FIVE REGULATORY INCENTIVES TO PROMOTE PRIVATE SECTOR BROWNFIELD REMEDIATION AND REUSE

1. DONGELL LAWRENCE FINNEY LLP FIVE REGULATORY INCENTIVESTO PROMOTE PRIVATE SECTOR BROWNFIELD REMEDIATION AND REUSE Presented by Tim Swickard September 12, 2007

2. Land Pollution and Contamination is not a New Problem! “Do not pollute the land where you are.” Nu 35:33 “The land you are entering to possess is a land polluted.” Ezra 9:11

3. Governments of growing industrial economies are faced with two substantial sources of urban environmental degradation—one from past activities and one from ongoing activities. • The interior of mature urban communities often contain large areas of environmental contamination from past contamination activity • These sites are commonly known as “brownfields” and often sit unmarketable and vacant, allowing the contamination to spread into the surrounding groundwater, land and air environments.

4. WHAT IS A BROWNFIELD? Defined by the U.S. Environmental Protection Agency as "[a]bandoned, idled, or under-used industrial and commercial facilities where expansion or redevelopment is complicated by real or perceived environmental contamination."

5. DONGELL LAWRENCE FINNEY LLP Brownfields also create a 2nd Front of Environmental Degradation • Urban growth is diverted to envelop “greenfields”—open space agricultural land and wildlife habitat on the borders of the urban area—creating a second front of degradation commonly known as urban or suburban “sprawl.”

6. Resolution of Historical Contamination and Non-sustainable Land-use can be achieved by Private Sector Redevelopment of Brownfields. • Well intentioned environmental laws and government policies often, in reality, inhibit or prevent brownfields redevelopment. • The most common are laws assigning legal liability for the past contamination to those willing to undertake remediation projects • The high transaction costs and long delays in these projects due to regulatory requirements.

7. FIVE GOVERNMENT POLICIES TO FACILITATE REMEDIATION AND REUSE OF BROWNFIELDS • NECESSITY – Of addressing 2 significant sources of urban environmental degradation • IMMUNITY – To innocent parties willing to invest in remediating past contamination. • EFFICIENCY – Streamlined regulatory processes to reduce time/cost of each redevelopment project • CERTAINTY – Predictability of Final cleanup required for discrete set of contaminants. • FLEXIBILITY - in Scope and Level of Cleanups through Utilization of Institutional Controls appropriate for varied end uses.

8. NECESSITY • To Stop Proliferation of Urban Brownfield Contamination • Public Health Effects • Urban Blight, Social/Economic Decay, Flight to Suburb • Huge Social, Governmental and Economic Costs • To Halt Degradation of Greenfield Open Space Agricultural and Wildlife Habitat • 1Million acres open space/wildlife habitat converted/Yr • 4.5 : 1 Ratio for Greenfield to Brownfield Development • Brownfields stocks sufficient for 2 decades of growth • From 1970 number of miles driven tripled to 3 Trillion

9. WHY CLEANUP BROWNFIELDS? DONGELL LAWRENCE FINNEY LLP California has been building a city for 600,000 new people each year since 1974 and this shows no signs of slowing. 1974 – Population - 20,873,000; 1984 – Population - 25,530,000 1994 – Population - 31,320,000 2004 – Population - 36,430,000

10. WHY CLEANUP BROWNFIELDS? DONGELL LAWRENCE FINNEY LLP • Many pension and investment funds have been required to have a portion of their investments be “green” and brownfields redevelopment is becoming a prime target for these entities. • Sarbanes-Oxley requires Public Companies to Report Environmental Liabilities with Criminal Penalties for non-compliance.

11. DONGELL LAWRENCE FINNEY LLP • Developable Land Stocks shrink each year in the United States • No Growth Initiatives on “open space” or “greenfields” development (Yolo, Napa, Marin, Burlingame, etc.) • Conservation Easements • Water entitlement Requirements • ESA Critical Habitat, Wetlands etc. • Increasing State Regulation of Local land use planning

12. DONGELL LAWRENCE FINNEY LLP • Greenfield development consumes 4.5 to 6 acres of open space land per acre of brownfield redevelopment due to infrastructure requirements, etc. • There are over 100,000 sites estimated in California and over a million nationwide.

13. DONGELL LAWRENCE FINNEY LLP IMMUNITY • The Key Obstacle in redeveloping brownfields is assumption of liability for the historical contamination by every new brownfield property purchaser • Diverts cleanup funds to Allocation Litigation • Immunity to Innocent Parties Willing to Invest in Remediating Past Contamination • CERCLA – 2002 Brownfields R.A. • STATE LAWS – AB 389 etc.

14. DONGELL LAWRENCE FINNEY LLP Environmental Liability 101 Comprehensive Environmental Response, Compensation, and Liability Act of 1980 • CERCLA “Superfund” liability scheme extends to: • Current property owner or operator • Owner/operator at the time of disposal • Arrangers and transporters • Strict, joint and several Liability • Liability concerns inhibit property transactions

15. DONGELL LAWRENCE FINNEY LLP Federal Brownfields ProgramSmall Business Liability Relief and Brownfields Revitalization Act of 2002 • Codified aspects of federal PPA policy • Amendments provided liability clarification • Prospective Purchaser/ Windfall Liens CERCLA (101(40)) and( 107(r)) • Contiguous properties CERCLA (107(q)) • Innocent Landowner CERCLA 101(35))

16. DONGELL LAWRENCE FINNEY LLP The California Land Reuse and Revitalization Act of 2004 (AB 389) • Provides immunity from liability to qualifying property owners or purchasers of brownfields • Incorporates process relief provisions • Requires DTSC or RWQCB oversight for immunities to take effect • Effective when agreement is signed with agency • Applies to urban infill areas

17. DONGELL LAWRENCE FINNEY LLP California Liability Relief Options • Polanco Redevelopment Act • California Land Reuse and Revitalization Act (CLRRA, AB 389) • Site Designation Process • Prospective Purchaser Agreements • No Further Action Letters/Comfort Letters • UPA Corrective Action Regulations for Local Agency RCRA Permit Cleanups

18. DONGELL LAWRENCE FINNEY LLP EFFICIENCY • Streamlined regulatory process efficiencies to reduce time/cost of each redevelopment project • Amend NCP – Worst Sites – Inappropriate for smaller sites. Recognized in B.R.A • STATE LAWS – Process Efficiencies - California’s AB 389 etc.

20. Application submitted, eligibility determined Conduct Site Assessment Site Assessment Report Select Lead Agency Implement Institutional Controls and Long-term O&M, as necessary Response Plan Negotiate Oversight Agreement Lead Agency approves Response Plan Enter into Oversight Agreement Immunity attaches Certificate of Completion issued by Lead Agency Implement Response Plan Site Assessment Plan

21. CERTAINTY • Predictability of Final cleanup required for any discrete set of contaminants lowers risk! • Regulatory agencies should provide set of standard remedies (Presumptive Remedies) for discrete sets of contaminants/property conditions • Regulatory agencies should make accessible Past Approved Remedies Database

22. DONGELL LAWRENCE FINNEY LLP Prospective Purchaser Agreements • An administrative tool to limit liability • Contains a covenant not to sue • PPAs used by US EPA, SWRCB and DTSC • Agency policy and guidance provides criteria for participation • Model agreement and guidance on DTSC’s website

23. FLEXIBILITY • In Scope and Level of Cleanups through Utilization of Institutional Controls appropriate for varied end uses. • Any Cleanup is better than No Cleanup! • Achievement of Source Control is Key • Provides Phased Cleanups as Real Estate Market Changes

24. FLEXIBILITY • An “all or nothing” regulatory approach to the cleanup of brownfields sites is financially infeasible and practically unworkable for many sites effectively precluding their cleanup and redevelopment. • Use of INSTITUTIONAL CONTROLS can protect public health and the environment while providing for a staged cleanup. • An Institutional Control is a non-remedial measure (usually legal) that restrict activities and access occurring on the site.

25. DONGELL LAWRENCE FINNEY LLP FLEXIBILITY • There are 4 general types of IC’s: • Legal Proprietary Controls – Easements, Deed Restrictions and Covenants • Govt Controls such as zoning, land use designation and permits • Enforcement tools – Consent Decrees • Notice Requirements

26. DONGELL LAWRENCE FINNEY LLP Consultative Services Agreement • DTSC feedback on Site Assessment, Response Plans etc., outside and prior to AB 389 Agreement Execution • Pays DTSC Costs

27. DONGELL LAWRENCE FINNEY LLP Site Designation, Prospective Purchaser AgreementMission Bay – San Francisco Residential developments Part of UCSF Research Campus

28. Before After DONGELL LAWRENCE FINNEY LLP Dean Di Carli Plaza Stockton, California

29. DONGELL LAWRENCE FINNEY LLP Oakland, CA Petroleum Brownfield Site Converted to Affordable Housing From This… 2004 Phoenix Award Community Impact …To This! • Community workshops:Summer 2001 • Planning Department Review: Fall 2001 • Family Selection: began November 2002 • Construction with volunteers: January - October 2003 • Completion: October 2003

30. Community Housing Richmond, CA • 3 Affordable Housing Units Planned at former UST site. • EPA Brownfields Grant. • Collaboration between EPA Region 9, Community Housing Dev. Corp. and City of Richmond.

31. WHY BROWNFIELDS? GOOD GOVERNMENT POLICY GOOD FOR THE ENVIRONMENT GOOD FOR THE SOUL Stops the Environmental Degradation of Suburban Sprawl Stops the Environmental Degradation of Spreading Contamination Preserves Open Space, Agriculture and Wildlife Habitat Stops Social Degradation of Urban Blight Creates Urban Community Social Revitalization Creates Urban Community Economic Revitalization

32. DONGELL LAWRENCE FINNEY LLP CONTACT INFORMATION TIM SWICKARDDONGELL LAWRENCE FINNEY LLPtswickard@dlflawyers.com 916-449-3999