Air Force must clean asbestos at Lowry

John Rebchook, Rocky Mountain News

Published March 6, 2007 at midnight

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The U.S. Court of Federal Claims this week held that the U.S.Air Force was liable to homebuilders who had cleaned up asbestos contamination at the former Lowry Air Force Base in Denver, the Denver law firm of Brownstein Hyatt Farber Schreck said today.

The firm described the victory as one of national importance, because it said it was the first judicial decision in the country interpreting Section 330 of the National Defense Authorization Act. The court held that this section provides a broad indemnity from the military to parties who purchase former military properties for all costs incurred as a result of environmental contamination caused by the military's historic activities on the property.

Because this decision is the first ruling by any federal court addressing the federal government’s indemnification obligations under Section 330, it has significance to any party who has any connection to development on former military property, according to the law firm. With the 2005 decision by the Defense Base Closure and Realignment Commission to close 22 major military bases by Sept. 15, 2011, more and more lenders, corporations and real estate developers will be involved in military base redevelopment. This decision is a first — but also a critical — step towards protecting these parties from the often exorbitant costs of cleaning up contamination on former military bases, according to Brownstein.

The homebuilders who brought the lawsuit — Richmond American Homes of Colorado, Inc., Metropolitan Development IV LLC, Metropolitan Builders Inc., Standard Pacific of Colorado Inc., and Touchstone Homes LLC — purchased the former base property from the Lowry Redevelopment Authority, a quasi-governmental entity charged with facilitating redevelopment of the former base property.

During the course of developing the property, the homebuilders discovered asbestos in the soil.

After the Air Force refused to clean up the asbestos, the Colorado Department of Public Health and Environment required each of the homebuilders to undertake the clean up at a total cost of about $9 million.

The homebuilders brought suit after the Air Force again refused to pay for any of the cleanup costs.

After a two year legal battle, the Court of Federal Claims found that the Air Force had caused the asbestos contamination by demolishing a number of asbestos-contaminated buildings prior to transferring the property, and held that the broad indemnity language of Section 330 required the Air Force to fully compensate the homebuilders for costs arising out of the contamination.

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