FUDS – UNCHARTED TERRITORY IN BROWNFIELDS REMEDIATION AND REDEVELOPMENT

Formerly Used Defense Sites (“FUDS”)

The Department of Defense (“DoD”) is responsible for environmental restoration of properties that were formerly owned by, leased to or otherwise possessed by the United States and under the jurisdiction of the Secretary of Defense.

The Army is the executive agent for the program and the COE manages and directs the program's administration.

FUDS Inventory At the start of Fiscal Year 2009, the Army Corps of Engineers

listed 4,610 FUDS Projects in the Continental United States.

The State of Maryland has 64 FUDS Sites.

The City of Baltimore has 5 FUDS Sites. Baltimore AAF Baltimore Adjutant General depot Fort Armistead /Hawkins Point Fort Holabird Johns Hopkins University Laboratory

Baltimore County has 18 FUDS Sites.

FUDS Remediation Funding Process The FUDS Program is part the Defense

Environmental Restoration Program (“DERP”) and remediates properties consistent with the CERCLA and the NCP.

FUDS is funded through annual Congressional appropriations.

Funds allotted to FUDS sites based on the degree of risk each site’s contaminants pose to human health and the environment relative to other sites in the FUDS Program.

FUDS Remediation Funds Barrier For Fiscal Year 2007, annual funding for the

FUDS Program was $262.1 Million in FY07, which was consistent with the annual funding in previous years.

In comparison, DoD estimates the cost of completing the remaining investigation and cleanup of FUDS properties to be $16.272 Billion.

Result: Despite DOD liability, FUDS Site remediation languishes .

Financing FUDS Remediation

Financing Sources to Remediate and Redevelop FUDS Sites Financing Approaches or

Incentives Traditional

Emerging

Other Incentives

Traditional Financing Approaches EPA Brownfields Program

Assessment, Cleanup, and Job Training Grants

Revolving Loan Funds

Tax Credits Federal or State

Traditional Financing Approaches Stimulus Funds

The Emergency Economic Stabilization Act of 2008 (“2008 Stimulus Bill”). Public Law 110-343

The American Recovery and Reinvestment Act of 2009 (“2009 Stimulus Bill”). Public Law 111-5.

Public/Private Partnerships Private Developer Funding Environmental

Oversight & Assurance Developer Assistance with Environmental

Remediation costs

Emerging Financing Approaches For FUDS Sites FUDS Negotiated Settlement

In FY 2007, the estimated “cradle to grave” cost of the United States to address residual environmental contamination at FUDS sites was approximately $16.272 billion dollars. For FY 2007, Congress appropriated $262.1 million to address all FUDS sites for that year.

United States Army Corps of Engineers ER 200-3-1 Formerly Used Defense Sites

(FUDS) Program Policy Chapter 5 Potentially Responsible Party

Process

FUDS Negotiated Settlement FUDS Negotiated Settlement Process (Cont’d) The process to achieve settlement with

USACE is necessarily site-specific but some of the common steps for each site include:

 Identification of appropriate site for settlement;  

Negotiation of a preliminary pro rata percentage of responsibility between the parties based on equitable factors;

Development of a remedial approach, implementation plan and Cost-to-Complete;

FUDS Negotiated Settlement FUDS Negotiated Settlement

Process (Continued)  Development of a Stakeholder Action Plan;  Technical discussions with the USACE

District office regarding scope of any remaining investigation and remedial alternatives and their associated costs;

Settlement negotiations with the assigned Department of Justice Attorney and/or USACE District Counsel; 

Referral of Settlement Demand by USACE chain-of-command;

Assignment of Department of Justice Attorney;

FUDS Negotiated Settlement • FUDS Negotiated Settlement Process (Continued)  Implementation of all or portions of

Stakeholder Action Plan, as needed; Finalization of Settlement in the form of a

judicially ordered Consent Decree; Finalization of state Administrative Orders

on Consent; Implementation of Cost-to-Complete; Five-year reviews; and Closure.

FUDS Cost Recovery Litigation FUDS Cost Recovery Litigation

CERCLA 107(a) Cost Recovery Claim United States v. Atlantic Research , 551

U.S. 128 (2007) CERCLA 107(a) allows cost recovery by a

private party that has itself incurred cleanup costs.

One PRP may sue anther to recover response costs incurred in voluntary cleanup.

Site owners need not wait for EPA enforcement action to institute a CERCLA 113(f) Contribution Action

FUDS Cost Recovery Litigation FUDS Cost Recovery Litigation (Cont’d)

Next step following unsuccessful FUDS Negotiated Settlement

Litigation preparation Remedial Determination/Implementation

Schedule Coordination with State and Federal

Regulators Demand on United States through COE Assembling costs and evaluation of

liability

FUDS Cost Recovery Litigation

FUDS Cost Recovery Litigation (Cont’d) CERCLA 107(a) Cost Recovery Action

Elements Defenses Objectives/Goals

Recovery of past costs expended for necessary and consistent (NCP) response costs

Secure judicial determination allocating CERCLA liability among the parties

FUDS Cost Recovery Litigation FUDS Cost Recovery Litigation

(Cont’d) Objectives/Goals (Continued) Secure a declaration pursuant to Section

113(g) of CERCLA of the United States’ liability for future responses costs incurred in remediating the FUDS Site, including: Judicial determination of United States’ pro

rata share for future response costs

Other Possible FUDS Incentives Obtaining Mineral Rights Mineral interests generally reserved on conveyance

by United States to private ownership. Allowed under Section 209 of the Federal Land Policy

Management Act. Application for Minerals is Made to Bureau of Land

Management May Act as Inducement to Prospective Redeveloper

Allows for Transfer of Complete Title (i.e. Surface and Subsurface)

May allow for the exploitation of any potential underlying value of the minerals

End-use may determine the real “value” of the minerals (site-specific analysis)