ENVIRONMENTAL SITE ASSESSMENT

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ENVIRONMENTAL SITE ASSESSMENT

• DUE DILIGENCE FOR PROPERTY TRANSFERS
• Oklahoma Brownfields Conference
• Dec. 2, 2008
• Ron Jarman, Ph.D.

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TOPICS

• Regulatory Overview
• CERCLA Liability/Liability Protections
• Liability Protection Coverage
• ASTM Phase I ESA
• EPA AAI
• Summary

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TIMELINE OVERVIEW

• 1980s CERCLA / SARA Requiring Due Diligence
• 1990s - ASTM Method E1527 Defines good
  commercial and customary practice for conducting
  ESA.
• 2002 Small Business Liability Relief and
  Brownfields Revitalization Act (SBLRBRA) cites
  ASTM E1527 as the Interim Standard for Conducting
  AAI. Directs EPA to Develop Standards Within
  Legislative Framework.
• 2005 EPA AAI Regulations and ASTM E1527-05
  Standards for Conducting AAI released. Effective
  Nov. 5, 2006.

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CERCLA or SUPERFUND Comprehensive Environmental
Response, Compensation, and Liability Act

• 1980 Response to Love Canal, Valley of the Drums,
  etc.
• Program to Clean Up Abandoned Waste Sites
• National Priority List Development
• Recover Clean Up Cost from Potentially
  Responsible Persons (PRPs)
• Clean Up More Sites

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CERCLA LIABILITY

• Strict Liability Fault is NOT a Prerequisite.
• Joint and Several Liability Deep Pockets Can
  Pay the Entire Clean Up Costs.
• Chain of Title Liability Application
• Provided for Innocent Landowner Defense
• Damages Covered
• Cost of Clean Up
• Third-Party Liability
• Natural Resources Damage

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SARA Superfund Amendments Reauthorization
Act

• Became Law on October 17, 1986
• Further Clarified the Concept of Acquisition
  without Knowledge
• The defendant must have undertaken, at the time
  of acquisition, all appropriate inquiry into the
  previous ownership and uses of the property
  consistent with good commercial or customary
  practices.
• Did not Define All Appropriate Inquiry (AAI)

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INNOCENT LANDOWNER DEFENSE

• Only Real Defense for Owners/ Operators
• User Must Show it had No Reason to Know
• By Doing All Appropriate Inquiry
• At Time of Acquisition
• Consistent with Good Commercial and Customary
  Practice
• ASTM Standard 1527 Developed

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2002 AMENDMENTS TO CERCLASMALL BUSINESS
LIABILITY RELIEF AND BROWNFIELDS REVITALIZATION
ACT

• Signed into Law January 11, 2002
• Title I Small Business Liability Protection Act
• De Micromis Exemption -100 gallons / 200 pounds
• Municipal Solid Waste Exemption
• Title II Brownfields Revitalization and
  Environmental Restoration Act of 2001
• Subtitle A Brownfields Revitalization Funding
• Subtitle B Brownfields Liability Clarification
• Subtitle C State Response Programs

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TITLE IIBROWNFIELDS REVITALIZATION AND
ENVIRONMENTAL RESTORATION ACT

• Subtitle B Brownfields Liability Clarifications
• Contiguous Property Exemption
• Persons that owns land contaminated solely by a
  release from a contiguous, or similarly situated
  property owned by someone else.
• Bona Fide Prospective Purchaser Exemption (BFPP)
• Persons that acquires ownership of a facility
  after January 11, 2002, where all disposal of
  Hazardous Substances occurred before the person
  acquired the facility.
• Maintains Innocent Landowner Liability Provisions
  from SARA

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EPA STANDARDS PRACTICES ALL APPROPRIATE
INQUIRIES

• Brownfields Law Required by EPAs AAI Rule to
  Include
• i) An Inquiry by an Environmental Professional
• ii) Interviews with Past and Present Owners,
  Operators, and Occupants
• iii) Review of Historical Sources Such as Chain
  of title Documents, Aerial Photographs, Building
  Department Records and Land Use Records to
  Determine Previous Uses and Occupancy Since First
  Development.
• iv) Searches for Environmental Clean Up Liens
  Against the Facility that are Filed under
  Federal, State or Local Law.
• v) Review of Federal, State and Local
  Government Records.

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EPA STANDARDS PRACTICESALL APPROPRIATE
INQUIRIES

• Criteria that MUST be Included
• vi) Visual Inspection of the Facility and
  Surrounding Properties.
• vii) Specialized Knowledge or Experience on the
  Part of the Defendant.
• viii) The Relationship of the Purchase Price to
  the Value of the Property, if the Property was
  NOT Contaminated.
• ix) Commonly Known or Reasonably Ascertained
  Information About the Property.
• x) The Degree of Obviousness of the Presence
  or the Likely Presence of Contamination at the
  Property and the Ability to Detect the
  Contamination by Appropriate Investigation.

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PURPOSE OF STANDARDASTM E-1527

• Define Good and Customary ESA Practice
• Identify Recognized Environmental Conditions
• Provide EPs Opinion Regarding Impact
• Allow for EPs Discretion and Judgment
• Incorporate Local Customary Practice

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THE PHASE I ESA DOES NOT

• Include Phase II Sampling and Analysis
• Address Audit Regulatory Compliance
• Provide a Basis for or Estimate Remediation Costs
• AN ESA IS NEVER
• A Guarantee Regarding Impacts - Not Saying Site
  is Clean!
• It is a Risk Elimination Process

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RECOGNIZED ENVIRONMENTAL CONDITIONSREC

• Presence or Likely Presence of Hazardous
  Substance or Petroleum Products
• Condition Indicating a Present, Past or Material
  Threat of a Future Release
• Potential Migration of Hazardous Substances or
  Petroleum Products
• Can Include Legally Compliant Conditions

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HISTORIC RECOGNIZEDENVIRONMENTAL CONDITION

• A Condition that in the Past was a REC
• May or May Not be Considered a REC Currently
• Consider Current Regulatory Status
• EP Shall Provide an Opinion of the Current Impact

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ENVIRONMENTALPROFESSIONALIN RESPONSIBLE
CHARGE

• Definition
• PE or PG and 3 Years Relevant Experience
• OR
• Other Government Issued License or Certification
  to Perform ESAs and 3 Years Relevant Experience
• OR
• BS or Higher in Engineering or Science and 5
  Years Relevant Experience
• OR
• 10 Years Relevant Experience

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USER RESPONSIBILITIES PHASE I

• Inform EP if Liability Protection is Desired
• Inform EP of any Prior Assessment Reports
• Check Title Records for Environmental Liens and
  Activity and Use Limitations
• Provide Chain of Title
• Disclose Specialized Knowledge
• Discuss Purchase Price vs. Market Value
• Answer Interview Questions in Good Faith
• Complete User Questionnaire

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WHO TO INTERVIEW?

• Key Site Managers
• Commercial Occupants
• If 5 or Less, Interview All
• If More than 5
• Interview the Majors
• Include any High Risk Operations
• Residential Occupants Excluded

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INTERVIEWING NEIGHBORS

• If Property is Abandoned with Evidence of
  Unauthorized Uses or Uncontrolled Access,
  Interview at Least One Neighbor
• Abandoned Property Property that can be Assumed
  to be Deserted or an Intent to Relinquish
  Possession or Control can be Inferred from the
  General Disrepair or Lack of Activity Thereon
  such that a Reasonable Person Could Believe that
  there was an Intent on the Part of the Current
  Owner to Surrender Rights to the Property.

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REASONABLY ASCERTAINABLE RECORDS

• Must Be Publicly Available
• Accessible within Reasonable Time and Cost
• Within 20 Calendar Days of Request
• Only Cost of 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

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ASTM REPORT INCLUDES

• Findings Those Matters that are Material to a
  Known or Suspected Environmental Condition
• Opinions Impact of Known or Suspected
  Environmental Conditions on the Property
• Data Gaps Identify Lack of Reasonably
  Ascertainable Information
• Conclusions List RECs
• Opinion Regarding Further Inquiry

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OPINION OR RECOMMENDATION?

• EPA AAI Part 312.31
• The Inquiry of the Environmental Professional
  Should Include an Opinion Regarding Additional
  Appropriate Investigation, if any.
• Should NOT Shall
• Opinion verses Recommendation

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ADDITIONAL INVESTIGATIONS

• The EP Should Provide an Opinion Regarding any
  Indicated Additional Investigation, if any, to
  Detect the Presence of Hazardous Substances or
  Petroleum Products. This Opinion Should only be
  Provided in the Unusual Circumstances when
  Greater Certainty is Required Regarding the
  Identified Recognized Environmental Condition

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ADDITIONAL INVESTIGATIONS

• A Phase I Environmental Site Assessment which
  Includes such as Opinion by the EP Does Not
  Render the Assessment Incomplete. This Opinion
  is not Intended to Constitute a Requirement that
  the EP Include any recommendations for the Phase
  II or other Assessment Activities.

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ENVIRONMENTAL PROFESSIONAL STATEMENT

• I, We declare that, to the Best of my, our
  Professional Knowledge and Belief, I, We meet
  the Definition of Environmental Professional as
  Defined in 312.10 of 40 CFR 312 and
• I, We have the Specific Qualifications Based
  on Education, Training and Experience to Assess
  the Property of the Nature, History and Setting
  of the Subject Property. I, We have Developed
  and Performed the All Appropriate Inquiries in
  General Conformance with the Standards and
  Practices Set Forth in 40 CFR Part 312.

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Summary

• An Appropriate Qualified Environmental
  Professional is Required to Conduct or Supervise
  the AAI Process, and Specifies the Qualifications
  for the Environmental Professional.
• Interviews with Current and Past Property Owners
  are Mandatory if the Site is Vacant then
  Interviews with Adjacent Property Owners are
  Required.
• Performance Standard for Understanding Site
  Development and Regulatory History to Time of
  Development (No Longer Need to Look Back to 1940
  if the Site was not Developed).

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Summary

• Need to Consider Purchase Price to the Fair
  Market Value of the Property.
• On-site Visual Inspection of Property is
  Mandatory
• A Review for any Environmental Clean-up Lien is
  Required.
• Includes Assessment of Public Knowledge and the
  Perception of the Property.
• Any Data Gaps During the Investigation Needs to
  be Detailed in the Report Including How the Lack
  of this Information has Affected the
  Environmental Professionals Ability to Make an
  Informed Opinion on the Condition of the Property.