Due Diligence April 10, 2018

Transcription

1 Due Diligence April 10, 2018 Elizabeth Limbrick, LSRP New Jersey Institute of Technology (NJIT) Technical Assistance to Brownfields Communities (TAB) Meade Anderson, CPG Virginia Department of Environmental Quality (VADEQ)

2 Acronyms TAB = Technical Assistance to Brownfield Communities ESA = Environmental Site Assessment (Phase I / Phase II) AAI = All Appropriate Inquiry CERCLA = Comprehensive Environmental Response, Compensation, and Liability Act (Superfund) RP / PRP = Responsible Party / Potentially Responsible Party BFPP = Bona Fide Prospective Purchaser REC = Recognized Environmental Condition HREC = Historic REC CREC = Controlled REC 2

3 Overview Take Aways / Objectives Understanding of 1. Due Diligence Investigation Requirements 2. AAI investigation Timing 3. Continuing Obligations CERCLA Liability & AAI ASTM E Phase I ESA Q&A 3

4 The CDFA Brownfields Technical Assistance Program is funded by the U.S. EPA and is intended to provide FREE technical assistance and resources on brownfields redevelopment financing. Learn More! Webinar: May 10, :00PM Eastern Register at cdfabrownfields.org Contact: Blake Williams Financing Toolkit Webinar Series Project Marketplace Project Response Teams CDFA Brownfields Technical Assistance Program

5 Project Response Team Opportunities Available! Communities can receive on-site technical assistance from a team of finance and technical experts and CDFA staff. These visits will offer specific, actionable advice that can transform brownfields into economic assets. Contact: Blake Williams bwilliams@cdfa.net CDFA Brownfields Technical Assistance Program

6 AAI All Appropriate Inquiry All Appropriate Inquiry a specific type of environmental due diligence with a specific set of standards established by EPA Systematic evaluation of a property An ASTM compliant Phase I ESA meets the requirements of AAI (this is the minimum but you may want to do more) Why do you want to do AAI? To determine contamination / other issues that may create liability, remedial obligations, development restrictions, added costs, and added time. To assess potential liability To establish an innocent landowner s defense if environmental contamination if found after the property is purchased To establish a Bona Fide Prospective Purchaser defense Often required by lenders, investors, buyers, insurers, and other stakeholders Using grant funds for an environmental investigation Seller may want to evaluate property prior to selling / Avoid delays and restrictions at time of sale 6

7 Liability under CERCLA (Comprehensive Environmental Response, Compensation and Liability Act (Superfund)) CERCLA when 1 st enacted - property owners were held strictly liable for prior contamination Strict liability: without fault or culpability Joint and Several liability: current and past owners can be held accountable individually or collectively Any owner within a property s chain of title could be held liable for contamination at a property, regardless of whether any particular owner caused the contamination 7

8 2002 Brownfields Amendments to CERCLA Small Business Liability Relief and Brownfields Revitalization Act (aka The BFs Amendment ) Established EPA s Brownfields grant program Established applicability of AAI Amended CERCLA and provided liability protections for certain property owners Innocent landowners Contiguous property owners Bona Fide Prospective Purchasers (BFPP) 8

9 Statutory Requirements for CERCLA Liability Protections BFPP Threshold Criteria: Purchaser is not a responsible party and not affiliated with a responsible party. All disposal of hazardous substances at property occurred before acquisition Conduct All Appropriate Inquiries prior to purchase. 180-days (or 1-Year w/ Update after 180-days) Phase I Environmental Site Assessment (ASTM standards) Comply with Continuing Obligations after purchase 9

10 Continuing Obligations Required following acquisition Comply with land use restrictions Do not impede effectiveness or integrity of institutional controls Take reasonable steps to stop on-going releases Prevent or limit human and environmental exposure to any previous releases Provide cooperation, assistance, and access to property Comply with CERCLA information requests and subpoenas 10

11 Continuing Obligations Not Addressed in AAI Guidance: ASTM E Standard Guide for Identifying and Complying With Continuing Obligations Provides information and suggested procedures for continuing obligations where response actions have already occurred remain ongoing, or may be necessary in the future

12 Some Typical Contaminants Encountered (not all contamination is created equal) (Source: Alan Peterson, USEPA) Chlorinated Solvents (PCE and TCE) PCBs Petroleum Products (USTs, ASTs) Heavy Metals PAHs Asbestos/Lead Paint Pesticides/Herbicides Dry Cleaner Scrap Yards Machine Shops Manufacturing Auto Repair/Auto Body Gas Stations Wood Treatment 12

13 AAI / Phase I ESA Who, What, When? Who can perform AAI? Environmental Professional Professional What? ASTM-Compliant / Educational Phase Relevant I ESA meets Experience the definition of Qualifications AAI When? 180 days (or 1 year with updates for certain sections Licensed interviews, by federal, records state, review, site 3 inspection) years tribe Where? (PE, Real PG, LSRP, Property etc.) (usually commercial): Gas station, BA/BS industrial degree properties, in relevant apartment 5 buildings, years malls, etc. science Why? Evaluate or engineering the property field for potential environmental contamination; assess potential liability; innocent landowner s No defense BA/BS degree 10 years 13

14 What is a Phase I ESA? A Phase I Environmental Site Assessment is: Initial investigation / Nonintrusive A paper / records investigation for a property with a formal report ASTM has established the standards for conducting Phase I ESA. (ASTM E-1527) 14

15 What a Phase I ESA is Not: A Phase I ESA is Not: Intrusive Investigation No Sampling Not a Building Survey Generally does not include (Non-Scope): Asbestos / Lead Based Paint / PCBs in Building Materials / Lead in Drinking Water Mold, Radon Environmental Land Use Constraints (Wetlands, Flooding) / Geotechnical Constraints (unsuitable soils for building; sinkholes) Cultural / Historic Resources Endangered Species Regulatory Compliance (including Health & Safety) Indoor Air Quality* 15

16 What is a Phase I (Continued) The Purpose of a Phase I is to identify Recognized Environmental Conditions (RECs) associated with the site: "the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property: (1) due to any release to the environment; (2) under conditions indicative of a release to the environment; or (3) under conditions that pose a material threat of a future release to the environment. Goals: Document site history Evaluate current and past uses to determine if RECs exist or are likely to exist Evaluate neighboring properties to see if they are potentially contaminating property. 16

17 RECs 17

18 De Minimis Conditions Condition does not represent a threat to human health or the environment; AND Condition would not be subject to enforcement action if brought to the attention of regulatory agency De minimis condition is NOT a REC Judging if a release is a de minimis condition is highly subjective and ultimately up to the EP s interpretation 18

19 Other Recognized Environmental Conditions - HREC Historic REC (HREC) A past release of hazardous substances or petroleum products in connection with the property that has been addressed to the satisfaction of the applicable regulatory authority or meeting unrestricted residential use criteria (e.g., no property use restrictions, AULs, institutional controls, or engineering controls). Before calling the past release an HREC, the EP must determine whether the past release is a REC at the time the Phase I ESA is conducted (e.g., if there has been a change in the regulatory criteria).

20 Other Recognized Environmental Conditions - CREC Controlled REC (CREC) A REC resulting from a past release of hazardous substances or petroleum products that has been addressed to the satisfaction of the applicable regulatory authority (e.g., as evidenced by the issuance of a NFA letter or equivalent, or meeting risk-based criteria established by regulatory authority) Hazardous substances or petroleum products allowed to remain in place subject to the implementation of required controls (e.g., property use restrictions, AULs, institutional controls, or engineering controls) A CREC shall be listed in the Findings Section of the Phase I ESA report, and as a REC in the Conclusions Section of the report.

21 What is a Phase I ESA? Key Phase I Regulatory Requirements Review of Historical sources of information Review of Federal, state, tribal and local government records Visual Inspections Interviews with knowledgeable people Written Report - signed by Environmental Professional 21

22 Additional Key Phase I Regulatory Requirements Users and EP Responsibilities o o o o o Reviews of environmental liens and activity and use limitations (user responsibility) Relationship between purchase price vs. value of property, if not contaminated (user responsibility) Specialized knowledge (user responsibility) Commonly known and reasonably ascertainable information (user & EP responsibility) Degree of obviousness of contamination and ability to detect by additional appropriate investigation (user & EP responsibility) 22

23 Presence or likely presence of HS/PP in, on, or at the Property Phase-I ESA Process Is the HS/PP under conditions indicative of a release? Yes Does the release present a threat to human health or the environment (would it be the subject of enforcement action)? Yes Has the release been addressed? Yes No No De minimis No Is there a material threat of a future release? No Yes REC HREC (not a REC) Not a REC Yes Addressed to most stringent cleanup criteria (unrestricted) with no restrictions (no AULs) CREC (a REC) No Slide from Brownfields 2017 Presentation by ASTM

24 ASTM E Phase I ESA Report - Format Executive Summary Introduction Site Description User Provided Information Records Review Site Reconnaissance Interviews Findings Identifies all known or suspected RECs, Controlled RECs, historical RECs and de minimis conditions

25 ASTM E Report Format Opinion Whether inquiry has identified conditions indicative of releases or threatened releases Data Gaps Additional appropriate investigations Conclusions Specific statement regarding evidence of recognized environmental conditions Deviations Additional Services References Signature of EP Qualifications of EP Appendices

26 All Appropriate Inquiry (AAI) EPA Office of Inspector General (February 14, 2011) evaluation of 35 Phase I Reports All reports were noncompliant with AAI requirements Is human health and environment threatened at redeveloped Brownfield sites? Landowner or purchaser at risk of incurring CERCLA liability 26 26

27 AAI and Phase I ASTM E Environmental Site Assessment (Phase I ESA) standards are consistent with the AAI requirements and may be used to comply AAI. (E Forestland/ Rural) Checklist /production/files/ /documents/aaireporting-fact-sheet-andchecklist final.pdf 27

28 Going Beyond a Phase I Phase I Preliminary Assessment What environmental issues could we have? (Presence or Likely Presence of RECs) Phase II Site Investigation Qualification: Do we have contamination/environmental issues? Yes or No? Remedial Investigation Quantification: What is the nature and extent of our contamination? How much? 28

29 What if I Find a REC? Opinions for Additional Appropriate Investigation Conclusions: Substantially similar to: We have performed a Phase I Environmental Site Assessment in conformance with the scope and limitations of ASTM Practice E-1527-[ ] of [insert address or legal description], the property. Any exceptions to, or deletions from, this practice are described in Section [ ] of this report. This assessment has revealed no evidence of recognized environmental conditions in connection with the property. or... This assessment has revealed no evidence of recognized environmental conditions in connection with the property except for the following: (list) 29

30 What if I find out the Site Has Contamination? Use the information from the ESA to negotiate the purchase agreement Ask seller to remediate before Buyer could reduce bid price to pay for remediation VRP Program 30

31 Buyer s (Lender s) Perspective to Phase I Higher Risk in Purchasing Lower No Phase I Buyer becomes PRP and assumes all risk Phase I Only Qualifies as BFPP, assumes all continuing obligations and potential risk due to uncertainty if there are RECs Phase I + Phase II Reduces risk with greater understanding of continuing obligations Phase I + Phase II + Cleanup Planning Minimizes risk and begins to approach cost certainty

32 Seller Perspective to Phase I Higher Lower Risk in Selling No Phase I May be desired by seller, but unknown risk for potential liability from 3 rd party lawsuit Phase I Only Helps establish baseline risk for marketing property, and lowers potential risk from 3 rd party lawsuit Phase I + Phase II Further reduces risk to seller and buyer, but may result in reportable concentrations which may require further seller responsibilities Phase I + Phase II + Cleanup Planning Minimizes risk, property value understood, improves decision making and bargaining position

33 What Makes a Good AAI / Phase I Contractor Ethical & Experienced Relationships with regulatory personnel Thorough Review Everything! all available records Interviews Attention to Detail Opinions / Conclusions Follow the ASTM standard Communication Skills Clear / Well Written Reports Responsive / Client Friendly / Timely Client Focused Eyes & Ears Notify you of other things that might be important to your project Efficient Reasonable Costs / Don t nickel and dime 33

34 RFP Considerations for AAI / Phase I Contractor Include in the RFP The completion of Phase I environmental site assessments shall be compliant with the all appropriate inquiry standard as specified by the USEPA. Objectives / Intent / Project Approach Project scope and expected deliverables Description of the site, including maps and diagrams Non-Scope Items Do you want to include potential Phase II s? QAPPs? ABCAs? Reuse Plans? Community Engagement? EPA Reporting Schedule / time constraints for completing the work Required Qualifications & Insurance Information on previous investigations, resources, studies Directions on How to Submit Evaluation Criteria 34

35 Question and Answer CONTACT INFORMATION: Elizabeth Limbrick NJIT TAB Hotline: ( ); Meade Anderson VADEQ

36 Game Time: Is It a REC? Or Not a REC? 36

37 Is it REC? Site is former Tannery New electrical transformers were located on a concrete pad enclosed within a chain-link fence in the southwestern section of the site. Based on their age and the signage, the transformers would not have contained PCB oils. There is no sign of staining. Is it REC? Not a REC, not expected to have caused a release of a haz sub. But what if there were older and were expected to have had PCBs? If no staining probably not a REC? If staining, it is a REC 37

38 Is it REC? Site is former Tannery As of the most recent sampling results, collected in 2014, petroleum concentrations in groundwater around the former UST area exceed corresponding regulatory guidelines. Since no known remediation was conducted, the extent of the petroleum has yet to be defined. Is it REC? Sample ID NJDEP MW -1 MW-2 MW-3 GWQC 7/10/2014 7/10/2014 7/10/2014 Units ug/l ug/l ug/l ug/l MTBE 70 1 U Benzene 1 1 U 1 U 15 Toluene U 1 U 400 Ethylbenzene U 1 U 350 m&p-xylenes U 2 U 1200 o-xylene U 1 U 1300 Naphthalene J 0.6 J 49 REC Compounds exceed criteria known release definitely a REC 38

39 Is it REC? Site is former Tannery Compounds persistently exceeding regulatory guidelines in soil and sediment associated with the lagoons included: bis(2- ethylhexyl)phthalate, acetone, chromium, manganese, mercury, and thallium. Groundwater in this area is reportedly also used as a source of drinking water. Is it REC? Sample ID NJDEP SB1 SB2 SB3 SRS 8/15/2017 8/15/2017 8/15/2017 Units ug/l mg/kg mg/kg mg/kg Acetone 19 1 U Chromium 20 1 U 1 U 15 Mercury U 1 9 Thallium 3 1 U 1 U 5 REC Compounds exceed criteria known release definitely a REC 39

40 Is it REC? Site is former Tannery The former municipal landfill is located 1 mile south southeast of the Subject Property, down-gradient topographically and hydraulically from the Subject Property. An investigation of the landfill concluded a leachate plume had impacted some fracture zones. Is it REC? Probably not a REC too far away and it is down-gradient of the site But what if it was upgradient? Probably not a REC too far away; But if it was ¼ mile upgradient Yes it would be a REC. 40

41 Is it REC? Site is former Tannery Two long shallow floor drains are located in the western portion of the tannery building where the wooden process drums were located. It is suspected this drain was for collecting process liquids that had come in contact with process chemicals. The final discharge location for this structure, however, is unknown. Is it REC? The use of process chemicals is a REC. The floor drain would just be the vehicle for potentially allowing a release to the environment. Need to do an investigation to determine where the final discharge location is, and determine the integrity of the floor drains. Could do a video inspection. If all is good, then the floor drain isn t a REC. 41

42 Is it REC? Site is former Tannery The western portion of the building contains several circular cut window openings that may have contained ventilation fans. It is assumed that these fans may have been used to ventilate the air discharge from the solvent tannery processes to the exterior of the building. This may cause solvents or other airborne wastes to condense and collect on the soils below the ventilation exhaust. Is it REC? Not a REC too many assumptions here, the presence of an architectural feature does not make a REC. A REC is "the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property: due to any release to the environment; under conditions indicative of a release to the environment; or under conditions that pose a material threat of a future release to the environment. 42

43 Is it REC? Site is former Tannery Although a majority of the tanning equipment and supplies are no longer at the facility, some debris remains within the tannery building including several large piles of leather scraps. It is not known if the leather was treated. Is it REC? Not a REC this does not rise to the level of a material threat of a release to the environment; also likely meets the definition of de minimus 43

44 Is it REC? Site is former Tannery A solvent recovery system and still, formerly located in the western part of the building would be an area where solvent use and potential spills could have taken place. It is not known exactly where the system was located, but it may be in the area where an interior sump is labeled on several figures. Is it REC? Historical use of solvents is a REC (however the feature sump isn t actually the REC it the use of hazardous substances under conditions that are indicative of release). 44

45 Is it REC? Site is former Tannery Plywood, 2 x4 s and other miscellaneous items have been improperly dumped and partially buried along a vegetated slope on the north side of the tannery building. Is it REC? Maybe a REC Could go either way C&D debris can removed and properly disposed. Is it expected to have caused a release of a haz sub to the environment 45

46 Removed Slides 46