Risk-Based Corrective Actions
The philosophy of a risk-based corrective action (RBCA – pronounced Rebecca) is very different from the traditional approaches to cleanup of soil and groundwater contaminants. Traditional approaches have been based upon either "prescribed numerical standards" or "technology-based limits". With prescribed numeric standards, concentrations of contaminants are lowered (volumes of contaminated material are removed) to levels that are considered safe. The definition of minimum safe levels has traditionally come under the authority of the EPA, with states being permitted to be more stringent, if they choose. For groundwater, defining safe levels has been consistent with the intended use of groundwater within the region. Thus groundwater regions classified as suitable for consumption have had prescribed numeric standards equivalent to drinking water standards. Those suitable for recreation have been prescribed to maintain natural aquatic environments, etc. "Technology-based limits" evolved to afford some economic consideration when removing contaminants to prescribed numeric standards is prohibitive. Here contaminants are reduced as much as is technically feasible given current technology. This modification to the traditional approach provides a compromise, when safe, to permit shutting down remediation systems that are ineffective in reducing concentrations to the prescribed numeric standards.
With a RBCA approach, decisions to determine acceptable contaminant levels are based upon a site-specific assessment of the current and potential risks that the contaminant has to human health and environmental resources. This approach seeks to reduce the identified risks to some low acceptable level. Acceptable methods to achieve this risk reduction include:
- Reducing contaminant concentrations.
- Controlling a reduction of exposure pathways by applying institutional controls, such as deed restrictions, use restrictions, and physical barriers.
- Allowing contaminants to remain in place based upon projections that they will become naturally attenuated, such as by progressive groundwater dilution and/or naturally occurring biological means.
EPA introduced the RBCA approach in 1989 in its Risk Assessment Guidance for Superfund. With the publishing of EPA's proposed rules for corrective action at solid waste facilities on July 27, 1990 in the Federal Register, this approach began to be recognized as a possible alternative methodology for corrective action in lieu of the traditional approaches to concentration reduction. Congress never promulgated these rules. But with the growing recognition throughout the United States of the need to revitalize major urban centers by redeveloping contaminated and abandoned urban properties and with the current political trend by Congress encouraging "states rights," states began to embrace the concept of these publications. They saw the RBCA approach as providing an economical means to manage the cleanup of the contaminated urban sites, where utilizing a traditional approach had been considered cost prohibitive. As a result many states have promulgated their own legislation to define acceptable levels of environmental risk from the concept promoted by EPA's publications. In addition, EPA has encouraged states to implement voluntary cleanup programs to encourage owners to clean up their contaminated properties as part of its Brownfields Initiative. As a result, a patchwork of risk-based corrective action programs have been individually conceived and adopted by a near majority of states.
Brownfields is the term given to abandoned or under-utilized urban sites with environmental contamination. Typically, lenders have shunned involvement in cleanup and redevelopment of these sites because of the potential liability under CERCLA. Seeking ways to encourage redevelopment of these sites has come into the political spotlight and efforts to accomplish this have become known collectively as the "Brownfields Initiative." Cities, states, and even Congress are interested in returning Brownfields sites to productive use. On January 25, 1995, the Environmental Protection Agency (EPA) announced the Brownfields Action Agenda which outlined EPA's activities and future plans to help states and localities stimulate environmental cleanup through economic redevelopment. The Brownfields Action Agenda has encouraged states to develop voluntary cleanup programs whereby an owner of a contaminated site approaches the state voluntarily to work out a cooperative process to ready the site for redevelopment. EPA has taken a wait-and-see attitude in the political climate that encourages "states rights", rather than first implementing this new program on the Federal level and then eventually passing it onto the states (as has been the tradition in the past). EPA is funding all 50 states for Brownfields pilots, hoping to gain experience from these pilots to guide the EPA's future efforts regarding the Brownfields Initiative.
It is the idea of, "What constitutes enough cleanup?" that maintains the specter of liability for anyone likely to be a future owner of a contaminated property, such as a mortgage lender. If a site were truly cleaned up, there would be no remaining liability from the former contamination. With RBCA, contamination is permitted to remain in soils and groundwater at concentrations that are based upon the assessed current and reasonable potential risks to human health and environmental resources. As a result, with RBCA cleanups, the residual concentrations of contaminants typically exceed the residual concentrations permitted by the traditional approach of reducing concentrations to either "prescribed numerical standards" or "technology-based limits". Of particular importance to understanding potential liability concerns with a RBCA approach is the fact that often the RBCA residuals exceed the traditional residual concentrations by many orders of magnitude.
Traditional and RBCA cleanup levels for Trichlorethylene (TCE) provide a good example. TCE is a carcinogen (suspect cancer causing substance) that is most commonly associated with soil contamination from dry-cleaning operations. Prior to the advent of risk-based corrective actions, the typical cleanup level for TCE would have been 25 ppb (parts per billion). With a RBCA approach, up to 100 ppb would be routinely acceptable. Depending on site-specific conditions, levels of 1,000 ppb and more could be found acceptable. Further use of modeling and risk assessment procedures could even eliminate the recommendation for any cleanup (Saga, 1996).
All of the releases of liability typically offered to date under the auspices of state voluntary cleanup programs do not offer any guaranteed liability protection to lenders of contaminated property. All have provisions for "reservations of rights," in which the state reserves its right to make further requirements should some problem result from the contaminated condition. As such, owners of "state approved" sites that have been cleaned up to new risk-based corrective action levels are not immune to further action or litigation. Besides the specter of liability related to costs to clean up contaminated sites under CERCLA, a lender, who could be adjudged an owner or operator of a contaminated site, is always exposed to third party (or private party) actions alleging damage resulting from a contaminated condition. These could take the form of toxic tort claims (such as health problems caused by the condition) or claims of diminution of property value (such as those from affected abutters or successors).
The EPA had originally attempted to reduce the specter of lender liability by promulgating a "Lender Liability Rule" on April 29, 1992. This Rule was intended to afford protection to lenders with respect to contaminated collateral. But it was vacated on January 17, 1995 when the Supreme Court refused to reverse a lower court's decision striking down the Rule. On its final day prior to adjournment in September 1996, Congress, recognizing the importance of this issue to the lending community, overturned by statute the D.C. Court of Appeals decision that had voided the EPA Lender Liability rule. Under that rule lenders can limit their liability following foreclosure by following certain prescriptive measures like avoiding management of contaminated the property and selling the property as soon as possible! The question arises as to whom one might sell the contaminated property. Many see this provision in the law as assuring that a lender who forecloses upon a contaminated property can expect a wholesale diminution of the property’s market value. Even with this rule in place, if a lender were to foreclose and manage a property that had been cleaned up by a RBCA approach, and at some time in the future a third party is harmed by the residual contaminants, the lender could be held liable. The real key to avoiding liability is in understanding the issues and in defining the answer to "How clean is clean enough?" for new investments. The implementation of risk-based corrective actions can provide a sound approach to managing contamination when properly understood and applied, but its proper application is highly complex and technically involved. As originally conceived by EPA, the appropriate tasks for a risk assessment approach were to include:
- Identifying contaminants of concern.
- Identifying the potential receptors of the contaminants.
- Analyzing and identifying the potential exposure pathways for contaminants to reach receptors.
- Performing an analysis of the response of receptors to the potential doses of contaminants.
- Quantifying the risks considering the potential levels of sensitivity and uncertainty of the analysis.
- Determining the appropriate means to manage the identified risks.
The proper application of this methodology requires a multi-disciplinary approach involving professionals with wide ranges of expertise, including engineering, chemical, and soils analysis, transport of compounds within the environment, risk assumption and analysis, statistical analysis, ecology, and human health. Because of this, it was intended that the risk assessment process be applied to large-scale, highly contaminated sites. Without proper knowledge and understanding, a risk assessment is little more than a complex mathematical exercise in which parameters can be adjusted to get the answer of choice.
In practice, while focusing upon risk and exposure is being encouraged by EPA and embraced by the states, there is a lack of clear guidance in the practical application of this approach. EPA is not regulating the process, nor has it completely endorsed it. Currently a majority of states (42 by the middle of 1999) are forging ahead with their own prescription of a RBCA program (in current lingo, these programs are known as voluntary cleanup programs or "VCP’s," the nomenclature first introduced in EPA’s 1995 "Brownfields Action Agenda"). Many of the state VCP’s are quite liberal in the approaches that they prescribe and in the lack of funding and oversight provisions. It is safe to say that compliance with many of these programs does not require a formal risk assessment. In many cases, problems are "risked away" by consultants applying their own brand of risk assessment methodology. The use of a RBCA approach is being applied to most contaminated sites within states that recognize this approach. Regulators, not adequately schooled in understanding and reviewing formal risk assessments, and knowing well that the political climate demands renewal and economic redevelopment, are eager to embrace proposals that encourage new investment and construction. Many lenders who understand what is happening are uncomfortable with this practice and are concerned with the residual liability issues.
