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