CLOSURE OF CONTAMINATED PROPERTY Mark H. Fackler Max Bridges - - PowerPoint PPT Presentation

RISK BASED MANAGEMENT AND CLOSURE OF CONTAMINATED PROPERTY

Mark H. Fackler Max Bridges

COSTS AND BENEFITS OF PRE- ACQUISITION DUE DILIGENCE INVESTIGATION

• All Appropriate Inquiry (“AAI”) – Phase I Site Investigation
• Cost - $2,500 to $5,000
• Benefits to Purchasers:
• Innocent Landowner and Bona Fide Prospective Purchaser (“BFPP”)
• Exemption from Superfund Liability as a site owner or operator
• Must have no affiliation with a responsible party
• Subject to meeting ongoing due care obligations
• A requirement to qualifying for Kentucky Brownfield

Exemption

• Tenants
• Tenants can qualify for BFPP exemption when both owner and tenant take

steps to qualify – 2012 EPA guidance provided limited protections

• Consolidated Appropriations Act of 2018 extends the exemption to qualifying

tenants, regardless if the landowner qualifies, provided the Tenant:

• entered a lease after 1/11/02
• completed a Phase 1 ESA prior to the start of the lease, and
• complies with the additional BFPP exemption requirements after lease

commencement (such as preventing exposure to occupants, cooperating with cleanup work, etc)

• Kentucky Brownfield Exemption is not available to tenants – only the

property owner

COSTS AND BENEFITS OF PRE- ACQUISITION DUE DILIGENCE INVESTIGATION

Kentucky Brownfield Liability Exemption

• Exempts investigation and cleanup obligations imposed by

Kentucky statutes for non-UST petroleum and hazardous substance release

• Cabinet concurs that the future use of the property will not interfere

with the remediation of a release, increase the impacts of the release, or expose the public/environment to unacceptable harm

• “The cabinet finds that the applicant shall not be liable for

performing characterization, correcting the effects of the release of petroleum, a hazardous substance, or pollutant or contaminant on the environment, or performing corrective action”

– 401 KAR 102:010

• Available only to Purchasers for releases that occurred before purchase
• Only applies to the Property Owner, not affiliates, subs, etc.
• If title transfers, the new Property Owner has to apply. The Exemption does not

transfer with title

Kentucky Brownfield Liability Exemption

• Requires
• AAI before taking title & Active Phase 1 when you apply
• $2500 Fee & Application Form
• Completion of all required notifications and responses to information requests
• Compliance with land use restrictions
• No impediment to investigation or cleanup by a responsible party
• No affiliation with a responsible party
• Safe uses of the property
• Property Management Plan – See 401 KAR 102:020
• Define past, current and future use of property
• Provide all info known about releases
• Vehicle for defining safe use of the property – will define the Voluntary engineering controls,

institutional controls, that will be put in place

• Requires certification by a registered professional engineer or geologist
• Notice of Eligibility/Notification of Concurrence
• Upon request, State will expedite review upon request – just give them some notice

https://eec.ky.gov/Environmental- Protection/Waste/superfund/Documents/Brownfield%20Program%20Application%20Form%201 1-12-13.pdf

Kentucky Voluntary Remediation Programs

“Self-Certified” Cleanup

• KRS 224.1-400(19)
• Minor Releases
• No Liability Protection

COSTS AND BENEFITS OF PRE-ACQUISITION DUE DILIGENCE INVESTIGATION

Kentucky Voluntary Remediation Programs

“Notice of Completion” Cleanup

• KRS 224.1-400(18), KRS 224.1-405(1) and 401 KAR 100:030,

Section 1(6)

• Reportable releases
• Private or Public Entities
• Notice of Completion Letter

COSTS AND BENEFITS OF PRE-ACQUISITION DUE DILIGENCE INVESTIGATION

Kentucky Voluntary Remediation Programs

“No Further Remediation” Cleanup

• KRS 224.1-450 through 1-465
• Reportable releases
• Public Entities
• No Further Remediation Letter

COSTS AND BENEFITS OF PRE-ACQUISITION DUE DILIGENCE INVESTIGATION

Kentucky Voluntary Remediation Programs

“Voluntary Environmental Remediation Program” (“VERP”) Cleanup

• KRS 224.1-510 through 1-532
• Reportable releases
• Private and Public Entities
• Covenant Not to Sue
• Modified in 2018 by House Bill 370 to simplify the process

COSTS AND BENEFITS OF PRE-ACQUISITION DUE DILIGENCE INVESTIGATION

Kentucky Voluntary Remediation Programs

• Excludes RCRA Facilities, Radioactive Materials Facilities, NPL Sites and

Enforcement Action Sites

• Risk-Based Cleanup Decision Making Built Into Kentucky’s Remediation

Statutes

COSTS AND BENEFITS OF PRE-ACQUISITION DUE DILIGENCE INVESTIGATION

Indiana Remediation Programs

• State Cleanup Program
• State resources allocated based on a statutory priority ranking
• Risk-based closure decision making
• Follows IDEM Remediation Closure Guide (2012)
• Terminates with Closure Completion Letter or No Further Action Letter
• Voluntary Remediation Program (“VRP”)
• Requires a Voluntary Remediation Agreement with IDEM
• Risk-based closure decision making
• IDEM Review/Overview costs paid by the program applicant
• Terminates with a Certification of Completion and Covenant Not To Sue
• Indiana Brownfield Program

COSTS AND BENEFITS OF PRE-ACQUISITION DUE DILIGENCE INVESTIGATION

Petroleum Underground Storage Tank Funds

• Kentucky Petroleum Storage Tank Environmental Assurance Fund (PSTEAF)
• Tank owner and operators
• Properly registered with payment of annual fees
• Funded through annual fees and a fee per gallon of petroleum sold by dealers
• Fulfills financial assurance obligations
• Kentucky Division of Waste Management contracts directly for work
• Indiana Excess Liability Trust Fund (ECTF)
• Tank owners and operators
• Properly registered with payment of annual fees
• Funded through annual fees and a fee per gallon of petroleum sold
• Fulfills financial assurance obligations
• Tank owners/operators must perform work and seek reimbursement

COSTS AND BENEFITS OF PRE-ACQUISITION DUE DILIGENCE INVESTIGATION

Tension between Sellers, Buyers and Lenders

• Arises from limits of exemptions and scope of

clean up obligations

• Recent Brownfield Program developments are

increasing tensions

• Property Management Plan audits
• Post-approval demands on Sellers to characterize

contamination on property

COSTS AND BENEFITS OF PRE-ACQUISITION DUE DILIGENCE INVESTIGATION

CASE STUDIES

CASE STUDIES

CASE STUDIES

• Vapors migrate into the

structure through cracks

• r utility routes
• Structure can generate a

negative internal pressure from stack or wind effects

• Stack effects are caused by

convection or active HVAC ventilation

• Wind effects are caused

differences in air pressure caused by wind striking the structure

CASE STUDIES

CASE STUDIES

CASE STUDIES

Risk-Based Closure & Management Options:

Engineering Controls

• Caps: Pavement, Building,

Clean Soil, or Membranes

• Vapor Barriers
• Groundwater Extraction
• In-situ Controls

Prevention of Exposure

Engineering and Institutional Controls

Institutional Controls

• Activity and Use Limitations (AULs)
• Deed and Land Use Restrictions
• Environmental Covenants
• Periodic Monitoring / Audits
• Management Plans

CLOSING THOUGHTS AND DISCUSSION

Questions?

Max Bridges Wyatt, Tarrant & Combs (502) 562-7248 mbridges@wyattfirm.com Mark Fackler AZLAND Risk Management (502) 807-3894 mfackler@azlandllc.com