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

COSTS AND BENEFITS OF PRE- ACQUISITION DUE DILIGENCE INVESTIGATION • 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

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

COSTS AND BENEFITS OF PRE-ACQUISITION DUE DILIGENCE INVESTIGATION 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

CASE STUDIES

CASE STUDIES

CASE STUDIES

• Vapors migrate into the structure through cracks or 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: Prevention of Exposure Engineering and Institutional Controls Institutional Controls Engineering Controls • Activity and Use Limitations (AULs) • Caps: Pavement, Building, Clean Soil, or Membranes • Deed and Land Use Restrictions • Vapor Barriers • Environmental Covenants • Groundwater Extraction • Periodic Monitoring / Audits • In-situ Controls • Management Plans

CLOSING THOUGHTS AND DISCUSSION

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