Tax Opportunity Amid Environmental Turmoil

Marcum, LLP
Patrick Rowland

June 16, 2016

In a recent article by Brian Dove originally published on the National Real Estate Investor Blog ( ), Brian was very thorough and careful to discuss the copious quantities of environmental exposures which exist across the spectrum of real estate investing; but one thing left out of that discussion was the possible upside opportunity associated with a special tax provision, which was originally implemented to ameliorate the burdens levied upon owners and investors from a contamination or pollution clean-up.  A possible bright spot in an otherwise dreary practice area might provide solace to those who are faced with the daunting task of cleaning up old contamination – particularly pertinent if the current owners didn’t cause the contamination.

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Approved Jurisdictional Determinations Now Subject to Appeal

Duane Morris LLP
Seth v.d.H. Cooley

June 6, 2016

In a game-changing decision for the world of wetlands law and beyond, the United States Supreme Court has held that U.S. Army Corps of Engineers-approved “jurisdictional determinations” (commonly referenced as “JDs”) constitute “final agency action” and can be appealed by property owners prior to any subsequent governmental enforcement or permitting action. United States Army Corps of Engineers v. Hawkes Co., Inc., No. 15-290 (May 31, 2016).

Upholding the determination of the Court of Appeals for the Eighth Circuit, the eight-member Supreme Court—perhaps influenced by the memory of the late Justice Scalia’s strong views on the intersection of individual property rights and the Clean Water Act—unanimously held that a Corps-approved JD is of such practical legal and economic significance that the owner of the affected property should be entitled to seek judicial review without awaiting regulatory or judicial action by the government (e.g., a penalty assessment for dredging alleged “waters of the United States” without a permit).

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Congress Sends Chemical Safety Reform Legislation to be Signed into Law

Morgan Lewis & Bockius LLP
John McGahren & Drew Cleary Jordan

June 8, 2016

 The historic reform of the Toxic Substances Control Act overhauls the United States’ primary chemical safety law for the first time in 40 years.

Following months of closed-door negotiations, the US House of Representatives and Senate have approved the first major overhaul of the country’s primary chemical safety law, the Toxic Substances Control Act of 1976 (TSCA), marking one of the final steps in a multiyear reform effort. After initial reports that congressional Republicans and Democrats had reached a deal to revise the outdated TSCA, the final text of the Frank R. Lautenberg Chemical Safety for the 21st Century Act (H.R. 2576, the Lautenberg Act) was released in late May (as amended by a manager’s amendment sponsored by Representative John Shimkus [R-IL]). Shortly thereafter, on May 24, the House took action by overwhelmingly passing the legislation by a vote of 403 to 12. Although initially delayed because of a hold placed on the legislation by Senator Rand Paul (R-KY.), the Senate passed the legislation by unanimous consent on June 7, sending the bill to President Barack Obama’s desk to be signed into law. This legislation constitutes a bicameral, bipartisan compromise that reconciles both of the House and Senate’s reform bills passed last year by merging the policy priorities of each.

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Transactional Issues: Federal District Court (New Jersey) Addresses Allocation of Environmental Liability in a Real Property Purchase Contract

Mitchell Williams Selig Gates & Woodyard PLLC
Walter Wright

June 9, 2016

A United States District Court (New Jersey) addressed in a May 19th opinion whether the seller of a parcel of property containing environmental contamination was relieved from liability by release language in the sale contract. See North River Mews Associates, LLC and 38 Coah Associates, LLC v. Alcoa Corp., et al.

Plaintiffs, North River Mews Associates, LLC and COAH Associates, LLC, purchased property from Defendants, Alcoa, Inc. and Alcoa Domestics, LLC (“collective Alcoa”).

The property had been vacant since 1978. Plaintiffs planned to redevelop the property. A manufacturing facility had been operated on the property by Alcoa from 1917 to 1968.

Plaintiffs hired Enviro-Sciences, environmental consultants to investigate the property for contaminants. The Plaintiffs believed the property had been properly investigated and remediated through a plan approved by the New Jersey Department of Environmental Protection.

In October 2013, two additional underground storage tanks were discovered. The tanks contained oil contaminated with Polychlorinated Biphenyls (“PCBs”) and other hazardous materials. The surrounding ground was also contaminated. After this discovery, the Borough of Edgewater served a stop work order on Plaintiffs. Plaintiffs had no prior knowledge of the tanks.

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