazardous Substance Activity • Provide Buyer With Covenants: • All remedial action necessary is completed at time of transfer; or remedy not finished but “operating properly and successfully” per EPA • The United States shall conduct any additional remedial action found necessary after transfer (for contamination existing at time of transfer). • Access reserved for any additional remedial action found necessary after the transfer.

  10. CERCLA Early Transfer J. Wellington Wimpy explains how CERCLA Sec. 120(h)(C)(3) works – the "early transfer" provisions of CERCLA Sec. 120

  11. CERCLA 120(h)(3)(C)Early Transfer Authority (ETA) CERCLA Early Transfer • Allows Governor (and EPA at NPL) to defer CERCLA covenant that all remedial action necessary has been taken prior to transfer if: • Property is suitable for use intended by transferee • The intended use is consistent with protecting human health & the environment • There are assurances that cleanup will be completed and the deferral will not substantially delay the cleanup

  12. CERCLA 120(h)(3)(C)Early Transfer Authority (ETA) CERCLA Early Transfer • Contract provisions: • Can agree to transferee’s performing the necessary investigation and cleanup • Must identify an approved schedule for investigation & completion of all necessary response action (by federal transferor or transferee) • Obligation to submit budget request to OMB that adequately addresses the schedule for investigation & cleanup(when federal transferor is doing cleanup)

  13. CERCLA 120(h)(3)(C)Early Transfer Authority (ETA) CERCLA Early Transfer • Deed restrictions on use: • To ensure protection of human health and the environment • To ensure no disruption of required investigations, response action and oversight activities

  14. Land Use Control Implementation • Cleanup Paradigm - breaking the link among the contaminant, the pathway and the receptor. • All three aspects are calculated via “risk assessments.” • Residential (unrestricted) use vs. Commercial/Industrial (restricted) use, drive the “risk assessment” process. • If cleanup is based on restricted use of land, then site-specific restrictions must be spelled out. • Restrictions are of two flavors: engineering controls vs. institutional controls. • Institutional controls can consist of Deed Notices vs. Promise to Do a Deed Restriction vs. Deed Restriction (no residents, no digging, no use of groundwater).

  15. CERCLA “Early Transfer” ProcessFinding of Suitability for Early Transfer (FOSET) & Covenant (i.e., all cleanup is complete) Deferral Request (CDR) Purchaser negotiatesnew cleanup agreementwith State Closing on SaleU.S. gives deed with Restrictions Purchaserperforms cleanuppost-transfer Actively Sell by NS or PS Prepare forPublic Sale (PS) Prepare for Negotiated Sale (NS) or Governor allows U.S. to defer CERCLA covenant DraftFOSET 30-dayPublic NoticeFOSET FinalFOSET &CDR Cleanup Complete U.S. provides deferred covenant State Regulator input Public Comment & Response

  16. http://propertydisposal.gsa.gov

  17. http://rc.gsa.gov

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