BPS-FUDS-ADC-Winter-Forum-2011-PowerPoint-4 by yantingting

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									Formerly Used
Defense Sites

           2011 ADC WINTER FORUM | PAGE 2
 Barry Steinberg, Senior Partner
          Kutak Rock LLP
     Jeff Swanson, President
      Westcliffe Engineers, Inc.
Cliff Yeckes, Senior Vice President
               WILLIS
                               2011 ADC WINTER FORUM | PAGE 3
   Formerly Used Defense Sites
             (FUDS)
        What are they and should you care?




2011 ADC WINTER FORUM | PAGE 4
           FUDS: Legal Foundation
•      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)
     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.
2011 ADC WINTER FORUM | PAGE 5
                             Defining FUDS
 •       Secretary of Defense delegated program
         responsibility to Army Corps of Engineers.
 •       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


2011 ADC WINTER FORUM | PAGE 6
Statutory Protection of Current Owner
        A) CERCLA warranty does not apply to property
           transferred prior to 17 October 1986
              1. 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

 2011 ADC WINTER FORUM | PAGE 7
         Magnitude of the Problem
   • > 9000 FUDS sites identified

   • Approximately 4700 sites with clean up
     responsibilities as of March 2010

   • Increase of 200 sites needing cleanup since
     July 2001

   • More???

2011 ADC WINTER FORUM | PAGE 8
          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


2011 ADC WINTER FORUM | PAGE 9
                          FUDS Inventory




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




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




  Source: DERP Environmental Report to Congress 2009
2011 ADC WINTER FORUM | PAGE 12
                  FUDS Cleanup Liability
   Total FUDS (FY11)
   Cost-to-Complete
    •    $2.7B          HTRW
    •   $10.4B          MMRP
    •    $1.2B          Prog. Mgmt.
    •   $14.6B          Total FUDS




2011 ADC WINTER FORUM | PAGE 13
                                      Source: J. Chu, USACE E2S2 Conference May 2010
  FUDS Program Goals & Funding




  Source: J. Chu, USACE E2S2 Conference May 2010

2011 ADC WINTER FORUM | PAGE 14
   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
2011 ADC WINTER FORUM | PAGE 15
      FUDS Program Uncertainty



• Site identification             • Approach          • Standards        • Responsibility
• Eligibility & Priority          • Level of Effort   • Concurrence      • Monitoring
• Disclosure                      • Documentation     • Residual risks   • Use restrictions
• Record Keeping                  • Uncertainty       • NDAI decision    • Liability




2011 ADC WINTER FORUM | PAGE 16
            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
2011 ADC WINTER FORUM | PAGE 17
                 FUDS Site Prioritization
 • 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
 Relative Risk Site Evaluation         Munitions Response Site
   (RRSE)                               Prioritization Protocol
 • Prioritize IRP sites                 (MRSPP)
 • High, Medium, Low                   • Prioritize MMRP sites
 • Based on contaminants, migration,   • Three modules: EH, CWM, MC;
   potential impacts on population.      Scores from 1-8; 1 = CWM
                                       • Based on relative hazards and
                                         potential impacts on population
2011 ADC WINTER FORUM | PAGE 18
         How Do FUDS Issues Arise?
 • Inadvertent 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 EDR
 • WWII air fields, industrial plants, old Army
   training areas

2011 ADC WINTER FORUM | PAGE 19
                                  Recourse

 • FUDS, but underfunded

 • CERCLA Section 107 – PRP Status of United
   States

 • Environmental Insurance




2011 ADC WINTER FORUM | PAGE 20
                    FUDS Risk Transfer
                   Owner Considerations
 • 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.
 • Many FUDS sites were transferred long ago, with
   non statutory deed restrictions or institutional
   controls which may not hold up with time.


2011 ADC WINTER FORUM | PAGE 21
                     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.
  • 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.
  • Explore Ability to Pay settlements with the USACE.
  • Consider minimizing USACE investigation and remediation
    costs by 3rd party review.

2011 ADC WINTER FORUM | PAGE 22
       Owner or PRP in a FUDS!
      Maximize Insurance Coverage
 • Determine the Chain of Title since transfer.
 • 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.



2011 ADC WINTER FORUM | PAGE 23
       Owner or PRP in a FUDS!
      Maximize Insurance Coverage
 • 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 conditions
             • Remediation of known conditions (excess of failure to respond of
               available DOD indemnity)
             • Potential Tort Exposures (3rd party BI, PD)
             • Non-indemnified Exposures – (NRD, 3rd Party DIV)
             • Defense Costs


2011 ADC WINTER FORUM | PAGE 24
              Owner or PRP in a FUDS
               Other considerations
 • If older policies exist, explore opportunities for
   claims recovery where applicable.

 • Consider liability transfer, guaranteed fixed price
   remediations with engineering firms or third
   parties.




2011 ADC WINTER FORUM | PAGE 25
   Responsibilities of U.S. for Environmental
  Condition on Real Property After Transfer of
          Title to Non Federal Entity
                               Authority for United States' Obligation
                                                   Section
                                                  330, FY '93
                                                   National
  Date of Transfer of               CERCLA        Def. Auth.
         Title                     120(h)(3)*        Act        CERCLA 107 PRP   Contractual
Prior to 1 August 1977                 No             No             Yes
Between 1 August
1977 and 17 October
1986                                   No            Yes             Yes
After 17 October 1986                 Yes            Yes             Yes



*Remediation Obligation Only
 2011 ADC WINTER FORUM | PAGE 26

								
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