Emily MurrayAllen Matkins Leck Gamble Mallory & Natsis LLP

Eddie ArslanianENVIRON International Corporation

March 21, 2012

Legal Issues In Real Estate DevelopmentIntroduction to Environmental Law

USC RED 562

INTRODUCTIONS/CLASS OUTLINE

• Introductions• Presentations

• Environmental Law Overview• Environmental Consultant Perspective

• Mock Case Study

ENVIRONMENTAL AGENCIES

Federal• Environmental Protection Agency (EPA)

California• California EPA• Regional Water Quality Control Boards

(RWQCB)• Department of Toxic Substances Control

(DTSC) Local Level

• Local City and County Departments

ENVIRONMENTAL LAWS - FEDERAL

• Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)• Liability• EPA Enforcement• Private Party Cost

Recovery

ENVIRONMENTAL LAWS - FEDERAL

• Resource Conversation and Recovery Act (RCRA)• Disposal of

waste and hazardous waste

ENVIRONMENTAL LAWS - FEDERAL (CONT.)

• Clean Water Act• Liability• Permits

• National Environmental Protection Act (NEPA)

• Endangered Species Act

ENVIRONMENTAL LAWS - STATE

• Hazardous Substances Account Act – State Superfund

• Hazardous Waste Control Law (Cal-RCRA)• Porter-Cologne Water Quality Control Act• California Environmental Quality Act (CEQA)• Common Law

WHEN DO ENVIRONMENTAL ISSUES ARISE?

• Pre-Purchase• Due Diligence• Contract Negotiation

• Entitlements / Development• CEQA / NEPA• Remediation

• Litigation

DUE DILIGENCE – PURPOSE AND FORM

• Purpose:• Know what you’re buying• Protect yourself from liability• Comply with the law• Satisfy lending institutions

• Form: • Phase I / Phase II Investigation

DUE DILIGENCE PURPOSE: DEFENSES TO LIABILITY

• Adjacent Landowner• Innocent Landowner

• Release precedes ownership• All appropriate inquiry; did not know or

have reason to know of contamination• Cooperation and access

• Bonafide Prospective Purchaser• Release precedes ownership• All appropriate inquiry; knew of

contamination• Cooperation and access

• ASTM Standard

• Satisfies “all appropriate inquiry” requirement

• Phase I

• Phase II

Source: Marc Defoe, 2003; SF Bay Regional Water Control Board, Brownfields)

DUE DILIGENCE FORM: PHASE I AND II

PROTECT YOURSELF: NEGOTIATE YOUR DEAL

• Indemnification• Shift liability to seller, other liable parties

• Price reduction• Allocate responsibility for cleanup activities

PROTECT YOURSELF: NEGOTIATE WITH AGENCIES

• “No Further Action” Letter• Comfort Letter• Prospective Purchaser Agreements

PROTECT YOURSELF: INSURANCE

• Insurance

ENVIRONMENTAL LAW: OTHER CONCERNS

• Entitlements / Development• CEQA / NEPA• Remediation

• Litigation

CONTACT

Emily MurrayPartnerAllen Matkins Leck Gamble Mallory & Natsis(213) 955-5584emurray@allenmatkins.com