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Identification and Management of Post-Transfer Environmental Obligations
MODERATOR:Barry Steinberg, Partner, Kutak Rock
SPEAKERS:• Bob Carr, Former Counsel, USEPA Region 9
• Kristie Reimer, Associate Vice President, ARCADIS US• Matt West, Tustin Legacy Project Manager, City of Tustin, CA
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Congratulations---The Signing Ceremony is Over
You now own the Land
What obligations did you just acquire
Acquiring title is not an environmental end state
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Environmental obligations and responsibilities can be imposed by law, regulation, contract and liability considerations
Deeds are contracts
Does the deed include limitations or conditions on use?
Are there environmental notices in the deed and what are the implications?
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Deeds are enforceable
Deeds can be breached
Deed terms may “run with the land”
Recorded Deed = Imputed knowledge of content
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Removal of environmental limitations or conditions requires grantor action and may require regulatory approval
Consequences of breach include enforcement, loss of statutory protections, denial of insurance coverage
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Objectives of this session
Know your post transfer environmental obligations
Negotiate terms and conditions to minimize post-transfer obligations
Include post-transfer obligation costs in your pro forma
Avoid breach and potential loss of protections
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Regulators’ Perspective
• Partnership with the military is defined by Statute, Executive Order, and NCP
• Investigation, Remedy Selection and Cleanup address known contamination
• Remedy must be protective for reasonably anticipated future use; may include restrictions
• Limitations are described prior to transfer and incorporated in transfer documents
Post-Transfer Cleanup Issues
• Who determines if a selected remedy is no longer protective?– NPL sites: joint remedy selection with EPA– Non NPL sites: comply with State law
• Who is responsible and who decides what should be done?– Standard for “found to be necessary”?
Addressing Changed Conditions
• Statute defines DoD obligations as owner of property at time of release
• CERCLA covenant creates an enforcement mechanism(I) all remedial action necessary to protect human health and the environment with respect to any such substance remaining on the property has been taken before the date of such transfer
(II) any additional remedial action found to be necessary after the date of such transfer shall be conducted by the United States
Does Section 330 Indemnification Solve the Problem?
• Scope is broad because it includes leased property and petroleum
• Contains no “found to be necessary” criteria for cleanup
• Primary focus was to address tort liability, not cleanup
• Does not apply to the extent that a covered person contributed to release
• Order may be a prerequisite to Indemnification
What Constraints Go With Transfer of BRAC Property?
• Land use restrictions: - monitoring- reporting- enforcement obligations
• Regulatory agreements: - FFA or State equivalent
• Post transfer remedial actions
Related Issues
• Five-year Review for CERCLA remedies – NPL and non-NPL
• State regulatory authority• Land Use Restrictions in Deed or Covenant
– Modification as conditions change
Post Transfer Implementation
Implications, Impacts and Consequences • Environmental Concerns
• Documents and Reporting
• Remedy Implementation
• Restrictions - Land Use Controls (LUCs)
LRAs need to know and be aware of:• How has DOD addressed known contamination / concerns
• What corrective action or remedies were selected
• Known contamination NOT addressed by DOD.- LBP, ACM, asbestos in soil, AST/UST, etc.
• Risks associated with suspected or “unknown” contamination
• The LRA’s responsibility regarding changed conditions.- Regulatory Standards, Land Use
Environmental Concerns
Documents and Reporting
• Documents – the Devil truly is in the Detail- Volumes of technical, acronymical, legalease - Dedicated resources needed to review and comment on
documents (may or may not be funded)- Schedule realities – years of monitoring and reporting
• DOD/Regulatory Agency Coordination- Critical to success!- Communicate early and often, and participate whenever
possible including IPR/BCT meetings, workshops, public hearings, etc.
RemedyImplementation
Environmental Remedy/Action• Must be protective for reasonably anticipated future use
• Decision factors include: reduction of toxicity, reliability, effectiveness, implementability and cost
• Due to budget realities – likely to include limitations or restrictions in the form of Institutional Controls
• Limitations NEED to be understood and described prior to transfer and incorporated in transfer documents
Restrictions -Land Use Controls
• Land Use Controls are physical or legal constraints that limit use, access, and activities on real property.
• Types - Engineering Controls = physical structures or mechanisms
that limit on-site activities, e.g. fences, caps- Institutional Control = limitations and conditions on the use
of property, e.g., deed restrictions, obligations- Public Health Notification = protective warnings for noticing
existing or impending risk associated with use, e.g. signage
Restrictions -Land Use Controls
• Implications, Impacts and Consequences- Land related – what is allowed, limitations on development,
stewardship requirement- Fiscal related – land value, financing, insurance implications- Post transfer documentation and reporting – deeds, covenants and
warranties; 5-year reviews per CERCLA; LUC reporting such as long term monitoring and annual reporting requirement.
- Enforcement – critical to all stakeholders, regulatory versus LRA/jurisdition
- Changed Conditions – regulatory standards and/or cleanup levels; land use designation
The Winding Road to Development
Former Marine Corps Air Station (MCAS) Tustin
Matt WestCity of Tustin/MCAS Tustin LRA
OUTLINE
About Former MCAS Tustin
Development Activities
Recent/Open Post-Transfer Environmental Discoveries
Implications/Lessons Learned
Former MCAS Tustin(aka “Tustin Legacy”)
1,600-Acre Helicopter Base Orange County, CA 1991, 1993 BRAC 1999 Base Closure
BRAC Closure Team (BCT) comprised of Navy, DTSC (Lead Agency), RWQCB, EPA
2001 Navy Completed Environmental
Baseline Survey (EBS)City obtained 10-Year PLL
($75M/$100K SIR)
Former MCAS Tustin(aka “Tustin Legacy”)
2002 Navy EDC to City of Tustin(1,175 AC or 75% of Base)11 Carve-Outs (LIFOC)400+ AC PBCs and Direct
Conveyances (Non-EDC)Navy still owns 244 AC
118 AC on future PBCs126 AC on 4 Carve-Outs
Impacted-GroundwaterConveyance – Est. 2016
2002-2008 City agreements and phased
conveyances to third parties City conveyed 1st of 4 phases to
Master Developer (TLCP) Developed Master Plan Grading/Demolition Impacted-Soil Removals
Development Activities
11
1
2010-Present City terminated DDA with TLCP City became “Master Developer” City conveyed property to
residential developers City commenced $100M
infrastructure projects City updating master plan for
consistency with market conditions
Development Activities
Post-Transfer Discoveries
2002 Navy EDC to City of Tustin (1,175 AC or 75% of Base) 11 Carve-Outs (LIFOC) 400+ AC PBCs and Direct
Conveyances (Non-EDC) Navy still owns 244 AC
126 AC on 4 Carve-Outs 118 AC on future PBCs
2002-2007 City Agreements and Phased
Conveyances to Third Parties Conveyed 1st of 4 phases to
Master Developer (TLCP) on 800 acres
2. BURIED DEBRIS
4. TPH
5. PAH
3. TPH
8. TPH 9. TPH
6. TPH (GW)
7. TCE (GW)
DISCOVERIES BY CITY OR MASTER
DEVELOPER (2006-PRESENT)
1. TPH
Post-Transfer Discoveries
2002 Navy EDC to City of Tustin (1,175 AC or 75% of Base) 11 Carve-Outs (LIFOC) 400+ AC PBCs and Direct
Conveyances (Non-EDC) Navy still owns 244 AC
126 AC on 4 Carve-Outs 118 AC on future PBCs
2002-2007 City Agreements and Phased
Conveyances to Third Parties Conveyed 1st of 4 phases to
Master Developer (TLCP) on 800 acres
2. BURIED DEBRIS
4. TPH
5. PAH
3. TPH
8. TPH 9. TPH
6. TPH (GW)
7. TCE (GW)
TLCP DISCOVERED TPH-IMPACTED SOIL DURING GRADING
1. TPH
No Navy come-back for TPH TLCP filed insurance claim; entered into VCA
with DTSC; RWQCB deferred to DTSC as lead; City not a party.
Roughly $8M paid out for impacted-soil removal under DTSC oversight.
Soil-removal activities complete but post-removal samples detected potential impacted groundwater (TPH, TCE, other).
Property reverted to City with open contamination issue.
TCE and TPH areas overlap but are not exactly the same; Navy is returning to address TCE but will not assess TPH-only areas.
City must wait for Navy to complete TCE assessment before proceeding with TPH analysis.
Post-Transfer Discoveries
2002 Navy EDC to City of Tustin (1,175 AC or 75% of Base) 11 Carve-Outs (LIFOC) 400+ AC PBCs and Direct
Conveyances (Non-EDC) Navy still owns 244 AC
126 AC on 4 Carve-Outs 118 AC on future PBCs
2002-2007 City Agreements and Phased
Conveyances to Third Parties Conveyed 1st of 4 phases to
Master Developer (TLCP) on 800 acres
2. BURIED DEBRIS
4. TPH
5. PAH
3. TPH
8. TPH 9. TPH
6. TPH (GW)
7. TCE (GW)
CITY DISCOVERED
TPH-IMPACTED SOIL DURING
GRADING1. TPH
City notified Navy of discovery. Navy offers (for the first time ever at
Tustin) to return Navy now challenges DTSC’s role in oversight of TPH and looks to RWQCB.
DTSC confirms inability to provide oversight and site closure on TPH.
RWQCB has much less stringent standards which reduces the aerial extent and ultimate costs to Navy.
Grading activities completed but with two holes.
City on-hold until Navy awards contract and returns to address.
Development opportunities for site on-hold.
So What?
Current Marketing
So What?
• Navy come-back provisions are great but who has the time? • They can be unrealistic when development is underway or
property needs to be delivered within certain timeframes.• LESSONS LEARNED:
– Get insurance and keep them informed– Try to turn dirt as early as possible to allow for lengthy come-back
periods if necessary and also while insurance policy is still effective.– Be crystal clear on what agency has oversight.– VCAs can be helpful but be careful not to give away the farm. It may cost
you way more in the end. Try to budget for a rainy day. You will still need money to cash flow SIRs and maybe even clean-up to make that big development deal happen.
