Elizabeth Limbrick, LSRP New Jersey Institute of Technology (NJIT)Technical Assistance to Brownfields Communities (TAB)

Meade Anderson, CPGVirginia Department of Environmental Quality (VADEQ)

Due DiligenceApril 10, 2018

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

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Overview

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Take Aways / Objectives – Understanding of1. Due Diligence Investigation Requirements2. AAI investigation Timing3. Continuing Obligations

• CERCLA Liability & AAI• ASTM E1527-13 – Phase I ESA• Q&A

Webinar Series Project MarketplaceFinancing Toolkit Project Response Teams

CDFA Brownfields Technical Assistance Program — www.cdfabrownfields.org

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, 2018 – 1:00PM Eastern Register at cdfabrownfields.org

Contact:Blake Williamsbwilliams@cdfa.net

CDFA Brownfields Technical Assistance Program — www.cdfabrownfields.org

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.

Project Response Team Opportunities Available!

Contact:Blake Williamsbwilliams@cdfa.net

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)

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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

Liability under CERCLA(Comprehensive Environmental Response,

Compensation and Liability Act (Superfund))

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CERCLA – when 1st 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

2002 Brownfields Amendments to CERCLA

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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)

Statutory Requirements for CERCLA Liability Protections

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• 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

Continuing Obligations

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• 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

Guidance: ASTM E2790-11 “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

Continuing Obligations Not Addressed in AAI

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

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AAI / Phase I ESAWho, What, When?

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• Who can perform AAI? – Environmental Professional• What? ASTM-Compliant Phase I ESA meets the definition of

AAI• When? – 180 days (or 1 year with updates for certain sections

– interviews, records review, site inspection)• Where? Real Property (usually commercial): Gas station,

industrial properties, apartment buildings, malls, etc.• Why? Evaluate the property for potential environmental

contamination; assess potential liability; innocent landowner’s defense

Professional / EducationalQualifications

Relevant Experience

Licensed by federal, state, tribe (PE, PG, LSRP, etc.)

3 years

BA/BS degree in relevant science or engineering field

5 years

No BA/BS degree 10 years

What is a Phase I ESA?A Phase I Environmental Site Assessment is:•Initial investigation / Non-intrusive

•A “paper” / records investigation for a property with a formal report

•ASTM has established the standards for conducting Phase I ESA. (ASTM E-1527)

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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*

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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.

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RECs

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“De Minimis” Conditions

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• 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 minimiscondition is highly subjective and ultimately up to the EP’s interpretation

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).

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.”

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

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Additional Key Phase I Regulatory RequirementsUsers and EP Responsibilitieso Reviews of environmental liens and activity and use

limitations (user responsibility)o Relationship between purchase price vs. value of property, if

not contaminated (user responsibility)o Specialized knowledge (user responsibility)o Commonly known and reasonably ascertainable information

(user & EP responsibility)o Degree of obviousness of contamination and ability to

detect by additional appropriate investigation (user & EP responsibility)

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Phase-I ESA Process

Is the HS/PP under conditions indicative

of a release?

No

Is there a material threat of a future

release?

YesDoes the release present a

threat to human health or the environment (would it be the

subject of enforcement action)?

No

Yes

Addressed to most stringent cleanup criteria (unrestricted)

with no restrictions (no AULs)

Presence or likely presenceof HS/PP

in, on, or at the Property

Yes REC

No

Not a REC

YesHREC

NoCREC

Yes Has the release been addressed?

De minimis

No

(not a REC)

(a REC)

Slide from Brownfields 2017 Presentation by ASTM

ASTM E1527-13 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

ASTM E1527-13 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

All Appropriate Inquiry (AAI)

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• EPA Office of Inspector General (February 14, 2011) evaluation of 35 Phase I Reports

• All reports were non-compliant with AAI requirements

• Is human health and environment threatened at redeveloped Brownfield sites?

• Landowner or purchaser at risk of incurring CERCLA liability

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AAI and Phase I

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ASTM E1527-13 Environmental Site Assessment (Phase I ESA) standards are consistent with the AAI requirements and may be used to comply AAI. (E2247-16 Forestland/ Rural)• Checklist

https://www.epa.gov/sites/production/files/2014-08/documents/aai-reporting-fact-sheet-and-checklist-062111-final.pdf

Going Beyond a Phase I

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Remedial InvestigationQuantification: What is the nature and

extent of our contamination? How much?

Phase II Site InvestigationQualification: Do we have

contamination/environmental issues? Yes or No?

Phase I Preliminary AssessmentWhat environmental issues could we have? (Presence or

Likely Presence of RECs)

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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) “

What if I Find a REC?

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

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Buyer’s (Lender’s) Perspective to Phase I

Higher

Risk in Purchasing

Lower

No Phase IBuyer becomes PRP and assumes all risk

Phase I OnlyQualifies 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 PlanningMinimizes risk and begins to approach cost certainty

Seller Perspective to Phase I

Higher

Risk inSelling

Lower

No Phase IMay be desired by seller, but unknown risk for potential liability from 3rd party lawsuit

Phase I OnlyHelps establish baseline risk for marketing property, and lowers potential risk from 3rd

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 PlanningMinimizes risk, property value understood, improves decision making and bargaining position

What Makes a Good AAI / Phase I Contractor

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• 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

RFP Considerations for AAI / Phase I Contractor

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• 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

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Question and AnswerCONTACT INFORMATION:Elizabeth Limbrick NJIT 973.596.5519limbrick@njit.edu http://www.njit.edu/tab/TAB Hotline: (973-642-4165); tab@njit.edu

Meade Anderson VADEQ 804.698.4179j.meade.anderson@deq.virginia.govhttp://www.deq.virginia.gov/

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

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Is it REC? Site is former Tannery

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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

Is it REC? Site is former Tannery

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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?

REC – Compounds exceed criteria – known release – definitely a REC

Sample ID NJDEP MW -1 MW-2 MW-3GWQC

Units ug/L ug/L ug/L ug/LMTBE 70 1 U 4.6 7.5Benzene 1 1 U 1 U 15Toluene 600 1 U 1 U 400Ethylbenzene 700 1 U 1 U 350m&p-Xylenes 1000 2 U 2 U 1200o-Xylene 1000 1 U 1 U 1300Naphthalene 300 0.7 J 0.6 J 49

7/10/2014 7/10/2014 7/10/2014

Is it REC? Site is former Tannery

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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?

REC – Compounds exceed criteria – known release – definitely a REC

Sample ID NJDEP SB1 SB2 SB3SRS

Units ug/L mg/kg mg/kg mg/kgAcetone 19 1 U 25 49Chromium 20 1 U 1 U 15Mercury 0.1 0.01 U 1 9Thallium 3 1 U 1 U 5

8/15/2017 8/15/2017 8/15/2017

Is it REC? Site is former Tannery

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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.

Is it REC? Site is former Tannery

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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.

Is it REC? Site is former Tannery

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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.”

Is it REC? Site is former Tannery

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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

Is it REC? Site is former Tannery

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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).

Is it REC? Site is former Tannery

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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

Removed Slides

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