astm e1527-13: applying the new phase i site assessment...

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

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WEDNESDAY, FEBRUARY 11, 2015

Presenting a live 90-minute webinar with interactive Q&A

Julie Kilgore, President, Wasatch Environmental, Salt Lake City

Lawrence P. Schnapf, Principal, Schnapf LLC, New York

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CLE Webinar

February 11, 2015

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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.

• [email protected]

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.

• [email protected]

Introductions

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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

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Release ◦ Includes “disposal”

◦ Passive migration vs. active disposal

Hazardous Substance

Facility

Response Costs ◦ Remedial or Removal

◦ Consistency with NCP

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Current and Former Owners ◦ Former “at time of disposal”

Current and Former Operators ◦ Control

◦ Former at “time of disposal”

Generators

Transporters

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Third Party

Innocent Landowner (ILO)

Bona Fide Prospective Purchaser (BFPP)

Contiguous Property Owner (CPO)

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Release Solely Caused by TP

No direct and indirect contractual relationship ◦ ILO Exception to this element

Due care

Precaution against foreseeable acts or omissions

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Did not know or have reason to know

Exercise appropriate inquiry into past use and ownership

Due Care

Precautions

Continuing Obligations

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Applies to transactions after January 11,2002

Applies to Purchasers and Tenants

Applies to Brownfield and NPL sites

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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

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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

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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)

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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)

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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

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Comply with all release reporting requirements

Comply with EPA CERCLA Information Requests and Subpoenas

Owner not a PRP or affiliated with PRP

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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

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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);

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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);

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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)

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“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 post-acquisition, to fully understand the conditions at a property, and fully comply with the statutory requirements for the CERCLA liability protections” Id.

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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

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ASTM Standards have 8-Year shelf life

◦ Prior E1527 publications:

1993, 1994, 1997, 2000, 2005

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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

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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

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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

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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

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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

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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 petroleum-impacted soils, the presence of onsite contaminated soils is considered an HREC”

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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 petroleum-impacted 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.”

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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

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OR


HREC, CREC, or REC

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OR


HREC, CREC, or REC




OR


HREC, CREC, or REC

Again, no deed restriction. Compliance is tracked by address and registered with local agency.

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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

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

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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?

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HREC, CREC, or REC?

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HREC, CREC, or REC?




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.

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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?

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?

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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

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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 . . .

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All “closures” are not created equal

CERCLA NFRAP

=

LUST NFA

=

VCP COC

=

NFRAR

=

No Constituents of Concern Remain

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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.

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A Phase I has already been done for this property I want to buy.

Why must I do another Phase I?

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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

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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

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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.

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60



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Historical research included review of aerial photographs dated 1984, 1993, 1998, and 2006.

“The photographs show the site essentially as it currently exists.”

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1984

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1984 1993

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1984 1993

1998 65



1984 1993

1998 2006 66

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

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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.

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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

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“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.”

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