Suggested Procedures for Remediating Contamination from Home Heating Oil Tanks with a Pending Real Property Transfer in Virginia
Developed by Soils and Environmental Services, Inc. for exclusive use by our clients.
Table of Contents:
Initial Response
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Evidence of leaks from home heating oil tanks is often discovered during inspections requested by potential purchasers and lenders. Prior to the inspection, all parties should be familiar with these procedures so that if a leak is discovered, it can be properly reported to the appropriate agencies within 24-hours. It is important to report that release within 24-hours to ensure access to the Virginia Petroleum Storage Tank Fund which will likely reimburse all costs related to remediation activities, after the deductible is paid.
Initial Response
Upon confirming a release has occurred, the responsible party (owner) is required to report or authorize a consultant to report the release within 24 hours. Additional initial response activities may include taking action to prevent further release of petroleum into the environment and identifying and or mitigating fire, vapor and explosion hazards.
Immediate actions to abate the conditions listed above are required by law and need not be pre-approved by VA DEQ. These actions are still eligible for reimbursement as long as they are not undertaken more than 24-hours prior to reporting and they are deemed reasonable and necessary by VA DEQ.
- Prepare contracts and agreements including a full understanding of the process by the sellers, purchasers and their respective agents and settlement attorney.
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Initial Abatement Measures Phase (IAM) (Three to Four Weeks on Average)
The IAM phase includes those activities undertaken during the initial response period as well as other non-emergency activities necessary to prevent the further spread of contaminants and insure human health and safety. All non-emergency activities must be pre-approved by VA DEQ prior to work beginning. These tasks include, but are not limited to, research of site characteristics and other environmental conditions on or near the site, a survey of potential contaminant receptors including water wells, streams and structures, excavation of contaminated soils and limited analysis of soils and water. Continued abatement of fire and vapor hazards and ensuring an uncontaminated drinking water supply are also common at sites with more significant contamination. The results of these activities are summarized in the IAM report which contains conclusions and recommendation for additional studies if necessary or case closure.
The costs for the Initial Abatement Phase can vary greatly, depending on the severity of the release.
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IAM Steps
- Prepare for an Activity Authorization Form (AAF) for the Initial Abatement Measures Phase
- VA DEQ signs off on IAM AAF.
- Local building permit obtained
- IAM site work completed
- New tank installed (VA DEQ does not reimburse any charges related to the installation of a new tank) (If a tank is being installed)
- Laboratory results of soil and groundwater samples received.
- IAM report generated and sent to VA DEQ, local building official sellers, purchasers and agents.
Property transfer usually occurs after the IAM report is generated. The information gathered will provide a good idea of the severity of the release and the extent of additional work, if any, that will be required to further characterize the site. The transfer of property at this time presents some challenges that can be overcome with good planning and a thorough understanding by all parties involved. The attorney or settlement agent should be privy to all information and draft all necessary agreements. Typically, all charges that have been previously agreed to are paid from settlement funds. This is usually required to eliminate potential mechanics liens on the property. Charges in excess of those due at settlement are assigned directly to SES via a claim reimbursement assignment form. In this case, the total reimbursement check will be mailed to and payable to SES. When received, we will reimburse the appropriate parties for monies paid less the deductible.
The costs for the Initial Abatement Phase can vary greatly, depending on the severity of the release.
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Site Characterization Report (SCR) Phase and Post SCR Monitoring (Three Months to One Year)
Site Characterization consists of activities performed to assess the site and contamination conditions, risks posed by the release and remedial options for cleaning up the release if warranted by the risk posed. The objective of site characterization is to obtain all information necessary to make an appropriate and informed decision regarding actions necessary to protect human health and the environment. If the IAM report recommends that additional studies are necessary, there must also be an agreement between all parties prior to settlement for the completion of and payment for site characterization studies. SES should be able to estimate the costs for site characterization after completion of the IAM phase.
Site Characterization steps follow steps 1 - 7 outlined in the IAM outline with the exception of step 5.
Site Characterization Activities for home heating oil releases can vary greatly, depending on the severity of the release.
The SCR usually comes to one of three conclusions. 1. Close the case with no further action, 2. Continue to monitor the site to charaterize the movement and concentration of contaminants or 3. Proceed to corrective action phase in order to implement non-passive remedial activities.
The owner of the property at the time the release is discovered is legally responsible for completion of all phases of the remediation process. After teh property changes ownership, the question of who will be responsible for future costs related to the clean up arises. Generally one of two options are selected depending on the severity of the release and desire of the pruchaser and their legal representative.
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Option 1: Seller Remains Responsible
Under this scenario, the seller remains liable for all of the costs incurred for site characterization and potential monitoring or corrective action measures. The purchaser and consultant are secured by having the responsible person sign multiple claim reimbursement assignment forms at settlement. Payment arrangements are worked out between the seller and the consultant and in the event that the seller does or cannot pay the consultant can be paid directly from the reimbursement fund. The beneifts are that the purchaser never incurs and liability for the remedial activities. The disadvantage is that there is still a third party (seller) to coordinate activities through and this coordination often results in delays in completing necessary studies.
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Option 2: Purchaser Assumes Responsibility
Under this scenario, the purchaser assumes responsibility and the seller relinquishes their rights to reimbursement to the purchaser. The transfer of responsibility never releases the original responsible party (seller) from any liability to complete the clean up or payment of third party claims that may arise. In addition, the party assuming responsibility is never responsible for the clean up (purchaser) fails to perform, the State may move to reinstate the original responsible party and their eligibility for reimbursement. The benefits are that there is no third party to coordinate activities with and the current owners of the property have more control over the scheduling of activities and the suitability of the remediation efforts.
Regardless of the option selected, it should be noted that any time during the process, the water supply well becomes contaminated, VA DEQ will act within 24 hours to provide the dwelling with a potable water supply. This is accomplished directly through VA DEQ and a statewide contractor who bills the State directly. Potable water will be supplied through a filtration system, bottled water or both.
SES is committed to making this difficult process as smooth as possible. We have built our reputation by serving our customers and incorporating our familiarity with the real estate transaction process into our business approach. Our payment terms are flexible with respect to charges and the reimbursement fund. Each project is evaluated on a case by case basis and payment terms are worked out based on your available cash flow and ours. Reimbursement turn around times usually run between 90 and 120 days depending on the reimbursement fund's cash flow.
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