Category: Blog

The Importance of Independent Environmental Due Diligence at DOD Properties

Department of Defense (DOD) properties including Formerly Used Defense Sites (FUDS) and portions of active installations are increasingly being transferred to the control of private entities for redevelopment and reuse. Prior to realignment or transfer, DOD typically commissions the preparation of a site wide environmental assessment report, commonly referred to as a Baseline of Environmental Conditions Assessment (BECA) or Environmental Baseline Survey (EBS).

The BECA will summarize:

  • Installation location and physical description
  • Utilities
  • Installation history
  • Summary of installation use(s) and processes performed at the installation
  • Environmental programs in terms of the Installation Restoration Program (IRP) sites with Hazardous Waste Management Units (HWMU), Solid Waste Management Units (SWMUs); active and inactive IRP sites; Areas of Concern (AOCs) that may not yet have been funded for investigation; Military Munitions Response Program Units (MMRPs); RCRA Environmental Sites, including Miscellaneous Units and Site Screening Areas
  • Environmental permits (Air, Hazardous Waste, Solid Waste, NPDES, Water Supply, etc.) and the status of those permits
  • Additional environmental concerns (petroleum—underground storage tanks, aboveground storage tanks, other bulk storage and use), asbestos, lead, PCBs

The BECA is prepared for the benefit of the Government and is not released until it has been subject to an exhaustive review. Although the BECA is a rigorous environmental assessment, it is not prepared for the developer, and may not constitute a demonstration that the developer has performed All Appropriate Inquiry (AAI) into a property, and therefore may not qualify a developer to utilize the defenses to Superfund liability that are available under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). The subject of CERCLA liability protection should be discussed with legal counsel, but for similar transactions, under the advice of legal counsel, developers have contracted with Apex to perform a Phase I ESA subsequent to the preparation of the BECA. Phase I ESA preparation is important to note because failure to perform independent due diligence has the potential to result in exposing a developer to substantial environmental liability. A Phase I ESA performed on the developer’s behalf accomplishes:

  • Environmental due diligence is performed in the interest of the developer, thus constituting that they have performed AAI.
  • The information in the BECA is evaluated for accuracy and applicability to the development project.
  • Although the developer may be indemnified from being the Responsible Party (RP) for contamination known to exist or documented in the BECA, environmental issues may still result in significant development costs for the developer if not identified and planned for before beginning a project. These could include increased demolition costs due to the presence of asbestos, lead or other hazardous material; construction cost increases or delays due to the presence of petroleum or other storage tanks; construction cost increases or delays due to contaminated soil or water management; or other environmental management and health & safety issues.

Preparing an independent Phase I ESA subsequent to the BECA can assist in planning for these potential issues and give the developer time to plan for and resolve these issues prior to beginning a project, thus ensuring budget and timing consistency for delivery of the end product, in a timely and on budget fashion.

Phase I Dilemma—Evaluating Historic Use of Pesticides and Herbicides as a Recognized Environmental Condition

The DC metro region formerly served as highly productive farmland, and much of the city’s surrounding area remains agricultural. Even properties that have never been commercially developed (e.g., agricultural or vegetated lands) may have historical contamination of soil, surface water and groundwater from applications of pesticides and herbicides. Residual levels of these chemicals cause unintended negative environmental impacts, including soil and groundwater contamination. Given their stable chemical structure, these chemicals can remain in the environment for hundreds of years, and some of their break-down products are linked to a wide array of detrimental health and environmental impacts.

While environmental and health impacts of pesticides and herbicides are well-documented, environmental consultants do not always recognize the historic use of these chemicals on a property as a potential recognized environmental condition (REC). RECs are identified based on an accepted set of industry standards described in ASTM E1527-05 Standard Practice for Phase I Environmental Site Assessments, which defines a REC as the presence or likely presence of contamination by hazardous substances or petroleum products on a property into the ground, groundwater or surface water of a property. Pesticides are discussed in the Legal Appendix XI.1.4.3.4, which provides the basis of the generally utilized “exception” from REC definition of pesticides “applied in accordance with labeling requirements” or “typical routine application.” Application of pesticides to “row crops” (wheat corn, etc.) do not result in the application of chemicals that would be considered a REC. But orchard applications often do, based on types and frequency of application (especially arsenic-based pesticides.

Due to gaps in historical data, it is difficult to determine if/when pesticides were used on agricultural properties, which chemicals were used and potential residual levels of contamination in soil and groundwater. Phase I assessments may recommend further investigation to answer these questions, but subsurface investigations require additional time, funds and potentially damage to subject properties. Based on a lack of strict regulations mandating the identification of harmful chemicals as RECs, environmental consultants do not always identify the historical use of pesticides and herbicides on a property, nor recommend follow-up subsurface investigations in relation to its historical uses.

The New ASTM Phase I ESA standard (1527-13), likely available in late 2013, is not anticipated to contain new language dictating how to evaluate historical uses of pesticides and herbicides on properties. Regardless of the standard, it is crucial that environmental consultants consider the potential impacts of these chemicals during Phase I ESAs and alert clients to the long-term implications.

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