Presenting a live 90-minute webinar with interactive Q&A ASTM E1527-13: Applying the New Phase I Site Assessment Standard Navigating the Material Changes to Meet All Appropriate Inquiries Requirements and Limit CERCLA Liability WEDNESDAY, FEBRUARY 11, 2015 1pm Eastern 12pm Central 11am Mountain 10am Pacific Today s faculty features: Julie Kilgore, President, Wasatch Environmental, Salt Lake City Lawrence P. Schnapf, Principal, Schnapf LLC, New York The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.
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CLE Webinar February 11, 2015 5
Introductions Larry Schnapf Founder, Schnapf LLC Larry focuses his practice on environmental issues associated with corporate, real estate, and brownfields transactions, including asset-based lending, mezzanine loans, and distressed debt. Larry@SchnapfLaw.com Julie Kilgore President, Wasatch Environmental, Inc. Julie chairs the national ASTM task force responsible for revisions to the ASTM E1527 standard practice and was part of the EPA Federal Advisory Committee that helped to develop the All Appropriate Inquiries rule. JK@wasatch-environmental.com 6
Qualify For Cleanup Liability Protections Negotiate/Allocate Liabilities Satisfy Lender or Insurance Requirements Toxic Torts Brownfield Grantees Tenants Ground Lessors Foreclosing Lenders Tax Foreclosure/Sale Eminent Domain 7
Release Includes disposal Passive migration vs. active disposal Hazardous Substance Facility Response Costs Remedial or Removal Consistency with NCP 8
Current and Former Owners Former at time of disposal Current and Former Operators Control Former at time of disposal Generators Transporters 9
Third Party Innocent Landowner (ILO) Bona Fide Prospective Purchaser (BFPP) Contiguous Property Owner (CPO) 10
Release Solely Caused by TP No direct and indirect contractual relationship ILO Exception to this element Due care Precaution against foreseeable acts or omissions 11
Did not know or have reason to know Exercise appropriate inquiry into past use and ownership Due Care Precautions Continuing Obligations 12
Applies to transactions after January 11,2002 Applies to Purchasers and Tenants Applies to Brownfield and NPL sites 13
Threshold Criteria Conducted AAI Not PRP or affiliated with PRP by: direct or indirect familial relationship contractual or corporate relationship Corporate Reorganization Disposal took place prior to acquisition 14
Continuing Obligations Complied with All Applicable Reporting Requirements Undertake Appropriate Care Cooperate and Provide Access to Persons Performing Response Actions Comply With LUCs Provide Access for Persons Maintaining LUCs Comply with EPA CERCLA Information Requests or Subpoenas 15
Voggenthaler v Maryland Square LLC, 2013 U.S. App. LEXIS 15307 (9th Cir. 7/26/13) Ashley II of Charleston V PCS Nitrogen, 2013 U.S. App. LEXIS 6815 (4th Cir. 4/4/13) 3000 E. Imperial, LLC v Robertshaw Controls, 2010 U.S. Dist. LEXIS 138661 (C.D. Cal. 12/29/10) Saline River Properties v Johnson Controls, 2011 U.S. Dis. Lexis 119516 (E.D. Mi. 10/17/11) 16
AMCAL Multi-Housing v Pacific Clay Prods, 457 F. Supp. 2d 1016 (C.D. Ca. 2006) U.S. v Honeywell, 542 F. Supp. 2d 1188 (E.D. Ca. 2008) Bonnieview Homes Assoc v Woodmont Builders, 655 F. Supp. 2d 473 (D. N.J. 2009) Ford Motor Co v Edgewood Props., 2012 U.S. Dist. LEXIS 125197 (D. N.J. 8/31/12) 17
Owner did not cause, contribute, or consent to release Conduct Appropriate Inquiry Exercise Appropriate Care Cooperate and Provide Access To Persons Performing Cleanups Comply With LUCs Provide Access To Persons Maintaining LUCs 18
Comply with all release reporting requirements Comply with EPA CERCLA Information Requests and Subpoenas Owner not a PRP or affiliated with PRP 19
Became Effective after November 1, 2006 ASTM E1527-13 satisfies AAI ASTM E1528 Transaction Screen Not AAI Non-Governmental or Non-Commercial Purchasers of Residential Property Site Inspection Title Search 20
inquiry by EP ( 312.21); interviews with past and present owners, operators, and occupants ( 312.23); reviews of historical sources since first developed ( 312.24); searches for recorded environmental cleanup liens ( 312.25 User); reviews of governmental records ( 312.26); visual inspections of the site and of adjoining properties ( 312.27); 21
specialized knowledge or experience of defendant ( 312.28-user); relationship of the purchase price to the value of the property if not contaminated( 312.29-user); Commonly known or reasonably ascertainable information( 312.30-user); and obviousness of the presence or likely presence of contamination ( 312.21); 22
AAI completed when release identified No further investigation required Sampling may be conducted to obtain address/explain data gaps May valuable for determining how a landowner may best fulfill his or her post-acquisition Continuing Obligations. Caution: Preamble states: the fact that the all appropriate inquiry standards do not require sampling and analysis does not prevent a court from concluding that, under the circumstances of a particular case, sampling and analysis should have been conducted to meet the degree of obviousness of the presence or likely presence of contamination at the property, and the ability to detect the contamination by appropriate investigation (70 FR 66101) 23
In certain instances, depending upon site-specific circumstances and the totality of the information collected during the all appropriate inquiries prior to the property acquisition, it may be necessary to conduct sampling and analysis, either pre-or postacquisition, to fully understand the conditions at a property, and fully comply with the statutory requirements for the CERCLA liability protections Id. 24
Third Party Defense Secured Credit Exemption UST Sites (unless Brownfield Site) RCRA 7002 Actions RCRA Corrective Actions State Superfund Programs Unless Specifically Incorporated Common Law 25
ASTM Standards have 8-Year shelf life Prior E1527 publications: 1993, 1994, 1997, 2000, 2005 26
ASTM Standards have 8-Year shelf life Prior E1527 publications: 1993, 1994, 1997, 2000, 2005 Action Options No Action let standard sunset upon expiration Ballot to re-approve with no change Reconvene Task Group, draft revision language, ballot revisions 27
More closely aligned with the EPA s All Appropriate Inquiries objective The presence or likely presence of any hazardous substances or petroleum products in, on, or at a property (1) due to a 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 de minimis now a stand-alone definition, but unchanged 28
More closely aligned with the EPA s All Appropriate Inquiries objective The presence or likely presence of any hazardous substances or petroleum products in, on, or at a property (1) due to a 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 de minimis now a stand-alone definition, but unchanged 29
Historical Recognized Environmental Condition definition originally developed pre-2002 before the Bona Fide Prospective Purchaser landowner liability protection/continuing obligations requirements Confusing and commonly misused Conditionally-closed sites were handled at least four different ways Consistency needed 30
Redefined Historical Recognized Environmental Condition Past releases addressed to unrestricted residential use Must consider current regulatory framework (rules change) this is not new, but worded more clearly now HRECs are not RECs Created new Controlled Recognized Environmental Condition term Past releases addressed to non-residential standard, subject to some type of control CRECs are RECs and must be included in the conclusions section of the report 31
Petroleum tank removed in 1997 with NFA letter. No express controls. Residual contamination is known but property use is commercial. Agency files document that approximately 100 cubic yards of contaminated soil remains in place; located 10 to 15 feet deep. Consultant concludes: Based on removal of the UST, analytical results, the regulatory closure, and partial removal of petroleumimpacted soils, the presence of onsite contaminated soils is considered an HREC 32
Petroleum tank removed in 1997 with NFA letter. No express controls. Residual contamination is known but property use is commercial. Agency files document that approximately 100 cubic yards of contaminated soil remains in place; located 10 to 15 feet deep. Consultant concludes: Based on removal of the UST, analytical results, the regulatory closure, and partial removal of petroleumimpacted soils, the presence of onsite contaminated soils is considered an HREC Consultant states If the subject property is redeveloped for residential purposes, a limited subsurface investigation may be warranted to determine the location and handling of contaminated soil that has been left in place at the subject property. 33
Rural mountain community/former mining town Widespread lead and arsenic impacts in soil, entire town subject to soil ordnance Sampling data must demonstrate that impacted soils have been removed and concentrations of lead and arsenic meet unrestricted use levels OR Documentation that at least 18-inches of clean fill is present. HREC, CREC, or REC 34
Rural mountain community/former mining town Widespread lead and arsenic impacts in soil, entire town subject to soil ordnance Sampling data must demonstrate that impacted soils have been removed and concentrations of lead and arsenic meet unrestricted use levels OR Documentation that at least 18-inches of clean fill is present. HREC, CREC, or REC 35
Rural mountain community/former mining town Widespread lead and arsenic impacts in soil, entire town subject to soil ordnance Sampling data must demonstrate that impacted soils have been removed and concentrations of lead and arsenic meet unrestricted use levels OR Documentation that at least 18-inches of clean fill is present. HREC, CREC, or REC 36
Rural mountain community/former mining town Widespread lead and arsenic impacts in soil, entire town subject to soil ordnance Sampling data must demonstrate that impacted soils have been removed and concentrations of lead and arsenic meet unrestricted use levels OR Documentation that at least 18-inches of clean fill is present. HREC, CREC, or REC Again, no deed restriction. Compliance is tracked by address and registered with local agency. 37
TCE release identified, site investigation conducted to delineate extent of impacts, agency notified that release occurred (reporting obligation met). Owner undertakes self-directed cleanup (where allowed) Consultant documents remedial activities and collects confirmatory soil and groundwater samples; residual impacts meet state-accepted commercial/industrial Regional Screening Levels CREC EP must be very clear regarding agency view/regulatory requirements for self-directed cleanups 38
TCE release identified, site investigation conducted to delineate extent of impacts, agency notified that release occurred (reporting obligation met). Owner undertakes self-directed cleanup (where allowed) Consultant documents remedial activities and collects confirmatory soil and groundwater samples; residual impacts meet state-accepted commercial/industrial Regional Screening Levels CREC EP must be very clear regarding agency view/regulatory requirements for self-directed cleanups 39
NFA letter was issued in 1999 for a 500-gallon UST removed from the subject property in 1990. Residual petroleum impacts allowed to remain in place given the property use as a warehouse. Current use of property is mostly office and warehouse, but part of the warehouse has since been converted to small apartments. HREC, CREC, or REC? 40
NFA letter was issued in 1999 for a 500-gallon UST removed from the subject property in 1990. Residual petroleum impacts allowed to remain in place given the property use as a warehouse. Current use of property is mostly office and warehouse, but part of the warehouse has since been converted to small apartments. HREC, CREC, or REC? 41
NFA letter was issued in 1999 for a 500-gallon UST removed from the subject property in 1990. Residual petroleum impacts allowed to remain in place given the property use as a warehouse. Current use of property is mostly office and warehouse, but part of the warehouse has since been converted to small apartments. HREC, CREC, or REC? 42
NFA letter was issued in 1999 for a 500-gallon UST removed from the subject property in 1990. Residual petroleum impacts allowed to remain in place given the property use as a warehouse. Current use of property is mostly office and warehouse, but part of the warehouse has since been converted to small apartments. HREC, CREC, or REC? There is no deed restriction, no formal AUL, no legally enforceable restriction There is an agency closure letter and supporting data appropriate for commercial use. 43
Past oil/gas well sites previously sampled for the parameters required under the oil/gas state program Also sampled for other constituents set by the state's DEQ Results meet the requirements of one program but not the other Neither agency willing to issue a letter saying the results are below human health risk based standards REC or CREC? 44
Past oil/gas well sites previously sampled for the parameters required under the oil/gas state program Also sampled for other constituents set by the state's DEQ Results meet the requirements of one program but not the other Neither agency willing to issue a letter saying the results are below human health risk based standards REC or CREC? If a CREC is a subset of a REC, does it Matter? 45
It is a different thought process for some. Prior Phase I ESAs may have identified a condition as an HREC that would now be a CREC under the new standard. EPs often didn't get it right under the OLD definitions. Consider: Is there anything left behind that requires awareness and management if you dig, repair a sewer line, add on to the building, put in a day care for employees, whatever If not, probably HREC If so, probably CREC If you can t tell, probably a REC until someone finds or collects the data 46
New E1527-13 language: Should be conducted for property and adjoining properties identified on one of the ASTM-specified standard government lists If not conducted, explain why Alternate sources ok A major challenge regarding records review is how to factor in the cost for these reviews Industry conflict between a technical standard that relies on professional judgment and a marketplace that demands low bid Critical issue for the task group to address because... 47
All closures are not created equal CERCLA NFRAP = LUST NFA = VCP COC = NFRAR = No Constituents of Concern Remain 48
An evaluation of Vapor Intrusion is not part of E1527 Vapor Migration is part of the E1527: a pathway that can result in the presence or likely presence of contaminants on the property from on offsite source Not New: E1527-13 and previous versions:... physical setting sources beyond topographic maps shall be sought when bad stuff is likely to migrate to the property... New: E1527-13: migration defined: refers to the movement of hazardous substances or petroleum products in any form, including, for example, solid and liquid at the surface or subsurface, and vapor in the subsurface. 49
A Phase I has already been done for this property I want to buy. Why must I do another Phase I? 50
A Phase I ESA <180 days presumed valid Between 180 days & 1 year update certain components must be updated > One year All Phase I components to be completed Prior report can be used as a reference A Buyer must also satisfy specific user or defendant responsibilities 51
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Phase I ESA conducted in 2013 Historical research of property and adjoining properties included a review of Polk city directories Dry cleaner located next door (and upgradient) from the 1930s through the 1960s Environmental professional concluded no historical activities of concern were identified on or adjoining the subject property 54
Phase I ESA from the 1990s: No RECs identified. Historical research consisted of chain of title report and interview with historical society. Phase I ESA from mid 2000s. No RECs identified. Historical research consisted of high-flight aerials and fire insurance maps. 55
Phase I ESA from the 1990s: No RECs identified. Historical research consisted of chain of title report and interview with historical society. Phase I ESA from mid 2000s. No RECs identified. Historical research consisted of high-flight aerials and fire insurance maps. 56
Phase I ESA from the 1990s: No RECs identified. Historical research consisted of chain of title report and interview with historical society. Phase I ESA from mid 2000s. No RECs identified. Historical research consisted of high-flight aerials and fire insurance maps. 57
Phase I ESA from the 1990s: No RECs identified. Historical research consisted of chain of title report and interview with historical society. Phase I ESA from mid 2000s. No RECs identified. Historical research consisted of high-flight aerials and fire insurance maps. 58
Phase I ESA from the 1990s: No RECs identified. Historical research consisted of chain of title report and interview with historical society. Phase I ESA from mid 2000s. No RECs identified. Historical research consisted of high-flight aerials and fire insurance maps. 59
Phase I ESA from the 1990s: No RECs identified. Historical research consisted of chain of title report and interview with historical society. Phase I ESA from mid 2000s. No RECs identified. Historical research consisted of high-flight aerials and fire insurance maps. 60
Phase I ESA from the 1990s: No RECs identified. Historical research consisted of chain of title report and interview with historical society. Phase I ESA from mid 2000s. No RECs identified. Historical research consisted of high-flight aerials and fire insurance maps. 61
Historical research included review of aerial photographs dated 1984, 1993, 1998, and 2006. The photographs show the site essentially as it currently exists. 62
1984 Historical research included review of aerial photographs dated 1984, 1993, 1998, and 2006. The photographs show the site essentially as it currently exists. 63
1984 Historical research included review of aerial photographs dated 1984, 1993, 1998, and 2006. 1993 The photographs show the site essentially as it currently exists. 64
1984 Historical research included review of aerial photographs dated 1984, 1993, 1998, and 2006. 1993 The photographs show the site essentially as it currently exists. 1998 65
1984 Historical research included review of aerial photographs dated 1984, 1993, 1998, and 2006. 1993 The photographs show the site essentially as it currently exists. 1998 2006 66
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EP only required to identify RECs, CRECs, HRECs and DMCs ( Findings). EP expresses opinion of impact of conditions on Property opinion regarding additional appropriate investigation to detect the presence of hazardous substances or petroleum products only unusual circumstance when greater certainty is required Identify Data Gaps and their significance Not required to provide recommendations Make sure recommendations are implemented 68
Questionnaire is optional. If user does not provide information, EP must determine significance (e.g. significant data gap?) If environmental liens or AULs are only recorded or filed in judicial records, the judicial records must be searched. User should retain title professional. 69
Legal Appendix Clarifies scope of indoor air exclusion New definition of migration refers to movement of hazardous substances or petroleum products in any form, including vapor in the subsurface. References that vapor migration in the subsurface is described in Guide E2600 nothing in this practice should be construed to require use of E2600 standard to achieve AAI Vapor migration just like any other pathway EPA preamble jeopardizes AAI compliance of E1527-05 reports that did not consider VI 70
all appropriate inquires and phase I environmental site assessments must include, within the scope of the investigation, an assessment of the real or potential occurrence of vapor migration and vapor releases on, at, in or to the subject property. EPA notes that both [AAI and E1527-05] already call for the identification of potential vapor releases or vapor migration at a property, to the extent they are indicative of a release or threatened release of hazardous substances. EPA wishes to be clear that, in its view, vapor migration has always been a relevant potential source of release or threatened release that, depending on site-specific conditions, may warrant identification when conducting all appropriate inquiries. Neither the All Appropriate Inquiries Rule nor the ASTM E 1527-05 standard excludes the identification of vapor releases as a possible type of release. 71