Lead’s adverse effects on people, particularly young children, have been reasonably well understood for decades.

Children afflicted by lead poisoning can suffer permanent brain and nervous system damage. This can lead to a lower IQ, anemia, slower growth, and behavior, learning and hearing problems.

Afflicted adults can suffer nervous system effects, cardiovascular effects, increased blood pressure and incidence of hypertension, decreased kidney function and reproductive problems. Pregnant women with elevated lead levels are at greater risk of miscarriage, reduced fetus growth and premature birth.

Because of this, lead is highly regulated. The Occupational Safety and Health Administration limits exposure in workplaces. In homes and multifamily residences, disclosures are required in transactions involving spaces where lead-based paint may be present, and strict standards exist for renovations and repairs that may disturb lead-based paint.

Lead is regulated as a pollutant under the Clean Water Act and as a common and toxic pollutant under the Clean Air Act. The Safe Drinking Water Act limits lead in drinking water and the 2008 Consumer Product Safety Improvement Act regulates lead levels in children’s products. Lead also is regulated as a hazardous waste and as a hazardous substance, often driving cleanup decisions at contaminated properties. The basic purpose of all these regulations is to prevent harmful exposures to lead.

Regulatory agencies have hardly been shy about taking enforcement actions when businesses fail to meet applicable standards, drawing further attention to the importance of preventing lead poisoning. For example, the lead-based paint Renovation, Repair and Painting rule is particularly sensitive because it prevents unsafe exposures to lead in homes.

Last fall, the Environmental Protection Agency published summaries of enforcement actions against violators of the RRP rule. Most of the companies involved were small and the fines were only a few thousand dollars.

However, the EPA filed an administrative complaint against Collegiate Entrepreneurs Inc., a business running collegiate painting services in the Northeast, alleging 101 violations of the RRP rule and seeking penalties of up to $37,500 per violation. The initial civil penalty calculated under EPA’s penalty policy and provided to Collegiate Entrepreneurs for settlement purposes was an astounding $863,100.

Given all of this, is it possible that we’ve missed something and that more should be done to prevent lead poisoning, especially in children? It turns out the answer may be “Yes.”

In a recent Mother Jones magazine article, Kevin Drum reviewed several recent econometric studies demonstrating connections between the adverse health effects of lead exposures, particularly to boys, and violent crime rates. In short, lead poisoning increases crime rates.

Drum also discussed several recent neurologic studies showing that lead has perverse health effects at blood concentrations once thought safe. He then makes the case that further reductions of lead, particularly in urban soils still contaminated from past use of leaded gasoline, will yield economic benefits worth 10 times the cost of additional cleanup – primarily in the form of cognitive improvements leading to higher lifetime productivity and additional reductions in crime rates.

More lead remediation starts to look like a no-brainer, right? In practice, however, the additional work should be considered within the context of our existing legal frameworks and, if existing legal frameworks are found wanting, new ones should be developed and adopted if additional lead remediation is determined to be a societal priority.

Currently, the residential cleanup standard for lead is no more than 400 parts per million of residual lead in soil. This is intended to roughly correlate with a blood lead level of 5 to 10 µg/dL, which has been considered safe but may now be in question.

Suppose that by reducing the soil standard to 100 ppm, significant health and economic benefits can be achieved. Who will pay for the additional cleanup needed and how can the benefits of additional cleanup be shared equitably across all social and economic strata of our society?

Under existing laws and regulations, our stated preference is “polluter pays.” For properties with distinct sources of lead that may be contemplating a conversion to residential use – such as a former industrial site – a new cleanup standard for lead may not be too disruptive. Assuming that adequate lead time exists, the cost of complying with new standards could be factored into the development process and the specific economics of the planned development.

For sites known to be contaminated with lead and previously remediated to existing standards, a difficult question exists: Should they be reopened for further cleanup so that more stringent standards are met? Sites cleaned to less stringent industrial standards (because children aren’t at risk), probably wouldn’t require further work. However, for sites cleaned to residential standards, reopening closed sites for more cleanup would be a distinct possibility.

Finally, in practice, “current owner pays” is a frequent regulatory outcome, especially for historic and diffuse sources of pollutants, such as lead dispersed to soils from vehicles burning leaded gasoline.

More stringent standards for single-family residents if cleanup costs are absorbed privately will separate families who can afford to pay for cleanup from those who cannot. For tenants in multifamily housing, landlords may be better able to finance remediation costs privately, but those costs will ultimately be passed on to tenants, likely harming those who can least afford to pay.

In commercial and other types of private properties open to the public and requiring cleanup, private costs would again filter out and be spread among property owners, tenants and customers – likely according to lease provisions and other contractual arrangements never intended to deal with such costs.

For the reasons noted, existing mechanisms for cost allocation and cleanup funding are not up to the task of achieving just and equitable outcomes if lead cleanup standards are tightened. Thus, new cost allocation and funding mechanisms should be developed along with any consideration of more stringent cleanup standards for lead.

Peter Sergienko is a partner in the Portland office of Davis Wright Tremaine LLP. He specializes in environmental compliance issues. Contact him at 503-241-2300 or petersergienko@dwt.com.

The post Getting the lead out appeared first on Daily Journal of Commerce.

In Part II of the “Back to the Future” trilogy, Marty McFly encounters a dystopian version of Hill Valley. Biff Tannen has murdered Marty’s father, married his mother, and rules over a gritty mecca of gambling and vice with an iron fist.

This reality happened when the 2015 version of Biff traveled back to 1955 to give his earlier self an almanac listing all sporting results from 1950 to 2000, allowing Biff to pile up gambling profits. Biff in adulthood represents a totally unconstrained high school bully.

Restoring order to the space-time continuum was an easy call. Marty and Doc Brown had to go back to 1955 to destroy the almanac so that Biff’s life would go forward without dangerous and corrupting future knowledge.

Unlike Marty and Doc, we do not have perfect knowledge of a dystopian future that we must make every effort to avoid. In our reality, there is plenty to do to meet existing needs. And, overall, we have it pretty good.

But we also know that plenty of trouble may lie ahead. That’s why there’s discussion today about how we may expand legal protections to include not only those of us here now, but those in the future as well.

Three basic principles underlie the theory of “intergenerational justice.”

The principle of conserving options requires that, on balance, the diversity of the resource base be maintained so that the options available to future generations to solve their problems and satisfy their values are not unduly restricted.

The principle of conserving quality requires, essentially, that current generations pass the planet on to future generations in no worse condition than it was received.

The principle of conserving access requires current generations to use and enjoy the legacy provided by previous generations in ways that conserve access to this legacy for future generations.

There is a wide range of legal mechanisms available to incorporate these principles into our decision-making. Constitutional provisions can set aspirational goals or establish enforceable rights.

Some countries, such as Israel, Wales, Hungary, and New Zealand, have ombudsmen or legal guardians tasked with protecting the interests of future generations in legislative and administrative processes.

Public trusts can be used to protect and manage state lands and natural capital. Statutes, regulations and the common law are more familiar options that could be used to protect future generations by restraining the current generation’s choices.

Last year, based largely on the scholarship of University of Oregon law professor Mary Christina Wood, children represented by guardians ad litem filed lawsuits against various agencies of the federal government and against numerous states, including Oregon.

The children are asking the courts to declare the earth’s atmosphere a public trust resource that the government has a legal duty to protect by adopting policies to cap and reduce greenhouse gas emissions consistent with the recommendations of leading climate scientists. These lawsuits are unlikely to achieve their substantive objectives, but they may spur us to re-evaluate our priorities for environmental protection and restoration.

How does this all of this affect the local business community? Until our politics permit comprehensive action on major environmental problems – such as climate change – state, local and voluntary actions will play a leading role.

In 1993, Portland was the first city to set goals to reduce greenhouse gas emissions and to adopt a formal plan to achieve them. By the end of 2010, emissions were 6 percent below 1990 levels. In contrast, national carbon emissions were up almost 12 percent over the same period.

Portland has achieved these results through various business cycles, with acceptable costs, and while maintaining a high quality of life. Thus, Portland’s plan demonstrates that certain types of restraints made primarily for the benefit of future generations can be implemented without adversely affecting current generations.

Area businesses are among the leaders globally in corporate sustainability and product stewardship initiatives, including efforts to measure and reduce greenhouse gas emissions, toxic chemicals use and wastes. Portland has attracted and is likely to continue to attract businesses that have strong sustainability ethics.

As the sustainability and stewardship initiatives of companies and their connection to the protection of future generations filter through our public discourse, space will be created for necessary wider actions such as state or federal legislation.

Achieving the goals and principles of intergenerational justice ultimately involves a complex balance of our use of physical, human, social and natural capital. Adding appropriate legal tools to help guide our use of natural capital would certainly improve our decision-making processes and outcomes.

We all want to avoid the Biff Tannen of “Back to the Future, Part II.” The much more nuanced and difficult work is to maintain a world where, as Doc said to Marty and Jen at the end of “Back to the Future, Part III”: “Your future hasn’t been written yet. No one’s has. Your future is whatever you make it. So make it a good one, both of you.”

Peter Sergienko is a partner in the Portland office of Davis Wright Tremaine LLP. He specializes in environmental compliance issues. Contact him at 503-241-2300 or petersergienko@dwt.com.

The post Should future generations have their rights recognized in today’s laws? appeared first on Daily Journal of Commerce.

Vapor intrusion is defined in Oregon Department of Environmental Quality guidance as the migration of volatile organic compounds from the subsurface into buildings. Common examples of VOCs are gasoline, diesel and solvents used to clean metals, thin paint, and dry-clean clothing. VOCs are sources of carcinogens such as benzene and trichloroethylene. Semi-VOCs and other hazardous substances also can be sources of toxic chemicals that can migrate into buildings and compromise indoor air quality.

In recent years, the mechanisms for vapor intrusion and the potential chronic health risks from long-term exposure to carcinogens in indoor air have become identified. In response, the private sector and state and federal regulatory agencies tasked with environmental protection and worker health and safety have all taken steps to better understand and manage these risks.

Legal concerns related to vapor intrusion also have become clearer. VI can subject developers, property owners, employers, investors, lenders and parties responsible for cleanup of hazardous substances to statutory and common law liability, tort claims, employee and tenant complaints, and remedial action costs. With this increased regulatory focus, VI has clearly become an issue that demands attention in real estate and business transactions involving real property.

Historically, indoor air quality issues in commercial buildings have been regulated by the Occupational Safety and Health Administration. However, the hazardous substance releases that can give rise to a VI issue have been and are regulated by environmental protection agencies, such as the Environmental Protection Agency and the DEQ. This has led to some confusion and uncertainty in the process of assessing VI risks in commercial real estate transactions.

Vapor intrusion is not specifically addressed in the environmental site assessment process. The current ASTM standard for ESAs defines a recognized environmental condition as the presence or likely presence of any hazardous substances or petroleum products on a property under conditions that indicate an existing release, a past release or a material threat of a release into structures or into the ground, groundwater or surface water of the property. Thus, while the conditions that can give rise to VI will generally be identified as a REC in a phase I ESA, VI is not evaluated as a REC.

To address this issue and the growing concern with potential VI liabilities, ASTM in 2008 approved a standard practice (E 2600-08) for assessing VI into structures in real estate transactions. Almost as soon as this standard was adopted, confusion arose between this practice and its role in the ESA process. Although Practice E 2600-08 was intended to be used on a voluntary basis to supplement a phase I ESA, commentators questioned whether the new standards would be interpreted to alter, expand or redefine both the ASTM standard for ESAs and the “all appropriate inquiry rule” under the federal superfund law. Additionally, it was not completely clear if the new practice was a VI screening standard or an assessment standard.

In response to these issues, ASTM re-titled and modified practice E 2600-08 last year. The current standard (E 2600-10) is entitled “Standard Guide for Vapor Encroachment Screening on Property Involved in Real Estate Transactions.”

It is clearly and unequivocally a screening standard. Its express purpose is to provide practical guidance for conducting a vapor encroachment screen, either independently or in conjunction with a phase I ESA. The standard guide explicitly states that RECs are identified only through the performance of a Practice E1527 phase I ESA.

As an assessment tool, the Standard Guide is divided into two tiers. The information needed to complete Tier 1 screening overlaps with the information needed to complete a phase I ESA, with customized search distances for potential sources of VOCs and other contaminants of concern. Tier 2 screening, if necessary and if pursued, applies numeric screening criteria to existing or newly collected soil, soil gas and/or groundwater testing results to evaluate whether a vapor encroachment condition exists. Tier 2 screening can be non-invasive or, similar to a phase II ESA, can require invasive sampling and analysis.

The process and requirements for performing site specific VI assessments are also changing. The DEQ last year issued final Guidance for Assessing and Remediating Vapor Intrusion in Buildings. The EPA is in the process of updating and revising draft guidance for VI screening and assessment originally adopted in 2002, with final guidance to be completed no later than November 2012. The EPA also is holding stakeholder meetings to consider adding a new screening mechanism to the hazard ranking system enabling sites with vapor intrusion contamination to be evaluated for placement on the national priorities list.

Some commentators believe that the standard guide will soon be used concurrently with the ASTM standard for ESAs as a standard industry practice. However, environmental professionals in Oregon are not yet seeing high demand for its use. At present, VI issues in real estate transactions here are still more likely to be addressed through the traditional phase I/phase II ESA process than through use of the standard guide.

Industry standards for best practices around VI screening and assessment are evolving. Because of the market force of a published ASTM standard, use of the standard guide will likely become more commonplace in coming years, especially as the market improves and the number of transactions trends upward.

Because there are serious liability concerns associated with VI, including the risk that properties with “no further action letters” may have VI issues either not addressed at all or not addressed adequately, real estate professionals should be on the alert in any deal where the subject property or a neighboring property has a history of VOC use. Real estate professionals, especially in these transactions, should carefully coordinate their due diligence with counsel and their environmental consultant to ensure that VI risks are evaluated appropriately.

Peter Sergienko is a partner in the Portland office of Davis Wright Tremaine LLP. He specializes in environmental compliance issues. Contact him at 503-241-2300 or petersergienko@dwt.com.

The post Legal implications of vapor intrusion for owners, developers appeared first on Daily Journal of Commerce.

Shortly after President Obama’s election, conventional wisdom generally held that comprehensive federal energy and climate legislation, including a cap-and-trade system to reduce greenhouse gas emissions, would be passed by 2010 and take effect in 2012 in coordination with a successor treaty to the Kyoto Protocol.

Although passage of a comprehensive bill is still possible this year, the path ahead for GHG regulation is littered with obstacles. Nevertheless, the real estate and development community should be prepared for potential impacts.

The House of Representatives passed the American Clean Energy and Security Act on June 9, 2009. ACES is a comprehensive energy and climate change bill that includes a cap-and-trade system under which the total amount of GHGs that can be emitted nationally is legally capped. Companies either are issued permits to emit these gases, or purchase and sell the permits.

Because ACES cannot pass the Senate, Sens. John Kerry, Lindsey Graham, and Joe Lieberman are attempting to create support for a bipartisan bill that can. The Senate bill is believed to combine aspects of ACES with provisions that are generally considered more favorable to industry.

These provisions likely include a hard price collar on emissions permits to better control costs, preemption of Environmental Protection Agency climate regulations under the Clean Air Act and preemption of state climate initiatives that have already become law to ensure uniformity of regulation, and slower phase-in times and perhaps alternative regulatory approaches for certain industry sectors that may have more difficultly adapting to GHG regulation.

The Obama administration is pressing for passage of a comprehensive climate and energy bill this year. Earlier this month, Larry Summers, director of the National Economic Council, and Carol Browner, director of the White House Office of Energy and Climate Change Policy, affirmed the Obama administration’s commitment to placing a first-ever price on domestic GHG emissions. Summers’ remarks were included in an important speech making the economic case for comprehensive energy reform.

Despite the efforts of Congress and the Obama administration, the prospects for passing a comprehensive climate and energy bill remain uncertain because of the threat of a Senate filibuster. In the absence of comprehensive federal legislation, however, GHG regulations are being decided by administrative agencies and the courts.

In 2007, the U.S. Supreme Court ruled that the EPA had the authority to regulate GHG emissions from motor vehicles and is required to regulate them if the emissions endanger the public health or welfare.

The EPA has since found that carbon dioxide and other greenhouse gases do endanger public health and welfare. In response, and slightly ahead of a Feb. 16, 2010, deadline, several lawsuits were filed that challenge the EPA’s finding.

These lawsuits notwithstanding, the EPA’s new GHG reporting rule, which requires many large sources to report their emissions, took effect on Jan. 1, 2010. The EPA is also preparing to finalize new GHG emissions regulations for stationary sources and motor vehicles. Because the endangerment finding is a necessary precursor to these regulations, this lawsuit indirectly challenges those pending regulations as well.

The EPA is not the only administrative agency actively seeking to regulate GHG emissions. On Feb. 18, 2010, the Council on Environmental Quality issued a draft guidance document regarding the review of climate change impacts under the National Environmental Policy Act. Although some courts have concluded that NEPA requires consideration of a project’s GHG emissions on climate change, this is the first time that the council has addressed the issue.

Additionally, the Securities and Exchange Commission recently released guidance documents indicating that material, physical, financial or regulatory risks due to climate change must be included in public companies’ SEC filings.

Finally, apart from the administrative regulations and associated lawsuits, in late 2009 the federal 2nd and 5th circuit courts of appeals allowed common-law nuisance lawsuits, brought by private parties against energy companies, to proceed past the pleading stage.

A similar suit is currently before the U.S. Court of Appeals for the Ninth Circuit. Thus, major emitters of GHGs may face tort liability in the courts, and judges could fashion remedies that are similar to a cap-and-trade system for emitters within their jurisdiction.

Passage of a comprehensive energy and climate bill would provide regulatory certainty and, depending on its final form, stimulate various sectors of the economy – likely including traditional energy exploration, nuclear power, energy efficiency, renewable energy, and research and development funding for carbon capture and storage. In the absence of a comprehensive bill, there will be a maze of regulations through a combination of federal agency, federal court, regional and state actions.

For the real estate and development community, an immediate impact of GHG regulation is the extension of NEPA to include GHG emissions analysis for major projects requiring a federal permit. If a comprehensive bill is passed, there should be further federal financial support for weatherization and efficiency projects.

Although early regulation of GHG emissions focuses on major emitters such as power plants and refineries, a recent survey found that 27 percent of emissions in the Portland-metro area come from energy consumed in the built environment. Thus, as GHG emissions limits, however imposed, eventually tighten, stringent energy efficiency and building environmental performance standards are all but inevitable in the long term.

Peter Sergienko is a partner in the Portland office of Davis Wright Tremaine. He specializes in environmental compliance issues. Contact him at 503-241-2300 or petersergienko@dwt.com.

The post Greenhouse gas regulation remains piecemeal appeared first on Daily Journal of Commerce.

Under an Oregon statute established in 1993, certain violations of environmental laws and regulations can be treated as criminal violations as well as civil violations. Criminal penalties for misdemeanors can be as stiff as $25,000 per day, per violation, plus up to one year of jail time. Criminal penalties for felonies can be as stiff as $250,000, plus jail time of up to 10 years.

Historically, enforcement of environmental law has been left to local district attorneys. Primarily because of the complexity of environmental crimes, scarce resources, and prosecutorial priorities, local enforcement has been uneven over the years. The possibility of criminal penalties probably has not been an effective deterrent.

The Oregon Department of Justice Web site and Attorney General John Kroger note that while Oregon has been a national leader in environmental protection, every major river in Oregon fails federal and state water quality standards for at least one pollutant, and the concentration of toxic air pollutants in Portland’s air exceed federal standards. In noting these problems, ODOJ sees the historic lack of credible criminal enforcement as failure to use a tool to spur improvements in environmental quality.

To address these issues, Kroger and the Oregon Legislature have worked in concert to create and fund a state environmental crimes unit within ODOJ. The environmental crimes unit consists of two attorneys, Patrick Flannigan and Stephanie Parent, and an investigator yet to be hired.

The unit will investigate and prosecute environmental crimes, bolster civil and criminal enforcement, provide prosecutorial support to local district attorneys pursuing cases of environmental violations, and coordinate federal enforcement of environmental crimes with the Environmental Protection Agency.

Two types of cases will be prioritized for enforcement. The first category consists of cases where illegal conduct continues even after state or federal authorities notify an offender that its conduct violates an environmental law. The second category consists of cases where the violations at issue pose a threat to human and public health or to the environment.

ODOJ’s efforts to publicize this initiative have been noteworthy. Kroger has engaged in a series of informal meetings with law firms to connect with lawyers in private practice and to share ODOJ’s enforcement priorities. Additionally, the home page of ODOJ’s Web site now includes a sign-up button to “help fight environmental crime.” Through this effort, ODOJ is engaging in general public outreach to encourage awareness and reports of environmental crimes.

The creation of ODOJ’s environmental crimes unit and the corresponding efforts to raise awareness are significant for the business and real estate communities.

First, while the vast majority of businesses observe environmental laws, those that do not may gain an economic advantage as long as their violations go unpunished. Adding a serious threat of criminal enforcement should further deter any business that might otherwise decide to risk the consequences of civil enforcement.

Second, raising awareness and encouraging citizen reporting of potential environmental crimes is likely to change employee behavior. Employee-driven complaints related to environmental compliance – legitimate and illegitimate – are likely to increase given ODOJ’s efforts and policies.

Finally, enforcement decisions will routinely consider all alternatives, including criminal prosecution. There is an additional layer of concern for businesses with environmental permits or that engage in routine or ongoing activities associated with property management and operations that implicate environmental laws and regulations, violations or potential violations.

Seemingly routine activities – such as demolition or renovative projects where asbestos abatement is required – are likely to become a focus of criminal enforcement. There are two reasons for this.

First, the laws and regulations concerning these activities are so well known that it is relatively easy for prosecutors to prove that violations are “knowing” within the meaning of the environmental crimes statute. And second, the failure to comply can expose workers and building occupants to health hazards, making criminal enforcement a priority under ODOJ’s announced priorities.

Going forward, the business and real estate communities should be aware of ODOJ’s changes in enforcement and the possibility of an uptick in environmental enforcement activity. For the vast majority of businesses, the creation of ODOJ’s criminal enforcement unit will not affect day-to-day operations.

However, for businesses that might cut corners or that might engage in activities that implicate environmental requirements without taking appropriate steps to comply, the threat of criminal prosecution should be taken seriously. This threat should deter such businesses from risky behavior while encouraging reasonable and necessary compliance efforts at compliance.

Peter Sergienko is a partner in the Portland office of Davis Wright Tremaine. He specializes in environmental compliance issues. Contact him at 503-241-2300 or petersergienko@dwt.com.

The post Oregon AG, Legislature get tough on environmental crimes appeared first on Daily Journal of Commerce.

ASTM International defines vapor intrusion (VI) as the migration of vapors from a chemical of concern in subsurface soil or groundwater to the indoor air environment of an existing or planned structure. Regulators and industry groups have increasingly focused on developing standards for evaluating VI risks in recent years because of a greater understanding of the risks and because the quality of air we breathe in our homes and places of work is a particularly sensitive environmental issue.

For example, VI concerns received renewed publicity earlier this year when the Oregon Department of Environmental Quality modified its Heating Oil Tank (HOT) Program in response to the Environmental Protection Agency’s reclassification of naphthalene and ethylbenzene as carcinogens. The new screening levels adopted by the DEQ will be more protective of human health; but at added cost and complexity, especially for homeowners with HOTs that have leaked.

In commercial real estate transactions, managing potential environmental liabilities through the phase I/phase II environmental site assessment (ESA) process has become almost second nature for real estate professionals. The current ASTM standard (E 1527, last updated in 2005) and EPA’s All Appropriate Inquiry rule have provided a reasonably clear road map for evaluating recognized environmental conditions (RECs).

A REC is the presence – or likely presence – of any hazardous substance or petroleum product on a property under conditions that indicate an existing release, a past release or a material threat of a release of any hazardous substance or petroleum product into structures on the property or into the ground, groundwater or surface water of the property.

On March 1, 2008, the ASTM approved a standard practice (E 2600-08) for assessing VI into structures in real estate transactions. A stated objective to the adoption of this standard is to supplement a phase I ESA conducted in accordance with Practice E 1527. Importantly, in adopting Practice E 2600, ASTM concluded that vapor intrusion, as a contributing indoor air quality issue, is a non-scope consideration in a phase I conducted in accordance with Practice E 1527. Effectively, this creates a special case for assessing VI in commercial property transactions where volatile chemicals have been released into the environment near a structure.

Although Practice E 2600 is intended to be used on a voluntary basis to supplement a phase I ESA and, substantively it provides a tiered approach to assessing potential VI risks, the practice may also add costs to transactions and create problems and confusion.

The purpose of Practice E 1527 is to define good commercial and customary practice for conducting an ESA on commercial real estate with respect to the range of contaminants regulated under the federal Superfund statute (or “CERCLA”) and petroleum products. These contaminants include volatile chemicals that are the source of VI concerns.

While phase I ESA reports may not include any evaluation of indoor air quality, a phase I ESA report complying with Practice E 1527 and satisfying the AAI rule should identify potential risks from volatile chemicals on or near a property, whether or not the chemicals may pose an indoor air quality risk. A consultant should not dismiss the presence or likely presence of source chemicals as an REC on the basis that an assessment of indoor air quality is a non-scope item.

Because of possible confusion regarding responsibility for evaluating indoor air quality given the ASTM’s statements in adopting Practice E 2600, purchasers should discuss and develop an appropriate scope of work for all phase I ESAs. The discussion should clarify all scope and non-scope items, expanding Practice E 1527, if necessary, in order to identify all relevant environmental issues.

Additionally, the completed phase I ESA report should be drafted to preserve the landowner liability protections afforded under CERCLA and the AAI rule even though ASTM has concluded that the assessment of indoor air quality is not a scope item under Practice E 1527.

Sellers should carefully consider the scope of environmental due diligence allowed in a purchase and sale agreement (PSA) and specifically whether it is appropriate to permit a VI investigation under Practice E 2600. Unlike a phase I ESA, which broadly identifies RECs with no attempt to assess the nature of any risks presented, the completion of a VI investigation under Practice E 2600 results in a type of completed risk assessment.

The nature of the risks evaluated are potentially very sensitive, due to the quality of indoor air in a structure breathed by its occupants. The nature of the risk assessment conducted is a screening tool that is not tied to specific legal requirements as Practice E 1527 is tied to the AAI rule, but the ultimate finding could be that an unacceptable risk to human health is believed to exist. Accordingly, sellers should draft due diligence provisions in PSAs to avoid inadvertently permitting the creation of evidence that could be interpreted to create immediate and costly legal obligations.

As the Oregon HOT example suggests, state and federal regulators are regularly reviewing and changing regulations and guidance documents as better information concerning VI risks is developed. In any real estate transaction where VI is a potential issue, each party should consult with its respective counsel and environmental consultant to insure that VI concerns are properly addressed.

Peter Sergienko is a partner at Davis Wright Tremaine, a law firm in Portland.  He specializes in environmental law, with an emphasis on permitting in real estate, telecommunications, energy and business transactions. Contact him at 503-241-2300 or petersergienko@dwt.com.

The post Vapor intrusion standards are changing appeared first on Daily Journal of Commerce.

Although the credit crisis and the economy are framing the election, Sens. John McCain and Barack Obama have discussed and taken significant policy positions concerning energy development and regulation of greenhouse gas emissions during the debates and in position papers.

While the candidates and House and Senate leaders also identify global warming as a priority issue for 2009, concern regarding compliance costs may delay or diminish federal legislation to limit greenhouse gas emissions. Thus, the candidates’ spending priorities may shape their leadership on energy and climate change as much as their stated policies on these subjects.
McCain’s Web site states that national climate policy: (a) should be based on scientifically sound mandatory emission reduction targets and timetables; (b) should utilize a market-based cap and trade system; (c) must include mechanisms to minimize costs and work effectively with other markets; (d) must spur the development and deployment of advanced technology; and (e) must facilitate international efforts to solve the problem.

McCain envisions a cap-and-trade system by sectors that will set limits on greenhouse gas emissions while encouraging the development of low-cost compliance options. Market participants would be allowed total permits equal to the cap on greenhouse gas emissions.
The system would allow entities to buy and sell rights to emit greenhouse gases, and participants that can invent, improve or acquire ways to reduce emissions can sell their extra permits for cash to market participants that need them. The cap on greenhouse gas emissions would be reduced over time to 2005 levels by 2012, to 1990 levels by 2020, to 22 percent below 1990 levels by 2030 and to 60 percent below 1990 levels by 2050.

Under McCain’s plan, permits would eventually be auctioned, but initially, some or all permits would be free and the percentage of each would be determined by a commission. Auction proceeds would be used to support the development of advanced technologies, to support research and commercialization ranging from carbon capture and sequestration, to nuclear power, to battery development. Auction proceeds would also be used to reduce impacts on low-income families and to fund transition assistance for consumers and industry.

When asked to prioritize health care, energy, and entitlement reform at the second debate, Obama responded that energy was his first priority. On his Web site, he identifies immediate relief from high energy prices as an immediate priority and climate change as a mid- to long-term solution to address the nation’s energy challenges – dependence on foreign oil and global climate change.

Obama favors an economy-wide cap-and-trade system to reduce carbon emissions to 80 percent below 1990 levels by 2050. He advocates a 100-percent auction to ensure that industries pay for every ton of emissions released rather than a system that gives some or all emission rights away for free. $15 billion per year of auction proceeds would be invested in the development of clean energy, energy efficiency, next-generation biofuels, clean-energy vehicles, and habitat restoration and efforts to assist fish and wildlife to adapt to climate change. The remaining receipts would be used for rebates and transition relief to assure that families and communities are not adversely impacted by the transition to a new-energy, low-carbon economy.

Not surprisingly, Obama’s priorities for energy and climate change align more closely with recent Oregon executive policies and legislation, which reflect Democratic control of Oregon’s legislature.

Oregon has taken recent executive and legislative actions to promote renewable energy, including legislation mandating a reduction in Oregon’s greenhouse gas emissions to 10 percent below 1990 levels by 2020 and to 75 percent below 1990 levels by 2050. Oregon’s statute does not mandate a cap-and-trade system, but, to meet these standards, Oregon is working within the Western Climate Initiative to enter into a regional cap-and-trade system that will launch Jan. 1, 2012.

Additionally, Oregon has adopted a renewable portfolio standard mandating that 25 percent of power sold by large utilities to retail customers in 2025 must come from sources such as wind, solar, wave, geothermal and biomass. There are interim targets for large utilities and lower 2025 targets for smaller utilities.

Oregon is positioning itself to be among the nation’s leaders for renewable power. Significant wind-power projects in Oregon are fully operational, more projects are in development, and observers expect generation of wind power to double in the next few years. Geothermal exploration is occurring currently in Central Oregon, and companies are beginning to explore wave-power projects along the Oregon coast.

Based on voting history, stated policy objectives, and political philosophy, Obama is more likely to advocate federal financial support for renewable power projects and biofuels. McCain is more likely to advocate federal financial support of nuclear power and fossil fuel exploration projects. McCain’s plan supports renewables in principle but relies more on free market approaches to renewable power project development than government stimulus or support.

While both candidates support cap-and-trade systems, Obama would pursue an economy-wide program with immediate and full auctions of rights to emit greenhouse gases while McCain favors a more cautious approach targeted to the sectors that emit 90 percent of greenhouse gases, with exemptions for small business and a phase-in of a system to auction rights to emit.

In the next few years, federal, regional and state initiatives will affect most or all businesses that emit greenhouse gases. Oregon businesses should track proposed federal energy and climate change legislation in 2009. Businesses that are significant electricity consumers should monitor legislation for its potential impact on energy costs. Finally, a legislative emphasis on renewables will stimulate business opportunities in Oregon, even for businesses that are not traditionally part of the energy sector.

Attorney Peter Sergienko is a partner at Davis Wright Tremaine, a law firm in Portland.  He specializes in environmental law, real estate law and climate change. Contact him at petersergienko@dwt.com or 503-241-2300.

The post What about climate policies? appeared first on Daily Journal of Commerce.