News & Announcements

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People contact us all the time asking about Phase I Environmental SIte Assessments. Mostly, they just ask about cost, but sometimes they ask if they really need one. For those folks I ask, “What happens if you buy a property and find it has an environmental problem?” I usually go on to explain there are two cases depending on whether you have a Phase I ESA or not.

I Have a Phase I Environmental Site Assessment 

If you have a Phase I Environmental Site Assessment (Phase I ESA), you have a document that can be used to identify site conditions that are or could impact the environmental conditions of property. The assessment determines whether current or historical uses of a property and nearby properties have caused conditions that may negatively affect the environment and/or human health. For example, consider a strip mall on the corner of a busy intersection that was once the location of a service station. Someone interested in buying the strip mall, or loaning against it, will want to know that in the past there was a service station at the site because that use may have resulted in contamination. Most folks don’t want to buy or finance a contaminated site and take on the associated liability.  

So how does a Phase I ESA help? If a Phase I is completed according to ASTM International (ASTM) Standard E1527-21 prior to close of escrow, the buyer will have liability protections under the law if an environmental problem is discovered after the property transaction has been completed. In other words, a Phase I adhering to the requirements in ASTM E1527-21 protects a new property owner (or their lender) from being held liable for environmental problems that come to light after the property was transferred. This is important. If that's not enough, consider the Sunferfund Cleanup Acceleration Act of 1998 requires that purchacers of commercial property perform a Phase I ESA meeting the sepcific standard of ASTM E1527-21.

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Most folk responsible for cleanup of contaminated property have one thing on their mind - environmental case closure. One can’t blame them. Thoughts of money evaporating into thin air and restricted property use does that. The problem is we might not have a clear understanding of environmental case closure and what it takes to get there. WIthout that understanding, frustration and disappointment are more likely to arise when we find our expectations unmet.

Consider the frustration that might arise when you hear for the third time “just one more thing and we can look at case closure.” You thought case closure would be granted after the first two “just one more thing” requests were dealt with. What now?

Or imagine you finally got your closure letter  - saw the words “no further action” and filed it away quickly before opening a bottle of Champagne to celebrate. Picture the frustration and disappointment a year later when you have the closure letter in one hand and a letter in the other requesting more investigation because contamination was found near your property.

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“Hold on,” I said, “I can barely make out what you’re saying.” It was a former neighbor who I helped with an application to California’s Underground Storage Tank Cleanup Fund (UST Fund). “We got our Letter of Commitment from the Fund and we’ve started work. I know you told me the hardest part is behind me, but all I see is a pile of invoices and an empty spreadsheet.” I sensed the frustration.

“Okay, okay - let’s take it one step at a time,” I said. “First, let me remind you that the Fund provides up to $3,000 for assistance with the application and reimbursement, that should relieve some of your frustration.” I continued, “Look, we can help you with the reimbursement, but while I got you on the phone, let me walk you through it in case you want the honor.”  My former neighbor agreed.

I began by explaining that each UST cleanup case is different and regulatory requirements vary, but the basic process for filing a reimbursement request is the same.

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So, you became a responsible party (RP) - that’s any person who is liable under state or local law for taking action in response to a release from an underground storage tank (UST). Hopefully, you submitted an application to the Underground Storage Tank Cleanup Fund (USTCF) to get the financial help you are eligible for. What comes next? 

Eligibility

It takes approximately 60 days for the USTCF to review a typical claim application. If the claim is found eligible, it is placed on the Priority List. In this case the RP becomes the claimant. Claim Priority is assigned based on the kind of the RP applying for a claim, such as a property owner or a corporation. The Priority is divided into four groups designated Class A, Class B, Class C, and Class D. 

Claim Priority Classes

Class A - The highest priority is Class A, which is reserved for claimants who are residential UST owners. Certain restrictions apply when determining if a UST can be qualified under Class A. The UST must be (or have been) used for the storage of petroleum, installed below ground, and must be on land used exclusively for residential purposes, including home heating oil USTs. USTs under this classification cannot be used for the purposes of resale or agriculture.

fdac24 sph2California just reminded owners and operators of underground storage tanks (USTs) that they are required to permanently close single-walled (SW) USTs by December 31, 2025. This includes connected SW piping. This news should rally property owners and owners of service stations, former service stations, and other facilities that have operating USTs, unused USdTs, or abandoned USTs.

UST owners and operators might wonder what the big deal is. It’s reasonable to think - “out of sight, out of mind”, “those tanks have been there 30 years - I think”,  and “those tanks aren’t hurting anyone - who cares?” And really, it’s a good question - why go through some UST closure process that may go from bad to worse? In other words, what is the cost of doing nothing?

Regulations

Underground storage tanks are highly regulated in California. There are state, county, and city regulations concerning all aspects of owning and operating USTs. Anyone that currently owns and/or operates USTs knows this regime well. But, for those who own unused or abandoned USTs, they might not even be aware the USTs exist or that they need to be removed.

Nevertheless, the regulation states that UST Systems which do not have secondary containment and a continuous leak detection system, and have not been permanently closed by the regulatory due date are out of compliance and cannot be operated. Penalties for systems out of compliance are $500 to $5,000 per day per UST. 

That is just one cost of doing nothing.

Unknown Liability

Maybe you are aware of unused or abandoned USTs that predate the current UST reporting requirements, or maybe your property was used as a service station in the past, but closed down operations long before the current regulatory regime existed. If USTs are there, they are unseen - so why bother with them? The answer is that at some point you may be exposed to the liability of owning unused or abandoned USTs.

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My phone rang. I didn’t recognize the number and was about to hang up when I inadvertently pressed the answer button. “Hi, this is Bob speaking, how can I help you?”, I said.

To my surprise an old family acquaintance answered, “Hi Bob, I’m the kid, well grown up now, who used to chase your sister around the yard. Anyway, I’m calling for some help. I remember you ended up doing environmental work.” “That’s right”, I said, “what’s up?” 

My former neighbor told me that his folks had left him and his sisters a piece of property that used to be a gasoline station. He told me the underground storage tanks (USTs) had been removed, but gasoline contamination was found. The county wanted cleanup, but the family didn't have the resources and no bank wanted to lend on the property.

“Well, you might be in luck”, I said. I let him know about the Underground Storage Tank Cleanup Fund, and told him that RRM has been helping clients use the Cleanup Fund for nearly 30 years. “We understand this complex program exteremly well and can help you through the process of eligibility and reimbursement of cleanup costs, even if you've already spent some money on cleanup.” A bit of our conversation is captured below as questions and answers.

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Dry cleaners are the leading source of environmental liability at commercial retail properties. That’s because the use and handling of tetrachloroethylene (PCE) is, or was, inherent in their business. If you are a real estate professional, property owner, developer, or operator involved with a former or existing dry cleaning business, there’s a good chance you could face liability stemming from a PCE release.

If a release is identified and you’re involved, your first thoughts might turn to questions like, “how long is cleanup going to take?” and “what’s it going to cost?”  Unfortunately, answers to those questions are hard to get.

Too often, I’ve sat in meetings where the RP (responsible party) asks “How long will it take to cleanup my site?” or “How much is this going to cost?”, and never heard a straight answer. We will try to answer those questions here.

Dry Cleaners: What’s the Problem?

You may have received a letter from a regulatory agency that reads something like this:

“Upload a work plan detailing and justifying a scope of work to assess the extent and magnitude of chlorinated solvents in groundwater and subsurface vapor…You have been identified as a potential responsible party for the contamination because you operated the dry cleaners or own the property.”

You are not alone. In 2019, California reported there were 12,947 inactive (unfunded) dry cleaner cases and 1,791 active cases in the state. In 2018, the Department of Toxic Substances Control (DTSC) had 120 tetrachloroethylene (PCE) cases open and only 15 sites categorized as “no further action.”

Consider:

  • There are a large number of undiscovered sites in urban areas, many which are, or were, family-owned businesses with no resources for cleanup. There are an estimated 17,000 sites throughout California with unknown or suspected releases of chemicals.
  • Funding is extremely limited. Of the 120 active DTSC sites, clean up was federally funded at 14 sites, state funded at 14 sites, and privately funded by the responsible party at 92 sites. The California Site Cleanup Program (SCP) reported there are approximately 3,932 open SCP sites; approximately 1,280 are inactive and in need of funding.
  • The primary funding mechanisms currently in place for cleanup of SCP sites include the Underground Storage Tank (UST) Cleanup Fund, Cost Recovery, and Site Cleanup Subaccount Program (SCAP). SCAP is the only funding mechanism for property owners and operators of dry cleaners. Of the known SCP sites in California, only a small fraction are receiving SCAP funding assistance.
  • PCE and trichloroethylene (TCE), chemicals associated with dry cleaning, are notoriously difficult to remove from soil and groundwater. Unlike policy for gas stations (petroleum hydrocarbon fuels), for dry cleaners there is no standard policy or recipe available in California for obtaining case closure with no further action. This is important, so let me emphasize - There is no standard policy or recipe available in California for obtaining case closure with no further action.

 

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I was on  the phone with a property owner and her attorney talking about possible cleanup options for her property. They explained that the property had undergone cleanup using soil vapor and groundwater extraction, but the problem still remained. While the initial cleanup work definitely moved the property toward case closure, regulators were looking to bring contaminant levels down even further because a nearby domestic water supply well was threatened.

As we discussed options, the property owner spoke up and asked about mobile high vacuum dual phase extraction (HVDPE). She had heard that it was very effective, but expensive. I explained that although it is expensive up front when compared to other cleanup technologies, the shortened cleanup time and effectiveness of HVDPE can make it cost competitive. I told her that in many cases, the amount of cleanup accomplished after two years of soil vapor and groundwater extraction could be attained by two months of mobile HVDPE. 

“Well,'' she said, “why aren’t we looking at it for my site? I am definitely interested in something that’s going to end this problem and give me back my property sooner rather than later.” Then she asked, “How much does  HVDPE cost?”

I explained that it's hard to tell because each site and its circumstances are different. For example, it’s hard to gauge how much contamination is available for extraction, so it’s hard to estimate how long HVDPE will have to operate. Often, a pilot test is done to determine HVDPE performance. Of course, that didn't answer her question.

After a brief pause in the conversation I said, “Okay, lets go over costs for a job I recently finished using mobile HVDPE to get an idea of what it could cost at your site. Let’s begin with a short description of mobile HVDPE and then we’ll get into the costs.”

I got a phone call from a close friend. She told me she was working on a development project, and just got the results of a Phase I Environmental Assessment. The assessment pointed to a potential obstacle to the project - a Recognized Environmental Condition (REC). The project site used to be a dry cleaner that closed up shop a few years back, and the assessment noted there could have been a release of tetrachloroethylene, or perchloroethylene (PCE) into the soil and groundwater. My friend was really upset. It was already difficult enough with stakeholders, banks, city and county regulators taking chunks of her time and money - now this. She was stressed. “Can you help?” she said, “Now they want a Phase II Assessment to investigate the REC. All I want to know is, how much is this going to cost?”

I paused for a moment thinking, “it depends…”, but quickly remembered the stress she was under. “How about we meet for coffee in a couple of hours and in the meantime, I will work up a cost for a Phase II Assessment for you?” That’s what she wanted to hear.

A Phase II Assessment is often recommended to verify a REC (Recognized Environmental Condition). In the case of my friend, a Phase II was recommended to determine whether there was a release of PCE. Typically, a Phase II entails collecting soil and/or groundwater samples and analyzing the samples for particular chemicals. Often, a Phase II Assessment means the same thing as a soil and groundwater investigation.

My friend described the site as a small empty retail unit at a shopping mall, so it seemed to me that we could find out if there had been a chemical leak by drilling three small-diameter holes into the ground to collect soil and groundwater samples. One at the former location of the dry-cleaning machine, one at the floor drain, and one along the sewer leaving the unit. At least two soil samples and one groundwater sample would be collected from each hole, and samples would be analyzed at a state-certified laboratory. A soil and groundwater investigation report would be prepared that would include methods, results, conclusions, and recommendations. All the work would be overseen by a professional geologist or engineer whose signature would appear on the final report.