Dirty Property

I recently had a client request a number of transaction screens for a block of properties that they are purchasing.

A transaction screen is a limited environmental assessment designed to identify readily apparent and potential environmental liabilities associated with a site or facility. All work is conducted in accordance with the ASTM E 1528-06: Standard Practice for Environmental Site Assessments: Transaction Screen Process. This ASTM standard was established by the ASTM Committee E-50 on Commercial Real Estate Transactions to provide landowners and purchasers with a basic understanding of the potential environmental concerns that may be associated with a particular parcel of real property. Exceptions to the ASTM standards are allowable to the extent that they are reasonable and that they are identified in the report.

A transaction screen can be described in short as a, “Phase I light” because it is a form of property due diligence, but is not as in-depth of an investigation as a full phase I. Transaction screens can be a very useful tool when an environmental investigation is required, but the property is not expected to be impacted, contaminated, or otherwise dirty.

Over the past couple of weeks, a hacker broke into my little blog site here and altered some of my posts with an iframes trojan virus nasty thing.  Google found this and was kind enough to let me know (and punish me for being attacked by decreasing my rankings).  I have fixed the problem by deleting the iframes insertions and strengthening my blog passwords and security systems.  Take a lesson from me here and remember that “password” is not a valid or safe password for your blog.

This was reported in the Sunday July 27, 2008 edition of the LA Times:

Does your new dream home come with dangerous hidden extras — like a seeping oil well in the backyard or a former meth lab in the bedroom?

It’s in the tank. Up in smoke. Biting the dust.

The real estate market?

No. The toxic substances in the water, air and dirt enveloping many Southern California properties. With leaky oil wells in backyards, solid-waste landfills near homes and abandoned meth labs in residential areas, it’s a wonder Southland residents aren’t neon.

“California . . . has thousands of waste sites that were contaminated either by industrial, agricultural or past military uses,” said Angela Blanchette, a spokeswoman for the California Environmental Protection Agency’s Department of Toxic Substances Control.

“Some towns don’t have much to worry about,” said Ralph Kephart, president of Long Beach-based GeoAssurance Inc. and an expert in mapping natural and environmental hazards statewide. “But some towns have been abandoned because of toxic spills.”

So when thinking about purchasing that perfect house near a onetime military base, dry cleaner or property that’s been empty for a while, experts advise paying a private company $50 to $150 for a detailed environmental hazards report or searching for free online information about the neighborhood from government agencies. Unknown environmental hazards are not included in the blizzard of paperwork buyers read at the close of escrow, so consumers bear the burden of uncovering the potential presence of noxious substances themselves. And there are plenty.

Although hundreds of so-called brownfield sites are now cleaned up and put back to productive use, according to Blanchette, hundreds still are awaiting cleanup and redevelopment. As of mid-July, her department listed more than 2,000 toxic-waste sites statewide. These figures do not include all of the federal Superfund sites or those under other state jurisdictions.

There are nearly 24,000 oil wells in Los Angeles and Orange counties, many properly abandoned but many not, according to the state Department of Conservation. And in 2007, 83 methamphetamine labs in Los Angeles, Orange, Riverside, San Bernardino and Ventura counties were identified by the state and cleaned up — just the tip of the iceberg, experts say, because many labs go undetected.

Sounds pretty nasty. Guillermo Mata, 31, knows first-hand just how nasty. The construction equipment sales rep considered buying a bank-owned duplex in Long Beach two months ago, until he walked upstairs and realized he had stumbled into a former meth lab.

Signs of trouble

The home had been vacant for some time and had become a “total, disgusting wreck,” he said. Some foreclosed properties are targeted by meth producers as “fly-by-night meth labs,” said Corey Yep, senior policy analyst for the state’s toxic substances control department. They’re not known to the police but are discovered by agents or buyers walking through.

When Mata and his agent, Autumn Anderson, entered the top unit, they saw a hole in the ceiling, through which a crude vent had been installed. The walls were stained and the house stank, all telltale signs of meth production.

Even though the price was right — about $355,000 — Mata said it would have cost $100,000 to make the duplex habitable. “The last thing I wanted was a rental unit where kids would get sick,” Mata said.

Meth labs produce solvents, acids, phosphorous, iodine and metals, which can result in respiratory problems, skin and eye irritation, headaches, nausea, lung damage and body burns. They recently were among the biggest health threats to homeowners, according to Cal/EPA, but that danger has waned as production has moved to Mexico.

California passed legislation in 2006 requiring that owners of meth-contaminated homes clean them up. Local agencies oversee the work and give the owners written confirmation of the completed job, which can cost between $5,000 and $100,000, depending on the level of contamination, Yep said. Contractors hired for the cleanup should be trained in hazardous-waste remediation. The state Department of Consumer Affairs provides a list of licensed contractors.

Yep recommends that home buyers check with local law enforcement agencies to see if the property they’re considering is on a list of former meth labs, and ask neighbors about any activity on the block.

“Use your senses,” Yep said. “Look outside for dead patches in the grass,” where chemicals may have been dumped.

Like meth labs, oil wells may harbor hidden menaces, unknown to a buyer until trouble comes calling.

Although thousands of the region’s wells — dating to the 1920s or earlier when abandonment rules were nonexistent — are properly capped and pose no threats, many still are buried in homeowners’ backyards and require attention when leaking methane gas rises to the surface or the water becomes contaminated. Depending on the depth of the well and remediation involved, it can cost tens of thousands of dollars to fix.

Lee and Barbara Shoag, veteran real estate agents, purchased a home in 2004 in Long Beach, their primary sales territory and a city with a long history of oil wells. After paying architectural and city permit fees for a remodel, they were instructed to consult with the state’s Department of Oil and Gas, which concluded there was an idle buried well on the property that had to be properly capped before construction could commence.

The job, they were told, would require drilling down 3,200 feet, bringing in a cement truck, hauling in a 4-inch-thick water line and filling the well with cement to avoid methane gas leaks. The cost: $70,000.

The Shoags hired a geo-tech company to locate the well and drive stakes into the spot, Barbara said. However, the couple, not wanting to invest such a large sum in the cleanup, ditched the project, made some cosmetic fixes to the house and sold it as-is — after disclosing the existence of the oil well — to a buyer to whom they offered “a deal.”

“My husband got a lot of gray hair over this,” Barbara Shoag said.

Meth labs and oil wells are one thing. Leaking underground storage tanks and toxic landfills identified as Superfund sites and mandated by the government for cleanup are another. Superfund sites — there are 23 federal and at least 100 active state sites in Southern California — often are huge and can take years to clean up.

Homes near dumps

The so-called McColl site was a 22-acre waste disposal facility in Fullerton contaminated with oil-refinery acid sludge, among other toxins. In 1960, the western portion was covered so the Los Coyotes Country Club Golf Course could be built there. In 1968, a number of homes went up on the eastern side, one of which is less than 100 feet from the site. More than 6,700 people live within three miles of the area, according to the state’s toxic substances control department.

Following complaints from residents about odors and health problems, local, state and federal agencies investigated the dump. They discovered that soil and groundwater there contained dangerous chemicals. After a federal cleanup that took 13 years, the job was completed in 1997. The agency continues to check the site and assess risks to human health.

Important as it is to many residents to know they live near once-teeming toxic-waste sites, there still are “some people who don’t want to know,” said Ken Thornburgh, an industrial hygienist, toxicologist and safety engineer with Westlake Village-based American Environmental Group. For sellers, “it impacts the value of your house, and there’s stigma that goes along with it.”

Although California sellers are required to know about and report to potential buyers the natural hazards — floods, fires and earthquakes — in their neighborhoods, they are not required to investigate or disclose environmental hazards of which they are not aware, said June Barlow, vice president and general counsel for the California Assn. of Realtors. That may include waste from an auto-body shop down the street 30 years ago or the corner mini-mall that was once a metal-polishing company.

CAR provides a booklet, available to clients from agents, describing potential environmental hazards, which the industry trade group recommends buyers and sellers read. There is a host of companies, such as Environmental Data Resources Inc., GeoAssurance Inc. and National Disclosure Authority, that will, for a fee, provide reports to individuals and businesses about the known contamination sources in a neighborhood. That information can help owners and buyers take measures to ensure their family’s safety.

“If you’ve got contaminated water tables, you can get a water filtration system,” said Farah Nourmand, chief legal officer for National Disclosure Authority. Or if a home is “near a landfill that is on a Superfund” list, shop elsewhere.

Once that house is found, there are other, less dramatic hazards to consider. Buyers of new, mobile, manufactured and recently remodeled homes are advised to check for formaldehyde, which may be found in cabinetry, building products and furniture. Home test kits are available for about $90, according to the state’s Air Resources Board.

Buyers of older homes should have professionals check for asbestos and lead-based paint, and all homes should be tested for the presence of radon, experts say.

Buyers who purchase properties on which oil wells or contaminants are discovered are advised to use one expert to inform them of the existence and extent of the problem and another to remove it. Get more than one bid for remediation.

“It’s best to find these things out before signing a purchase contract,” Long Beach agent Lee Shoag said. “Environmental reports are relatively cheap. It can cost a bundle in cleanup fees, lost equity and sometimes legal fees, however, if the hazards are discovered afterward.”

The Economic Development Agency (EDA) of the City of San Bernardino has been awarded $400,000 in grant funding from the United States Environmental Protection Agency (EPA) to develop an inventory of potential and actual Brownfields sites contaminated by hazardous substances and/or petroleum, to conduct environmental site assessments, and to support community outreach activities.
A Brownfields site is defined as an abandoned, idle, or under-used industrial or commercial facility where expansion or redevelopment is complicated by real or perceived environmental contamination. The goal of the EPA grant is to identify and address environmental contamination issues so that Brownfields properties can be readied for reuse and redevelopment. For the property to be eligible for remediation grant funding, there can be no financially viable responsible party connected to the
Brownfields site.
EDA is currently soliciting sites to include in this grant funded program, and is accepting public comment and site nominations for Brownfields sites within the grant’s predefined study area of the City until 4:00 p.m. Friday, September 12, 2008. The study area of the City is bounded on the North by 9th Street, on the West by Pepper Street, on the South by Mill Street, and on the East by Tippecanoe Avenue (see map).

A public meeting to present the work plan and receive public comment and site nominations is scheduled for Monday, July 28, 2008 from 6:00 p.m. to 7:30 p.m. in the Economic Development Agency Board Room.

Public Meeting:
Date: Monday, July 28, 2008
Time: 6:00 p.m. to 7:30 p.m.
Where: Economic Development Agency of the City of San Bernardino
EDA Board Room
201 North “E” St., Suite 301
San Bernardino, CA 92401

Another way to comment on the grant work plan and/or to nominate potential
Brownfields sites is to contact:
Kathleen Robles, Project Manager at:

Economic Development Agency of the City of San Bernardino
201 North “E” St., Suite 301
San Bernardino, CA 92401
Email: krobles@sbrda.org
Phone: 909-663-1044
Fax: 909-888-9413
www.sbrdaprojects.org/Brownfields

Comments/nominations are to be received by 4:00 p.m., Friday, September 12, 2008.

I am proud to announce that we have achieved closure for one of our clients at a property in Gardena, California.  Here is a little bit of information about the project: 

From the late 1980s to 1997, a manufacturer of metal fasteners for the aerospace industry and military was located at the site.  These former operations are reported to have included the use of Aboveground Storage Tanks (ASTs) and petroleum solvents.  The former property owner also operated a waste storage area near the center of the southern portion of the site.  The site is currently occupied by various tenants that utilize the property for warehousing, distribution, and small-scale manufacturing.  

Several phases of soil, soil gas, and groundwater investigations have been performed at the site between 1998 and 2006.  The primary objective of subsurface investigations at the site was to provide analytical data that will identify the nature and extent of PCE in soil and groundwater beneath the site.  To help meet this objective, a total of twelve soil borings have been advanced at the site to help characterize PCE in soil.  Three soil gas probes were advanced at the site to help characterize PCE in soil gas.  Additionally, GeoTrans installed and sampled groundwater monitoring wells at the site in two locations to characterize PCE in groundwater.  

Based on the results of this current program and previous soils investigations at the Site, GeoTrans concluded that very low concentrations of PCE are present beneath the southern portion of the Site.  We worked with the Los Angeles Regional Water Quality Control Board and concluded that the presence of this constituent at the concentrations detected during our site investigations is unlikely to pose a significant threat to human health or the environment. Therefore, no further work is warranted at this time in regards to soil and groundwater at the site. 

It has been a few weeks since my last post, but it is time I followup on one of my previous posts regarding impacted soil. In that post, I described a situation where an Underground Storage Tank (UST) was encountered and needed to be removed. During the process of removing the tank, we found that the tank had leaked and impacted the soil and potentially the groundwater in the area of the tank excavation. The excavation had to be back-filled to allow other construction activities at the property to continue, so we removed as much stained soil as we could and back-filled the excavation with a one sack slurry. We also transported the impacted soil offsite and had it properly disposed of.

Now, it’s time to get on with the investigation of the tank leak. Let’s assume that the depth to groundwater in this area is relatively shallow (<30′). Let’s also assume that the soils in the area are sandy or fine-grained (not cobbles or boulders). With these assumptions, we will be able to perform our investigation using a direct-push rig. This device is a truck mounted device that uses the weight of the truck and a hydraulic hammer to drive rods into the sub-surface allowing the operator to collect soil, soil gas, and groundwater samples.

We will collect a few soil samples, soil gas samples, and groundwater samples around the tank area, but there is a significant amount of setup work that needs to be done first. I’ll get into that in my next blog post.

I saw this posted on ENS-Newswire.com and thought I would re-post here since it deals with subject matter from one of my previous posts.

PHILADELPHIA, Pennsylvania, March 19, 2008 (ENS) - The U.S. EPA’s Environmental Appeals Board has ordered a company that owns gas stations in the mid-Atlantic states to pay a $3.16 million penalty for violations involving 72 underground fuel storage tanks at 23 gas stations.

In a ruling announced today, the board upheld the agency’s enforcement action against the owner of Lowest Price gas stations in Maryland, Virginia and the District of Columbia.

In cooperation with state and DC officials, the EPA filed a complaint in September 2002 against gas station owner Euclid of Virginia, Inc. for violating regulations designed to detect and prevent fuel leaks from underground storage tanks.

A leaking underground storage tank is excavated - not at a Euclid-owned station. (Photo courtesy EPA)

In a March 11, 2007 decision, the board ruled against every issue raised in an appeal filed by Euclid of Virginia, Inc.

The company had appealed an administrative law judge’s November 2006 assessment of a $3.08 million penalty for these violations - the largest penalty ever assessed by an EPA administrative law judge for violations of any federal environmental law.

Instead, the board ruled in favor of EPA’s cross-appeal against Euclid, increasing this precedent-setting penalty to $3,164,555.

“With millions of gallons of gasoline, oil, and other petroleum products stored in underground tanks, leaving them unchecked can cause major soil and groundwater contamination,” said Donald Welsh, regional administrator of EPA’s mid-Atlantic region.

Leaking tanks are a major source of soil and groundwater contamination. EPA and EPA-authorized state regulations are designed to reduce the risk of underground leaks, and avoid the costs of major cleanups.

“This decision should send a strong message to owners of underground storage tanks that it is not only in the public’s best interest but in their own, too, to comply with leak detection and prevention requirements,” said Welsh.

The violations involved 14 gas stations in Maryland, two in Virginia, and seven in the District of Columbia.

The board found that the EPA had proved that Euclid failed to maintain required leak detection and control equipment, failed to perform required leak detection activities and failed to comply with corrosion-prevention standards.

The company also was found to have failed to properly install or maintain equipment to prevent releases of gasoline due to the overfilling of tanks or other spills when tanks are being filled, and failed to maintain required financial assurances.

The size of the penalty is due not only to the large number of facilities and underground storage tanks involved, but also to Euclid’s repeated non-compliance with the same regulations over periods that often lasted for several years.

The administrative law judge cited the breadth of the violations, Euclid’s “high degree of negligence” and its overall record of non-compliance in allowing violations to continue despite numerous warnings from the EPA and the Maryland, Virginia and District of Columbia state environmental agencies as further justification for the substantial penalty.

The state and DC agencies coordinated with the EPA to conduct numerous inspections of Euclid-owned gas stations, and inspectors from each agency served as witnesses at the trial.

Euclid has the right to appeal the board’s decision again, this time in federal circuit court.

Copyright Environment News Service (ENS) 2008. All rights reserved.

Earlier this month, the American Society for Testing and Materials (ASTM) published a new standard for the assessment of vapor intrusion into structures on property involved in real estate transactions (ASTM 2600-08). You can read the ASTM press release here.

Generally speaking, vapor intrusion is an indoor air quality condition that occurs when chemicals volatilize from impacted soil and groundwater beneath a building to fill that building with potentially hazardous vapors.

Vapor intrusion has become a significant environmental concern in recent years as properties that were formerly manufacturing facilities, gasoline stations, dry cleaners, or for other reasons have impacted soil and/or groundwater are redeveloped into offices, residential buildings, or mixed use facilities. Until ASTM took the responsibility upon their shoulders, there has been a lot of discussion and inconsistencies about the appropriate methods of measuring the vapor intrusion impact within structures and the appropriate methods of estimating the risk associated with that impact. This new standard is a significant milestone for this emerging area of property due diligence, but I feel that this will be a long and tortuous path with many more milestones to come.

This assessment standard goes a long way to identify the process of assessing the potential Vapor Intrusion Condition (pVIC) or the Vapor Intrusion Condition (VIC) and how the assessment of the VIC relates to the previously established due diligence procedures of a Phase I (ASTM 1527-05). The vapor intrusion standard also provides a prescriptive method on how to identify if a pVIC exists and when a Phase I would identify the need for a vapor intrusion screen to be performed. What the standard does not do is provide a prescriptive method for determining if vapor intrusion results in an indoor air quality level that presents a threat to human health and the environment; at this point the standard directs the user to follow appropriate and applicable government guidance documents. As I have stated in my previous posts, here in Southern California, the convoluted regulatory community could potentially make this part of the site assessment grind to halt or worse underestimate the thret to human health and the environment.

This problem is only exaserbated by the fact that ASTM is only an engineering standards organization, not a regulatory body. Even though this standard is published by ASTM and will be used quite frequently almost immediately by due diligence professionals like myself; it may be decades before state and/or local regulatory agencies begin to recognize site assessments performed and published in full compliance with the standard.

There will be more to come in the saga of vapor intrusion, stay tuned!

To continue on the subject of the last post, let’s assume that you disposed of the tank and the pea gravel or sand that surrounded the tank without incident. You even excavated as much of the stained soil from the base of the excavation as possible while you had the excavation contractor onsite. Let’s also assume that you were able to back-fill the excavation with 1 sac slurry without incident. The soil samples you collected from the base of the excavation came back with gasoline and BTEX, so you will have to perform an additional investigation under the direction of the County Fire Department. You’ve hired your drilling contractor to come out and collect some soil samples as well as install some vapor extraction wells.

You may be thinking to yourself, “I am starting to not understand these terms”. That’s completely fine. Let me take a minute to define a few of these terms before we move on:

BTEX - A combination of volatile organic compounds commonly found in gasoline, Benzene, Tolulene, Ethylbenzene, and Xylenes. Xylenes inlcude m,p-xylenes, o-xylenes, and total xylenes. These compounds all have their own regulatory limits, there is no regulatory limit for BTEX as a group.

Clean Certificate - A Marine Chemist will certify the tank for “Hot Work”. If “Hot Work” will be done on the tank at the destination it will be transported to, the certification that the tank is clean and vapor free should be performed by a certified Marine Chemist.

CUPA - Certified Unified Program Agency, a California state agency. The CUPA was created by SB 1082 in 1994 to consolidate a number of hazardous material programs into one single agency. In many areas the local CUPA is the local fire department, but based on where your property is located your CUPA may be a city agency, the department of health services, or the local arm of the Environmental Protection Agency. In the previous post, the CUPA agency is the Los Angeles countyHot Work - Welding or cutting of metal with a torch.

Marine Chemist - A person qualified to certify a tank as “clean” meaning that all visible deposits, sludge, and all other foreign materials have been removed from the inside of the tank and that there is no flammable hazard or vapors exist. The Marine Chemist fills out the “Clean Certificate”.

One Sack Slurry - A type of cement mix that is delivered in a cement truck. It is mixed at the cement plant and consists of one sack of portland cement to one sack of aggregate, in this case we usually use medium sand. The benefits of a one sack slurry is that is has a pretty good compressive strength meaning that you can drive a truck over it and once it is dry and it can still be worked with an excavator or a backhoe.

Pea Gravel - Gravel, usually crushed granite, that falls within a certain size range that roughly equals the size of a pea. This type of gravel, sand, or one-inch crushed rock is used when a UST is installed because it doesn’t settle or allow the tank to shift around inside the tank pit.

UST - Underground Storage Tank, usually used to hold petroleum hydrocarbons such as gasoline or diesel. Can also be used to hold industrial chemicals and waste oil.

That is a good ammout of information for this post, so I’ll end it there. Next time we’ll discuss what is involved with investigating the extent of the imacts from this leaking tank.

Back to our regularly scheduled program of regulatory how-to.  One of the problems that I mentioned in my last post that you may encounter is the potential that the Underground Storage Tank (UST) that you were planning to remove leaked during it’s former use.  Let’s assume again that the tank held automotive gasoline.  Let’s also assume that the tank is located in Los Angeles County and therefore all work will be overseen by the Site Mitigation Unit of the Health and Hazardous Materials Division of the Los Angeles County Fire Department.

You went ahead and filed the permits to remove your tank, paid the fees and got approval.  You also scheduled with your contractor to excavate the tank and remove the tank in the presence of the inspector.  The inspector also required you to have a marine chemist on site during the tank pull, so she shows up and runs her tests, fills out her forms and now you are good to go.  Until the tank is pulled and exposes a small rust hole  and a relatively large  patch of stained soil beneath the tank.

Now you have a site investigation on your hands.  You will still collect samples from the sidewalls and the base of the excavation, but the samples you collect from the base of the excavation will be impacted with gasoline.

The County Fire Department will require an investigation  whether you backfill or not, so let’s just say that in this case you need to backfill because you have other redevelopment contractors that need to be able to drive over the area.  Go ahead and order your 1 sack slurry from your local cement supplier and fill that excavation up.  You will also have to dispose of the pea gravel or sand that was around the tank so call your favorite trucking company and find a place that will accept the material.

Call a drilling company and plan on collecting soil samples and installing a soil vapor extraction system.  We’re into remediation now, hold tight for the next installment in the process.