Practice Areas: Environmental Solutions

Brownfields

United States Patent and Trademark Office—Landfill and Former Rail Yard to 2 Million Square Foot Office Campus

Rendering of United States Patent and Trademark Office upon completion.

LCOR Alexandria LLC constructed the $600 million United States Patent and Trademark Office (“USPTO”) campus in the Washington, D.C. area on a former municipal landfill and rail yard contaminated with a variety of hazardous substances and petroleum products. The USPTO houses approximately 7,000 employees and represented the largest lease ever signed by the Government Services Administration at that time.

LCOR Alexandria turned to McGuireWoods for assistance in managing the environmental issues in the purchase and redevelopment of the site. A detailed soil characterization and management plan was developed to assure compliance with applicable waste regulations and to allow the buyer and seller to allocate costs and liabilities as over 450,000 cubic yards of contaminated soil and landfill material were removed in the initial phase of site development. Virginia’s Voluntary Remediation Program was used to assure that the risks associated with residual contamination and landfill material were properly addressed to allow the safe re-use of the site which includes a day care center. Restrictions and institutional controls including a requirement for pavement or two feet of clean fill and a landfill gas collection system under each building are part of the ongoing requirements for protecting human health at the site.

Photo of the excavation of USPTO site. Over 450,000 cubic yards of soil and landfill material
were removed in the construction of the USPTO.

The USPTO is just one example of the many Brownfield sites where we have assisted our clients in managing the legal and practical complexities of contaminated site redevelopment. Our experience and creativity will help you avoid development and financing pitfalls that can make the difference in the success of your project. Please use the links to the side of the page to see more information regarding McGuireWoods’ Brownfield practice.

Extensive Federal and State Specific Experience

Many of the Brownfield redevelopment opportunities available to developers fall within the purview of state programs and those sites remediated under federal law are still subject to a number of state laws. While we have worked across the country on Brownfield sites on a federal and state level, we have notable experience in a number of states including Florida, Illinois, Iowa, Maryland, Pennsylvania and Virginia.

General Description

Long before brownfields became a hot topic, McGuireWoods was involved in the cleanup and redevelopment of contaminated sites using the existing regulatory programs and creative private contracting mechanisms. We have also been instrumental in developing state remedial standards based on actual site risks, and in implementing these in government orders and remediation programs. In recent years, we have utilized developer-friendly state voluntary remediation programs and EPA brownfields initiatives to assist our clients in developing contaminated sites across the country. Please use the links to the side of the page to see more information regarding McGuireWoods’ Brownfield practice.

Remediation Strategies

While remediation of contaminated sites has become common, the remaining brownfields properties present more difficult challenges due to the types, levels and the location of the contamination. Conventional approaches such as locating a paved parking lot over the contaminated area may undermine the optimal development plan. We utilize our combined land use and environmental experience to assist our clients in adapting the remedial approach to the most favorable development plan for a contaminated site, including extensive experience in sustainable development. We also assist our clients in balancing the present benefit of institutional and land use controls in saving development dollars with the long-term impact of such development restrictions. For example, accepting a property with residual contamination may limit future development or reuse of the property.

We also bring our long experience in providing legal counsel for real estate and environmental issues in transactions in identifying and resolving the liability risks for owners, tenants, contractors and lenders. While a government agency may issue a letter that no further remedial action is required, contamination may remain that could result in substantial disposal costs when excavated, or even liability for a current or future owner. We understand these development issues and can help clients avoid the pitfalls. Our experience includes all aspects of the negotiation of risk allocation for liability for contamination. We have used environmental insurance in many instances as a mechanism for addressing the lingering risks.

Financing Remediation and Redevelopment

We bring the ability to seek unique financial resources to support development of brownfields. We work with clients to evaluate the numerous state and federal grants, loans and tax incentives to finance brownfields investigation and remediation. In additional our experience in municipal finance allows us to work with municipalities and other local entities to use standard development financing tools, including tax increment financing, special service areas, and special use districts to redevelop brownfields sites, either as stand alone projects or as part of larger redevelopment initiatives. In addition, our financial services practice allows us to draw on years of experience in addressing the concerns of lenders regarding environmental risks.

Representative Projects Around the Country:

• Representing a client in the construction of an indoor soccer stadium in the Midwest, guiding the client through the voluntary remediation program, advising the client regarding development and construction choices to balance future risks and current costs, and obtaining state grants to help fund the remediation.
• Assisted clients in developing former military facilities. We assisted one development company in stimulating proper agency responses to their property which was contaminated with unexploded ordinance and declared an National Priorities List (“NPL”) site. We assisted another company in assessing and managing risks as it bought the site following the government's cleanup.
• Advising a client with regard to the sale of property in the Midwest to a residential developer where portions of that property are subject to restricted uses due to groundwater contamination. We are using a mix of easements and deed restrictions to ensure that the client is protected from future liability.
• Representing a municipality in the closure of a solid waste landfill in the Midwest so that it may complete the terms of a state grant to construct a golf course on the landfill.
• Represented a client who was a potentially responsible party under CERCLA in complex negotiations with EPA, the other potentially responsible parties and a municipality regarding the cleanup of an NPL-listed former industrial site along the shoreline of Lake Michigan. As the result of an innovative agreement reached among the parties, the cleanup will allow for the commercial and residential development of more than 40 acres of lakefront property, a central feature of the municipality's lakefront redevelopment plan.

Redeveloping Brownfields in Virginia

Picture of the Pivotal Propane site prior to redevelopment.

Pivotal Propane of Virginia, a subsidiary of AGL Resources, Inc. constructed a critical peak shaving facility in Chesapeake, Virginia to ensure Hampton Roads has an adequate supply of natural gas in the winter months. Pivotal Propane identified an ideal site for the facility on the Elizabeth River, but the property presented a number of environmental concerns.

Examples of some of the areas on the Pivotal Propane site prior to remedial work and construction.

McGuireWoods assisted Pivotal Propane in overcoming the environmental concerns using Virginia’s brownfield protections. Virginia has enacted liability defenses similar to those available under CERCLA in order to alleviate concerns for liability for purchasers of contaminated sites. Working closely with Pivotal Propane, its environmental consultant and the Virginia Department of Environmental, McGuireWoods obtained a comfort letter from DEQ within 2 weeks of application indicating that Pivotal Propane qualified as a bona fide prospective purchaser. This gave Pivotal Propane the comfort it needed to close on the purchase of the property. Pivotal Propane went on to enroll the site in the Virginia Voluntary Remediation Program which affords immunity to participants after completion of the program. The site that lay idle for years was brought back into productive use with Virginia’s brownfield protections being key to allowing this important project to proceed.

Before and after photos of a contaminated site.

This is just one example of the many clients McGuireWoods has assisted in Virginia in buying, selling and redeveloping contaminated sites. The USPTO is another example of how we have assisted our client with the successful redevelopment of a brownfield. While Virginia’s Brownfield Program is developer friendly, other Virginia regulatory programs can impose a material financial impact on the redevelopment. Reuse limitations due to residual contamination and how to overcome them is critical to making your project succeed. Purchasers and developers must have counsel like McGuireWoods who understand the application of Virginia law to the sites and the experience with satisfying the needs of risk adverse lenders. The following are examples of our work for other clients with brownfield sites:

• Obtained one of the first bona fide prospective purchaser (“BFPP”) letters to allow redevelopment of a former unpermitted landfill site;
• Assisted client redeveloping site under VRP with qualification for deduction of remediation expenses under the Internal Revenue Code;
• Obtained BFPP letter to complete purchase of former industrial facility;
• Drafted and negotiated extensive lease and purchase option provision of site being entered into VRP and advised client on variety of VRP issues; and
• Assisted client with developing a contaminated soil reuse and management plan on a 300 acre site formerly remediated under CERCLA with residual contamination issues.

Redeveloping Brownfields in Iowa

In 2004, McGuireWoods was contacted by an existing client in urgent need of assistance with a development project in Iowa. An expansion of the client's facility was under construction and contamination was encountered in the excavation of the foundations. This presented the potential for significant delays in the project. A solution that would allow construction to continue and that would satisfy the lender providing project financing was necessary in short order. To complicate matters, a third party owner was responsible for the construction. Working with the owner's consultant, McGuireWoods assisted in the use of the Iowa Land Recycling Program ("LRP") expedited assessment and remedial process. The Iowa Department of Natural Resources ("IDNR") allows participants in the LRP to complete sampling and other activities and proceed to the next step without IDNR having completed its review of written reports. This requires close coordination with IDNR to minimize the risks that IDNR personnel may disagree with the approach upon ultimately reviewing the submittals.

After some expedited sampling in the construction footprint, IDNR granted approval for construction to re-commence. However, our client was on a tight time table and needed to have IDNR approval to satisfy the lender at the end of the construction process. All aspects of the investigation, risk analysis and remediation were pushed through at a rapid pace. The major hurdle was the need for IDNR to grant a no further action determination to satisfy the lender at the same time four quarters of groundwater monitoring were necessary to satisfy the LRP requirements. Mother Nature further complicated the matter as groundwater was not present in some of the wells at critical sampling points thus presenting additional delays. We were able to work through a solution with the consultant and IDNR providing an approval conditioned upon completion of the groundwater monitoring. Such approval was satisfactory to the lender allowing all critical deadlines for the client to be met. McGuireWoods success in this project lead to our engagement for another development site in the LRP and we are assisting a client on assessing the LRP for a for a third site.

McGuireWoods experience with the LRP and other voluntary remediation programs around the country has allowed us to achieve favorable results for many developer clients.