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Environmental & Land Use,Real Estate

In Practice: Dawn Stolfi Stalenhoef | Environmental Law

Multiple Authors

In Practice is a new series in which Rubin Rudman attorneys speak candidly about the experience and judgment that shape their approach to client work.

 

Environmental concerns can surface amid a real estate deal, a permit renewal, or a regulator’s phone call, sometimes with significant consequences for deal timing and value. In this inaugural installment of In Practice, hear from Dawn Stolfi Stalenhoef, a partner in Rubin Rudman’s Environmental & Land Use group, whose path to this legal field began when she was an environmental scientist.

You took a non-traditional path to environmental law, starting as an environmental scientist. How does that scientific background shape the way you advise clients today?

I routinely draw upon the experience and skills gained in my early environmental career. Environmental lawyers must be adept at working and communicating with all sorts of technical stakeholders, including scientists and engineers as well as regulators with technical backgrounds. During an undergrad semester interning for a public interest lobby group in Washington, DC, I worked alongside several of the environmental lawyers who had completed graduate degrees in science and engineering, and I admired their ability to analyze problems through both a scientific and legal lens. At the root of environmental law is ever-evolving science.

In complex transactions, environmental risk can affect deal structure, timing, and value. How do you collaborate with business, real estate, and finance teams to keep transactions on track?

It takes a village! The teams at Rubin Rudman are familiar with the many ways that environmental issues intersect with other terms in a deal. As a result, most of my efforts go toward educating and negotiating with our counterparts on the other side of the deal, with our client, or with pertinent third parties such as the investment bankers, lenders or insurance companies. When a transaction involves commercial or industrial property in Massachusetts, the deal typically involves some environmental risk, as well—so I make this type of investment on a fairly routine basis.

You work with a range of clients and across multiple practice areas within the Firm. What environmental issues tend to create the biggest surprises for clients—and how can they be avoided?

Unfortunately, they sometimes cannot be avoided. So much of environmental risk is premised on what parties know or don’t know, and when. If you represent a purchaser of commercial or industrial real estate, you want your client to fully investigate what they are buying. If you represent the seller of that same real estate, you want to shield your client from investigations conducted by a purchaser which could lead to the identification of a previously unknown condition. That is a constant tension that sometimes requires creative solutions to get the deal done, such as shifting some of the risk to a third party through the use of pollution legal liability insurance products, or highly customized, creative drafting.

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Brownfield sites are often seen as liabilities. What do you see when you evaluate a brownfield property, and what makes a redevelopment successful?

In Massachusetts, we have a robust brownfields regulatory scheme that provides a number of protections and incentives to encourage the redevelopment (and financing) of so-called brownfield properties. A full-service environmental lawyer will be just as informed about these resources as we are about the environmental laws, regulations or policies that are implicated in a development project or transaction. In addition to the more traditional deal terms such as indemnities, escrows, and holdbacks, there are several other tools that can move a deal forward that may be less commonly utilized, such as environmental insurance products and deed restrictions or Activity and Use Limitations.

Many sophisticated developers and lenders in MA have become comfortable with these tools and with relying on specialized consultants to provide guidance regarding what is likely to be involved in managing the cleanup requirements or development limitations associated with these kinds of properties. The applicable regulations frequently allow consideration of end uses in the determination of cleanup requirements, so there can be flexibility. MA has been an innovator on brownfields for many years, which makes it a particularly rewarding jurisdiction for environmental practice.

You’ve served in a senior role at the Massachusetts DEP and also as an Assistant AG with the Attorney General’s Office. How does that government experience influence your approach when advising clients facing regulatory scrutiny or enforcement?

Knowing how the regulators and the AG’s Office are likely to interpret and approach inquiries or enforcement is a key insight that truly distinguishes an environmental lawyer among his or her peers. Typically, only someone who has sat on the other side of the table can meaningfully understand that thinking. In my practice, I am constantly sensitive to the fact that clients are likely to be interacting with these regulators for the duration of their business activities in the space.  Although one hopes not to have more than one enforcement experience, how that first one plays out can impact how any subsequent interaction might play out, and not just figuratively. Many environmental violations come with increased penalties or other consequences in cases of repeat violations. So preserving the relationship between client and regulator, and being able to use experience to advise a client on which battle is a good one and which may not be, is an important part of guiding a client well.

Environmental law is constantly evolving as science, regulation, and public priorities change. How do you help clients stay nimble in such a dynamic landscape?

Even though I’ve been at this for a while, I am still sometimes surprised by the problems clients confront. I chose this specialty precisely because I knew it would involve a lifetime of learning, but frequently clients take all the right steps and try to be proactive and still find themselves caught up in entirely new and unexpected situations. With an aging population of our environmental regulators (and reductions in budgets or retirement buyouts), there can suddenly be new interpretations of well-established requirements, or different priorities that no one saw coming. We routinely invest time in alerting our clients when we’ve discovered something that is relevant to their business on the horizon, but when we have to react to something unforeseen we must be nimble. Typically, an experienced environmental lawyer can find the threads in a new situation that will help bridge the gap between what feels like shifting sands and something more familiar, and help the client get back to solid ground as expeditiously as possible.

For business owners or developers navigating environmental concerns for the first time, what advice would you offer at the outset of a project?

If the client intends to remain in the business or industry for a long time, and they will likely need a long-term relationship with the applicable regulators, the out-of-the-gate strategy should be systematic compliance to avoid scrutiny and enforcement in the first place. That is not always as straight-forward as it may sound, but being out of compliance can affect the ability to obtain necessary approvals in addition to the expense and delays typically associated with enforcement and after-the-fact compliance requirements. It can also impact the ability to obtain project partners and financing. My advice is to spend the time and shorter money upfront developing good compliance systems and protocols and avoid having to pay a lot more to respond to or defend against a violation down the road. There are certainly cases where regulators can be overzealous, but staying off the radar in the first place is a worthwhile business strategy.