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2011 ADC WINTER FORUM | PAGE 2 Formerly Used Defense Sites.

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Presentation on theme: "2011 ADC WINTER FORUM | PAGE 2 Formerly Used Defense Sites."— Presentation transcript:

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2 2011 ADC WINTER FORUM | PAGE 2 Formerly Used Defense Sites

3 2011 ADC WINTER FORUM | PAGE 3 Barry Steinberg, Senior Partner Kutak Rock LLP Jeff Swanson, President Westcliffe Engineers, Inc. Cliff Yeckes, Senior Vice President WILLIS

4 2011 ADC WINTER FORUM | PAGE 4 Formerly Used Defense Sites (FUDS) What are they and should you care?

5 2011 ADC WINTER FORUM | PAGE 5 FUDS: Legal Foundation Recognized in the Defense Environmental Restoration legislation as a specific account for funding – 10 United States Code, 2703(a)(5)Recognized in the Defense Environmental Restoration legislation as a specific account for funding – 10 United States Code, 2703(a)(5) Title 10 U.S.C., Section 2701(C)Title 10 U.S.C., Section 2701(C) 1.Basic Responsibility. – The Secretary shall carry out (in accordance with the provisions of this chapter and CERCLA) all response actions with respect to release of hazardous substances from each of the following: … (B) Each facility or site which was under the jurisdiction of the Secretary and owned by, leased to, or otherwise possessed by the United States at the time of actions leading to contamination by hazardous substances.

6 2011 ADC WINTER FORUM | PAGE 6 Defining FUDS Secretary of Defense delegated program responsibility to Army Corps of Engineers.Secretary of Defense delegated program responsibility to Army Corps of Engineers. Corps’ Definition:Corps’ Definition: A)Real Property B)Under the jurisdiction of the Secretary of Defense or a Secretary of a military department C)-- 1.Owned by, or 2.Leased by, or 3.Otherwise possessed by the United States, or 4.Those real properties where accountability rested with DOD but where the activities at the property were conducted by government owned contractor operated (GOCO) D)Transferred from DOD control prior to 17 October 1986

7 2011 ADC WINTER FORUM | PAGE 7 Statutory Protection of Current Owner A)CERCLA warranty does not apply to property transferred prior to 17 October Superfund amendments became law 2.No retroactive application for deeds already executed B)330 Indemnity 1.Applies for deeds executed between 1 August 1977 (Enactment of 10 U.S.C. 2687) and 17 October 1986 C) Funding competition with BRAC and active base remediation

8 2011 ADC WINTER FORUM | PAGE 8 Magnitude of the Problem > 9000 FUDS sites identified> 9000 FUDS sites identified Approximately 4700 sites with clean up responsibilities as of March 2010Approximately 4700 sites with clean up responsibilities as of March 2010 Increase of 200 sites needing cleanup since July 2001Increase of 200 sites needing cleanup since July 2001 More???More???

9 2011 ADC WINTER FORUM | PAGE 9 FUDS Program Overview Established in 1986 by SARA as part of Defense Environmental Restoration Program (DERP) –Requires DoD to investigate and remediate past environmental releases and hazards Program elements –Installation Restoration Program (IRP) –Military Munitions Response Program (MMRP) –Building Demolition/Debris Removal (BD/DR) Army designated Executive Agent for FUDS –Executed by US Army Corps of Engineers –Regulatory oversight by State’s and EPA

10 2011 ADC WINTER FORUM | PAGE 10 FUDS Inventory Source: J. Chu, USACE E2S2 Conference May 2010

11 2011 ADC WINTER FORUM | PAGE 11 FUDS Inventory Source: J. Chu, USACE E2S2 Conference May 2010

12 2011 ADC WINTER FORUM | PAGE 12 FUDS Program Site Status Source: DERP Environmental Report to Congress 2009

13 2011 ADC WINTER FORUM | PAGE 13 FUDS Cleanup Liability Source: J. Chu, USACE E2S2 Conference May 2010 Total FUDS (FY11) Cost-to-Complete $2.7B HTRW $10.4B MMRP $1.2B Prog. Mgmt. $14.6B Total FUDS

14 2011 ADC WINTER FORUM | PAGE 14 FUDS Program Goals & Funding Source: J. Chu, USACE E2S2 Conference May 2010

15 2011 ADC WINTER FORUM | PAGE 15 FUDS Program Goals & Funding FUDS-IRP Remedy in Place –High RR 2007 –Medium RR 2011 –Low RR 2014 FUDS-MMRP Initial Assessments –PA 2007 –SI 2010 Remedy in Place –All Sites 2020 Source: J. Chu, USACE E2S2 Conference May 2010 RR = Relative Risk IRP = Installation Restoration Program MMRP = Military Munitions Response Program HTRW = Hazardous, Toxic, Radioactive Waste

16 2011 ADC WINTER FORUM | PAGE 16 FUDS Program Uncertainty InventoryInvestigationCleanup Long-Term Monitoring Site identification Eligibility & Priority Disclosure Record Keeping Site identification Eligibility & Priority Disclosure Record Keeping Approach Level of Effort Documentation Uncertainty Approach Level of Effort Documentation Uncertainty Standards Concurrence Residual risks NDAI decision Standards Concurrence Residual risks NDAI decision Responsibility Monitoring Use restrictions Liability Responsibility Monitoring Use restrictions Liability

17 2011 ADC WINTER FORUM | PAGE 17 FUDS Challenges for Landowners & Communities Engagement in FUDS Process -“Getting a seat at the table” -Access to decision makers -Disclosures, information Prioritization and Funding -RRSP and MRSPP vs. “Squeaky wheel” -Sequencing = Politics -Interim Risk Management Managing Uncertainty & Liability Concerns -Scope of investigation and remediation -CERCLA responsibility -“NDAI” decision point

18 2011 ADC WINTER FORUM | PAGE 18 FUDS Site Prioritization Relative Risk Site Evaluation (RRSE) Prioritize IRP sites High, Medium, Low Based on contaminants, migration, potential impacts on population. Relative Risk Site Evaluation (RRSE) Prioritize IRP sites High, Medium, Low Based on contaminants, migration, potential impacts on population. Munitions Response Site Prioritization Protocol (MRSPP) Prioritize MMRP sites Three modules: EH, CWM, MC; Scores from 1-8; 1 = CWM Based on relative hazards and potential impacts on population Munitions Response Site Prioritization Protocol (MRSPP) Prioritize MMRP sites Three modules: EH, CWM, MC; Scores from 1-8; 1 = CWM Based on relative hazards and potential impacts on population DoD prioritizes funding to clean up sites that pose the greatest threats first – “Worst First” Sequencing of sites for clean up: -RRSE & MRSPP to determine site’s relative risks -Economics, programmatic and stakeholder concerns may also affect clean up priority -Preference to complete existing sites before starting new

19 2011 ADC WINTER FORUM | PAGE 19 How Do FUDS Issues Arise? Inadvertent discovery – problem unearthedInadvertent discovery – problem unearthed –No disclosure in transfer documents –Prior use, military presence lost in the fog of history Increased due diligence – FUDS now reported on Phase I EDRIncreased due diligence – FUDS now reported on Phase I EDR WWII air fields, industrial plants, old Army training areasWWII air fields, industrial plants, old Army training areas

20 2011 ADC WINTER FORUM | PAGE 20 Recourse FUDS, but underfundedFUDS, but underfunded CERCLA Section 107 – PRP Status of United StatesCERCLA Section 107 – PRP Status of United States Environmental InsuranceEnvironmental Insurance

21 2011 ADC WINTER FORUM | PAGE 21 FUDS Risk Transfer Owner Considerations Pre-1986 Deed Indemnification Language (including liability-shifting or restriction clauses) does not mitigate DoD’s responsibilities under CERCLA.Pre-1986 Deed Indemnification Language (including liability-shifting or restriction clauses) does not mitigate DoD’s responsibilities under CERCLA. USACE, as agent for the DoD, is liable for remediation of any release that occurred during their ownership under CERCLA, regardless of PRP’s.USACE, as agent for the DoD, is liable for remediation of any release that occurred during their ownership under CERCLA, regardless of PRP’s. Many FUDS sites were transferred long ago, with non statutory deed restrictions or institutional controls which may not hold up with time.Many FUDS sites were transferred long ago, with non statutory deed restrictions or institutional controls which may not hold up with time.

22 2011 ADC WINTER FORUM | PAGE 22 FUDS Risk Transfer Understand the Game Depending upon age, because of statutory uncertainty, all environmental costs may not be covered by DoD - investigate all sources for recovery.Depending upon age, because of statutory uncertainty, all environmental costs may not be covered by DoD - investigate all sources for recovery. Expedite $ recovery process - long USACE time frame for CERCLA investigation, remediation and closure process.Expedite $ recovery process - long USACE time frame for CERCLA investigation, remediation and closure process. Which regulatory framework best drives the investigation and cleanup and maximizes the contributions of others, including insurers.Which regulatory framework best drives the investigation and cleanup and maximizes the contributions of others, including insurers. Explore Ability to Pay settlements with the USACE.Explore Ability to Pay settlements with the USACE. Consider minimizing USACE investigation and remediation costs by 3 rd party review.Consider minimizing USACE investigation and remediation costs by 3 rd party review.

23 2011 ADC WINTER FORUM | PAGE 23 Owner or PRP in a FUDS! Maximize Insurance Coverage Determine the Chain of Title since transfer.Determine the Chain of Title since transfer. Assess current and historic insurance policies for potential environmental coverage.Assess current and historic insurance policies for potential environmental coverage. –Some Pollution Coverage may be available in CGL policies issued prior to the Categorical Exclusions of the 1970’s and the Absolute Pollution Exclusion of 1986.

24 2011 ADC WINTER FORUM | PAGE 24 Owner or PRP in a FUDS! Maximize Insurance Coverage Consider acquiring Environmental Site Liability coverage, if none exists.Consider acquiring Environmental Site Liability coverage, if none exists. –Provide environmental site data. –Carriers often like FUDS because they are generally small, and have been developed for some time. –Develop new coverage: Remediation of unknown conditionsRemediation of unknown conditions Remediation of known conditions (excess of failure to respond of available DOD indemnity)Remediation of known conditions (excess of failure to respond of available DOD indemnity) Potential Tort Exposures (3rd party BI, PD)Potential Tort Exposures (3rd party BI, PD) Non-indemnified Exposures – (NRD, 3rd Party DIV)Non-indemnified Exposures – (NRD, 3rd Party DIV) Defense CostsDefense Costs

25 2011 ADC WINTER FORUM | PAGE 25 Owner or PRP in a FUDS Other considerations If older policies exist, explore opportunities for claims recovery where applicable.If older policies exist, explore opportunities for claims recovery where applicable. Consider liability transfer, guaranteed fixed price remediations with engineering firms or third parties.Consider liability transfer, guaranteed fixed price remediations with engineering firms or third parties.

26 2011 ADC WINTER FORUM | PAGE 26 Responsibilities of U.S. for Environmental Condition on Real Property After Transfer of Title to Non Federal Entity Authority for United States' Obligation Date of Transfer of Title CERCLA 120(h)(3)* Section 330, FY '93 National Def. Auth. ActCERCLA 107 PRPContractual Prior to 1 August 1977No Yes Between 1 August 1977 and 17 October 1986NoYes After 17 October 1986Yes *Remediation Obligation Only


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