Posted on April 24, 2018 by George von Stamwitz

Everybody loves Brownfields. Local, State and Federal agencies provide an array of tax credits, grants, expert support, statutory liability protections and contractual liability protections to developers of contaminated land. Brownfield buyers generally are looking to avoid assuming liability for pre-existing conditions and for a few incentives to sweeten the pot. The public sector is eager to help.

Less well known, and virtually ignored by the public sector, is a small but growing segment of the Brownfield ecosystem where buyers of contaminated land “run to the fire.” These buyers willingly take liability for pre-existing conditions, known and unknown, and provide the seller with a broad, collateralized indemnity. From the public sector’s perspective, these buyers are user–friendly, as they rarely seek government grants, incentives or liability protections. In recent years these “risk transfer” transactions have been particularly popular with owners of decommissioned power plants with ash ponds.

Indeed, these transactions have ingredients that EPA and the States typically love: tons of financial assurance for the benefit of the seller, an accelerated schedule for demo and cleanup with sanctions, engagement with the local community regarding future use, and job creation. Sometimes the risk transfer buyer turns the project over to a Brownfields buyer once the liability is managed.

Perhaps EPA, the States and NGOs can get to know the risk transfer portion of the Brownfield ecosystem a little better, add their expertise, and help get more sites cleaned up faster.

Comments (1) -

Tom McKittrick United States
4/25/2018 9:25:30 PM #

Well said George.  I'm one of those "run towards the fire" developers and had the pleasure of working with George for years on multiple Risk Transfer transactions.  Our country's transition  from coal fired generation has left in its wake a multitude of shuttered coal plants, often in small towns where the sting of lost tax revenue and jobs is amplified.   Utilities are increasingly attracted to Risk Transfer as it provides a fixed cost decommissioning solution and paves the way for redevelopment.  Communities, rate payers, and shareholders all benefit.   I remain hopeful, the EPA will continue to explore Risk Transfer as an option for appropriate CERCLA sites. Problems are often disguising opportunities..

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