An Experiment in Site Remediation

• Author: Elliott P. Laws
• Position: EPA Assistant Administrator and former President for Safety, Health & Environment of Texaco, is a Partner at Crowell & Moring
• Pages: 14-14

Page 14 ❧ THE ENVIRONMENTAL FORUM Copyright © 2011, Environmental Law Institute®, Washington, D.C. www.eli.org.

Reprinted by permission from The Environmental Forum®, May/June 2011

e RACER tr ust

could help communi ties

aected by the GM

bankruptcy

By Elliott P. Laws

An Experiment in

Site Remediation

I

have the honor of participating

in an experiment that could have

a major impact on how the govern-

ment approaches site remediation

and redevelopment. Emerging from

the bankruptcy of General Motors is

a dual purpose environmental trust,

unlike any previously created. Revi-

talizing Auto Communities Environ-

mental Response Trust became ef‌fec-

tive on March 31. rough a limited

liability corporation, I have been ap-

pointed as a trustee.

e RACER Trust was established

through the unprecedented ef‌forts

of the federal government, 14 state

environmental departments and at-

torneys general, the St. Regis Mo-

hawk Tribe, and Motors Liquidation

Company (the “old GM”). e trust

is the third largest holder of indus-

trial property in America and the

largest environmental trust in U.S.

history, with over $700 million in

assets. Some 89 former GM proper-

ties were transferred to the trust on

its ef‌fective date. Its main goal is to

remediate the properties and prepare

them for future reuse.

In announcing the formation of

the trust, the White House noted

that it “will give local communities

the opportunity to participate in de-

signing the strategy for repurposing

these properties in accordance with

their specif‌ic development objectives,

using these funds to both properly

clean them up and quickly return

them to productive use, creating

jobs and restoring communities.” It

is hoped that this ability to focus on

how the properties will be utilized af-

ter remediation, and the requirement

that local communities be a major

part in deciding the post-remediation

use, could serve as a model for future

bankruptcies and possibly standard

remediation actions.

e likelihood of this concept be-

ing viable outside of the bankruptcy

context is more dif‌f‌icult to envision

at this time, but only time will tell.

I say that in part because the chal-

lenge that this approach would face

outside of a bankruptcy results some-

what from the assumptions that the

lead environmental agencies (both

state and federal) agreed to during

the negotiation process.

One assumption is that the site

actions will be geared toward indus-

trial site cleanup and redevelopment.

By taking the possibility of more

stringent cleanups of‌f the table, the

parties were able to make funding

assumptions which

would keep the size

of the trust manage-

able. States and EPA

do not normally yield

that decision before

the remediation pro-

cess begins. By agree-

ing to industrial cleanups, however,

the regulators not only allowed for

some degree of cost management,

but also set the stage for a level of co-

operation that will be unique.

Here is the situation at a particu-

lar site: the parties (trust, lead agen-

cy, and af‌fected community) know

the targeted cleanup level and they

know how much money the trust

has been provided to remediate the

site. Except in limited circumstances

(a “cushion fund” for unknown site

conditions across the trust’s portfo-

lio) there is no more money. So the

parties are faced with the reality that

we have “this amount of money” and

“these environmental conditions” —

let’s work together to decide what we

can do to accomplish our goals. e

transparency of the trust should lead

to unprecedented cooperation be-

tween all of the af‌fected parties.

If the trust performs as expected,

it could serve a useful purpose in

demonstrating that a pre-selected

targeted cleanup level can result in

a protective cleanup that allows for

redevelopment. In certain circum-

stances this could allow for cost sav-

ings in avoided investigation costs,

more targeted community input by

eliminating reviews of incompatible

uses, and more creativity and collab-

oration in making remedy decisions.

On the other hand, the unique cir-

cumstances of the trust, primarily a

limited amount of funding (funding

that is derived from the federal gov-

ernment’s infusion of TARP funds

in old GM prior to and up to the

bankruptcy), present an acceptable

scenario in the bankruptcy context

which regulators are likely unwilling

to accept when dealing with a viable

party.

But even acknowledging that this

approach may not be

completely replicable

outside of a bank-

ruptcy, at least one

component of the

settlement is worth

considering in other

contexts. “e trust

is directed in the settlement agree-

ment to work together with the lead

agency and the prospective purchaser

to attempt to integrate the redevelop-

ment of the property with the timing

and the sequencing of the environ-

mental action.” is direction gives

the trust the ability to bring together

environmental and redevelopment

activities in a cooperative context

and have the trust reach its purpose

of assisting the communities hurt by

the GM bankruptcy.

Elliott P. Laws, f o rm e r E P A

Assistant Administrator and former President

for Safety, Hea lth & Environment of Texaco,

is a Partn er at Crowell & Moring. H e can be

reached at elaws@ crowell.com.

T B  E

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