The Advantages of Using ADR in Brownfields Redevelopment Projects

P.B. "Lynn" Walker-Coffey
Fognani Guibord Homsy & Roberts, LLP
Denver, Colorado

The U.S. Environmental Protection Agency's (EPA's) Brownfields Program is "centered on partnerships - with other Federal, State and local agencies and diverse stakeholders." U.S. EPA 1997 Annual Report on Superfund Reforms. While this goal is laudable, in the real world, such "partnership" projects may look more like a feud. The creative use of alternative dispute resolution (ADR), however, may help resolve the myriad of thorny issues inherent with many Brownfields projects.

Brownfields Hypothetical

Assume you are the attorney for a large corporate client which has acquired an old contaminated smelter site. The property is surrounded by single-family and multiple-unit residential properties, many of which are owned by poor minority families, as well as schools and small businesses. Except for residual contamination and liability concerns, the site is an ideal candidate for redevelopment because of its location in the heart of the city with convenient access to major transportation and other infrastructure. Your client has found some investors for constructing a car rental/maintenance/warehouse facility, which will provide jobs. City officials want revitalization of a dangerous blight in the community and will support the project if state/federal regulators agree on the cleanup level and the community concurs. Local residents think that "cleanup" means that it will be safe for residential purposes. Regulators want the smelter to be "clean closed" and have been hounding your client and the prior owners for years to do so. Your client recognizes that it has some responsibility for the cleanup, but feels that the regulators should "go easy" on the company since it wasn't the original "polluter," and the prior owners should pay the bulk of the cleanup costs. Your client's technical advisors have indicated that the site should only be cleaned up to industrial standards given the planned future use and since the property largely will be paved. Now what? Many issues could be resolved through ADR.

Negotiating the Deal

Are you a good negotiator? Many lawyers are not, especially in the context of the sensitive multi-party negotiations inherent in most brownfields projects. Clients may feel comforted by the knowledge that if they go to court, they have a rabid junk-yard dog in their camp. But the strong advocacy skills essential for a superior trial lawyer can be detrimental during negotiations of a brownfields project. While the lawyer will play a key role in the success of the project, a third-party neutral may be much better skilled at formulating solutions.

The Negotiating Parties

EPA or the State

For negotiations involving EPA, stakeholders may utilize the EPA ombudsman program. The EPA ombudsman accepts complaints and independently investigates whether something can be done to address the identified concern. The ombudsman does not have authority to change EPA's decisions, but the EPA Regions are under some pressure to try to develop solutions.

Additionally, EPA guidance strongly supports ADR in all EPA programs. 65 Fed. Reg. 81858-60 (Dec. 27, 2000). Likewise, many state agencies have increased their utilization of ADR neutrals for environmental controversies. See, e.g., O'Leary, Yandle, and Moore, The State of the States in Environmental Dispute Resolution, 14 Ohio St. J. on Disp. Resol. 515 (1999).

Ten brownfields sites with a diverse range of redevelopment issues were selected as part of EPA's ADR pilots. EPA's March 2000 report on its ADR accomplishments indicates that while the facilitation process is still ongoing at these pilots, the lessons learned will influence EPA's approach to community involvement. U.S. EPA Office of the Administrator, March 2000, EPA-100-R-00-003 "ADR Accomplishments Report." EPA found that facilitators provide "a better understanding of stakeholder needs and concerns and opened up a forum for proposing solutions." Id. The key role of the facilitators has been to keep the diverse stakeholders talking and focused on the potential gains of cooperative solutions.

Negotiations with EPA or a State about the cleanup levels at your client's smelter site and performing the cleanup may be complicated by a number of unrelated factors. You may need to cope with the Agency's anger (e.g., for past acts of non-participation) or self-righteousness or blame (e.g., the "polluter must pay") or with issues involving national precedent or high public visibility. An ADR specialist can serve to defuse that hostility and resentment, which may make direct negotiations futile.

Second, a mediator may be effective in convincing a party which has been implacable in direct negotiations to take a fresh look at the issues. A neutral may be better able to point out the weaknesses in a party's legal position or other aspects of its case without the taint/skepticism that might result if the same were noted by another party to the dispute. While this is important with respect to all parties, it is particularly valuable with respect to negotiations with the government. Agency negotiators will often be able to convince their senior officials to be more flexible about settlement positions if the recommendation is based on the advice of a neutral.

Finally, a skilled neutral will point out the pitfalls of no agreement and can explore solutions without one party having to appear "weak" by proposing a compromise. The government may be concerned about being "too conciliatory" in direct negotiations with potentially responsible parties (PRPs), but willing to compromise if a solution is promoted by an ADR neutral.

The U.S. Institute for Environmental Conflict Resolution (Institute), established by Congress, may be a good resource when negotiating with EPA. The Administrative Dispute Resolution Act of 1996 and the creation of the Institute are strong indicators of Congressional recognition that ADR can lead to faster, more creative, sensible, and less contentious outcomes.

Other PRPs

Typically when PRPs (such as your client and the prior owners of the old smelter in the hypothetical) are negotiating a contribution settlement to divvy up the cleanup costs among themselves, the PRP negotiators have more flexibility in their solutions than in negotiations which involve the government. The formula for successful cost allocation negotiations among PRPs is one which explores alternatives that can meet the all the objectives of the parties, including underlying management objectives, corporate policies or other sensitivities. A neutral can improve such negotiations through confidential caucuses. Without disclosing confidences or undermining negotiation positions, the neutral can use the information garnered in caucuses to create solutions.

The Public

In the hypothetical there will likely be outraged neighbors concerned about their stigmatized properties and the adverse health effects on their minority community. You may try to persuade the local citizens with "hard data," but, if there is mistrust, your facts and figures may be woefully unpersuasive. Individuals may mistrust large corporations (or government bureaucrats) and feel threatened by their money and power. They may fear being manipulated by "slick mouthpiece" attorneys. A neutral may help counteract power imbalances between unevenly matched parties, increasing their comfort level with the dispute resolution process and making them more receptive to agreement.

A mediator can also help the parties agree on what would constitute "adequate" technical data or other information needed to make acceptable decisions. The neutral may focus on what decisions can be made with the amount of information in hand or assist the stakeholders in determining whether it is possible/worthwhile to do additional data collection/assessment prior to making a decision.

A mediator can help the parties grapple with the time and financial commitments necessary to garner additional scientific and technical information. The neutral may establish a panel of experts to assist in gathering information needed to resolve the dispute or set up other procedures for neutral fact gathering, e.g., develop consensus as to the testing methodologies to be used, a list of independent experts which might be acceptable to all the parties, or a list of assumptions for filling in data gaps.

A facilitator can orchestrate community meetings and provide a non-threatening structure for two-way communication to dispel rumors and/or misinformation. Environmental justice and community concerns, in general, can be highly volatile issues and a neutral can help avoid information exchanges turning into shouting matches. A neutral can help with educating the public and can offer an opportunity for individuals to "vent." Voicing frustration, anger, fears, etc. to a neutral party may be sufficient catharsis for a party and may open the door to consensual resolution.

The Client

A significant percentage of those few cases in the civil court system that actually go to trial are the result of a client on one side refusing to accept the settlement recommended by its own attorney. Unrealistic expectations in the client undoubtedly will hamper settlement and are ultimately likely to result in the client being dissatisfied not only with any settlement obtained but also with the quality of its representation.

A neutral may help avoid this potential by easing the transition between "I can't possibly lose this case" and the client's realistic assessment of BATNA (the best alternative to a negotiated agreement). Your clients come to you because you know how to get something done and, presumably, the sooner the better. ADR will be much quicker than the process of litigation and provides an opportunity for more creative, efficient (and cheaper) solutions than can be afforded in court.

Conclusion

Environmental transactions involving diverse stakeholders and complex issues are well suited to resolution through ADR. The standard system of public notice and comment or public meetings may be insufficient to achieve a useful decision. Skeptical activists can be engaged directly in an ADR process and may ultimately become supportive of the outcome. Various ADR tools can be invaluable in achieving a majority consensus.