The Newsletter of the Environmental Law Section of the TBA August 1997

				In this Issue...
				Brownfields Study Project by Steven R. Stout & James C. Wright
			Meet Justin P. Wilson Interview Conducted By J. Wayne Cropp
			Chair's Corner By Susan Lee
			Section Activities Compiled By Bill Penny

Brownfields Study Project
by Steven R. Stout & James C. Wright

The Tennessee Bar Association’s Environmental Law Section is initiating a new special project with the publication of this newsletter. The special project will be a study of various issues and concerns related to the redevelopment of Brownfields, with the aim of recommending ways to facilitate Brownfield redevelopment in Tennessee.

A Brownfield is generally described as a site that has been contaminated by the release of pollutants in the course of past industrial or commercial operations, and currently unutilized or underutilized. Property falling within this category will not readily be redeveloped by the private sector in the absence of an organized initiative to address impediments related to the use and development of these properties, such as liability of a current owner for contamination, rigid cleanup goals, and the pariah status of any contaminated property. These abandoned sites represent more than just a physical location on which to hang abstract legal issues; they represent lost hope and opportunity for our communities. These sites signify deterioration with our economy that often has its most profound impact in communities of our poorest and most disadvantaged citizens within our largest cities and smallest towns. It is absolutely vital to our future as a society to restore Brownfields to productive use. Because of the importance of this issue, we expect that there will be a high level of participation in the Section to address the particular issues which comprise the overall set of obstacles and impediments to the problem of Brownfields redevelopment.

It is anticipated that the culmination of the project would be a set of recommendations for legislative and/or regulatory changes and guidelines. This agenda would be presented to the Tennessee Department of Environment and Conservation (TDEC) as well as proposed for endorsement by the Tennessee Bar Association’s Board of Governors.

This project will require coordination of the activities of Tennessee Bar Association members with business and industry, lenders and regulators. We anticipate that a series of forums conducted in different parts of the state might be used to generate an awareness of Brownfields issues.

Brownfields Background.

As a result of historical releases of contamination and the interplay of existing environmental laws, many prime industrial properties have become abandoned or are currently being underutilized. Because the federal CERCLA law and its state counterpart create enormous risk of liability exposure for owners and prospective purchasers, there is a disincentive to reuse property which has historically been in industrial use. Costs of investigation and clean-up can easily exceed the value of the land. Additionally, although corrective legislation at the state and federal level has reduced concern over “lender liability,” lenders also face risks in terms of providing money for projects at Brownfield sites. Even with lender liability protection, the lender might not be able to find a buyer for the property because of the risk attendant with an old contaminated site. The stigma associated with Brownfields drives away lenders, hence, even willing buyers cannot make purchases.

Recognizing the considerable problems related to Brownfields, the EPA has taken a number of steps to alleviate barriers to Brownfields redevelopment. In 1995, EPA announced a Brownfields Action Agenda in order to identify and address barriers created by regulations, guidance and administrative practices. As a result, EPA has issued a number of new guidance documents to encourage Brownfields redevelopment and modified existing ones such as the 1989 guidance on prospective purchaser agreements.

The TBA Environmental Law Section Brownfields Special Project

The Tennessee Bar Association’s project will examine ways to make the best use of the federal program as well as other states’ initiatives. Even with the initiatives at the federal level, states have created additional incentives to redevelopment such as voluntary cleanup programs to augment the federal effort. Other states have gone further in providing financial incentives and clean-up standard identification than Tennessee has to-date. Part of the project will be examined and will evaluate the success of what has been done elsewhere.

Issues to be studied include:

1. The extent of the problem of abandoned and underutilized industrial and commercial sites in Tennessee and the extent to which environmental laws provide an impediment to their redevelopment.

2. Whether Tennessee needs to develop additional tools to encourage and promote the development of Brownfields. These may include, in addition to prospective purchaser agreements, tools designed to help current owners who have acquired the property “involuntarily” either through foreclosure, tax sale or otherwise.

3. The use of site-specific clean-up standards for property and their relationship to effective institutional controls of future land use consistent with site-specific clean-up standards.

4. Lender concerns relating to the availability of financing due to issues over collateral and credit risks for the borrower. Despite considerable regulatory alteration to lender liability, this does not affect long-term concerns over the value to either the owner or the lender of the Brownfield site as collateral. Therefore, although a bank may not have concerns relating to its own direct liability in a project, it may still have concerns about environmental liability, as it impacts the value of its collateral in event of foreclosure. Also, a bank or other financial institution could be reluctant to face the risk that a major environmental liability would financially cripple an otherwise sound borrower and destroy its ability to repay a loan. For all these reasons, a bank may not be interested in undertaking the risk of development of a Brownfield in the first instance.

5. The effectiveness of Tennessee’s clean-up program particularly as it relates to its process certainty (clean-up standards, extent of NCP consistency) and speed. Most business negotiations cannot withstand the uncertainty and the duration of any extensive regulatory review and analysis.

6. Development of state or federal financial incentives in Tennessee for Brownfields development. This would be done in light of lender concerns previously identified. It may be possible to leverage public money in some form of public/private financial partnership.

7. Policies of other state agencies and entities that effect and should be coordinated with the Brownfields initiative. For example, the State of Tennessee, under certain grants uses funds for infrastructure to be extended to new or raw lands (Greenfields); the State should consider using grants or other incentives to promote Brownfields development.

Working on this article, the authors discussed numerous scenarios and situations that were problems for both owners, leases, prospective purchasers, lenders and governmental entities. Without appropriate action in Tennessee, there remains the potential for Tennessee’s economy to totally lose the value of certain land both presently and prospectively. In that situation, cities and counties can lose tax revenues. Jobs will not be created, open spaces will be used and additional transportation infrastructure needed. In short, without the redevelopment of these historically industrial and commercial sites, people, the economy and the environment all suffer

Current Brownfields Initiatives in Tennessee

There are a number of initiatives occurring in the State. At present, there is a federal program in the city of Memphis. Memphis has received a federal grant from EPA and is interested as a first step in the redevelopment of a 75-acre former industrial site. This site is within an urban enterprise zone established by HUD.

Through the National Conference of Mayors, Knoxville’s Mayor Ashe, an early outspoken proponent of Brownfield redevelopment, led Knoxville to seek a grant from EPA to identify a center city business area for redevelopment. Knoxville has already had a buyer for one tract. Chattanooga also has produced a vision for its future that incorporates addressing Brownfields. There are many other examples from large and small places across the state where the set of issues associated with Brownfields redevelopment have an impact. We hope that more can be developed through this new project.

On other ongoing work, Steve Stout is working with George Wyeth with EPA’s Office of General Counsel on a project involving land use controls in Superfund remedies under the auspices of the Solid and Hazardous Waste Committee of ABA-SONREEL. At the University of Tennessee, Dr. Mary English of the Waste Management Research and Education Institute has just finished a study of long-term effectiveness of institutional controls under an EPA grant.

Conclusion

A comprehensive approach needs to be developed for handling Brownfields development in Tennessee. On one hand, the State’s policy must protect the environment by ensuring appropriate clean-up of contaminated sites. On the other hand, State policy should encourage developing these properties to their optimum use, as opposed to further disturbing new and undeveloped lands. This is a highly important issue to the social, economic and environmental future of the State of Tennessee. We are anxious and hopeful that there is active and serious involvement to promote examination of this issue. We hope to add to and further define this set of issues and to break participants into smaller sub-committees to concentrate on one or more of the identified issues for study and to recommend solutions.

Should you have any input or wish to be involved or have any questions, you may contact the authors of this article at:

James C. Wright, Esq Butler, Vines & Babb Post Office Box 2649 Knoxville, TN 37901-2549 e-mail: bvb@usit.net

Steven R. Stout, Assistant General Counsel State of TN, Dept. of Environment &Conservation, Office of General Counsel 401 Church Street Nashville, TN 37243-1548 e-mail: sstout@mail.state.tn.us

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Steven R. Stout is counsel for the Tennessee Department of Environment and Conservation. Jim Wright is a partner at Butler, Vines & Babb, P.L.L.C. The opinions expressed in this article are the result of a collaboration of the authors and are solely the opinions of the authors. This article does not represent the official position of the Tennessee Department of Environment Conservation.

Meet Justin P. Wilson
Interview Conducted By J. Wayne Cropp

The following is an interview with Justin P. Wilson, conducted by J. Wayne Cropp, of the Chattanooga law firm of Grant, Konvalinka & Harrison, P.C., on June 25, 1997. The interview has been edited to accommodate length restrictions.

Justin Wilson is a graduate of Vanderbilt University (1970), where he was Order of the Coif, and Associate Editor, Vanderbilt Law Review. He obtained his L.L.M. from New York University, and a Master of Criminal Justice from Kennedy-Western University. Mr. Wilson obtained his undergraduate degree from Stanford University.

Mr. Wilson worked with the Nashville law firm of Waller Lansden Dortch & Davis from 1974 until 1996, when he assumed the position of Commissioner, Tennessee Department of Environment and Conservation (TDEC). Mr. Wilson also served on the Metropolitan Health Board for Davidson County, Tennessee, from 1988 until 1996. Mr. Wilson is married to Barbara Engelhardt, M.D., Assistant Professor of Neonatology, at Vanderbilt’s School of Medicine.

Cropp: Justin, I would like to start the interview with the new Office of Policy. Give me, if you will, your correct title and the name of the Office?

Wilson: My name is Justin P. Wilson. I am the Deputy to the Governor for Policy, and the office is called the Office of Policy for the Governor. The Office of Policy was created in January, 1997.

Cropp: So, it’s not just an “Office of Environmental Policy?”

Wilson: No, it is not. In fact, I head the Environmental Policy Office, but that is just part of my duties. The Environmental Policy Office is located in the Department of Environment and Conservation. That office has responsibility not just for TDEC policy issues, but a variety of other issues that may affect anything to do with natural resources.

Cropp: So, what are the boundaries then of the Office of Policy?

Wilson: The Governor’s Office of Policy deals with all policy matters that the State of Tennessee may have, including welfare reform, for example, or tax policy. It’s whatever the Governor determines he wants us to look into. As far as the Environmental Policy Office, the Department of Environment and Conservation deals with most natural resource issues. The Office of Environmental Policy deals with “hot” issues, and policy issues that are really appropriate to be decided by the Governor, as opposed to the Department, and to some extent, issues of federal and state relations and issues with other states.

Cropp: You moved to the Office of Policy from the position of Commissioner of TDEC. Obviously, we have a new Commissioner, Milton Hamilton. What is the relationship between the Office of Policy and the Commissioner’s Office now?

Wilson: Well, the Office of Policy is, of course, entirely independent from TDEC. As far as the Office of Environmental Policy, it is administratively attached to TDEC, and there is dual-reporting, both to Commissioner Hamilton and myself, and, quite frankly, I don’t know organizationally how it works out, but as a practical matter, we have absolutely no problem working together.

Cropp: How is the Office of Policy structured? You have already mentioned the Office of Environmental Policy. What other subgroupings do you have within the Office of Policy?

Wilson: Well, we don’t have subgroups as such, other than Environmental Policy. We have five employees, and what we usually do is, we create working groups within the departments to deal with specific problems, such as welfare or transportation.

Cropp: How do you go about recruiting the personnel who will be serving on a working group?

Wilson: The recommendations usually are made from the Commissioners of the respective departments involved, or, in the alternative, chosen by the Governor’s Office.

Cropp: How much of your time would you say is dedicated to environmental policymaking?

Wilson: Well, almost all of the environmental policies I have now deal with issues that are worked out of the Office of Environmental Policy, and I would guess – right now, given the amount of time I am spending on Oak Ridge – it is probably as much as 30% to 40%.

Cropp: How much does the Office of Policy get involved with environmental legislation, or other legislative initiatives? Do you only get involved with those initiatives which are the Governor’s initiatives, or do you also deal with issues proposed by other parties?

Wilson: Generally speaking, the first cut at the legislation that’s reviewed by TDEC is made by TDEC. They may refer an issue to us, or at the Governor’s instigation, we may choose to get involved in an issue. But, I would say that at least 90% of the legislation that is proposed by someone other than the Administration is reviewed by TDEC – and not the Office of Policy.

Cropp: Tell me a little bit about your background. I know that you were at the Nashville firm of Waller Lansden for a number of years, but you weren’t really working in environmental law, as I understand it, before becoming the Commissioner of TDEC. What were the areas in which you primarily practiced?

Wilson: Oh, I was an old will-scribner and a deed conveyancer. I did a lot of real estate work and did a lot of estate planning and tax work.

Cropp: Prior to your becoming Commissioner of TDEC, there were several controversial issues before TDEC, and yet when you took over the position, you had a couple of big wins for the Department. I’m thinking specifically of your work on the air permitting issues for the Great Smoky Mountains National Park and the Southern Appalachian Mountain Initiative (SAMI). How were you able to come out of your areas of specialization – wills, estates, real estate – and have the success that you did early on with TDEC?

Wilson: I am certainly glad that you consider some of the things I did successful. Some of the things weren’t so successful, but on balance, I believe that my tenure tended to be favorable. What I tried to do was determine what was appropriate for the State of Tennessee to do, and I didn’t rely so much on technical knowledge as just general management.

Cropp: What do you consider some of the successes that you had when you were at TDEC? I mentioned one for which you are given a lot of credit. What were some of the other areas?

Wilson: Well, I think that the most long-lasting change we’re making is a re-look at our permitting procedures, to make them simpler, quicker, more environmentally responsible, and more directed towards dealing with real problems than dealing with paperwork.

Cropp: I know that’s been a major initiative and one that holds some real promise for Tennessee. What is the genesis of the permit initiative, and where do you see it going?

Wilson: Well, the genesis, I believe, came as a result of the 1994 elections – and a campaign promise of Governor Sundquist. We also saw what was going on in other states, such as Massachusetts. People do not like being unable to get answers to their questions from government. They don’t like uncertainty. They believe that government should be responsive. They believe that government should make sense. We have had surprisingly little pressure for relaxing environmental requirements in this initiative. This is something that we have not done at all and, in fact, we have had very few requests for it. We have had a lot of pressure – and this is also from within the Department – for giving people answers. People are entitled to know what the rules are, and they are entitled to be able to get decisions on which they can rely. One of the difficulties that we had at first was to be sure that the employees within TDEC were on board, because the initial reaction was to view any sort of permitting reform as providing less environmental protection. This is clearly not our intention and, in fact, our greatest advocates are people within the Department who realize that they can spend their time on areas where their tremendous expertise can be directed, instead of doing routine permits.

Cropp: One concept that’s often mentioned on a municipal level is one-stop shop permitting. Do you see any of your efforts moving toward a similar concept on a state level?

Wilson: Absolutely, and Commissioner Hamilton had made this his major initiative, and he has employed A. T. Kearney to assist him in redoing the permitting system.

Cropp: How do you go about reforming the permit process?

Wilson: Well, first of all, I think that perhaps Commissioner Hamilton would be better able to respond to that, but generally speaking, the first thing we’re doing is to be sure that this process is employee-driven. This is driven from the bottom up, where the ideas come primarily from the employees who know what we’ve been doing wrong for a long period of time, and how to fix it. It is surprising how many good ideas reside presently at TDEC that haven’t been heard.

Cropp: One of the things that I know that you did when you were Commissioner, was work on a process for being able to make appropriate notifications to government agencies, in order to simplify spill reporting requirements. Does the notification issue fit into the permit question that we are talking about?

Wilson: Yes. The concepts are related, but are not the same. The whole idea is that you should be able to talk to your government and request information without getting a run-around. That’s a real problem that we have in Tennessee, and elsewhere in the country. We proposed an XL project with the EPA, but EPA has not accepted the project. It so happens that one of the environmental groups has proceeded with this, so I think we will have the net result that we are looking for here in Tennessee, although we will not have the notification protection that we intended to get for the people who do their best to comply with the law.

Cropp: I mentioned SAMI – where are we on that program? Tennessee adopted a Memorandum of Understanding, I believe, that calls for action when other states also sign on to that concept.

Wilson: Tennessee has adopted permitting procedures to give greater certainty to people who are seeking permits for major sources, as far as air is concerned, that may affect a Class I area, such as the Smoky Mountains. Tennessee is bound by this agreement, and it is really designed to improve communications, so we get decisions earlier for people who are seeking permits. We are encouraging other states to enter into the same agreement, which was designed to accommodate additional states and, in fact, if no other state joins by December 31st of next year, then the agreement will terminate.

Cropp: What is Tennessee’s position on EPA’s proposed air quality standards – what would you say in response to the proposed revisions to the ozone and PM standards?

Wilson: The real question Tennessee has is: What is best for the health of Tennesseans, and what makes the air cleaner? We are not convinced that EPA’s proposed standards will, in fact, improve the quality of life in Tennessee, or improve air quality. The burden of proof is on EPA, and we have not yet seen them meet this burden. The air in Tennessee is much cleaner, and we don’t want to do something that could adversely affect the real progress we have made in Tennessee. We’re certainly open to examining the air standards, and to an examination of the scientific data, but as of yet, we have not seen clear and convincing evidence.

Cropp: You mentioned Oak Ridge and the amount of time that is being spent on Oak Ridge issues. Federal facilities are a big issue in Tennessee – not only do you have issues in Oak Ridge, but also, at the Volunteer Army Ammunition Site in Chattanooga, and the Milan Army Ammunition Site, among others –

Wilson: You’ve hit the big three.

Cropp: What’s the relationship between DOD, DOE and the Office of Policy and TDEC? Can you address any of those issues?

Wilson: Well, there is the government’s regulatory responsibility under the Federal Facilities Act. Secondly, and far more importantly, the United States has a fundamental, legal and moral obligation to clean up the pollution that was caused here in Tennessee, because Tennessee was able to contribute its citizens and resources to win World War II and the Cold War.

Cropp: What do you see as the Governor’s big push on environmental issues, looking forward the next several years?

Wilson: The real issue is, can we make Tennessee a better place to hunt, to fish, and just to be outdoors. The Governor’s primary concern, of course, is the protection of human health.

Cropp: How much do you see environmental issues figuring into the next election?

Wilson: Oh, I suspect it will definitely be a political issue of one sort or another. It’s so easy to make statements – all sorts of statements – about the environment. There’s a lot of misinformation about the environment, and the real trick is to be responsible – and to develop solutions that make sense, and that protect human health.

Cropp: One of the changes in the last few years is the controversy about the relocation of the Offices of General Counsel throughout the many departments in government. How do you see those changes affecting environmental policy in Tennessee?

Wilson: I am very pleased with the lawyers we have representing TDEC. They’re good lawyers, and they know their stuff. I don’t see that any change in where lawyers have their offices will have any real effect, as far as their ability to deliver good quality service.

Chair's Corner
By Susan Lee

While no single year defines an organization, we hope that the plans made for the 1997-1998 Environmental Law Section will demonstrate progress toward our goal of providing quality information and services to our Section members.

Our exciting plans include a slate of new officers including the election of Joe Sanders (TDEC General Counsel) as our Chair-Elect and Steve Stout (TDEC Assistant General Counsel) as our Secretary/Treasurer. The newly-elected Executive Committee is divided into three geographic districts: the Western District Counsel is represented by Randy Womack (Glankler, Brown in Memphis), Carter Gray (Memphis Air Bureau) and David Jensen (Federal Express in Memphis). Melissa McGuire (Bridgestone/Firestone in Nashville), Bill Penny (Manier, Herod in Nashville) John Williams (Tune, Entrekin in Nashville) comprise the Middle District Council. The Eastern District Counsel is John Barker (Baker, Donelson in Knoxville), Jim Wright (Butler, Vines in Knoxville) and Bob Colby (Chattanooga Air Bureau).

In order to provide increased services and information to our members, the Executive Committee is planning a Continuing Legal Education seminar to be held in November, with Bill Penny spearheading the effort. Watch the newsletters for additional information regarding this seminar.

Brian Humphrey (Miller & Martin in Chattanooga) has agreed to coordinate a quarterly brown-bag luncheon with guest speakers. One luncheon each will be held in Chattanooga, Nashville, Memphis and Knoxville. Jon Hastings (Boult, Cummings in Nashville) has agreed to host the Nashville brown-bag luncheon in August and Rick Hitchcock (Strang, Fletcher in Chattanooga) has agreed to host the Chattanooga brown-bag luncheon in October. Additional details concerning the brown-bag luncheons will be presented in future newsletters.

The Newsletter Editor, Ed Callaway (Waller Lansden in Nashville) will oversee the issuance of four newsletters. In addition to updates on Section activities, each newsletter will present an interview conducted by Wayne Cropp (Grant, Konvalinka in Chattanooga) with a person involved in environmental law or policy matters. The debut interview, which appears in this newsletter is with Justin Wilson, who explains his role in forming environmental policies that impact Tennessee. Of course, we would like to publish information or articles about members, their practice, and environmental law issues, and encourage members to submit them.

Another important project underway, and the subject of this newsletter’s feature article, involves Brownfields. A group being led by Steve Stout, John Barker and Jim Wright is being formed to consider Brownfield policies and issues in Tennessee. The goal of this section special project is to develop clearer, easier to use administrative or legislative mechanisms to encourage the redevelopment of contaminated properties.

A little further out on the horizon, James Weaver (Waller Lansden in Nashville) with assistance from David Bullock (Miller & Martin in Nashville) and Jim Wright, is organizing a reception at the Annual Solid and Hazardous Waste Conference held in Gatlinburg each Spring. Details regarding the reception will also appear in future newsletters.

As you can see, there are a number of environmental lawyers that are working together to improve the services and information provided to you as a Section member. If you would like to become more involved in the Environmental Law Section, please contact me at Grant, Konvalinka & Harrison, P.C., Ninth Floor Republic Centre, 633 Chestnut Street, Chattanooga, Tennessee 37450; (423) 756-8400; or susanlee@gkhpc.com. Of course, you may also contact any other officer or Executive Committee member to obtain information if you would like to become more involved in the Section.

We expect a progressive year with solid accomplishments that would not be possible without the dedicated efforts of many environmental attorneys and the Tennessee Bar Association staff to whom I offer my heartfelt personal thanks.

Section Activities
Compiled By Bill Penny

IT’S BACK!! The Environmental Law Section of the Tennessee Bar Association has brought back by popular demand, the Environmental Law Forum. The program will be held on November 20, 1997, in Nashville. Details will be forthcoming; however, speakers are expected to include top EPA headquarters and regional personnel, top state environmental staff, and other nationally recognized speakers. Topics will include items of current interest, as well as focus on substantive issues of concern to environmental practitioners. We hope to have a reception following the seminar which will include Region IV administrator John Hankinson’s and our own OGC’s David Harbin’s band, “The Non Essentials.” In scheduling continuing education for this year, you will want to make sure that you include this program in your budget. Mark your calendar and plan to attend. If you have any questions, please contact Bill Penny at (615) 742-9346.

The Executive Committee of the Environmental Law Section has decided to commence a program of brown-bag luncheons featuring timely environmental topics and speakers on a quarterly basis. These events will be open to all Section members free of charge. The first is to be hosted by Jon Hastings of Boult, Cummings, Conners & Berry in Nashville and is expected to take place sometime in August or September. The specific date, topic, and speaker have not yet been determined, but will be announced to the Section members as soon as possible. The next brown-bag luncheon is to be hosted by Rick Hitchcock of Strang, Fletcher, Carriger, Walker, Hodge & Smith in Chattanooga and is expected to take place in October or November. Brian Humphrey of Miller & Martin in Chattanooga will coordinate the brown-bag luncheon program and will send out notices of the topics, speakers, and dates when they have been finalized. If anyone has any ideas for speakers and topics, or would like to host a luncheon, please contact Brian at (423) 785-8309.