MUNICIPAL ISSUES ASSOCIATEDWITH ENVIRONMENTAL DUE DILIGENCE

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There are a number of general environmental issues that attorneys who deal with municipalities should familiarize themselves with because they tend to arise from time to time.?These include:

???????????1.?Ground Penetration Requests.?Municipalities are frequently asked by property owners to allow an environmental contractor to do soil and/or groundwater testing in their right of ways and on other municipal property.?There is significant potential liability and a number of issues associated with allowing a private entity to enter upon municipal property to do this type of work, including but not limited to who is responsible if the work causes the contamination to spread.?Each environmental site is unique and presents unique issues. As such, each Access Agreement tends to be negotiated separately and on a case-by-case basis.?Some municipalities prepared ground penetration work permits to address these types of requests if the municipality would rather deal with these issues in that manner.?In any event, a municipality will require some written assurances and commitments from the owner/operator of contaminated sites before any type of environmental testing proceeds forward on municipal property.?Most Access Agreements will have requirements relating to environmental indemnity and insurance requirements but an attorney who is representing a client who wants to do ground penetration work on municipal property also needs to be prepared to address issues such as:

(a)?????Scope of Work – The Contractor will need to provide the municipality with a scope of work showing the proposed locations and depths of soil borings and groundwater monitoring wells.?No revisions or additions are allowed to be made to the proposed work on the municipality’s property without the written permission of the municipality’s public works director.

(b)?????Sidewalk/Street Closures – The Contractor will need to work closely with the municipality to implement and maintain adequate traffic control plans and street and/or sidewalk closure plans approved by the municipality.?The Contractor shall at all times conduct the work in such a manner as to minimize hazards to vehicular and pedestrian traffic and to those using the municipality's property.?All signs, barricades, flaggers, etc., required for traffic control shall be furnished by the Contractor.

(c)?????Generator Status – The Contractor will be solely responsible for the testing, storage, treatment and disposal of all material removed from the soil borings and groundwater monitoring wells which result from the work such as soil boring cuttings.?The municipality will not be identified at any time, in any place, document, record or manifest as the owner, generator or transporter of materials (including water) or soil taken from the municipality’s property as a result of the investigation.

(d)?????Hours of Work –The Contractor will need to schedule the work on days and times acceptable to the municipality so it does not interfere with anything the municipality has going on in the area, and the municipality may reserve the right to limit work hours in connection with the investigation.?

(e)?????Vacating Municipal Property - Contractor acknowledges and agrees that the municipality may require, at any time, Contractor to vacate all or part of the municipality's property. The municipality shall not be held responsible in any way for any losses, damages or expenses suffered by Contractor in Contractor's vacating the municipality’s property.?

(f)??????Own Risk - Contractor shall bear the sole and entire risk of its property or equipment being located on the municipality’s property.?The municipality will not be responsible for any damage caused by the municipality or otherwise to the Contractor or its agent's equipment or property.?

(g)????Utility Locate - Contractor shall consult with the local utility companies to determine the existence and location of electrical, gas, water, cable and telephone service on the municipality’s property.?Contractor shall be solely responsible for selecting the location for the ground penetration work provided, however, that the proposed soil boring/groundwater monitoring wells shall be located and constructed to the satisfaction of the municipality’s public works director or his duly authorized representatives.

(h)?????No Cutting Trees - Contractor shall not trim, cut or in any way disturb any trees or shrubbery on the municipality’s property without the written approval of the municipality’s public works director or his duly authorized representative.?Contractor will not do or permit any act or thing which may impair the value of the municipality’s property or that materially increases the dangers or poses an unreasonable risk of harm to persons on or off the municipality’s property arising from activities thereon, or that constitutes a public or private nuisance or waste to the municipality’s property or any part thereof.?

(i)??????Record Sharing - Contractor will be required to deliver to the municipality any and all records, documents (including writings, drawings, graphs, charts, photographs, phono records, and other data compilations from which information can be obtained, translated, if necessary, through detection devices into reasonably usable form), or reports of any kind (including all written, printed, recorded or graphic matter however produced or reproduced and all copies, drafts and versions thereof not identical in each respect to the original) which relate or refer to the environmental matters and/or conditions associated either directly or indirectly with the municipality’s property and/or the site (including the groundwater thereunder), including but not limited to written reports of a site assessment, environmental audits, soil test reports, water test reports, laboratory analysis and documents, reports or writings relating or referring to the work.

(j)??????Impacts to Neighbors - Contractor will take reasonable steps and precautions to coordinate the work so that it does not unnecessarily interfere with any ongoing activities that may be occurring in and around the property and the surrounding neighborhood.

(k)?????Restoration of Property - The restoration of the property and abandonment of the work must be to the municipality’s satisfaction.

(l)?????Independent Contractor - In performing the work, it is understood that the Contractor is acting as an independent contractor and that its employees, agents and representatives and those of any and all contractors and subcontractors and other workers which it retains for the work hereunder shall not be deemed, for any purpose, to be agents, servants, and/or employees of the municipality.?It must be clear that the Access Agreement does not create any legal relationship between the municipality and Contractor (such as joint venture or partnership).?The municipality is not undertaking by virtue of this Agreement any responsibility or liability for compliance with any laws, rules or regulations relating to the work.

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(m)????As-is ?- The municipality shall not be obligated or required to make any repairs or do any work on or about the property or any part of it.?The municipality shall not be liable for any injury or damage caused by or growing out of any defect or condition of the property or its soils and groundwater, or caused by or growing out of fire, rain, wind, snow, leaks, seepage, migration or other causes.?The municipality shall not be liable for any damage occasioned by failure to keep the property in repair, nor for any damage arising from acts or neglect of any owners or occupants of the property and/or adjacent or contiguous property.?The municipality does not assume any care, custody, or control of any personal property, materials and equipment upon the property.?The municipality shall not be responsible in any way for any theft or vandalism on the property.?Any property or equipment placed or located on the property shall be at the sole risk of the Contractor.

???????????2.?Highway Authority Agreements.?Occasionally, after the due diligence is completed, a municipality is asked to enter into what is commonly referred to as a Highway Authority Agreement (HAA) when contamination has migrated off private property (such as a gas station or dry cleaner site) and under a municipal highway or road.?These agreements allow contamination that has migrated under a right of way to remain in place as long as the highway acts as an engineered barrier where no one is going to be exposed to the contamination. These agreements are not the invention of the companies asking for them, but rather, are the result of the Illinois Department of Transportation (IDOT) getting involved in the Tiered Approach to Corrective Action Objectives (TACO) rule change which required the Illinois Pollution Control Board to consider land use controls in determining risk to human health from contaminated soil and groundwater.?As a result of IDOT’s efforts, HAAs became one of the land use controls recognized in TACO, and IDOT has signed literally hundreds of them.

IDOT has its own HAA form but the amendment to the TACO regulations now requires that municipal HAAs submitted to the IEPA match the form and contain the same substance as the model HAA set forth in Appendix D of the regulations.?A copy of the form is attached.

The difficulty with the form HAA as required by the IEPA for municipalities is that no input was ever asked for or given by municipalities, and the form HAA is troublesome in a number of different ways.?Just by way of example, the IEPA form agreement does not contain many provisions that are important to municipalities, such as the indemnity and reimbursement provisions.?In order to address the issues where the HAA does not go far enough to protect the interests of the municipality, if the municipality was inclined to agree to the HAA, it may require the site owner to enter into a separate Environmental Indemnity Agreement which is structured to have the requester:

a)????????indemnify, hold harmless and defend the municipality against future claims;

b)????????release the municipality from liability; and

c)????????reimburse the municipality for its future costs in dealing with contamination should the municipality excavate through contaminated soil in the right of way.

???????????The long and the short of it is that a number of municipalities enter into HAAs if it makes technical sense to do so.?From a legal standpoint, it resolves the liability and damage issues without going through the expensive and uncertain process of litigating against an alleged polluter.?

???????????3.?Groundwater Ordinance Request.?Local ordinances prohibiting the use of groundwater for potable purposes or prohibiting the installation and use of new potable water supply wells is another type of institutional control that may serve in lieu of cleaning up contaminated groundwater.?The reasoning is that where there are no existing wells and where future new potable uses of groundwater are prohibited, it is unnecessary to remediate contamination to potable levels.?The purpose of the ordinance would be to cut off the groundwater pathway so that the public does not come into contact with the contaminated groundwater.?Simply put, no existing pathway – no exposure to humans.?

The use of an ordinance by itself as an institutional control is specifically limited to ordinances that effectively prohibit the installation and use of all new potable water supply wells.?Thus, an ordinance prohibiting the installation of all potable water supplies and the use of such wells that does not expressly prohibit the installation of all new potable water supply wells (including community supply wells of the municipality) may be acceptable as an institutional control only if a Memorandum of Understanding is entered into between the municipality and IEPA.?In the Memorandum of Understanding, the municipality would agree to assume certain responsibilities for tracking sites and undertaking monitoring activities.?Simply put, if the municipality were inclined to adopt an ordinance to be used as an institutional control, it would have the following two options:

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Alternative 1: Adopt an ordinance that prohibits the use of groundwater as a potable water supply within the corporate limits of the municipality (or a portion thereof) by the installation or drilling of new wells by all parties, including the municipality itself.?The regulations do not call for the municipality to take any further action under this alternative but rather places the burden under this alternative on the owner or successor in interest for monitoring the municipality's activities with respect to the ordinance. However, given the possibility that new wells may need to be developed within the municipality’s boundaries in the future, a complete municipal-wide ban does not appear to be a realistic option for a number of municipalities.?Another option that IEPA has allowed and that has been used for a number of sites is a complete ban in certain identified areas within a municipality's corporate boundaries.?In that case, the municipality would adopt an ordinance that would ban the use of groundwater as a potable water supply for a certain designated plume area in and around the contaminated site.?The ordinance would prohibit the use of groundwater within the designated plume area as determined by mathematical modeling under the regulations (for example a 2,000 foot radius around the site).?This is something many municipalities have done in the past on a site-by-site basis.?It is usually the best alternative for the municipality.?

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Alternative 2: Where an ordinance prohibits the use of groundwater for potable purposes or the installation of new potable water supply wells by only private parties while continuing to allow such activities by the municipality (either expressly or by remaining silent on the issue), the ordinance will not stand alone as an environmental institutional control.?In that case, perfecting the use of the ordinance as an institutional control requires the municipality to not only adopt the ordinance but to enter into a Memorandum of Understanding with the IEPA in which the municipality would undertake the record keeping and notification requirements under the regulations.?A copy of the IEPA model ordinance is attached.

???????????4.?Environmental Liability Associated with Land Donations.?Under the Comprehensive Environmental Response Compensation Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq., liability associated with the cleanup of toxic waste is extremely broad and expensive.?For example, by virtue of the simple fact that a municipality may be a current or past owner of a site that contains hazardous waste, it could theoretically be held responsible for the entire cost of the cleanup of that waste, even if it did not otherwise contribute to the harm. ?In order to protect the municipality from this potential liability as a prerequisite to the municipality taking title or an ownership interest in any real property or improvements located thereon, it first requires the grantor of the land to provide a "Phase I" Environmental Audit demonstrating that the property does not deviate from the applicable environmental statutes, common laws, ordinances and rules and regulations required thereunder.??