604-PT – Revision 1 – 04.30.08.USA

1

Welcome to the International Right of Way

Association’s

Course 604Environmental Due

Diligence and Liability

604.PPT.R2.2015.08.14.0.0

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IntroductionsWho we are…What we do…

Where we do it…

An environmental issue we are interested in learning more about...

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Objectives (1) At the conclusion of the course, you will be able to...

• Provide an overview of the innocent landowner defense

• Provide an overview of the ASTM International’s Phase I Environmental Site Assessment standards

• Understand the Environmental Protection Agency’s “All Appropriate Inquiry” Rule

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Objectives (2) At the conclusion of the course, you will be able to...

• Understand other environmentaldue diligence components

• Establish expectations and orderdue diligence services

• Analyze due diligence reports and weigh their conclusions on proposed projects

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Objectives (3) At the conclusion of the course, you will be able to…

• Explain when an environmental site assessment (ESA) is needed

The course will not qualify or enableyou to complete a Phase I ESA.

66

Housekeeping

77

Schedule (1)

8:00 - 8:30 Introductions, Etc.

8:30 -9:15 What Is a Phase I ESA?

9:15 -10:15 Why Conduct a Phase I ESA

10:30 -11:15 Regulations and Resources

11:15 -12:00 Components of a Phase I ESA

(Records Review)

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Schedule (2)

1:00 -2:45 Components of a Phase I ESA

(Visual inspection, interviews, report)

3:00 - 3:30 Non-Scope Considerations

3:30 - 3:45 Ordering a Phase I ESA

3:45 - 4:00 Summary and Review

4:00 - 5:00 Exam

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What is a Phase I ESA?(Session Objectives)

• The various phases of environmental site assessments

• The basic steps in a Phase I ESA and some of its limitations

• When events trigger a Phase II ESA or a Phase III ESA

• The expectations, outcomes and limitations of a Phase II ESA or a Phase III ESA

To understand better:

1010

Environmental Site Assessments

ESAs are structured into separate phases:

Phase I ESA: Site Assessment

Phase II ESA: Contamination Assessment

Phase III ESA: Remedial investigation and site remediation

1111

Phase I ESA

A Phase I ESA defines good commercial

and customary practice in conducting an

environmental site assessment of a real estate

parcel with respect to the range of contaminants

within the scope of the Comprehensive

Environmental Response, Compensation and

Liability Act (CERCLA) and petroleum products.

12

Exercise No. 1 (1)

1) Does a Phase I ESA involve sampling/testing and/or cleanup/remediation?

Why? Why not?

No. These activities (i.e., sampling/testing and/or cleanup/remediation) describe tasks completed in Phase II and Phase III ESAs.

13

Exercise No. 1 (2)

2) Will the property be considered

“contaminate free” after the completion

of a Phase I ESA? Why? Why not?

Not necessarily. That is completely dependent on the property, its history and site conditions. It may be necessary to proceed past a Phase III ESA or other actions if it is even possible to have a “contaminate free” property.

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Exercise No. 1 (3)

3) Does a Phase I ESA conclusively identify

all environmental issues associated

with a property? Why? Why not?No. There are many types of environmental issues that a Phase I ESA will not detect, and there are definite limitations to them.

1515

Exercise No. 1 (4)

4) Will a Phase I ESA ascertain if there is

contamination present from current or past underground storage tanks (USTs) on the site? Why? Why not?No. All a Phase I ESA will determine, with limitations, is whether or not there are indications of current or past USTs on a site and/or whether or not there was a contamination action opened on the site. These mayor may not represent actual property conditions.

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Exercise No. 1 (5)

5) Will a Phase I ESA provide remediation

cost estimates? Why? Why not?No. This information cannot be developed with any reliability until, at least, the completion of a Phase II ESA.

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Exercise No. 1 (6)

6) Does a Phase I ESA discuss whether

or not permits (e.g., Corps of Engineers

404 wetlands permits or air emissions

permits) are needed? Why? Why not?

No. These and other items are specifically excluded from a Phase I ESA scope.

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18

Records ReviewVisual Inspection

InterviewsReport

The goal is to identify potential “red flags” associated with the property. In some instances, the “red flags” are referred

to as Recognized Environmental Conditions and are, in layperson’s terms, simply potential environmental issues.

Phase I ESA

1919

Phase I ESA - Records Review(to determine historical property uses)

Database searches

Aerial photographs

Ownership records

Sanborn (fire insurance) maps

Cross-reference directories

Maps

2020

Phase I ESA - Visual Inspection(to look for signs of problems)

Distressed vegetation

Stained soil

Hazardous materials/waste storage areas

and containers

Polychlorinated biphenlys (PCBs)

Underground storage tanks (USTs)

Disturbed soil, fill, pits, ponds, lagoons

Property perimeter

2121

Phase I ESA - Interviews(to learn more about situations not uncovered in the

records review or on the visual inspection)

Current/past owners, occupants, lessees

Neighbors

Others with site knowledge

2222

Phase I ESA - Report

Summarizes findings and “red flags”

ASTM International has a recommended table of contents,

which many preparers andusers find helpful.

2323

Phase I ESA A Phase I ESA does not:• Include sample collection of media or building

materials• Audit subject property regulatory compliance• Provide a base for remediation costs• Satisfy environmental assessment (EA) or

environmental impact statement (EIS)

processes as defined in the National

Environmental Policy Act (NEPA)

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Phase I ESA

A Phase I ESA is never:

• An automatic attainment of an innocentlandowner status

• A guarantee that the subject property is “clean”

• A risk elimination process

2525

Phase II ESA (1)

• Additional investigation of “red flags”

identified in a Phase I ESA

• Usually involves sampling and testing

(e.g., asbestos survey, ground water plume

delineation, waste characteristics)

• Cost can range from a few hundreddollars to tens of thousands of dollars

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Phase II ESA (2)

• Time to complete can range froma few days to several weeks

• Usually completed by an environmentalconsultant or environmental consulting firm (highly specialized and technical)

2727

Phase III ESA (1)

• Implementation of remediation plan developed from the Phase II ESA(e.g., disposal of accumulated waste, soil and/orgroundwater remediation, asbestos abatement)

• Costs are highly variable

• Time to complete is highly variable

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Phase III ESA (2)

• At times, results in feasibility studies,risk analysis or assessments

• Activity and use limitations (AULs) orother restrictions on property use arecommon outcomes

2929

Decision Table

3030

Exercise No. 2 (1)

1) What findings from a Phase I ESA would trigger a Phase II ESA?

Any recognized environmental conditions (REC’s) discovered in a Phase I ESA which require additional research/investigation to determine if it is an actual , rather then potential, issue.

3131

Exercise No. 2 (2)

2) What triggers the end of a Phase II ESA?

When the validity of the potential issues has been verified or determined not to be relevant.

3232

Exercise No. 2 (3)

3) What are some examples of Phase II ESA findings that would trigger a Phase III ESA?

Any issue associated with contamination that requires action (e.g., cleanup, property use restrictions).

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Exercise No. 2 (4)

4) What triggers the end of a Phase III ESA?

Usually, the completion of remediation, or other activities designed to make the property usable, sometimes with restrictions.

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Exercise No. 2 (5)

5) After the completion of a Phase II ESA and/or a Phase III ESA will a property necessarily be “contaminate free”? Why? Why not?

No. Many times, contamination and/or liability will still exist even after the completion of these tasks.

3535

Exercise No. 2 (6)

6) Is it always necessary to proceed to a Phase II ESA if RECs are discoveredin a Phase I ESA? Why? Why not?

No. The potential purchaser may determine that the property contains too many potential liabilities and choose not to proceed.

3636

Why Conduct a Phase I ESA? (Session Objectives)

To understand the reasons to conduct a Phase I ESA, which include:

• Potential liability implications

• Potential cost implications

• Potential project timing delay implications

• Potential offset impacts

• Determining when further investigation is warranted

• Exploring options when an issue is discovered

• Other considerations

3737

Exercise No. 3 (1)Light Rail and Station

Bulk oil storage: Spills, leaks

Warehouse: What’s stored?

30s residences: ACM, fuel oil tanks, LP, pesticides

Park: What’s in the former landfill?

Service station: USTs, fuel and other products

3838

Exercise No. 3 (2)Above Ground Electric Transmission Line

Agriculture: Fertilizers, herbicides, pesticides

Railroad: herbicides, pesticides, PCBs, creosote,

hazardous materials spills?, petroleum, fuel spills

Oil and gas operations: Leaks in gathering lines, proximity of tank battery

leaks

3939

Exercise No. 3 (3) Runway Extension

Dry cleaners: Solvent spills, dumping, leaks

Auto salvage: Batteries, brake fluid, tires,

transmission fluids, motor oil

Warehouse: What’s stored?

4040

Exercise No. 3 (4)Compressor Station

Agriculture: Fertilizers, herbicides, pesticides

Former Superfund site: Why a Superfund site?,

cleanup status, activity/use restrictions?

Former dairy: Solvents, fuel, building materials,

mercury/PCB equipment

4141

Why a Phase I ESA? (1)

4242

Why a Phase I ESA? (2)

• To access the innocent landowners defense under Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)

• To assess environmental liability and cost issues

• To quantify the extent of contamination and determine costs before/after purchase for use in negotiations

4343

Why a Phase I ESA? (3)

• To identify existing or potential environmental hazards

• To identify whether or not a neighboring property has the potential to impact the subject property

• To determine if further investigation is required

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Why a Phase I ESA? (4)

• Discount purchase price

• Escrow accounts

• Indemnifications

• Operation and maintenance (O&M) expenses

• Activity and use limitations (AULs)

• Assessing suitability for planned purposes

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Why a Phase I ESA? (5)

Since the mid-1980s, Phase I ESAs have been incorporated into the environmental policies of most lending organizations as a requirement of any loan application involving a parcel of commercial real estate.

According to the Mortgage Bankers Association, over 250,000 Phase I ESAs are performed annually.

4646

Phase I ESA Significance and Use Limitations

• Primary purpose: To satisfy All Appropriate Inquiry (AAI) and to provide access to the innocent landowner defense

• Not limited to CERCLA

• Site specific - Time limitations

• Uncertainty not eliminated, not exhaustive

• Usage of prior assessments limited

4747

Situations that Could Trigger a Phase I ESA (1)

• Property transaction: User may wish to establish innocent landowner defense under CERCLA

• Initial assessment of a property when a spill occurred or a suspected disposal site

• A firm’s proactive assessment of its property and other assets

4848

Situations that Could Trigger a Phase I ESA (2)

• Facility closure plan development

• User may wish to conduct an inquiry into non-scope considerations of another project or for other business risk decisions

• When acquiring an easement (to establish baseline conditions, identify potential hazards and to identify AULs)

4949

Summary: Why a Phase I ESA?• Properly conducted environmental due diligence

provides CERCLA liability relief

• Increasingly, insurance companies require purchasers and lenders to obtain environmental insurance. Phase I ESAs (and occasionally Phase II ESAs) are performed to provide information to the underwriters with data to assess risks

• Information collected during a Phase I ESA is vitalto property owners, corporate managers, investors, borrowers and/or lenders during a property transaction

5050

Exercise No. 4 (1)

1) What, if any, are the liability considerations of obtaining an easement versus purchasing a property in fee?

Essentially, there is no difference from a liability standpoint. Liability exists and is no less, in an easement, so the needs are the same.

5151

Exercise No. 4 (2)

2) What, if any, are the liability considerations of purchasing a property with no knownenvironmental concerns but with neighboringproperties that might contain potential significant environmental issues?

While responsibility for issues on neighboring properties should be rightfully assigned to them, a Phase I ESA and, more likely a Phase II ESA are important in this instance to satisfy “all appropriate inquiry” and establish whether or not there is any affect on the subject property from the neighboring properties.

5252

Exercise No. 4 (3)

3) What, if any, are the liability considerationsof purchasing a property where there hasbeen a known cleanup completed that was overseen and approved by a regulatory agency?

While there is liability that is obvious in this instance and that would be most likely be addressed in the sale’s contract, there may be other liabilities that a Phase I ESA would uncover. The need is the same as for any other situations.

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Exercise No. 4 (4)

4) What, if any, are the liability considerations ofpurchasing a property that is undeveloped?Used solely for agricultural purposes? Used for a park or golf course?

There will be liability in any of the situations and the need to conduct a Phase I ESA is the same as for a site with obvious issues, possibly more so. Just because the property is undeveloped/agricultural/recreational now, does not mean that the property always has been or that some other incident/factor does not affect the property environmentally. One of the may purposes of a Phase I ESA is to determine if there have been activities that affect the property even though the effects are not obvious.

5454

Regulations and Resources (Session Objectives)

To:

• Understand the basics behind CERCLA liability, the AAI rule and the innocent landowner defense

• Understand Brownfield laws and recent trends, including new liability defenses

• Become familiar with ASTM Standard E-1527 and how it applies to the AAI rule

• Be aware of some of the resources available regarding environmental due diligence

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Exercise No. 5

5656

Due Diligence (1)

• Comprehensive Environmental Response,

Compensation, and Liability Act (CERCLA)

• Superfund Amendments and Reauthorization

Act (SARA)

• Small Business Liability Relief and Brownfield's

Revitalization Act (“Brownfield's Law”)

5757

Due Diligence (2)

Comprehensive Environmental Response,

Compensation, and Liability Act (CERCLA)

• Commonly known as Superfund, enacted in 1980.

• Provided broad Federal authority to responddirectly to releases or threatened releases of hazardous substances that may endanger public health or the environment.

CERCLA provided for strict liability of persons responsible for releases of hazardous waste

5858

Superfund Amendments and Reauthorization Act (SARA)

• SARA amended CERCLA in 1986.

• Provided a defense for CERCLA liability.

• To establish the defense, had no reason to know…the defendant must have undertaken, at the time of acquisition, all appropriate inquiry into the previous ownership and uses of the property consistent withgood commercial or customary practice in an effort to minimize liability.

Due Diligence (3)

5959

Superfund Amendments and Reauthorization Act (SARA)

• Neither Congress nor the Environmental ProtectionAgency (EPA) defined environmental investigationsnecessary to qualify for an innocent landowner defense.

• In 1993, private interests developed ASTMStandard E-1527.

• Never approved by Congress or the EPA

Due Diligence (4)

6060

• Small Business Liability Relief and Brownfield's

Revitalization Act (“Brownfield's Law”)

• “Brownfield's Law” enacted in 2002.

• Created new liability protections under CERCLAfor prospective purchasers ultimately found to be contaminated by hazardous substances on or up togradient of the purchased property.

• Established funds to assess and cleanup Brownfield sites.

• New liability protection included: bone fide prospectivepurchaser contiguous property owner

Due Diligence (5)

6161

Due Diligence (6)

• To qualify for these protections, prospective purchasersmust, among other things, make “all appropriate inquiry” to determine whether or not the property may becontaminated.

• All appropriate inquiry still not defined.

• EPA and interested parties began efforts to define all appropriate inquiry.

• Meanwhile, ASTM revised its Standard E-1527 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process remained the unofficial “go to” document.

6262

All Appropriate Inquiry• On November 1, 2005, EPA published its Final Rule

establishing standards and practices for “allappropriate inquiry” (AAI)

• The Final Rule became effective on November 1, 2006.

• The Final Rule established a minimum due diligencestandard for seeking liability protection under CERCLA through objectives and performancestandards.

• ASTM revised its Standard E-1527-05 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process to satisfy the AAI rule.

6363

All Appropriate Inquiry Rule (1)

Provided property owners with three avenues of CERCLA liability protection:

1. Innocent landowner defense (traditional)

2. Contiguous property owner protection(protects from off-site mitigation)

3. Bone fide prospective purchaser(first ever protection for an owner of a site with known contamination at the time of purchase)

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All Appropriate Inquiry Rule (2)

The AAI rule provides the details and broadens thescope of environmental inquiry compared to

traditional Phase I ESAs.

• Conduct interviews with a wider range of individuals with knowledge of property, including former owners and operators of property and, in certain circumstances, owners and occupants of nearby properties

• Undertake a more thorough visual inspection of properties adjoining the property

• Review a broader array of governmental records

• Draft a report that expressly acknowledges areas of uncertainty that may have an effect on the environmental professional’s conclusions

6565

All Appropriate Inquiry Rule (3)

Other Elements

• Established professional qualificationsfor environmental consultants

• Defined a shelf life (180 days)

• Defined owner’s post-purchase obligations over property ownership

• Must consider institutional controls or activity use limitations

(More discussion later.)

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Institutional andEngineering Controls

Institutional controls (IC) or sometimes referred to as activity use limitations (AULs) are non-engineered instruments (e.g., administrative and legal controls to limit human exposure to contamination and protect the integrity of a remedy by limiting land or resource use. For example, prohibiting the drilling of wells into contaminated ground water.

Engineering controls (EC) are engineered controls designed with the same intent as the institutional controls. For example, paving over contaminated soil.

6767

All AppropriateInquiry Rule (4)

If property is located in a state that maintains a publicly available list or registry of ICs or ECs, must search for these records

CERCLA liability protection may be forfeited if IC or EC are not identified and adhered to over course of property ownership (key post purchase “continuing obligation”)

6868

Conducting Phase I AAIs (1)

Expanded Interviews

• Current and past owners and site operators

• Neighboring owners and operators

Expanded Historical Period

• Back to first development or use (former standard required historical research only to 1940

Expanded Records Review

• Use limitations, corrective actions (must conduct searches for environmental cleanup liens, deed restrictions, or restrictive covenants)

• Federal, State, Tribal, Local

Database Search Radii

6969

Conducting Phase I AAIs (2)

• Identify commonly known or reasonably ascertainable information

• Evaluate degree of obviousness or likely presence of property contamination

• Relationship of the purchase price to fair market value of the property (if property was not contaminated)

• Conducted by an environmental professional

Individuals who are not environmental professionals qualified may still participate in the AAI.. They must work under the supervision or responsible charge of an environmental professional

Environmental profession requirements

Current professional engineer or professional geologist and 3 years experience; or

Licensed by government and 3 years experience; or

BS in engineering, environmental science or earth science and 5 years experience.

7070

Conducting Phase I AAIs (3)

Report Requirements

Statements required to be attached to report:

• Environmental professional qualifications (resumes,past relevant experience, proof of qualifications)

• Prepared in accordance with federal regulation

Opinion of releases or threatened releases

• Identification of data gaps preventing full evaluation (For example, if a environmental professional is unable to locate the previous landowner for an interview, it must be listedas a data gap and explain

• Must be conducted within 1 year of purchase date(6 month update)

7171

Shared:

Consider “commonly known” information

Consider “degree of obviousness of contamination”

User or environmental professional:

Search for environmental cleanup liensConsider “specialized knowledge”Consider relationship of purchase price to fair market value of property, if not contaminated

Inquiry by environmental professional must include:

Visual inspections Interviews Reviews of historical sources Reviews of government

records

AAI Components

7272

All Appropriate Inquiry

For more information about the AAI regulation

including the rule, fact sheets and additional

materials, visit the EPA Office of Brownfield's

Cleanup and Redevelopment Website:

http://www.epa.gov/brownfields/regneg.htm

7373

Phase I ESA Guidance (1)

ASTM developed the E1527-05 standard to:• Define good commercial and customary

practices for conducting Phase I ESAs

• To permit a user to satisfy the requirements to qualify for one of the liability protections underthe AAI rule

• To evaluate business risks

• To identify Recognized Environmental Conditions (RECs)

Note: The ASTM standard is a tool and is not a specific requirement to satisfy AAI requirements. However, it is highly recommended.

For more information about ASTM International go to: http://www.astm.org

7474

Phase I ESA Guidance (2)

Recognized Environmental Conditions (RECs):

• Presence or likely presence of a hazardous substance or petroleum products,

• Under conditions that indicate an existing release,a past release, or a material threat of a release,Into structures on the property or into the ground, groundwater, or surface water.

Does not include de minimis conditions that do not present a risk of harm to public

health or environment and that would not be subject of an enforcement action.

de minimis ≠ REC

7575

Phase I ESA Components:Records Review (Session Objectives)

“The purpose of the records review is to obtain and review records that will identify historical property uses

which could constitute a liability.”

The records review should provide an in-depth understanding of the site history, knowledgeof a range of possibilities with respect to contamination, and documentable factswith respect to actual contamination.

7676

Phase I ESA Components

Records Review

Visual Inspection

Interviews

Report

7777

Exercise No. 6The area is zoned light industrial.

The neighborhood properties include a service station

(unknown prior uses, if any) to the north. An oilfield

equipment manufacturer (formerly a rail yard) to the east.

A 60-year old railroad line (unknown prior uses, if any)

to the south. A wood treatment facility (formerly a

galvanizing plant) to the west. Currently, the subject

property is utilized as a warehouse. Formerly, it was an

electroplating shop and prior to that, it was used for

transformer repair and assembly.

7878

Phase I ESA Components: Records Review

(“Rules” for Records Review)

Information must be reasonably ascertainable

Research must go beyond property border

Environmental professionals and Phase I ESA

users of federal/state records are not

responsible for the accuracy or completeness of records

Required only to use standard sources of information

7979

Phase I ESA Components: Records Review

(Reasonably Ascertainable Records)

Must be publicly available

Accessible in a reasonable time and at a reasonable cost• Standard, within 20 calendar days of information

request

• Cost should be only for retrieving and duplicating

Must be practically reviewable• Reviewable for limited geographic area

• Subject to large database limitation

• Adequate address information to be located on a map

8080

Phase I ESA Components: Records Review

(Government Environmental Records)

Standard federal and state records: Usually, purchased from commercial sources for a nominal fee. Reliability/quality highly variable.

Additional sources are discretionary on environmental professional’s judgment: Often, corridor studies require modification.

Standardized search distancesReducing search distances are discretionary, but not allowed for the following records databases:• NPL• RCRA Treatment Storage and Disposal (TSD)• TSD• Emergency Response Notification System (ERNS)

8181

Phase I ESA Components: Records Review

(Standard Federal Databases)Database Search Distance

NPL 1.0 mile CERCLIS 0.5 miles* CERCLIS – NFRAP Subject and

Adjoining Property RCRA CORRACTS TSDs 1.0 mile Non-CORRACTS TSDs 0.5 miles RCRA Generators Subject and

Adjoining Property*ERNS Subject Property

* May be reduced at the discretion of environmental professional

8282

Phase I ESA Components: Records Review (National Priority List [NPL])

NPL database is a subset of CERCLIS and identifies sites for priority cleanup under the Superfund program.

Database source: Environmental Protection Agency

Approximately 1,450 sites in the United States

High level of risk if near subject property

Search distance: 1.0 mile

Some NPL sites have been delisted

8383

Phase I ESA Components: Records Review (Comprehensive Environmental Response, Compensation

and Liability Information System [CERCLIS] list)

Database containing potentially hazardous waste sites reported to EPA by states, municipalities, private companies and private persons.

These sites are either proposed to or on the NPL (e.g., Superfund investigation sites)

Database source: Environmental Protection Agency

Approximately 40,000 sites in the United States

Search distance: 0.5 miles

8484

Phase I ESA Components: Records Review (CERCLIS -

NFRAP [No Further Remedial Action Planned])

CERCLIS-NFRAP sites include:

• Sites where no contamination was found froman initial investigation; or

• Contamination was removed quickly without the need for the site to be placed on the NPL; or

• Contamination was not serious enough to require Federal Superfund Action or NPL consideration

Database source: Environmental Protection Agency

Search distance: Subject and adjoining property

85

Phase I ESA Components: Records Review (RCRA TSD Facilities)

Resource Conservation and Recovery Act Treatment, Storage and Disposal facilities

Regulated hazardous waste treatment facilities

Database source: EPA (RCRIS database)

Approximately 6,800 facilities in the United States

Over half of the TSD sites are in violation of RCRA

CORRACTS: Corrective Action Report identifieshazardous waste sites with RCRA corrective action

Search distance: 1.0 mile for CORRACTS

8686

Phase I ESA Components: Records Review (RCRA Generator)

Businesses that generate hazardous wasteLarge Quantity Generators (LQG): >1,000 kg/month = >2,200 lbs/month>1 kg acute hazardous waste

Small Quantity Generators (SQG): >100 kg/month, but <1,000 kg/month

Conditionally Exempt SQG (CESQG): <100 kg/month and <1 kg acute

Approximately 430,000 generators in the United States~20% are LQG; ~50% are SQG; ~30% are CESQG

Search distance: Subject and adjoining property

87

Phase I ESA Components: Records Review (Emergency Response Notification System [ERNS])

Accidental releases and spills database

Collected from federal agencies

Large and small spills alike (database does not differentiate)

Weak address and location information

Database source: National Response Center,United States Coast Guard

Search distance: Subject property only

88

Phase I ESA Components: Records Review (Standard State Databases)

Database Search Distance

State Priority List (SPL) 1.0 mile*State “CERCLIS” 0.5 miles*Landfills 0.5 miles*Leaking Underground Storage Tank (LUST) 0.5 miles*Underground Storage Tank (UST) Subject and Adjoining

Property*

* May be reduced at the discretion of environmental professional

89

Phase I ESA Components: Records Review (State Priorities List [SPL])

State Superfund sites

Database source: State specific environmental agency that maintains listing

High level of risk if near subject property

Search distance: 1.0 mile

90

Phase I ESA Components: Records Review (State “CERCLIS” List)

State investigation sites

Each state has different program to manage sites that have been reported to the state environmental agency

• Voluntary Cleanup Program• State Brownfield's Program

Level of risk can be highly variable (e.g., a site could be free of contaminants, a remediated site, small or large spill, a highly contaminated Superfund site)

Search distance: 0.5 miles

91

Phase I ESA Components: Records Review (Registered Underground Storage Tanks [USTs])

All states require a UST registration and publish a listing of all registered USTs

Some USTs also appear on the state leaking underground storage tank (LUST) list

Risk of a UST site is based on:Age of USTType of USTCompliance of UST owner

Search distance: Subject and adjoining property

Potential problem, the UST listing address may not reflect the actual location of the UST

92

Phase I ESA Components: Records Review (Leaking Underground Storage Tanks [LUSTs])

States maintain a LUST program to remediate sites

Some LUSTs also appear on the state cleanup list

High level of risk for subject property if LUST is in vicinity

Search distance: 0.5 miles

9393

Phase I ESA Components: Records Review (State Landfill Facilities)

Solid waste disposal sites for active and inactive landfills

Typically found in RCRIS database,but state environmental agency responsible for RCRA program has listing of commercial recycling facilities and facilities permitted or authorized (interim status) TSDF

High level of risk if near subject property

Search distance: 0.5 miles

94

Phase I ESA Components: Records Review (Activity Use Limitations [AULs])

• Restrictions on property use normally associated with risk assessment and justification to leave contamination on subject property

• Can be in the form of institutional controls, land use restrictions or other

• Sometimes recorded and filed with deed records; other times referenced in agreement with regulatory agencies

• Inconsistent and sometimes difficult to locate, very important information to know

9595

Phase I ESA Components: Records Review (Maps)

Aerial photographs (show tanks, surface stains, lack of vegetation, drums)

Fire insurance (Sanborn maps)

United States Geological Survey (USGS) Topographic

Soil Surveys

Geological

Hydro geological

Floodplain

9696

Phase I ESA Components: Records Review (Local Records)

Health Department

Fire Department

Planning, Zoning and Building Permit Department

Pollution Control Agency

Water Quality Agency

Utility Companies

Land title records (in addition, must use one other source)

Street directories

Property tax files

9797

Exercise No. 7

The following series of PowerPoint slides shows a property’s changes over time. As the slides are shown participants should write down or “call out” possible environmental issues as they come up.

98

Sanborn Map

Legend

Property No. 1

99

1911 Sanborn Map

Subject property appears as a vacant lot near downtown area adjacent to a railroad spur.

Property No. 1

100

Property No. 1

1915 Sanborn Map

Subject property still appears as a vacant lot. However, the railroad spur has been removed.

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Property No. 1

1939 Sanborn Map

Now, subject property appears as the “Scotch Oil Company” with onsite bulk oil tanks.

102

Property No. 11962 Sanborn Map

Now, subject property is listed as “Nelson Electric Manufacturing Company” and is bounded on the northeast by a foundry.

103

Property No. 2

1950 Aerial Photo

Subject property appears as a rural residential property bordered on the north by an orchard/nursery and to the south by wooded area.

104

Property No. 2

1972 Aerial Photo

Subject property now vacant. No evidence of orchard/nursery. Structurally improved commercial property north of site and possible gas station west of site.

Residential subdivision south of site.

105

Property No. 21992 Aerial Photo

Commercial properties along northern edge of site.

Residential development south and east of site.

106

Property No. 2

2005 Aerial Photo

Subject property now appears to be a commercial

building in an apparent business park.

Gasoline station west of site.

107

Subject property history indicates drilling, oil production, chemical and other manufacturing. FDIC, why? City, why?

Property No. 3

108

Phase I ESA Components: Visual Inspection(Session Objectives)

“The purpose of the visual site inspection is to observe situations which could constitute a liability in connection

with the subject and/or adjoining properties.”

A thorough investigation of the grounds and buildings to observe conditions and activities which may have resulted in contamination.

Gather information on the surrounding properties and how they may affect the environmental conditions.

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Phase I ESA Components

Records Review

Visual Inspection

Interviews

Report

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Exercise No. 8

The following series of PowerPoint slides show properties with possible environmental issues. As the slides are shown participants should write down or “call out” possible environmental issues as they come up.

111

Unmarked containers, poor condition, staining on the ground.

What do you see?

112

Overall poor housekeeping. Staining on wall from unknown source. Muriatic acid tank over half full with poor containment. Drums not in containment (unknown contents). Unknown material on surface with staining.

What do you see?

113

What is this? Underground tank? Monitor well? Product pipeline? Is it capped?

What do you see?

114

What do you see?

Batteries, in various

condition.

115

What do you see?Large areaof distressed vegetation from pipeline (?) release.

Distressed vegetation in a straight line, indicating unnatural cause. (Actually, it is a track for irrigation system.)

116

What do you see?Seemingly innocent shed, correct?

The shed houses remediation system controls.

117

Old transformers possibly containing PCBs.

Unlabeled, bulging drums.

What do you see?

118118

What do you see?

Electric transmission line. Concerns?

Human-made “berm”. Why is it there?

What’s beneath it?

119

What do you see?

120

What do you see?

Underground storage tank (USTs) fill caps.

Former gasoline station.

121

What do you see?

Fuel dispensing operation.

122

What do you see?

Suspect friable asbestos

123

What do you see?

124

What do you see?

Non Scope Consideration

125

Phase I ESA Components: Visual Inspection(Obtain Permission)

Must gain legal access to the property

Normally provided by seller

Many times coordinated with other service providers

Can be sensitive, especially with unwilling seller or when transaction is confidential

In corridor situations, may involve many landowners

126126

Phase I ESA Components: Visual Inspection(Environmental Professional’s Tasks) (1)

Observe visual signs of contamination and uncover evidence of potential liabilities and/or contamination from past and current operations and/or from offsite activities.

Visual observation: Identify conditions onsite conditions and on adjacent property. Take photographs and note physical locations (Global Positioning System [GPS] or document on a site map)

Olfactory observation: Use sense of smell to identify foul/noxious odors and note physical location

Remember REC definition under ASTM

127

Phase I ESA Components: Visual Inspection(Environmental Professional's Tasks) (2)

• An attempt to inspect the entire subject property should be made (the ASTM’s design is to visit the property only once)• All buildings should be inspected externally and internally (if possible)• When not feasible to investigate the entire property, minimum coverage should include:

the perimeterall surface water routes (including dry creek beds)all roads (paved and unpaved)external and internal of structures and buildingsall areas that are reasonably accessible

• When assessing adjoining properties and where access is not granted consider aerial photographs or surveillance (e.g., public roads, elevated vantage points and along the perimeter.

128

Phase I ESA Components: Visual Inspection (Items of Concern)

• Potable water sources• Chemical storage areas, maintenance or shop areas • Sumps or storm drains • Oil/gas tanks, disposal tanks, drums and/or transformers• Water bodies and presence of discharges (e.g., discoloration or

sheen)• Areas of stressed or dead vegetation, stained soil or pavement• Indications of liquid or solid waste dumping or disposal• Indications of above and underground storage tanks• Evidence of wells or septic tanks• Abnormal odors• Presence of unnatural fill material or soil grading• Presence of special resources on or near the property• Indications of environmental and/or hazardous conditions

129

Phase I ESA Components: Visual Inspection(Items to Remember)

• Camera

• Field book or Personal Data Assistant (PDA) • Phase I ESA checklist

• Clipboard

• Global positioning system (GPS)

• Maps and site drawings

• Cell phone• Appropriate attire (e.g., boots, jeans, long-sleeved shirt)

• Water bottle, insect repellent, machete

• Sampling supplies (be prepared from a health and safety standpoint)

130

Phase I ESA Components: Interviews(Session Objectives)

“The purpose of interviews is to obtain information indicating potential environmental problems in

connection with the property.”

Interviews are important to obtain unrecorded information concerning the historical land use and activities associated with the subject property. To collect information about hazardous substances used at the site or past releases/spills that were never reported.

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Phase I ESA Components

Records Review

Visual Inspection

Interviews

Report

132

Exercise No. 10

Develop a list of questions to ask past and present owners/occupants/neighbors that will help you determine the site’s history and/or possible environmental issues. Be as specific as possible.

133

Phase I ESA Components: Interviews(Questionnaire)

Although considered by some to be a part of records review, the current owner should be provided with a questionnaire as a part of the interview process.

The questionnaire asks for information such as:• Past/current operation/practices• Data that could be a potential environmental liability

Usually, the questionnaire becomes part of the report to document and supplement information related to the condition and history of the property.

134

Phase I ESA Components: Interviews(Who to interview?)

ASTM’s Phase I standard requires an environmental professional to conduct the interviews with the current owner and/or occupants of the subject property and a staff member from at least one of the following local governmental agencies:

• Fire department • Health agency • Other agency having jurisdiction over hazardous waste disposal or other environmental matters

If locatable, past owners and neighbors should be interviewed as well

Commercial occupants create complications (e.g., scheduling with multiple parties, etc.)

135

Exercise No. 11

Compare the list of questions developed in Exercise No. 10 with the “Phase I ESA Interview Questionnaire” questions in the Participant Manual pages 21-26.

136

Phase I ESA Components: Report(Session Objectives)

“To summarize the findings of the records review, historical use research, visual site inspection and interviews associated with the subject property.”

If an issue is identified, ASTM and AAI do not require that recommendations be made for a Phase II. However, many times, users of the report need them.

137

Phase I ESA Components

Records Review

Visual Inspection

Interviews

Report

138

Exercise No. 12

Compare the sample Phase I Tables of Contents in the Participant Manual, Pages 28 through 33. Which one does your group prefer? Why?

139

Phase I ESA Components: Report(Report Requirements)

List and document all findings discovered from the records review, historical property use research, visual site inspection and interviews

For any issue identified, address the “potential impact or risk of hazardous substance or petroleum product contamination on and/or around the subject property”

Describe deviations from ASTM standard or from AAI guidance

ASTM has a recommended report format.

Data gaps are a significant part and change in requirements by AAI. Data gaps must be identified in the report. However, analysis of data gaps is left to the user.

Recommendations are not required but often preferred. Can be included in a cover letter.

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Phase I ESA Components: Report(ASTM Report Format)

141141

Exercise No. 13

Please look at the Phase I ESA report issue assigned to your group and with your group decide if the issue is adequately addressed. If yes, why? If no, what do you think the author should have included?

142

Is the Phase I ESA report issue adequately addressed? If yes, why? If no, what do you think the author should have included?

Site Observation DetailElectrical Transformers/PCBs

Pad or Pole Mounted Transformers and/or Capacitors

Seven (7) pad-mounted transformers were observed at the assessment site. Transformers of this type frequently contain dielectric fluid that may contain PCBs. They are sometimes owned by the public utility

serving the area (Southwest Electrical Power Company). Contamination resulting from leaking transformers is the

responsibility of the transformer owner. Evidence of minor leakage or stains was observed in the vicinity of these transformers.

Issue No. 1

143

Issue No. 2Is the Phase I ESA report issue adequately addressed? If yes, why? If no, what do you think the author should have included?

Historical Use Information on the Property

Limited aerial photographs were available for the assessment site. Seven (7) historical aerial photographs of the site and surrounding area were reviewed. The photographs were reviewed for indications of past use, to assess the environmental condition of the property, if possible, and to chronicle the development of the property and surrounding area. The photographs were reviewed at the County Natural Resource Conservation Service. The dates of the aerial photographs were 1941, 1951, 1963, 1970, 1979, 1991 and 2002.

144

Issue No. 3

Is the Phase I ESA report issue adequately addressed? If yes, why? If no, what do you think the author should have included?

Leaking Underground Storage Tanks (LUST) List

The State UST Regulatory Body (SURB) maintains an inventory of known leaking underground storage tank (LUST) sites located within the state. A list of all LUST cases reported within a one half (½) mile of the site is provided in Exhibit C.

The assessment site was not listed as LUST site. .....

145

Issue No. 4Is the Phase I ESA report issue adequately addressed? If yes, why? If no, what do you think the author should have included?

ERNS List

The EPA Emergency Response Notification System (ERNS) is the national database used to collect information on reported CERCLA hazardous substance releases or spills of oil or hazardous substances beyond the acceptable limits, as maintained by the National Response Center. A search of the database records as of July 15, 2002, revealed that one ERNS incident occurred on the subject property. According to the EDR report a fuel tanker truck overturned in the facility parking area releasing approximately 300 gallons of diesel fuel into the unpaved areas along the eastern border of the site. No additional ERNS incidents were reported within a one half (½) mile radius of the assessment site.

146146

Phase I ESA Components

Records Review

Visual Inspection

Interviews

Report

147147

Non-Scope Considerations

Working individually, please take just a minute to decide which, if any, of the following items you think should be included in a Phase I ESA.

148148

Exercise No. 14

149

Non-Scope Considerations(Issues not addressed by ASTM 1527 and AAI)

Mold inspections

Endangered species

Wetlands determinations

Health and safety surveys

Asbestos

High voltage power lines

Lead-based paint

Lead in drinking water Radon air sampling

Regulatory compliance issues

In-door air quality Cultural-historical

resources Industrial hygiene

The following are commonly requested assessments that are not covered in either the

ASTM standards not under the AAI rule.

150

Non-Scope Considerations(Issues not addressed by ASTM 1527 and AAI)

Asbestos (1)

When requested, asbestos-containing materials (ACMs) should be evaluated for all buildings constructed prior to 1987.

Requires a certified professional for investigation and abatement.

Health effects include asbestosis (lung tissue scarring), mesothelioma and lung cancer.

Occupational Safety and HealthAdministration (OSHA) PermissibleExposure Level (PEL) =

0.1 fibers/cubic cm.

151151

Non-Scope Considerations(Issues not addressed by ASTM 1527 and AAI)

Asbestos (2)

Pipe insulation Tile backing Old gasket

Plaster ceiling Roof insulation Roofing/siding

152152

Non-Scope Considerations(Issues not addressed by ASTM 1527 and AAI) Mold

Approximately 70,000 species of fungi (molds, yeasts and mildews) have been identified.

Nearly all fungi can cause allergies. Approximately 100 species are considered to be pathogenic.

Molds grow in indoor and outdoor environments. Given the right conditions, molds can grow exponentially.

153153

Non-Scope Considerations(Issues not addressed by ASTM 1527 and AAI)

Lead-based Paint

Over 80% of homes in the U.S. built before 1978 contain lead-based paint. Residential, public, commercial and industrial structures can all contain lead-based paint.

Lead exposure can result in serious health effects, especially in young children, including brain/organ damage, abnormal fetal development and reduced intelligence and behavioral problems.

The most common pathways for human exposure are breathing/swallowing leaddust or ingestion of paint chips.

154154

Non-Scope Considerations(Issues not addressed by ASTM 1527 and AAI)

RadonColorless, odorless radioactive gas that occurs naturally. It is a product of the natural radioactive decay of uranium found as a trace element in most rocks, soil and water.

Long-term exposure to radon can cause lung cancer and according to EPA, radon is the number one causeof lung cancer among non-smokers.

EPA Action Level = 4 picocuries per liter (pCi/L)Average Indoor Radon Level = 1.3 pCi/L Average Outdoor Radon Level = 0.4 pCi/L

155155

Non-Scope Considerations(Issues not addressed by ASTM 1527 and AAI)

Wetlands

Wetlands are particularly sensitiveto releases of contaminants.

Significant regulatory constraints for property owners who propose to construct near or through jurisdictional wetlands.

Wetlands include swamps, marches,bogs, peatlands, wet meadows, seasonal basins and prairie potholes. BUT some areas can be classified as wetlands and not exhibit some of the visible signs of typical wetlands.

156156

Non-Scope Considerations(Issues not addressed by ASTM 1527 and AAI)

Cultural-historical Resources

• Pre-historical• Historical• Tribal/Native American• Federal, state, tribal and local requirements

157157

Non-Scope Considerations(National Environmental Policy Act)

Requires the consideration of environmental impacts forany proposed construction project falling under federal jurisdiction.

Projects crossing state lines (e.g., interstate pipelines), projects receiving federal funds or projects that require a federal license.

Environmental issues include wetlands, wilderness areas, flood plains, threatened and endangered species, cultural resources, historical sites, noise and aesthetic issues and others.

A project halted due to a NEPA issue could result in a financial and public relations problem for the borrowerand possibly the lender.

158158

Exercise No. 15

Please take a few minutes to read the four scenarios and recommend any items you would like see added to the Phase I ESA scope.

159

Scenario No. 1What items would you recommend for inclusion in the Phase I ESA scope.

A proposed thirty-six mile long highway extends through undeveloped and rurally developed property twelve bridges required approximately eight miles of deforestation required (100’ right of way width) plug and abandon ten electric powered oil/gas wells remove four existing structures structure nos. 1 and 2: 1970s era, structure no. 3: 1920s era, structure no. 4: 1890s era.

Scope addition recommendations.

160

Scenario No. 2

What items would you recommend for inclusion in the Phase I ESA scope.

An existing office-warehouse building built in 2002 on previously undeveloped 2.5 acre site entire site is improved with building or parking lot.

Scope addition recommendations.

161

Scenario No. 3What items would you recommend for inclusion in the Phase I ESA scope.

An existing commercial building built in the early 1900s in a manufacturing district two story structure (first story partially below grade) sump located in southeast corner of first story north half of the site contains the building and an asphalt parking lot south half of the site is gravel covered historical property uses included: dry cleaners printing photograph development bottle cap Manufacturer floor tile/mastic manufacturer

Scope addition recommendations.

162162

Scenario No. 4

What items would you recommend for inclusion in the Phase I ESA scope.

A 15-acre vacant site. Historical property uses included: livestock grazing shooting range used oilfield pipe storage

Scope addition recommendations.

163

Ordering a Phase I ESA

164

Ordering a Phase I ESA(Who Requests a Phase I ESA?)

Banks Insurance companies Real estate financing companies Industrial companies Law firms Public institutions (e.g., municipalities, schools, universities) Government agencies Landowners Perspective purchasers

Purchasers want to ensure that property they acquire is either free of contamination, or that the contamination can be identified to determine the cost of remediation, and that cost be factored into the selling price.

165165

Ordering a Phase I ESA(Who Can Perform a Phase I ESA?) (1)

Environmental professionals must have sufficient training and experience; possess the ability to develop conclusions and opinions concerning RECs

Non-environmental professionals may gather records

Credentials of the environmental professional should be provided in Phase I ESA report

With the passage of the 2002 “Brownfield's Law”, new education, certification and experience requirements are required with All Appropriate Inquiry legislation.

166166

Ordering a Phase I ESA(Who Can Perform a Phase I ESA?) (2)

167167

Ordering a Phase I ESA(Considerations When Ordering a Phase I ESA)

Non-scope issues (e.g., NEPA, ACM, Lead-based paint, etc.

Whether or not to include recommendations in the report

Should the Phase I ESA’s satisfy AAI requirements or is the Phase I ESA for another purpose (e.g., collecting information to make an informed business decision)?

Specify report format/content to minimize data gaps.

Shop around for consultants. All consultants are not created equally. Seek references. Ask for table of contents or work samples.

168168

Exercise No. 16 (1)

The class is the new proud owner of the site shown on the left. Formerly, it was used for random neighborhood dumping, one “dumper” operated a metal stamping plant. UST’s were removed in the 1970s.

We plan to demolish the existing building and build a new 2 story building with below grade parking.

169169

Exercise No. 16 (2)

We are about to order a Phase I ESA. What issues and concerns do we want the environmental professional to address?

170170

Exercise No. 17 (1)

Unmarked container of concentrated herbicide.

Note leakage.

171171

Exercise No. 17 (2)

Is this drum half full or half empty?

172172

Exercise No. 17 (3)

Poor housekeeping.

Note historic leakage and dirt floor.

173173

Exercise No. 17 (4)

Partially buried drum used to dip fence posts. Contains wood preservatives.

174174

Exercise No. 17 (5)

Above ground tanks with no containment. Note fuel dispenser for UST.

175175

Exercise No. 17 (6)

This is a footprint of a former underground storage tank in which contaminated soil may exist.

176176

Exercise No. 17 (7)

Remote dumping areas.

Note the drum.

177177

Exercise No. 17 (8)

Does your shop look like this?

Who knows what evil lurks in the hearts of men?

178178

Exercise No. 17 (9)

Who knows what lies below the snow.

Always a challenge during winter conditions.

179179

Objectives (1) Now, you are able to...

• Provide an overview of the innocent landowner defense

• Provide an overview of the ASTM International’s Phase I Environmental Site Assessment standards

• Understand the Environmental Protection Agency’s “All Appropriate Inquiry” Rule

180180

Objectives (2) Now, you are able to...

• Understand other environmental due diligence components

• Establish expectations and order due diligence services

• Analyze due diligence reports and weigh their conclusions on proposed projects

181181

Objectives (3) Now, you are able to...

• Explain when an environmental site assessment (ESA) is needed

182182

Thank you!

604-PT – Revision 1 – 04.30.08.USA