LiabilityFeedback

One reason the principal entities involved in revitalization (owners, purchasers, developers, lenders, investors, and insurers) have been reluctant to pursue revitalization projects is that federal and state environmental laws assign liability to a broad range of entities. A property owner or operator of a contaminated property may be held responsible for the cleanup. Purchasers are concerned about possible liability associated with contaminated wastes caused by the previous owners. In addition, current owners fear the potential for future liability related to the presence of unknown contamination. This liability section discusses: Liability Risk Concerns, Regulatory Liability, Third Party Liability, Environmental Insurance, and Resources and Tools.

Federal government environmental cleanup laws, such as CERCLA, or Superfund, have served a crucial role in protecting human health and the environment. However, the uncertainties associated with liabilities under these laws, as well as the fact that liabilities may arise under both federal (CERCLA) and state law, can create barriers that inhibit stakeholders from investing in, revitalizing, and reusing contaminated properties.

More than 35 states now have Voluntary Cleanup Programs (VCPs) under which private parties that voluntarily agree to clean up a contaminated site are offered some protection from future state enforcement action at the site, often in the form of a “no further action” letter, covenant not to sue, or “certificate of completion” from the state. Such state commitments do not affect EPA’s authority to respond to actual or threatened releases of hazardous substances under CERCLA.

The nature of the properties typically considered for revitalization can lead to uncertainty associated with the legal requirements regarding these properties that have been either dormant or abandoned for many years prior to the current interest in revitalization. Revitalization project teams often require a legal mechanism to assist in reducing or mitigating the possible risks associated with third party claims, claims by previous owners, regulatory issues, real estate law, environmental law, liens, and a variety of other potential legal issues.

As with many of the other aspects of successful revitalization, a thorough assessment of the legal condition of the property prior to initiating the project should be completed. The development of a detailed legal history and the identification of potential legal issues that could impact the revitalization effort are necessary. Unknown legal issues encountered during project implementation may be costly in terms of project schedule and financing. Therefore, it may be critical that this information be uncovered and addressed as early in the process as possible.