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Planning a Fossil Teardown

Decommissioning and remediation of coal- and oil-fired plants.

April 2012

poses sequencing issues that might preclude complete asbestos or lead paint abatement prior to demolition, or that might require remedial measures to be instituted prior to, or during, demolition. Also, site features or remedial systems might need to be preserved throughout the demolition process. An environmental consultant, working with legal support, can help the owner determine when and how to remove underground site features such as storage tanks. Such a consultant can help define whether and how to do sub-slab testing to enable early detection of environmental issues that could halt or complicate a smooth demolition process and thereby avoid significant incremental demolition expense. If remediation is needed, the consultant also can work with legal counsel to define “how clean is clean” because cleanup standards often are defined by the potential future uses and institutional and engineering controls and deed or use restrictions that might apply to the site.

Finally, the owner should consider working with external legal resources to help shore up legal protections for the site owner during every step of the process. Such needs include: reviews under state environmental quality rules and the National Environmental Protection Act, any applicable federal, state and local approvals and permits, interfacing with involved regulators, and arranging the bidding and contracting process—including development of commercial terms and conditions. Another potential advantage of outside counsel is the ability to attach the attorney-client privilege to certain phases of the pre-demolition deliberative process, which might prove valuable if there’s neighborhood opposition, as well as to advise in developing a strategy for discussions with regulatory authorities. Confidentiality might be less secure if in-house counsel also serves in dual legal and business capacities.

Scheduling and Game Plan

The starting point for a game plan will hinge on whatever triggered the decision to proceed with demolition. If the plan is to construct a replacement generation facility or other specific redevelopment objective, detailed specifications will dictate the condition the property must be in at the end of demolition. Or, if the state utility regulatory agency required demolition without specifying the desired future use of the property, the initial plan will focus on ensuring that local demolition permitting requirements are met, qualifying the costs of the project for rate reimbursement, and on obtaining a definitive cost proposal from a qualified bidder.

The preliminary plan also must address the extent to which environmental remediation can and should be incorporated into the demolition phase of the project or saved for a post-demolition phase. Even if the plant had no major historical spills or releases, the owner should expect coal storage-related soil or groundwater quality issues and at least minor petroleum contamination. If this contamination must be investigated or remediated under an agency order, it will be necessary to resolve the details of the order and its timing. Such matters might be addressed through voluntary cleanup programs to obtain significant liability protections for prospective purchasers and, if so, the plan should factor in timing, process, and regulatory approval considerations. Other areas might need extensive investigation to identify and determine the extent of site-related contaminants, and