Part I: Overview of the New Phase I Environmental Site Assessment Standards

1

• Part I Overview of the New Phase I
  Environmental Site Assessment Standards

2
Overview

• All Appropriate Inquiries (AAI) Final Rule
• New Phase I ESA Standard ASTM E 1527-05

Effective Date November 1, 2006
3
2002 Federal Brownfield Amendments

• The Small Business Liability Relief and
  Brownfields Revitalization Act of 2002
• Innocent landowner defense (amended)
• Contiguous property owner protection
• Bona fide prospective purchaser protection

4
The Brownfields Defenses

• The Innocent Landowner Defense
• Where the release or threatened release of
  hazardous substances occurred before the innocent
  landowner acquired the property.
• The property owner must show they did not know
  and had no reason to know of the contamination
  prior to the purchase.
• To demonstrate they did not/had no reason to
  know, the owner must show that they conducted
  all appropriate inquiries at the time of
  purchase.
• CERCLA 101(35), 107(b)(3)

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The Brownfields Defenses

• The Contiguous Property Owner Protection
• Where contamination on the persons property was
  due solely to migrating contamination from a
  contiguous property.
• This is an exception to the normal rule under
  CERCLA, which holds owners and operators
  liable for contamination on their property.
• Property owners seeking this protection must
  demonstrate that they conducted all appropriate
  inquiries at the time they acquired the
  property.
• CERCLA 107(q)

6
The Brownfields Defenses

• Bona Fide Prospective Purchaser (BFPP)
  Protection
• Where a purchaser who could be considered the
  owner or operator of a facility meets the
  definition of a BFPP
• Disposal of all hazardous materials occurred
  before the person acquired the facility.
• The person conducted all appropriate inquires
  into the previous ownership and uses of the
  facility at the time of acquisition.
• CERCLA 101(40) 107(r)

7
Continuing Obligations

• To maintain liability protection, a person
  qualifying for a brownfields defense must
• Maintain compliance with and not impede the
  efficacy of all land use restrictions and
  institutional controls.
• Provide full cooperation and access to persons
  authorized to conduct response actions.
• Comply with all information requests and
  subpoenas.
• Provide all legally required notices regarding
  releases.
• Take reasonable steps regarding releases of
  hazardous substances.
• Common Elements Reference Sheet, U.S. EPA

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Reasonable Steps

• Reasonable steps under CERCLA with regard to
  releases of hazardous substances include
• Stopping any continuing releases.
• Preventing any threatened future release.
• Preventing or limiting human, environmental, or
  natural resource exposure to earlier hazardous
  substance releases.
• Common Elements Reference Sheet, U.S. EPA
• CERCLA 101, 107

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ASTM E 1527-05s Purpose

• This practice is intended to permit a user to
  satisfy one of the requirements to qualify for
  the innocent landowner, contiguous property
  owner, or bona fide prospective purchaser
  limitations on CERCLA liability.
• ASTM 1.1

10
The AAI Rule and ASTM Require

• Site inspections
• Interviews
• New standard requires interviews of users and,
  for abandoned properties, neighboring property
  owners
• Reviews of historical sources
• New standard requires review of recorded land
  title records
• Reviews of government records
• New standard includes more sources
• Consideration of commonly known information
• New
• Search for environmental cleanup liens
• New
• Consideration of specialized knowledge
• New
• Consideration of relationship of purchase price
  to fair market value of property, if not
  contaminated
• New
• Consideration of degree of obviousness of
  contamination

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For How Long is a Phase I Report Valid?

• Presumed valid if completed 180 days prior to the
  date of acquisition of the property.
• Presumed valid if completed within 1 year prior
  to the date of acquisition of the property if the
  following five items are updated within 180 days
  of the date owner takes title
• Interviews,
• Search for environmental cleanup liens,
• Review of government records,
• Site visit, and
• Declaration/signature by EP.

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For How Long is a Phase I Report Valid?

• A report more than 1 year old must be updated in
  its entirety, i.e. a new Phase I Site Assessment
  must be performed and new report prepared.
• See ASTM 4.6 and 70 Fed. Reg. 66070, 66084
• A report prepared pursuant to ASTM E 1527-00 may
  NOT be updated to meet ASTM E 1527-05.
• See ASTM 4.6
• Any Phase I reports performed for acquisitions
  that may occur after October 31, 2006 should be
  performed pursuant to the new AAI Rule and ASTM E
  1527-05.

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Timing of Phase I Reports

• The Phase I must be completed less than 180 days
  before application submission.
• Phase I reports older than 1 year old may not be
  submitted to DCA, even if updated.
• A Phase I 180 days old or more, but less than 1
  year old, may be submitted to DCA if updated in
  accordance with ASTM.

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Qualifications to Conduct AAI

• An Environmental Professional is defined in the
  AAI rule as
• A person with a PE or PG license AND 3 years
  relevant experience or
• A Baccalaureate (or higher) degree in engineering
  or science AND 5 years relevant experience or
• A license or certification by government agency
  AND 3 years relevant experience or
• 10 years relevant experience

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What is Relevant Experience?

• Environmental Site Assessments, other
  investigations and remediation.
• Involves understanding of surface and subsurface
  environmental conditions.
• Proven experience using professional judgment to
  develop opinions regarding releases or threatened
  releases of hazardous substances.

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Documentation of Qualifications

• The Phase I report must identify the
  qualifications of EP and of person(s) who
  conducted site reconnaissance and interviews.
• The Phase I must also include the declaration
  language from AAI rule that essentially states
• I/We declare that I/We meet definition of EP, and
• I/We developed and performed the AAI in
  conformance with the federal rule.

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Environmental Consultant Signature Pages
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Who Performs the Phase I?

• site visit
• interviews
• research
• report writing
• review of report

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Additions to the Records Review

• Certain new standard federal sources
• Engineering controls and institutional controls
  records search
• Tribal government records search
• Local government records search

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Additional Historical Use Information Sources

• Internet sites
• Community organizations
• Local libraries/historical societies
• Current owners/occupants of neighboring
  properties and
• As many standard historical sources as are
  reasonably ascertainable and likely to provide
  useful information to identify previous uses of
  the property.

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Who is a User of a Phase I?

• User is broadly defined in ASTM as the party
  seeking to use Practice E 1527 to complete an
  environmental site assessment of the property.
• Users can include
• Potential purchasers
• Lenders
• Property managers
• Owners
• Potential tenants

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User Responsibilities

• Review of reasonably ascertainable recorded land
  title records and lien records for environmental
  liens.
• Communication to the EP of any specialized
  knowledge of the user relevant to identifying
  Recognized Environmental Conditions (RECs).
• Communication to the EP of any actual knowledge
  of the user relevant to identifying RECs.
• Investigation into the relationship between the
  actual purchase price of the property and the
  fair market value of the property, if not
  contaminated (if the property is being
  purchased).
• Communication of commonly known or reasonably
  ascertainable information within the local
  community relevant to identifying RECs.
• Communication to the EP of the purpose for which
  the user is requesting the ESA.

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User Interview Format
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Property Valuation

• What does an investigation into the relationship
  between the market value and purchase price of
  the property mean?
• The user (and EP) must compare the purchase price
  of the property to the market value of the
  property.
• If the purchase price is not the same as the
  market value, the user and EP must then consider
  the potential causes of that differential--could
  the differential be due to any environmental
  conditions at the property? Are there other
  explanations?
• The EP must address any differential and its
  causes in the Phase I.

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Property Valuation for DCA Submissions

• The EP must inquire of the seller, broker, or
  real estate professional associated with the
  project as to the market value as compared to the
  purchase price.
• The actual purchase price itself need not be
  included in the report, just whether a
  differential exists between the market value and
  the purchase price.

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Data Gaps

• A data failure has occurred if all reasonably
  ascertainable sources have been reviewed, but
  objectives of the records-review have not been
  met.
• A data gap is when, despite all good faith
  efforts, there remains a lack of or inability to
  obtain information required under the practice.
• A Phase I must give reasons why sources were
  excluded and identify any document data failures.
• EP must determine
• If the data failure represents a significant data
  gap AND
• The impact of a data gap on ability to identify
  RECs.

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What is Reasonably Ascertainable?

• Information that is
• Publicly available
• Obtainable within reasonable time and cost
  constraints
• Practically reviewable
• What does that mean in the real world?

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• Part II Review of the Revised DCA Environmental
  Manual

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Environmental Manual Table of Contents
30

• Section A DCA Specifications Regarding Phase I
  Requirements Within the ASTM Scope

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Reliance for Phase I and Phase II Reports

• The following parties must be listed as users
  of the Phase I Report and interviewed for the
  user interview portion
• Entity that has title or will take title
• Project development partners
• Equity partners for the project
• Any other party meeting the definition of user
  under ASTM.
• Any Phase I or Phase II Report must state that
  DCA and GHFA may rely upon it.

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Environmental Assessment Requirements

• Phase I Format is dictated by the manual, and has
  been made very specific.
• Subsections may not be added.
• Additional appendices may be added.
• A site map conforming to DCA specifications must
  be included.
• The Phase I must conform to ASTM E 1527-05, or
  any updated version.
• Where the DCA regulations are more stringent,
  they are to be considered controlling.

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Phase I Format
34
Purpose of the Phase I

• The EP shall ask the Applicant what the
  Applicants purpose is for having the Phase I
  perfomed and must include the purpose in the
  Report.
• The purpose may be to qualify for one of the
  three Brownfields protections, for bond issuance,
  for tax credits, or for loans.
• The Phase I Report must also state that the
  purpose is to determine whether the property is
  suitable for construction of multi-family housing.

35
Environmental ProfessionalResponsibilities
Qualifications

• The definition of EP for DCA purposes matches
  that of ASTM.
• Resumes for personnel involved in the Phase I
  assessment must be included in the Report.
• The EP is not required to perform the site
  reconnaissance, but must supervise and review the
  Phase I Report.
• The EP must sign the Environmental Consultant
  Signature Page.

36
Comprehensive Historical Review

• The EP must hire a title company or title
  professional to research recorded land title
  records, records of environmental liens, and
  records of activity and use limitations, unless
  these records have already been provided by a
  user.
• The report from the title company or title
  professional must be included in the Report, as
  well as any records discovered for any
  environmental liens or activity and use
  limitations.

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Summary, Conclusions, and Recommendations

• The Phase I must set forth the EPs findings,
  clearly written conclusions, and recommendations.
• The Report must identify and comment upon
• Supporting data and test results.
• Data gaps
• Including the good faith efforts made to gather
  the information that could not be obtained.
• Commonly known and reasonably ascertainable
  information available to the user or to the EP.

38
Professional OpinionPhase I Reports

• The EP must provide an opinion as to
• The existence or non-existence of RECs
• Whether the property has any known or is at risk
  of contamination
• Whether further assessment activities are
  necessary
• Whether AAI was conducted.
• Whether the review of pertinent information in
  Sections 4.0 and 5.0 indicates or does not
  indicate RECs.

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Ways to Address Regulatory Record Sources
(Section 4.1)
40
Ways to Address Regulatory Record Sources
(Section 4.1)
41

• Section B Non-Scope Issues for Phase I Reports

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Issues For Which Requirements Have Not Changed
Significantly

• Lead In Drinking Water
• Phase I must include the most current
  documentation regarding compliance with EPA
  standards.
• Buildings more than 25 years old must be tested.
• PCBs
• Phase I must include documentation regarding
  potential PCB-containing equipment both on-site
  and off-site.
• Photographs
• The photographs must be dated and labeled with a
  description of the view presented
• Other Hazards
• The EP must provide documentation that water and
  sewer services is available to the property (a
  record of a phone call by the EP to the local
  authority or copy of letter sent to the Applicant
  by local authority is sufficient).

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Water Leaks, Mold, Fungi, Microbial Growth

• For multi-family units, the EP must evaluate
  water leaks, mold, fungi, and microbial growth
  for every unit in which the EP also is assessing
  lead based paint, radon, or asbestos.
• The EP must visually examine the following areas
  in the selected units where readily accessible
• Ventilation systems
• Areas behind walls, under floors and above
  ceilings.

44
Radon Gas

• Renovation or use of existing structure
• A radon test must be performed unless an EPA
  approved test has been performed in the lowest
  areas within the last 6 months demonstrating
  levels at or below 4 pci/l.
• New construction
• The Phase I report must indicate that the
  buildings will be constructed in accordance with
  EPA requirements.

45
Asbestos

• An asbestos survey must be performed on all
  buildings scheduled for demolition or renovation.
• The EP must assume that there is ACM in all
  buildings constructed before 1980.
• Representative sampling must be performed, unless
  a comprehensive asbestos survey was performed on
  or after January 1, 1986.
• Friable ACM must be remediated by removal or
  encapsulation.
• An OM Plan must be included for all non-friable
  ACM and/or encapsulated friable ACM.

46
Lead Based Paint

• Where any current or former structure was
  constructed before 1979
• If such structures are not planned for
  demolition, sampling must be performed on the
  interior and exterior of the building.
• If such structures are planned for demolition,
  soil sampling is required, with some exceptions
• Prior to conducting any soil sampling, Applicants
  are encouraged to submit a proposed scope of work
  in the same manner as a proposal for a Phase II.

47
Wetlands

• No project will be accepted for DCA funding or
  tax credits if it disturbs more than 1/10 acre of
  wetlands.
• If wetlands will be filled or impacted and the
  project involves HOME funds or other HUD funding
  sources, the HOME and HUD Environmental
  Questionnaire must demonstrate compliance with
  the wetland management 8-step process.
• This process may be found at 55 Fed. Reg. 396,
  403 (January 4, 1990).

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Wetland Management 8-Step Process

1. Determine whether proposed action is located in a
   wetland.
2. If so, notify the public.
3. Identify and evaluate practicable alternatives to
   construction in the wetland.
4. Identify potential direct and indirect impacts
   associated with the modification of the wetland.
5. Design or modify the proposed action to minimize
   potential effects on the wetland.
6. Reevaluate proposed action to determine whether
   a. It is practicable b. any potential
   alternatives are viable.
7. Publish final notice regarding action in the
   wetland.
8. Implement the proposed action, and fulfill
   continuing responsibility to ensure mitigation
   measures are also implemented.

49
State Waters

• The EP must identify any potential state waters
  and applicable buffer areas and show them on the
  Site Map.
• If a project will disturb any buffer areas, the
  Applicant must apply for, receive and document
  any necessary variances, or the project will not
  be accepted.

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Floodplains/Floodways

• The FEMA map for the property must be included,
  even if the property is not within the 100-year
  floodplain.
• If any buildings will be within the 100-year
  floodplain
• Tax credit rehab projectsthe Phase I must
  include evidence that the lowest existing floor
  is 6 above the floodplain elevation.
• Tax credit new construction--the project will not
  be accepted unless the property will be
  reclassified out of the floodplain prior to
  completion and certain documentation is included.
  
• HOME projects which are in the floodplain require
  additional documentation, including compliance
  with the Floodplain Management 8-Step Process, 24
  C.F.R. 55.20.

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Noise

• The EP must determine if the property is within
• 5 miles of a civil airport
• 15 miles of a military airport
• 1000 feet of a major highway or busy road
  (greater than 10,000 average daily count)
• 3000 feet of a railroad or rail line.
• If so, the EP must complete a noise assessment
  for the property using 10 year projections for
  traffic, aircraft, and railway noise.
• Where not available for traffic noise, estimate
  3 yearly growth to determine the projection.
• Where not available for aircraft or railway
  noise, use currently-available data.

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Major Highway or Busy Road
53
Noise (continued)

• New Construction Projects, Rehabilitation
  Projects, and Tax Credit Allocations
• If the assessment indicates any part of the
  project is over 65 decibels (dB), but less than
  75 dB, the Phase I must
• Include a noise attenuation plan completed in
  accordance with HUD guidelines which demonstrates
  exterior attenuation to below 65 dB and interior
  attenuation to below 45 dB.

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Noise (continued)

• If the assessment indicates any part of the
  project is over 75 dB, the project will NOT be
  accepted by DCA unless
• The project incorporates noise attenuation and
• The project addresses other important public
  policy considerations.
• Where interior noise levels exceed 45 dB,
  projects must include a letter from the project
  architect discussing the sound transmission class
  of construction materials and the estimated
  interior noise level should be included.

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• Section C Requirements for Phase II Reports

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When a Phase II is Recommended in the Phase I
Report

• Must submit a draft or final Phase I report (text
  only), a draft of the Phase II scope of work, and
  a site map no fewer than 60 days before
  Application submission.
• If the Applicant does not do so, DCA may require
  additional actions by the Applicant (e.g. testing
  or remediation).
• DCA will issue its concurrence or ask for
  additional scope items.
• If DCA does not respond by 15 days prior to
  Application submission, the Applicant should
  proceed with the Phase II work.
• DCA may, at its sole discretion, require
  additional actions by the Applicant

57
Phase II Reports

• If the Phase I investigation documents an REC,
  suspected environmental concern, or non-scope
  issue, the Phase II investigation must be
  completed as part of the Application submission.
• The Phase II Scope of Services must be included
  in Appendix E of the Phase I, but the final Phase
  II Report may be submitted separately.
• An EP must supervise, review, and sign the Phase
  II Report using the Environmental Consultant
  Signature Page.

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Professional OpinionPhase II Reports

• The EP must provide an opinion as to
• Whether the property is contaminated.
• Whether any identified contamination is from
  on-site or off-site sources.
• Whether any reporting or cleanup obligations are
  triggered.
• Whether the property is likely to be listed on
  the HSI.

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• Part III Submission Requirements

60
Required Documentation for Phase I Reports

• Environmental Consultant Signature Page (as seen
  above)
• Environmental Certification
• Owner Environmental Questionnaire Disclosure
  Statement
• Property Log and Information Checklist
• HOME and HUD Environmental Questionnaire (where
  required)
• Proof of Insurance
• Letters of Reference for the Consulting Firm

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Environmental Certification
62
Owner Environmental Questionnaire Disclosure
Statement
63
Property Log and Information Checklist
64
HOME and HUD Environmental Questionnaire
65
Insurance

• Insurance coverage amounts are dictated in the
  DCA manual and have changed.
• DCA and GHFA must be named as an additional
  insured on the commercial general liability
  insurance policies.
• Proof of insurance must be included in the Phase
  I Report in Appendix K.

66

• Part IV Common Omissions and Errors

67
Common Omissions

• Report Date (not included on the cover).
• Environmental Certification Form.
• Signature of the EP on the Environmental
  Certification.
• Signature of the Applicant on the Environmental
  Certification.
• Environmental Professionals resume,
  qualifications, letters of reference.
• Proof of insurance in specified amounts GHFA and
  DCA listed on the certificate as a certificate
  holder and as an additional insured for
  commercial general liability policy.
• Owner Environmental Questionnaire Disclosure
  Statement.
• Property Log.
• HOME and HUD Environmental Questionnaire.
• Professional Opinion, conclusions, and
  recommendations in the Executive Summary and in
  Sections 4.0 and 5.0.
• Date of Site Reconnaissance.
• Comprehensive historical review in accordance
  with ASTM requirements and DCA standards.
• Interviews names and titles of interviewees
  documentation of all interviews and attempts to
  interview in the Appendices.

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Common Omissions (cont.)

• Geological investigation.
• Floodplain investigation and map.
• Wetlands investigation, including wetlands maps.
• Location map indicating groundwater flow.
• Discussion of each property identified in the
  environmental regulatory database(s) and
  rationale(s) for determining whether or not each
  property presents an REC to the subject property.
• Photographs dates and description of view
  presented.
• Noise Assessment Report and professional opinion
  (including NAG when noise levels exceed HUD
  limitations).
• Radon site classification for new construction
  Radon testing in buildings for rehabilitation.
• Survey of mold conditions in buildings for
  rehabilitation.
• Lead in Drinking Water documentation.
• Asbestos sampling/survey.
• Lead Based Paint sampling.
• Map locating all sites identified in Regulatory
  Review.

69
Common Errors

• Report Date (outdated).
• Noise Assessment Report and professional opinion
  (not including 10 year traffic projections).
• Use of disclaimer language inconsistent with
  requirements of these Environmental Guidelines.
• Site reconnaissance observations not sufficiently
  discussed.
• Photographs observations and potential
  environmental impacts not sufficiently discussed.
• Not following the DCA format.