How to Effectively Manage Vapor Intrusion Risks When Acquiring and Developing Property

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Farella Braun + Martel LLP

With increasing concern and attention being raised by regulatory agencies and the public on protecting building occupants from exposure to vapor intrusion (VI)-related contaminants, parties acquiring and developing property must make sure that their environmental due diligence process includes a thorough assessment of VI risks. The failure of new landowners to critically assess and properly manage VI risks could have adverse consequences, including potential loss of Superfund liability protections, increased toxic tort liability exposure, and adverse impacts on the marketability and usability of the property. As discussed below, effectively managing VI risks requires the involvement of experienced environmental professionals, a careful analysis of site conditions and data, and consideration of short- and long-term remedial obligations that may be imposed on new property owners to mitigate VI conditions.

Background

Prospective purchasers typically conduct environmental due diligence prior to acquiring potentially contaminated properties for many reasons. Foremost among them is the need to conduct “all appropriate inquiry” or “AAI” in order to qualify for landowner liability protections (i.e., innocent landowners, bona fide prospective purchasers, and contiguous property owners) under CERCLA (also known as Superfund). To satisfy federal AAI requirements, prospective purchasers will hire environmental consultants to conduct a Phase I Environmental Site Assessment (Phase I ESA) in compliance with current ASTM Standards. While performing a Phase I ESA requires the consultant to assess the potential for releases and migration of contaminants in the vapor phase, consultants often fall short in critically assessing the risks associated with the intrusion of contaminant vapors into existing and planned structures on the property.

The regulatory environment for VI has expanded significantly within the past ten years, with increasing attention being paid by federal and state regulatory agencies to the identification and mitigation of VI risks. At the federal level, EPA published its final VI guidance, titled “OSWER Technical Guide for Assessing and Mitigating the Vapor Intrusion Pathway from Subsurface Vapor Sources to Indoor Air,” in June 2015. The guidance provides detailed technical recommendations for evaluating and mitigating actual and potential VI impacts associated with releases of hazardous volatile chemicals. Most recently, EPA modified its Hazard Ranking System protocols to include VI as a contaminant pathway for purposes of assessing whether a site qualifies for inclusion on the Superfund National Priorities List. The rule was published in the Federal Register on January 9, 2017, but its effective date has been deferred to May 22, 2017 as a result of the current Administration’s January 20, 2017 “Regulatory Freeze Pending Review” directive and EPA’s subsequent actions implementing that directive.

Most states also have some form of VI guidance. At least 28 states have standalone or draft VI guidance, with numerous other states including VI guidelines within broad guidance or as part of a specific cleanup program. In California, the Department of Toxic Substances Control (DTSC) has developed several guidance documents dealing with various aspects of VI, including guidance on performing soil gas investigations, evaluating and mitigating subsurface VI to indoor air, remediating vapor source areas, and performing long-term monitoring (www.dtsc.ca.gov/SiteCleanup/Vapor_Intrusion.cfm). Further updates to DTSC’s VI Guidance are expected later this year. The San Francisco Bay Area Regional Water Quality Control Board (SFRWQCB) has also developed its own VI guidelines for trichloroethylene (TCE)-contaminated sites in the San Francisco Bay Region, as well as VI-related screening levels (http://www.waterboards.ca.gov/sanfranciscobay/water_issues/programs/sitecleanup/TCE_Interim_VI_Framework.pdf and http://www.swrcb.ca.gov/rwqcb2/water_issues/programs/esl.shtml).

Assessing VI During the Due Diligence Process

While there are many environmental professionals who may be qualified to perform Phase I ESAs in conformance with federal AAI requirements, evaluating the potential for and mitigation of VI conditions on a target property requires the hiring of a more specialized environmental consultant. In particular, an appropriately-qualified consultant should be:

  • Experienced in assessing VI conditions, including an understanding of potential sources and pathways for VI contamination and potential effects from site-specific, non-VI vapor sources (e.g., fugitive sources within buildings, auto exhaust);
  • Experienced in conducting VI-related investigations, including the conducting of soil gas, sub-slab, and indoor air testing;
  • Familiar with local subsurface geological and hydrogeological conditions, and known on-site and regional contamination conditions;
  • Well-versed in federal and state VI-related requirements and guidance, and potentially applicable regulatory standards; and
  • Experienced in designing, installing, operating and maintaining VI mitigation systems.

Depending on the findings of the Phase I ESA, “Phase II” testing may be needed to confirm the presence or absence of a VI condition. While sellers may be reluctant to allow prospective buyers to conduct such testing, the heightened regulatory attention to VI issues coupled with increasing demands for VI-related testing from buyers’ lenders, investors, employees, and prospective tenants has resulted in an increasing trend to having some degree of Phase II testing be included as part of a prospective buyer’s due diligence process.

Phase II testing may include collecting and analyzing subsurface soil gas samples outside of existing or planned building areas, areas of suspected contamination, and/or beneath existing building floor slabs. In certain circumstances, collecting and analyzing indoor air samples may be appropriate to assess whether identified subsurface VI conditions, and possibly other confounding variables, are adversely impacting indoor air. The presence of volatile contaminants in soil vapor and/or indoor air may trigger certain “continuing obligations” and “reasonable steps” for the new landowner.

Continuing VI Obligations

Superfund imposes a continuing obligation on new landowners seeking to qualify for Superfund liability relief to take “reasonable steps” to prevent or limit exposure to contamination discovered on the property. The failure of a new landowner to take reasonable steps could potentially result in a loss of landowner liability protection under CERCLA. For sites with VI conditions, reasonable steps may involve the installation and maintenance of mitigation measures to protect site occupants from exposure to unacceptable levels of underlying contaminant vapors.

When it comes to VI mitigation, many options are available and should be explored with input from the environmental consultant and experienced environmental legal counsel. In some cases, existing structures may have VI mitigation already in place or may require retrofitting with a VI mitigation system. For properties where new construction is planned, an opportunity to design and include VI mitigation as part of the initial site development (as opposed to retrofitting after site development) could be a cost effective way to address VI conditions. Depending on the circumstances, involvement of regulatory authorities may be required. VI mitigation could involve one or more of the following approaches:

  • Use of a site development design (e.g., podium-style buildings) that limits exposure of building occupants on lower floors to underlying VI conditions;
  • Installation and operation of a soil vapor extraction (SVE) system to remediate contaminant source areas;
  • Installation of vapor barriers beneath building floors and utility conduits.
  • Application of sealants to floor slabs and utility conduits;
  • Installation and operation of a building’s heating, ventilation and air conditioning (HVAC) system to create a pressurized space within the building to resist VI; and/or
  • Installation of active or passive sub-slab ventilation/depressurization systems to create a negative pressure environment beneath building floor slabs, thus keeping unacceptable levels of VI contaminants out of the building.

When designing and installing a VI mitigation system, it is important to also identify those operation and maintenance (O&M) obligations that will be needed to assure the long-term effectiveness of the installed VI mitigation system. O&M may include requirements to:

  • Notify building occupants of the presence of VI mitigation systems;
  • Continuously operate HVAC systems during periods of building occupancy, which may include weekends, holidays, and nights if it is reasonably foreseeable that tenants may be working during such off-hour periods;
  • Conduct periodic inspections and resurfacing/repair of previously-applied sealants;
  • Avoid penetrating floor slabs or conducting subsurface excavations that could potentially disturb underlying vapor barriers and/or ventilation piping systems, and have mechanisms in place to prevent tenants from doing so;
  • Notify regulatory authorities of work that is expected to interfere with or compromise installed VI mitigation components;
  • Conduct emergency repairs if VI mitigation systems are accidentally damaged;
  • Conduct periodic inspections and perform needed repair of worn VI mitigation system components; and/or
  • Conduct periodic indoor air monitoring to confirm the effectiveness of installed VI mitigation systems.

Consideration also must be given to identifying those parties who will be responsible for performing and paying for any required O&M. Depending on the site-specific circumstances, such parties may include prior and/or new landowners and tenants, as well as those parties who are responsible for the underlying contamination conditions. The environmental consultant and environmental legal counsel play important roles in identifying appropriate O&M measures and the parties who will be performing and paying for such O&M, and in preparing appropriate documentation to memorialize such roles and responsibilities.

For sites with pre-existing contamination and VI conditions, it is not uncommon for such properties to contain a land use restriction and environmental covenant that obligates current and future owners of the property to install, operate, and maintain VI mitigation systems to protect site occupants. Because Superfund imposes a continuing obligation on landowners to comply with imposed land use restrictions and institutional controls, the failure to comply with such restrictions and controls could potentially jeopardize the new landowner’s liability protection under CERCLA. Consequently, understanding and complying with such obligations, with the assistance of environmental legal counsel, is critical to preserving the new landowner’s defense to Superfund liability and in avoiding possible toxic tort claims from building occupants (e.g., tenants, guests).

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By diligently assessing VI conditions and implementing and maintaining effective VI mitigation with the assistance of experienced environmental consultants and legal counsel, landowners acquiring and developing contaminated property will not only preserve their defenses to potential Superfund liability, but will make their properties safer for current site occupants (decreasing their potential exposure to toxic tort liability) and more marketable to future buyers and tenants.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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