Archive for October, 2010

Environmental Assessment and Delineation-when is Enough?

October 4th, 2010

Question – Recently, a client was looking to purchase a piece of real property.  The phase I environmental site assessment recommended soil sampling because of historical uses and soil tailings deposited onsite from an adjacent municipal operation.  The preliminary Phase II assessments identified that one fourth of the soil sample lab results showed impacts above Florida Department of Environmental Protection residential soil impact/clean up target levels (SCTLs) but well below commercial/industrial impact levels, and only at shallow depths of 0”-6” below land surface (BLS).   The client presently wants to use the parcel for onside parking, which improvement it was going to self-fund; however, client also indicates that there is a possibility that future development might include multi-family housing – the client wanted to know if further assessment needed to be done, and if so, how much is enough.  How should one respond?

Response – One obvious initial question is, why does the buyer not approach the seller with the Phase II data and request that seller demonstrate, through its own investigations (using professionals and methods approved by and acceptable to buyer), what the level and area of impacts are – in other words, delineate the impacts so that the parties all have a clear understanding of the concern, the probably associated costs and regulatory issues.  However, in this case, seller had informed buyer that the seller did not want to know the results of buyer’s investigations (to avoid having knowledge that might lead to an “owner” reporting obligation), and that buyer would have to expend its own funds and time to see if buyer could get comfortable with any identified issues.

Since the burden of going forward falls back squarely on the buyer, we need to know exactly what level of risk the buyer is willing to tolerate.  The answer depends on what the prospective owner intends to do with the property.  Based upon the client’s stated purpose of paving over the parcel to use as on-site parking for an adjacent complex, a defensible legal and practical argument could be made for telling the client that further soil assessment was not necessary.  Since the present identified impacts were not above commercial/industrial impact levels, and given that the buyer was not involving any lender (which due diligence requirements would likely be more stringent), a paved parking lot improvement which did not remove any topsoil to another/offsite location would probably be possible to accomplish without inordinate compliance costs.

However, the buyer has also indicated that future plans might also include residential improvements such as multi-family housing.  Clearly, that kind of use is impeded by the initial identification of soil impacts above residential SCTLs.   In order to know whether any type of residential improvement might be possible on this target parcel, buyer needs to determine the horizontal extent of the impacts (is it localized or widespread); also, depending on the type of construction, if any depths below 6” BLS are going to be disturbed, buyer needs to understand the vertical range of impacts also.   This information will allow the buyer to assess the levels of risk and cost associated with dealing with any potential residential project in the future.

Buyer engaged its consultant to do an initial soil grid method of testing, to see if four corner boundaries could be ascertained for the initial discovered impacts; the consultant also took additional discrete borings between 6’’ and 24’’ and between 24’’ and 48” so that vertical impact depths might be determined if necessary.  The first round of testing found “clean” boundaries on the North and West sides of the initial impacts, but more contaminated soil was identified in the Southerly and Easterly directions.  After another round of samples, the horizontal and vertical boundaries of the impacts were identified, the consultant was able to inform the buyer of the range of costs associated with dealing with the volume of impacted soil and legal counsel was able to advise on regulatory requirements and possible outcomes.  By completing the delineation assessment pre-closure, the buyer had sufficient data to make an informed decision on whether and how best to proceed.