Financial History Issue 130 (Summer 2019) | Page 32

after whomever had deep pockets, and of course they fought it. Most times it got sorted. Without Superfund and the related environmental statutes, that may never have been done.” David Overstreet has been an environ- mental attorney for more than 25 years. He left full-time practice to form a boutique firm that handles decommissioning and transition work more as project managers than attorneys. He noted that over previous decades there have been waves of disputes and litigation over environmental liability and insurance coverage, mostly by owners trying to transfer risk and underwriters working just as diligently to prevent it. More recently, however, there have been initiatives by owners of brownfield sites jointly with developers, lenders and insurance companies to get contaminated areas back into beneficial use through pre- planned transfer of liability. The essential points are a practical remediation plan and funding, supported by indemnifica- tion and insurance. “There has been an attempt to move beyond the battles over exclusion and into inclusion of associated risks,” said Overstreet. “None of the components are new. There has always been the contrac- tual opportunity to transfer liability, and insurance for environmental exposures, and of course capital for development or redevelopment.” Mostly those operated separately, or at worst, in opposition. One of the sharpest arrows in the laws, joint and several liabil- ity, became in some instances an impedi- ment to new plans and new money being willing to engage. “People struggled with how to imple- ment remediation plans,” said Overstreet. “Now insurance brokers, underwriters, lenders and developers are finding ways to assemble the layers. There is the con- tractual shifting of liability, with the corre- sponding indemnification, all backstopped by the insurance with the liabilities specifi- cally included rather than excluded.” It is a measure of how far Superfund has come in its 40 years that the majority of discussion is now about return to benefi- cial use. In the dark days of the late 1970s and early 1980s, it seemed a long shot that even federal intervention could turn the tide against decades of corporate irrespon- sibility and lack of local regulation. Love Canal is actually in Niagara Falls, New York. The proximity does not seem 30    FINANCIAL HISTORY  |  Summer 2019  | www.MoAF.org as gentrification drove interest in clean- ing it. However, many local residents and businesses fought against Superfund list- ing because of the stigma. Nevertheless, it was listed in 2010. No one wants to live or work near a toxic property, but neither is anyone too keen to cozy up to a Superfund site. At Love Canal and in many other cases, residents were eager to be bought out and start fresh elsewhere. In other cases, the sites themselves were remote. “If you put a pencil mark at the middle of the Marcellus and the Utica shale for- mations, that is my hometown in northern West Virginia,” said Phil Lookadoo, a partner in the law firm of Haynes & Boone with practice in energy transactions, regu- latory compliance in oil and gas, power and renewables, commodity trading and derivatives, mergers and acquisitions, as well as project finance and development. “It was an incredibly dense industrial area for a century,” he elaborated, “but most of that has been knocked down in recent decades. That has left a lot of brown- field sites. Innovation in environmental liability and indemnification insurance could be transformational. Eventually a hilly region like that runs out of flat land and you have to use whatever you’ve got. If there is a tangible prospect of long-term value, then people will invest.” As vexing as those brownfield chal- lenges remain, the situation would be much worse if not for Superfund and other similar federal and state legislation. “Superfund has to be judged to have been successful,” said Lookadoo. “If not for that liability, so many sites would never have been remediated.” As an example, Lookadoo described a hypothetical site where 80 years ago there had been a coal-tar plant making illuminating gas and petrochemicals. The waste was buried. Decades later a service station was built on the site, but later abandoned when the interstate highway went elsewhere. The fuel tanks were left in the ground. They rusted out, releasing gasoline, which seeped into the coal waste and then into the groundwater. “At the time the people who built and then left those facilities did not think they were doing anything wrong,” Lookadoo explained, “and under the laws and prac- tices at that time, they were not. Now we know better. To get such sites remedi- ated, governments and attorneys went “Danger, Hazardous Area” sign as seen through a chain link fence at Love Canal containment zone, near Niagara Falls, New York. to have done anything to harm the roman- tic if kitschy reputation of the town or the natural grandeur of the falls. Love Canal was one of two initial exca- vations for what was to be a canal to pro- vide inexpensive hydroelectric power for industrial development around the turn of the 20th century. Ultimately, with the tri- umph of alternating current (championed by enigmatic genius Nikolai Tesla) over direct current (promoted by Thomas Edi- son), the canal excavation was abandoned. It filled naturally with water as many dis- used quarries and mines do. Between 1942 and 1953, Hooker Elec- trochemical disposed of more than 21,000 tons of hazardous chemicals into the abandoned Love Canal, contaminating the soil and groundwater, according to the EPA official history of the site. In 1953, the landfill was covered with soils and leased to the Niagara Falls Board of Educa- tion. Afterwards, the area near the covered landfill was extensively developed, includ- ing construction of an elementary school, as well as many residential properties. During the 1960s, complaints about odors and residues were first reported at the Love Canal site. In 1968, Hooker was acquired by Occidental Chemical Corp., subsidiary of the eponymous petroleum company. Reports of contamination increased in the 1970s as the water level rose, bringing contaminated groundwater to the sur- face.  Various federal and state studies indicated that numerous toxic chemicals, including dioxin, had migrated through