Due Diligence we ll discuss how to go about doing it and the approach may vary

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5 Due Diligence we ll discuss how to go about doing it and the approach may vary depending on your HUD project. What this training is NOT You will not a qualified EP. Rather, this is Overview of the topic NEPA is interdisciplinary hopefully, this will give you knowledge and tips on how to conduct due diligence a good start. Also want to cover situations where a formal, complex DD may not be required such as SF Rehab but where some degree of DD is necessary. In other words, the approach to DD will be relative to the HUD activity. 5

6 Love Canal HUD assisted project Housing development built on a buried canal containing more than 21,000 tons of toxic waste generated from Hooker Chemical Corporation The site was contaminated with polychlorinated bi-phenols (PCBs), Dioxins and Furans, and Benzene Contamination was discovered with the emergence of an abnormally high occurrence of cancers, birth defects and other health problems 6

7 Note that the HUD policy applies to both Part 50 and Part 58. The distinction is who must perform the environmental review - the Responsible Entity (if Part 58) or HUD (Part 50).

8 HUD Mission/Policy 1949 Housing Act, Section 2 = Provide a decent home and a suitable living environment for every American. Sustainability is reflected in the Department s current management plan.

9 Financial = Increased liability & exposure for cleanup costs Affects borrower s ability to re-pay loan Knowing the costs of remediation up-front allows sponsor/grantee/etc to build those costs into the project budget at the outset just like with any environmental matter that must be mitigated

10 One of the country s early Superfund sites (1982). Took 15 years to clean up. Waste oil used on road. What did St. Louis County spend to spread the dioxincontaminated oil? Perhaps a few thousand dollars? {Source: 10

11 Choice-limiting actions include real property acquisition, leasing, disposition, demolition, rehabilitation, repair, construction and site improvements Commit = legally binding agreement or contract. 11

12 Specific contaminants are listed or defined in federal statutes, including but not limited to: Substances defined in CERCLA 1321(b)(2)(A) Listed as hazardous wastes in RCRA 3001 Listed as hazardous air pollutants in CAA 112 Section 1317(a) of Clean Water Act refers to toxic and pretreatment effluent standards 12

13 Previous site uses, nearby land uses Potential Sources: -Railroad yards -Foundries & incinerators -Auto & truck garages, gas stations & service centers -Dry cleaners -Dumps landfills and junkyards -Commercial printing operations -Hospitals -Waste treatment, storage, disposal, processing or recycling facilities -Agricultural operations -Tanneries -Mining operations Caused by: o Industrial or commercial operations not properly managed, resulting in spills and careless waste disposal practices o Leakage of gasoline or other products from underground storage tanks o Municipal waste disposal sites may contain solvents, paints and heavy metals which can leach out if not properly managed o Agricultural and other land with past use of pesticide and herbicides o Intentional and illegal discharges on and in land, air and water 13

14 If the previous business on/near the proposed HUD-assisted project site stored, manufactured or handled hazardous chemicals, there is possibility of spills ( release ) related to those chemicals and potential migration of these chemicals towards the proposed area for development of the HUD-project. Heavy Metals Lead, Arsenic, Mercury Asbestos & Radon Chlorinated Solvents Degreasers Dry cleaning solvent Petroleum Solvents Dry Cleaning Petroleum fuels & oils Pesticides & herbicides PCBs 14

15 NAPL means Non Aqueous Phase Liquids NAPL Many common contaminants are liquids that, like oil, do not dissolve readily in water. Such liquids are known as NAPLs, of which there are two classes: light NAPLs (LNAPLs), such as gasoline, are less dense than water; dense NAPLs (DNAPLs), such as the common solvent trichloroethylene, are more dense than water. National Research Council, 1994 NAPL A liquid solution that does not mix easily with water. Many common ground water contaminants, including chlorinated solvents and many petroleum products, enter the subsurface in nonaqueous-phase solutions. National Research Council, 1993 NAPL Many contaminants, including chlorinated solvents and petroleum products, enter the subsurface in the form of an oily liquid, known as a NAPL. NAPLs do not mix readily with water and therefore flow separately from ground water. If the NAPL is more dense than water (known as DNAPL), it will tend to sink once it reaches the water table. If the liquid is less dense than water (known as an LNAPL), it will tend to float on the water table. National Research Council,

16 References: U.S. EPA - Patricia Overmeyer, 3/30/2006, PPT presentation to HUD environmental officers on AAI rule ATSDR ToxFAQs : Meth labs: State of Michigan Health Dept. 16

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18 HUD s MAP Chapter 9 (Office of Housing - FHA) provides a template for approaching RBCA e.g., Part 58 grantees can use the procedures of MAP. MAP Chapter 9 is useful guidance (not a regulation). HUD SF Housing Insurance: Soil contamination Evidence of hazardous substances in the soil, such as stressed vegetation, stained soils or pavement, drums or odors. Proximity to dumps, landfills, industrial sites that could contain hazardous wastes If there are leaky Underground storage tanks, or any other persistent soil deterioration condition, further analysis or testing is required. 18

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20 Pay particular attention to dumps, landfills, industrial sites, or other locations on site or in general proximity that contain, or may have contained, hazardous waste. Due diligence: Process of evaluating property for potential environmental contamination prior to acquisition or commitment of funding. Decision-making rests with Responsible Entity (Part 58) or HUD (Part 50). Investigation ranges from simple to the complex. 20

21 Is Phase I always needed? NO! But still need to use reasonable and good faith effort to conduct due diligence. Key here is that the approach to due diligence depends on your project construction of hospital is different than SF rehab But always use a reasonable, consistent and professional approach. Part 58 does not require Phase I. However, SF Rehab project is CEST ( 58.35(a)(3)(i)) & so is required to comply w/ HUD s contamination policy at 58.5(i)(2). Note that some HUD activities e.g., utility assistance, TBRA, public services, homeownership assistance, etc do not require any due diligence. These projects are CENST under 58.35(b) i.e., not subject to the contamination policy. [For more information: contact your HUD environmental officer regarding level of review. ] 21

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25 You may consider additional studies, as necessary, depending on the scope of the project and likelihood for contamination. Lead-based paint hazard control, for example, is required in HUD s regulations at 24 CFR Part 35. Consult your state agencies and local HUD field environmental officer for technical assistance on what additional contaminants could be of concern for your specific projects. 25

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27 ASTM International (formerly known as the American Society for Testing and Materials (ASTM)) is a globally recognized leader in the development and delivery of international voluntary consensus standards. Today, some 12,000 ASTM standards are used around the world to improve product quality, enhance safety, facilitate market access and trade, and build consumer confidence. ASTM Phase I Used primarily for commercial real estate transactions and CERCLA liability protections. Also used to assess business environmental risk concerns. Does NOT delineate contamination or quantify the risk of contamination. Current online price = $57. Download directly from ASTM website. (Note: An equivalent Phase I due diligence may be achieved by conducting All Appropriate Inquiries (AAI) using 40 CFR Part 312. AAI was added as amendment to Small Business Liability Relief and Brownfields Revitalization Act of Rule became effective Nov 2006.) 27

28 Vapor Encroachment (aka, vapor migration): Short term problems = respiratory, headaches, nausea, eye irritation Long-term exposure = cancer VE analysis often appropriate to conduct because a VEC (vapor encroachment condition) may not otherwise be identified by the ASTM Phase I e.g., where vapor source is down-gradient of the target property. ASTM E Standard Guide for Vapor Encroachment Screening. Uses iterative approach are known or suspected sites in proximity that may have vapor contamination (e.g., drycleaners, gas stations, industrial uses) If yes, perform further assessment & may include sampling for soil gas or groundwater contamination Depending on various factors, a VEC may or may not be considered a REC. VE is relevant to the earlier slide about different programs, different requirements The VE analysis is required in MAP Chapter 9 While only MAP requires it (for FHAinsurance programs), it may well be appropriate to conduct VE analysis for other projects, e.g., Part

29 Take-away: Phase I can only be performed by a professional who meets the qualifications of the ASTM standard. Make sure you have a good EP!! Both AAI and ASTM Phase I define qualified professional the same. AAI: 40 CFR ASTM E : Appendix X2 29

30 Phase I identify the following particulars about a property: Uses and occupancies of property Uses of hazardous substances Waste management activities Corrective actions and response activities Institutional and engineering controls Nearby and adjoining properties with environmental conditions Congress included in the Brownfields Amendments a list of criteria (including those above) that the EPA had to include in the AAI regulations establishing standards and practices for conducting all appropriate inquiries. In addition to providing these criteria in(40 CFR 312) the statute, Congress instructed EPA to develop regulations establishing standards and practices for conducting all appropriate inquiries in accordance with generally accepted good commercial and customary standards and practices. The criteria are set forth in CERCLA section 101(35)(2)(B)(iii). 30

31 If between 180 days and 1 year old, the following sections must be updated: Interviews, Environmental cleanup liens, Government records searches, Site/visual inspections, Report & EP s declaration. If over 1-year, prior report can be used as a reference, but a new Phase I must be completed. 31

32 De minimis conditions are not RECs. ASTM: recognized environmental conditions the presence or likely presence of any hazardous substances or petroleum products on a property under conditions that indicate an existing release, a past release, or a material threat of a release of any hazardous substances or petroleum products into structures on the property or into the ground, ground water, or surface water of the property. The term includes hazardous substances or petroleum products even under conditions in compliance with laws. The term is not intended to include de minimis conditions that generally do not present a threat to human health or the environment and that generally would not be the subject of an enforcement action if brought to the attention of appropriate governmental agencies. ASTM uses recognized environmental condition (REC). AAI uses identified condition. The two are synonymous. Neither AAI rule or ASTM Phase I practice: Includes sampling and testing Provides a basis for remediation costs Is a guarantee regarding impacts Is a risk elimination process 32

33 Think of this is quality control. Ultimately, the RE/HUD is on the hook responsible for the environmental decisionmaking. Get a copy of the ASTM standard & read it. Training is available from ASTM. 33

34 Note: Phase II activities are not required as part of AAI (40 CFR Part 312), but can provide valuable information necessary for complying with reasonable steps. Mention standards for Phase II or Phase III. ASTM has E1903 Standard Guide for Environmental Site Assessments: Phase II Environmental Site Assessment Process. Other CERCLA, RCRA, state guidance documents for required/useful for assessment and cleanup. 34

35 Briefly discuss Phase III, et. al. just overview. 35

36 Missouri VCP median time, from application to cleanup = 18 months (varies e.g., if groundwater contamination, state will want to monitor for several quarters to see if stable) VCP aka, Brownfields program 36

37 RBCA = often called Rebecca 37

38 Engineering controls are any physical mechanism used to contain or stabilize contamination or ensure the effectiveness of a remedial action. Engineering controls may include, without limitation, caps, covers, dikes, trenches, leachate collection systems, signs, fences, physical access controls, ground water monitoring systems and ground water containment systems including, without limitation, slurry walls and ground water pumping systems. Institutional controls are mechanisms used to limit human activities at or near a contaminated site, or to ensure the effectiveness of the remedial action over time, when contaminants remain at a site at levels above the applicable remediation standard which would allow for the unrestricted use of the property. Institutional controls may include structure, land, and natural resource use restrictions, well restriction areas, classification exception areas, deed notices, and declarations of environmental restrictions. 38

39 Not every project requires a Phase I ESA. 39

40 Is that a UST vent line? Or the periscope of a submarine? Use a Field Inspection Checklist HUD can provide you with one. 40

41 7827 State Line Rd, KCMO,

42 Title Search is helpful, particularly is property is proposed for acquisition (in which case title search will be done anyhow) Title search can yield additional information: Environmental liens Activity and Use Limitations Other Sources of Historic Uses Newspaper archives Internet sites Community organizations Local libraries Historical societies Miscellaneous maps 42

43 Report-generating services like EDR will perform the record search at a reasonable cost. There are many records (databases) that are searched (see next slide). Or, you can search yourself, using some on-line tools that we will talk about in a minute. 43

44 Recommended Government Records Search Distances (ASTM Practice E , Section 8.2.1) Discuss NEPAssist can add in radii for search distances. 44

45 For real-time demonstration, use zip-code & Map the sites. Go to RCRA-CA site Go to Superfund site This Example shows three types of icons: Brownfields + CERCLIS + RCRA Brownfields (ACRES) The Assessment, Cleanup and Redevelopment Exchange System (ACRES) captures grantee reported data on environmental activities and accomplishments (assessment, cleanup and redevelopment), funding, job training, and details on cooperative partners and leveraging efforts - a central objective of the Brownfields Program. The information in ACRES is provided at the property and grant level. Superfund (CERCLIS) Superfund is the federal government's program to clean up the nation's uncontrolled hazardous waste sites. The National Priorities List (NPL) is the list of national priorities among the known releases or threatened releases of hazardous substances, pollutants, or contaminants throughout the United States and its territories. Hazardous Waste (RCRAInfo) Hazardous waste is waste that is dangerous or potentially harmful to our health or the environment. Hazardous wastes can be liquids, solids, gases, or sludges. They can be discarded commercial products, like cleaning fluids or pesticides, or the by-products of manufacturing processes. 45

46 For real-time demonstration, use zip-code & Map the sites. Go to RCRA-CA site Go to Superfund site Can mouse-over the sites to see links to additional info 46

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48 CEQ NEPA regulations: 40 CFR (c) Ultimately, of course, it is not better documents but better decisions that count. NEPA s purpose is not to generate paperwork even excellent paperwork but to foster excellent action. Your determination must be substantiated not just by the data but by analysis. 48

49 Caveat Emptor 49

50 NEPA is the umbrella under which the environmental review is conducted Contamination is but one spoke on the umbrella. NEPA is multi-disciplinary & analytical. 50

51 Free publication: Call or Choosing Env Safe Site, publication #6039 Also available as download from HUD environmental website. 51

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