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.
2.
3.
4.
Owned by, or
Leased by, or
Otherwise possessed by the United States, or
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
2011 ADC Source:
WINTER FORUM
10
J. Chu,| PAGE
USACE
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
$10.4B
$1.2B
$14.6B
HTRW
MMRP
Prog. Mgmt.
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
Inventory
• Site identification
• Eligibility & Priority
• Disclosure
• Record Keeping
2011 ADC WINTER FORUM | PAGE 16
Investigation
• Approach
• Level of Effort
• Documentation
• Uncertainty
Cleanup
Long-Term
Monitoring
• Standards
• Concurrence
• Residual risks
• NDAI decision
• Responsibility
• Monitoring
• Use restrictions
• Liability
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
(RRSE)
• Prioritize IRP sites
• High, Medium, Low
• Based on contaminants, migration,
potential impacts on population.
2011 ADC WINTER FORUM | PAGE 18
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
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
Def. Auth.
Act
CERCLA 107 PRP
Date of Transfer of
Title
CERCLA
120(h)(3)*
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
Contractual