Tag: real estate owners

  • Illicit Abandonment

    environmental Strategist®, between the lines:  Illicit Abandonment is an environmental exposure, which most commercial real estate lessors don’t think about.

    Let me digress, back in 2008 when the economy tanked, we received a call from an insurance agent who explained his client had a leased facility and the tenants went out of business.  When the client went to inspect their property, they found raw materials stored in 55 gallon drums, totes and other storage containers, which were left behind by the bankrupt tenant.  None of the containers were leaking or causing an environmental liability, but to rent the building out the owner had to get rid of the raw materials and it cost more than $80,000.  That is a simple example of illicit abandonment and this exposure can be covered with pollution liability insurance.

    The article below talks about refurbishing of containers, such as 55 gallon drums, and the environmental exposures it creates for workers and neighbors to business those refurbish containers.  The article also talks about how most containers they receive have some residual product left in the containers.

    Photo credit: www.jabat.com

    When you see a facility like the one in this picture, which stores old containers outside over an unsealed surface, over time residuals will leak out and contaminate the ground and ground water.  Under federal law the owner of the property is ultimately responsible for the environmental condition of their property.  What if the contamination migrates onto a neighboring property?

    What the article does not talk about is the huge environmental exposure storage and use of 55 gallon drums, totes, buckets… creates for businesses that use them.  How does the business buy the raw materials; FOB point of shipment, or FOB point of delivery?  Do they store them in a secure area with secondary containment?

    As your client’s professional risk manager, do you go out and inspect their rental properties to make sure a tenant is not creating an environmental exposure for your insured?  What is the tenant’s strategy to meet the environmental indemnification contained in the lease agreement they signed?

    Is the tenant’s financial assurance strategy to go out of business if they create an environmental liability, and leave the property owner with an illicit abandonment exposure?

    Working with Environmental Risk Managers we can coach you and your client’s on better managing and transferring their environmental exposures.

    ERMI Sales Strategy:  Every time you go out and inspect a client’s tenant, it creates a potential new sales opportunity for you with the tenant.  While serving your client’s better, you are also creating a great opportunity to increase your sales.  Win /Win!!!!!

    https://projects.jsonline.com/news/2017/2/15/chemicals-left-in-barrels-leave-many-at-risk.html

  • Environmental Exposures Created By Loading Docks

    loadingdock

    by Chris Bunbury, eS – 12/17/15 :  Environmental liabilities generally take place over long periods of time.  A perfect example of this are loading docks.  Some of the contaminants that come off trucks using loading docks are lead; cadmium; asbestos; anti-freeze; petroleum products; hydraulic fluids; release of fluids from loading dock levelers; loading & unloading of cargo….  Loading docks that are not maintained like in the picture above allow these contaminates to seep into the ground and spread via ground water, vapor intrusion or storm water runoff and can create environmental liabilities for the property owners.

    Companies with loading docks need to have a loading dock management program that maintains the integrity of the dock while capturing contaminants so over time they do not create an environmental liability.

    Real estate owners that lease out facilities with loading docks should include in their lease the tenant is responsible for maintaining the integrity of loading docks including an overview of what is expected in maintaining the integrity.  Tenants should also be responsible to provide timely notification of environmental concerns related not only to the loading docks but the leased premises to the real estate owner/s.

    environmental Strategist™ (eS) go one step further and feel the tenant should at a minimum, annually send to the property owner a signed document they have maintained the leased premises free of environmental liabilities.  The reason you do this is because as the property owner you are ultimately responsible for the environmental condition of your property regardless of who caused the environmental liability.  With the tenant environmental sign off report you are at a minimum building your defense should the tenant cause an environmental liability and you get dragged in as the real estate owner.

  • More water problems hit Town of Jackson residents Friday

    environmental Strategist, between the lines:  Fact:  when businesses analyze their environmental exposures they generally focus on their exposure to clean up costs should a spill / release / exacerbation… of pollutants take place.  In reality, the cost to clean up a spill / release / exacerbation… of pollutants is far less than the claims / costs that come in from third parties for bodily injury, property damage and what I call the big black hole, business interruption.  You have to also factor in costs for defense, environmental investigations, claims management, public relations, natural resource damages….  Environmental insurance can cover the above environmental costs and more.

    So the real question a business has to answer when analyzing their environmental exposures is “does it make financial sense based upon our business model to transfer our environmental liabilities to a third party for fractions of a cent on the dollar or wait until an environmental liability occurs and pay 100 cents on the dollar out of our own pocket for clean up, third party bodily injury, property damage, business interruption, defense, environmental investigations, claims management, public relations, natural resource damages…”.

    Since every business is impacted by environmental exposures, every business must have a strategy to address their environmental exposures if they want to remain viable in today’s business environment.  environmental Strategist proprietary environmental Management Strategy (eMS) is designed to accomplish this goal and much more.  Contact us if you would like more information on development and execution of an eMS to drive growth and profits in today’s business environment.

    10/31/2014 – Milwaukee Journal Sentinel (WI)

    For Tom Willetts and his neighbors in the Town of Jackson, what he calls the next chapter in “the continuing saga” of a 2012 gasoline pipeline spill came Friday with the Halloween-style trick of no drinking water followed by a brownish flow.

    When he started his day early Friday, there was no water pressure, and no water in the line, Willetts said. Low pressure was restored a short time later but he wouldn’t drink or use what was coming out of his pipes, he said.

    “It looked pretty nasty,” Willetts said in describing the thick, brown water that flowed into his home Friday morning.

    Earlier this year, town residents living near the spill were offered connections to Village of Jackson water service as a substitute for contaminated wells or other private wells in a contamination advisory area.

    On July 17, 2012, a section of gasoline pipeline ruptured and spilled an estimated 54,600 gallons of gasoline in a farm pasture.

    West Shore Pipe Line Co. of Illinois, owner of the regional fuel distribution pipeline, is paying all costs of extending village water service to a large portion of the town. West Shore also is paying costs of building lateral lines needed to connect municipal mains to residences.

    The state Department of Natural Resources ordered 37 contaminated water wells to be abandoned.

    As of Tuesday, a total of 102 town residences had been connected to the municipal water system, Heidtke said.  Eight miles of water main have been installed to serve an area of the town on the west.

     

  • There Are 532 Superfund Sites in Indian Country! How many contaminated sites don’t we know about?

     environmental Strategist™, between the lines:  My question after you read the article below is how many contaminated sites don’t we know about?

    Under CERCLA you are responsible for the environmental condition of your property.  What if a third party contaminates your property and they do not have the financial ability to correct the problem?  Your asset has just become a liability.

    Contamination from third parties can come from air, water, soil, ground water or just over the surface of the land and below are real life examples.

    While this article points out that 25% of Superfund sites are on Tribal land, the other 75% represent and even greater impact on human health and the environment.

    Environmental Strategist™ Risk Management Tip:  Environmental insurance can protect real estate owners if third parties contaminate their property.

    Environmental Trivia Question:  Where are the highest concentration of Superfund Sites in the United States?  Answer below article.

    Kill the Land, Kill the People: There Are 532 Superfund Sites in Indian Country!

    Terri Hansen:  Indian Country Today – 6/17/14

    Of a total of 1,322 Superfund sites as of June 5, 2014, nearly 25 percent of them are in Indian country. Manufacturing, mining and extractive industries are responsible for our list of some of the most environmentally devastated places in Indian country, as specified under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), the official name of the Superfund law enacted by Congress on December 11, 1980. 

    Most of these sites are not cleaned up, though not all of the ones listed below are still active. Some sites are capped, sealing up toxics that persist in the environment. In cases like the Navajo, the Akwesasne Mohawk and the Quapaw Tribe, the human health impacts are known because some doctors and scientists took enough interest to do studies in their regions. Some of those impacts may persist through generations given the involvement, as in the case of the Mohawk, of endocrine disrupters. 

    TheSalt Chuck Mine Superfund site in southeast Alaska operated as a copper-palladium-gold-silver mine from 1916 to 1941. Members of the Organized Village of Kasaan, a federally recognized tribe, traditionally harvested fish, clams, cockles, crab and shrimp from the waters in and around Salt Chuck, unaware for decades that areas of impact were saturated with tailings from the former mine. As if that weren’t enough, Pure Nickel Inc. holds rights to mining leases in the area and began active exploration to do even more mining in summer 2012, according to Ground Truth Trekking.

    The Elem Band of Pomo Indians, whose colony was built on top of the waste of what would become California’s Sulfur Bank Mine Superfund site in 1970, have elevated levels of mercury in their bodies, and now fear for their health. According to an NBC News investigation, nearby Clear Lake is the most mercury-polluted lake in the world, despite the EPA’s spending about $40 million over two decades trying to keep mercury contamination out of the water. Although the EPA cleaned soil from beneath Pomo homes and roads, pollution still seeps beneath the earthen dam built by the former mine operator, Bradley Mining Co. For years, Bradley Mining has fought the government’s efforts to recoup cleanup costs.

    The Washoe Tribe of Nevada and California requested EPA involvement in the cleanup of an abandoned open pit sulfur mine on the eastern slope of California’s Sierra Nevada that became the Leviathan Mine Superfund site. The Washoe Tribe had become concerned that contaminated waters were affecting their lands downstream, causing impacts to culture and health, environmental damage, remediation, monitoring and testing, posting of health advisories, drinking water, effects on pregnancy, and cancer. Aluminum, arsenic, cadmium, iron, manganese, nickel and thallium have beendetectedin surface water and sediment downstream from the mine. The U.S. Centers for Disease Control and Prevention (CDC) concluded that exposures could result in cancerous and non-cancerous health effects.

    The abandoned FMC phosphorus facility occupies more than 1,000 acres of the Shoshone-Bannock Tribes’ Fort Hall Reservation in Idaho, and lies within Eastern Michaud Flats Superfund site. The primary contaminants of concern at the site are arsenic, elemental phosphorous and gamma radiation. FMC left a legacy of contamination in the air, groundwater, soil and the nearby Portneuf River, which threatened plants, wildlife and human health on the reservation and in surrounding communities. The Shoshone-Bannock have long asked for a cleanup of contaminated soils, but instead the EPA’s 2012 interimremedyis to cap and fill, including areas containing gamma radiation and radionuclides.

    Answer to trivia question:  Silicon Valley

  • Potential value of environmental liability insurance — AST spills into Colorado River

    environmental Strategist, between the lines:  Businesses often times question the value environmental liability insurance offers their business model.  Below is s simple spill that only released 7,500 gallons of oil from an Above Ground Storage Tank.

    The premium for a $1,000,000 Above Ground Storage Tank policy runs roughly $400.  So the premium versus the face value of the policy means it cost the insured $.0004 cents on the dollar for the insurance versus self insuring and paying 100 cents on the dollar out of your own pocket for cleanup costs, defense, third party bodily injury, third party property damage, third party business interruption….

    Environmental insurance versus self insurance, what adds more value?

    7,500 gallons of oil spills into Colorado river

    Fort Collins Coloradoan – by Ryan Handy

    FORT COLLINS, Colo. — A storage tank damaged by recent flooding has dumped 7,500 gallons of crude oil into the Poudre River near Windsor, the Colorado Oil and Gas Conservation Commission (COGCC) reported late Friday afternoon.

    “At this time we know of no drinking water intakes affected by this spill. The release is not ongoing,” COGCC spokesman Todd Hartman said

    The oil has stained vegetation as far as a quarter of mile away from the damaged tank, Hartman said.

    The tank’s operator, Noble Energy, discovered the spill Tuesday afternoon and later reported it to the COGCC, the state’s regulatory agency for the oil and gas industry. Recent high river flows undercut the bank where the storage tank was sitting, causing the tank to drop and breaking a valve. About 178 barrels of oil dumped into the river.

    The well near the tank has been shut in, and a second tank in the area appears to be unaffected, Hartman said in a news release.

    COGCC and water quality experts from the Colorado Department of Public Health and Environment were at the scene of the tank spill, where clean-up efforts were underway Friday. Clean-up crews are working to absorb the spilled oil and a vac-truck is removing oil-filled standing water from a low-lying area around the tank.

    The site of the spill is southeast of Fort Collins near the Poudre River Trail.

    Contributing: Associated Press

  • Report backs Chinese drywall health complaints

    environmental Strategist™, between the lines:  Who are you doing business with?  This is the first question a business answers as they develop and execute their environmental Management Strategy (eMS).  The article below is an excellent example of why it’s critical to find out who you are doing business with.

    An eMS is the first step a business takes on their sustainable path.  An eMS is designed to identify your environmental foot print to drive growth and profits in today’s business environment.

    The four footings of an eMS are:

    1. What’s coming in your front door? (Who are you doing business with?)
    2. What goes on inside your corporate walls
    3. What goes out your back door
    4. Who are your neighbors

    For more on developing and executing your eMS go to www.estrategist.com.

     

    Report backs Chinese drywall health complaints

    Elizabeth Weise, USATODAY1:04 a.m. EDT May 2, 2014

    Chinese-made drywall used in more than 20,000 homes in the United States could have caused nosebleeds, headaches, difficulty breathing and asthma attacks in tens of thousands of Americans exposed to it, the federal government said in a long-awaited report released Friday.

    The drywall was installed in mostly Southern homes since 2005, and it has been the subject of multiple lawsuits. In addition to health-related complaints, homeowners have also alleged sulfur dioxide and other chemicals found in the drywall caused foul odors and corroded pipes and wiring. There have been five settlements totaling more than $1 billion, but it’s not clear how much of the drywall was replaced.

    “The bottom line is that this modeling data suggests that levels of sulfur dioxide and other sulfur compounds found in the Chinese manufactured drywall were sufficiently high to result in the health effects people have been reporting,” said Vikas Kapil, chief medical officer with the U.S. Agency for Toxic Substances and Disease Registry at the Centers for Disease Control and Prevention.

    The health research began in 2011 but was not finished until now because of the work necessary to create scientifically valid models that allowed researchers to estimate what the sulfur emissions from the drywall samples “might mean for people in a room in a house” containing that drywall, Kapil said.

    As of Jan. 20, owners of 20,244 properties had registered for compensation in a multistate settlement program overseen by the New Orleans federal court where all the lawsuits were consolidated. Claims have been filed by homeowners, home builders, contractors and construction material distributors.

    The homes smelled like rotten eggs, many reported. Appliances and electronics failed as their wiring corroded and metal in the homes tarnished and pitted.

    The only way to deal with the problem is to rip out and replace the faulty wallboard.

    The drywall, sometimes called wallboard, was imported from China beginning in 2005, after the record-breaking hurricane seasons of 2004 and 2005 created a shortage of U.S.-made wallboard.

    Drywall is made of gypsum plaster pressed between two thick sheets of paper, and is used to make interior walls and ceilings.

    The U.S. Agency for Toxic Substances and Disease Registry sent staff to China, where they obtained samples of wallboard manufactured there in 2005, 2006 and 2009.

    The samples were tested by the Lawrence Berkeley National Laboratory in Berkeley, Calif. Results from those samples were then used to estimate how much of the chemicals would be present in the air of a home with the defective wallboard.

    High levels of sulfur dioxide were found in the samples of Chinese wallboard, as well as hydrogen sulfide, carbon disulfide, methyl mercaptan, dimethyl sulfide, carbonyl sulfide and ethyl mercaptan.

    Samples of U.S.-made wallboard had very low or undetectable amounts of those chemicals.

    The samples gave off the highest amounts of chemicals when they were exposed to hot, humid conditions — much like those found in Florida and Louisiana, two states with the largest number of cases linked to the wallboard.

    Tainted Chinese drywall is no longer sold in the United States since the 2012 passage of the Drywall Safety Act, which set chemical standards for domestic and imported drywall.

  • EPA adopts ASTM E1527-13 Standard

    environmental Strategist™, between the lines:  environmental Strategist™ research shows in excess of 50% of Phase I site assessments are inaccurate which supports the changes outlined below.

    Two changes outlined in the article below stood out to me and both deal primarily with, Who Are Your Neighbors?

    1.  Identifying potential for vapor releases, or the potential presence or migration of vapors associated with hazardous substances or petroleum products.
    2. Greater emphasis on conducting regulatory file reviews, particularly of adjacent properties, which may pose a concern.

    In other words you may not be a polluter but who are your neighbors and what if they are causing contamination to come onto your property.  Under Federal law the real estate owner is ultimately responsible for the environmental condition of their property.  Environmental insurance can protect real estate owners if third parties contaminate their property.

    EPA adopts ASTM E1527-13 Standard

    From: Allison Winter, ENN 
    Published January 6, 2014 09:35 AM

    EPA finalized a rule last week adopting the revised ASTM E1527-13 “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process” as a standard by which parties may comply with the “All Appropriate Inquiries” Rule, 40 CFR Part 312.

    In the United States, the Phase I ESA is a report prepared for a piece of property that identifies potential or existing environmental contamination liabilities. Phase I ESAs assess risks of ownership and are conducted in order to determine if a site may be contaminated from past spills, leaking underground storage tanks, or historical uses of the site, to name a few.

    American Society for Testing and Materials (ASTM) released the revised E1527-13 standard in November 2013, and now the EPA has announced that they will recognize it. However, the newly revised EPA rule does not delete reference to the previous ASTM standard, E1527-05, so as of now, both standards are acceptable.

    However, in the Federal Register notice finalizing the rule, EPA indicated that it does intend to propose an amendment to 40 CFR Part 312 removing reference to the E1527-05 standard. In its response to comments received on the new rule, EPA noted that it “… agrees with commenters that the revised ASTM E1527-13 standard includes improvements to the previous standard and its use will result in greater clarity for prospective purchases with regard to potential contamination at a property. Therefore, EPA recommends that environmental professionals and prospective purchasers use the ASTM E1527-13 standard.”

    Some changes to the standard include:

    •   Clarification to the definition of a Recognized Environmental Condition (REC). A REC is the presence or likely presence of any hazardous substances or petroleum products, in, on, or at a property.
    •    Addition of the term: “Controlled RECs”. Controlled RECs refer to contamination that has been remediated, but still may be the basis for ongoing or future land use or exposure control obligations
    • Identifying potential for vapor releases, or the potential presence or migration of vapors associated with hazardous substances or petroleum products.
    • Greater emphasis on conducting regulatory file reviews, particularly of adjacent properties, which may pose a concern.

  • Chemical spill a blow to W.Va. capital’s economy

    environmental Strategist™, between the lines:  This environmental loss below is a very simple real life example of why environmental Strategist state that every business is impacted by environmental exposures.  While the company that caused the spill is probably toast, how are the impacted third party businesses going to be compensated for being forced to shut down?  What about defense cost, third party property damage, third party business income…?  What about employees not getting paid because their employer was forced to shut down?  This means bills are going to be paid late so other business are also going to be impacted.  And so on and so on…

    Environmental losses can cut deep and wide with those they impact.  Since every business is impacted by environmental exposures, common sense tells us businesses must have an environmental Management Strategy (eMS) that shows how to manage and transfer their environmental exposures.  Why has an eMS become part of “Best Practices” for business?  Because common sense tells us without our environment nothing else really matters because we’re toast.

    For more on developing and executing an eMS go to www.estrategist.com.

    Chemical spill a blow to W.Va. capital’s economy

    Brendan Farrington and Jonathan Mattise , AP Business Writers, 7:59 a.m. EST January 12, 2014

    CHARLESTON, W.Va. (AP) — On the third day without clean tap water, business owners with empty dining rooms and quiet aisles of merchandise around West Virginia’s capital were left to wonder how much of an economic hit they’ll take from a chemical spill.

    Most visitors have cleared out of Charleston while locals are either staying home or driving out of the area to find somewhere they can get a hot meal or take a hot shower. Orders not to use tap water for much other than flushing toilets mean that the spill is an emergency not just for the environment but also for local businesses.

    A water company executive said Saturday that it could be days before uncontaminated water is flowing again for about 300,000 people in nine West Virginia counties. The uncertainty means it’s impossible to estimate the economic impact of the spill yet, said the leader of the local chamber of commerce.

    Virtually every restaurant was dark Saturday, unable to use water to prepare food, wash dishes or clean employees’ hands. Meanwhile, hotels had emptied and foot traffic was down at many retail stores.

    “I haven’t been able to cook anything at home and was hoping they were open,” Bill Rogers, 52, said outside a closed Tudor’s Biscuit World in Marmet, just east of Charleston. “It seems like every place is closed. It’s frustrating. Really frustrating.”

    In downtown Charleston, the Capitol Street row of restaurants and bars were locked up. Amid them, The Consignment Shop was open, but business was miserable. The second-hand shop’s owner said she relies on customers who come downtown to eat and drink.

    “It’s like a ghost town,” Tammy Krepshaw said. “I feel really bad for all my neighbors. It’s sad.”

    The person she doesn’t feel bad for is Freedom Industries President Gary Southern, who told reporters the day before that he was having a long day and quickly wrapped up a news conference on the chemical spill so he could fly out of the area.

    “People want answers. They deserve answers,” Krepshaw said.

    The emergency began Thursday, when complaints came in to West Virginia American Water about a licorice-type odor in the tap water. The source: the chemical 4-methylcyclohexane methanol that leaked out of a 40,000 gallon tank at a Freedom Industries facility along the Elk River. State officials believe about 7,500 gallons leaked from the tank, some of which was contained before flowing into the river. It’s not clear exactly how much entered the water supply.

    Thirty-two people sought treatment at area hospitals for symptoms such as nausea. Of those, four people were admitted to the Charleston Area Medical Center but their conditions weren’t available Saturday.

    Federal authorities, including the U.S. Chemical Safety Board, opened an investigation into Thursday’s spill.

    By Saturday morning, FEMA said it had delivered about 50 truckloads of water, or a million liters, to West Virginia for distribution at sites including fire departments.

    There’s no question businesses have been hurt — particularly restaurants and hotels, said Matt Ballard, president of the Charleston Area Alliance, the state’s largest regional chamber of commerce.

    “I don’t know that it can be quantified at this point because we don’t know how long it will last,” Ballard said. “I’m hoping a solution by early next week so business can get back to normal.”

    While restaurants are having the most trouble, the effect ripples to other businesses, Ballard said. When people go out to dinner, they also shop. And restaurant workers who miss paychecks aren’t spending as much money.

    During the emergency, many people are just staying home, and some of those who aren’t are leaving the region and staying with family and friends who have a water supply. Ballard said that includes one of his employees who is staying in Ohio for the weekend.

    “It’s smart, but it certainly has a negative impact on what would be a normal business weekend,” Ballard said.

    The Alliance is urging businesses owners to check their insurance policies to see if they can make claims over lost business. It plans to hold workshops to assist businesses with those issues, Ballard said.

    In downtown, the store Taylor Books usually fills the 40 seats in its cafe. But the cafe was shut down by the state Department of Health on Friday because it said employees had no way to safely wash their hands before serving customers. On Saturday only three people sat in the bookstore using the wireless Internet. Manager Dan Carlisle said he canceled a musician scheduled to play that night and the store was going to close five hours early.

    “It’s pretty annoying,” Carlisle said about Freedom Industries’ response to the spill. “I feel like you should just be honest with people immediately.”

    Some bars have remained open, but they’ve seen a large drop in business. State officials were working Saturday on alternative sources of water that may allow restaurants to reopen.

    “We will work around the clock, 24-7, and try to open … as many businesses as possible in the next couple of days,” said Dr. Rahul Gupta, health officer for the Kanawha-Charleston and Putnam County boards of health.

    Several businesses that had arranged other sources of water were inspected Saturday. Gupta said health officials considered the closures’ impact on workers when they decided to allow businesses to reopen if they have potable water.

    “This is not only the businesses but also the folks that work in those businesses,” he said.

  • Hydraulic Fracturing: Latest Developments and Trends

    environmental Strategist™, between the lines:  Fracking has been around for a long time.  With the oil and gas industry boom taking place in the United States it’s critical you have an understanding on fracking, resources used and potential third party impacts.

    environmental Strategist™ Position:  While this article takes a more negative stance, the bottom line is, in the near future, as long as people want to drive cars, fly on vacation / business, run industry… there will be demand for oil and gas resources.  Finding ways to utilize these resources that has the least amount of impact on human health and the environment is the goal.  In order to do so we have to be educated, pro / con or otherwise and with enough information you can make informed decisions.  This is just one piece of information.

    By Adam Orford /  October 6, 2013

    Hydraulic fracturing (commonly called “fracking”) remains one of the most controversial environmental issues of the day. The process involves breaking open otherwise impermeable oil and gas bearing geologic formations using a pressurized mixture of water, “proppant,” and chemicals.

    As the hydraulic fracturing industry matures and the nationwide controversy enters its fourth year, the legal landscape continues to change on numerous fronts. Continuing to identify trends within the massive amount of news remains an important task for those following the field, and this article seeks to highlight some of the most important recent developments. From chemical risks to water resources, from old battles over local bans to new battles over sand mines; governments, environmental interests, and industries across the country continue to struggle with governance of the fracking industry.

    Fluid Chemicals, Storage, and Disposal – the Blackside Dace Die-off Report

    Many opponents of hydraulic fracturing have emphasized the unknown risk characteristics of the chemicals used in the development of fracked oil and gas. They argue that the process has caused or has the potential to cause subsurface pollution of drinking water resources or to harm sensitive environmental receptors. They contend that fracturing may lead to the migration of unknown and potentially toxic chemicals into water resources. Proponents of hydraulic fracturing, on the other hand, contend that the fracturing process itself – occurring deep underground and geologically separated from near-surface water resources – is not likely to cause releases of chemicals to groundwater, and that a better focus is on well construction and integrity, and fluid handling and storage above ground. See generally A. Orford, Hydraulic Fracturing: Legislative and Regulatory Trends, Marten Law Environmental News (Oct. 4, 2011).

    The U.S. Geological Survey and Fish and Wildlife Service recently released a joint report which is likely to provide ammunition to both sides of this argument. In Histopathological Analysis of Fish from Acorn Fork Creek, Kentucky Exposed to Hydraulic Fracturing Fluid Releases, published in August in the Southeastern Naturalist,[1] federal scientists concluded that a surface spill of hydraulic fracturing fluids into a previously pristine stream inhabited by the blackside dace, a federally listed threatened fish species, was likely to have been the direct cause of a major die-off of that and other species in the stream. Although unable to identify precisely which chemicals were spilled (due to limitations on fluid chemical disclosure requirements), the federal scientists determined that immediately following the spill the stream’s pH dropped from 7.5 (neutral) to 5.6 (acidic), while stream conductivity increased dramatically, indicating the presence of dissolved heavy metals. Dead fish exhibited gill lesions consistent with exposure to acidic water and heavy metals, and thus the hydraulic fracturing fluid release was linked strongly to the die-off. This study is possibly the first to link a surface release of hydraulic fracturing fluid to significant ecologic harm, and certainly the first related to a federally listed species.While the facts underlying the report tend to support the argument that focus should be on surface and near-surface operations, not deep fracturing, the Kentucky blackside dace incident is likely to be influential in discussions over hydraulic fluid handling, storage, and disposal regulation going forward.

    Water Resources and Scarcity – The Rise of Recycling and Acidization

    The debate over hydraulic fracturing started with concerns about water quality, but greater concern may be with impacts on limited water resources. See A. Orford, Water Resources – Not Just Water Quality – Gains Attention of Opponents to Hydraulic Fracturing, Marten Law Environmental News (Apr. 22, 2013). Recent reports lend some support to these concerns. Ceres, a respected organization for the promotion of sustainable business practices, recently issued a report (available at this link) entitled Hydraulic Fracturing & Water Stress. Its core message – that shale plays are often located in water-stressed areas – supports the argument that industry needs to do everything it can to manage its water use. As one example of what can happen if this is not done, a recent report from the Texas Commission on Environmental Quality estimates that, given ongoing drought conditions and a large increase in groundwater withdrawals for oil and gas development, over thirty Texas communities face the unprecedented risk of running out of water entirely by the end of 2013.[2]

    Industry is not unaware of these challenges, and entrepreneurial companies have been busy developing technology to minimize water usage in hydraulic fracturing. These technologies include both equipment to process and recycle used frac water (separating chemicals from flowback and produced water for reuse), and development of methods to better utilize brackish (salty) groundwater in the hydraulic fracturing process, minimizing the need for freshwater withdrawals. Currently, such methods are generally voluntary. The interesting question from a business perspective is whether (or when) such technologies will become cost-effective enough to be put into widespread use. Following from this, it will be important to watch the extent to which regulatory bodies, particularly state oil and gas agencies, impose limitations on freshwater withdrawals or require the use of recycled water over time.

    In California – a state familiar with water scarcity – industry is looking to a third, more controversial option to avoid a water scarcity problem.[3] The term “acidization” is not yet a household word, but in California it may become one in short order. In brief, Californian oil and gas producers face unique challenges due to California’s unique geology, transformed by earthquakes over millennia into a complex and fragmented jumble, often not conducive to directional drilling and high volume hydraulic fracturing. An alternative method is to pump mixtures of water and hydrofluoric and hydrochloric acids into the well to dissolve the rock and release the oil and gas trapped within. Acidization requires much less water than hydraulic fracturing – the acid must generally be diluted below 15% concentration in water, but at much lower volumes (the two processes can also be combined: an “acid frac”). It is unclear whether or to what extent such activities would be exempt from regulation under the Safe Drinking Water Act’s hydraulic fracturing exemption (which specifically references “hydraulic fracturing”). See 42 U.S.C. § 300h(d)(1)(B)(ii). In any event, there is little question that hydrofluoric and hydrochloric acids are dangerous hazardous chemicals and environmental and water protection interests have begun to urge California lawmakers to take a closer look at the process, which resulted in an amendment to a bill recently passed in California which would do just that.[4] As hydraulic fracturing has spread west, it will be important to observe the extent to which use of and concern over acidization spreads east – and how the states and federal government will respond.

    Supply Line Warfare – The Battle Over Frac Sand

    In addition to direct assaults on the hydraulic fracturing industry, opponents have started moving down the supply chain to target the makers of process inputs. In the case of hydraulic fracturing, the focus has turned to “frac sand” – the proppant that, together with water and chemicals, allows hydraulic fracturing to work. Frac sand is what it sounds like – silica sand – and makes up 80% of the multi-billion dollar proppant industry. The best sand is very round-grained, has high quartz content, and can withstand very high pressures. It must be mined, and mining requires permits. Consequently, opponents in jurisdictions without any significant oil and gas development have found a way to involve themselves in the debate, joining forces with local interests concerned with the environmental effects – particularly air, light, noise, traffic, and stormwater pollution – associated with frac sand mining.

    The fight has been especially heated in Wisconsin, which hosts the nation’s largest accessible reserves of high quality frac sand, and where over 100 frac sand mining operations have started business in the last several years, largely in previously undeveloped wilderness areas. Wisconsin’s pro-business Walker administration strongly supports the economic benefits and jobs that this increased mining has brought, and is planning infrastructure improvements to permit the industry to expand even further.[5] In response, environmental groups and concerned citizens have begun filing lawsuits over individual mining approvals, particularly with respect to review of the industry’s primary air emission: fine silicate particles smaller than 2.5 micrometers (PM 2.5), which are subject to EPA regulation. It takes around 2,000 tons of sand to frac a well – and the business and environmental stakes of these lawsuits will be very high.

    Other states face similar issues, but have taken different paths. Minnesota, across the Mississippi River, imposes much stricter environmental review standards on its sand mines, but even there new mines have been approved and are operating – over local opposition. In neighboring northeastern Iowa, there is currently only one frac sand mine operating. However, operators have been scouting additional locations, prompting two county governments in northeastern Iowa (the location of the most viable deposits) to impose 18 month mining moratoriums earlier this year.[6] The frac sand mining debates are currently the Midwest’s primary contribution to the larger fight over hydraulic fracturing, and interested parties should keep an eye on sand mining proposals elsewhere.

    Meanwhile, the federal government has become indirectly involved, as the Occupational Health and Safety Administration (OSHA) has just announced a long-delayed proposed rule on crystalline silica exposure (OSHA rulemaking information available at this link) that will affect both mining and hydraulic fracturing operations where exposure occurs. Current rules are over 40 years old, and the new proposed rule would significantly lower the permissible exposure limits (PEL) for workers. OSHA has promulgated a notice of proposed rulemaking, which as of this writing is yet to be published in the federal register. Upon its publication, interested parties will have 90 days to submit comments on the proposed rule.

    Local Bans – Court Challenges Continue

    Finally, continuing a trend that has its roots in local opposition to hydraulic fracturing in the Mid-Atlantic region, some individual municipalities continue to exercise their authority to ban oil and gas development at the local level.

    Local bans on fracking started in upstate New York, where municipalities have won significant victories in court against challenges to their home rule authorities. The towns of Dryden and Middlefield have each passed resolutions banning hydraulic fracturing within their borders. These local ordinances were upheld by New York State trial courts – see A. Orford, Local Bans on Hydraulic Fracturing Upheld in New York State, Struck Down in West Virginia (April 10, 2012). The towns also prevailed in New York State intermediate appellate courts earlier this year. Given the lower courts’ reliance on prior binding precedent from New York’s highest court, the Court of Appeals, it was no surprise that the losing parties (landowners and drilling companies) sought review there. On August 29, 2013, the Court of Appeals agreed to hear argument on both cases, meaning that the question of the legality of local bans in New York state should be finally answered within a year.

    Next door in Pennsylvania, things have taken a slightly different course. The Pennsylvania state legislature passed Act 13 of 2012. Among its provisions, the law specifically preempted local governments from banning oil and gas development. See 58 Pa. CS. § 3304 (Act 13 available at this link). A coalition of local governments challenged the constitutionality of the law’s preemption provisions as impinging upon their ability to protect the health and safety of their residents. In Robinson Township v. Pennsylvania, Case No. 284 M.D. 2012 (July 26, 2012), the Commonwealth Court of Pennsylvania (the state’s special court of appeals for cases involving the Commonwealth) struck down the law’s preemption provisions, paving the way for municipalities in Pennsylvania to enact municipal zoning bans. The decision was appealed and argued to the state’s Supreme Court in late 2012, but no decision has yet come from the six justices who heard the case, prompting speculation that the court is deadlocked and calls for re-argument before a seven-judge court. In the meantime, Pennsylvania lawmakers will consider a proposal to be introduced that would repeal the controversial provisions prior to a decision being made.

    Most recently, a milestone has been reached in a long-running controversy in the city of Dallas, Texas. After leasing land – in a floodplain considered municipal parkland – to a gas developer for $19 million in 2008, the City of Dallas delayed issuing necessary drilling permits after strong public opposition rose to what would be the first hydraulic fracturing to be performed within the City’s limits. On August 28, 2013, the Dallas City Council finally voted to reject the company’s permit applications (the vote was 9-6 for approval, but required a supermajority of 12 to pass). The City’s Mayor has warned that the result of the vote will very likely be a costly lawsuit. A lawsuit in Texas would be one to watch carefully, as it could raise not only municipal home rule issues, but also constitutional takings questions due to the prior lease of the land for development purposes.

    Conclusion

    The above is an overview of some of the most important recent developments in the world of hydraulic fracturing. Many others deserve honorable mention. In Colorado, an appeals court has ruled that plaintiffs need not present prima facie evidence of harm (so called Lone Pine showings) before pursuing discovery in a toxic tort case related to hydraulic fracturing, a decision which was just argued to the state’s Supreme Court.[7] In Pennsylvania, landowners are contending that they are not receiving the royalties they were initially promised in lease agreements, which will likely lead to lawsuits.[8] In North Carolina, a controversial proposal is under consideration to require so-called “forced pooling,” under which landowners would be forced to lease their mineral rights if a certain number of their neighbors do so (a practice intended to protect parties from having the gas stolen from underneath them by migration to the neighboring property, but with obvious property rights implications).[9] Tracking current developments requires acknowledging that after the last several years of hydraulic fracturing, the industry is maturing. Many “firsts” have come and gone; the law is stabilizing and jurisdictions confronting new issues have an ever-larger body of precedent to refer to. Certainly, new fights are brewing, but the industry continues to grow, and opponents in general have yet to slow the train down.

    For more information, please contact Adam Orford or any member of Marten Law’s Energy practice group.

    – See more at: http://www.martenlaw.com/newsletter/20131007-hydraulic-fracturing-developments-trends?utm_source=Marten+Law+News&utm_campaign=ba137c5111-Marten_Law_News_October_17_201310_16_2013&utm_medium=email&utm_term=0_ff00f67215-ba137c5111-222187793#sthash.0SgUGR9X.dpuf

  • Mercury Sediment Carried Forth by California Floods

    environmental Strategist, between the lines:  I don’t care where you own property in the United States, historical contamination is a massive environmental exposure for real estate owners.

    This article gives an excellent overview on the impact storm water runoff has on third party properties from historical contamination.

    This also highlights how historical mining operations are causing environmental liabilities for unsuspecting property owners.  Out of sight, out of mind is the attitude of the masses but this has proven to be catastrophic for tens of thousands of real estate owners.

    I recently drove from Denver to Aspen, throughout the mountains you can see old mines scattered along the hill sidess.  Each one of these mines represents a contamination source to the local environment.  A number of years ago Copper Mountain Ski area in Colorado was cited for exacerbating contamination while performing their snow making operations.  Copper Mountain was pulling water from the river that flows along the base of Copper Mountain for snow making.  Unknown to Copper Mountain was that the river is full of old mine tailings causing contamination.  When Copper Mountain pulled the contaminated water from the river for snow making and spread it on their ski runs they exacerbated the extent of the contamination.

    Mercury Sediment Carried Forth by California Floods

    From: Robin Blackstone, ENN
    Published October 29, 2013 01:59 PM

    Mercury contamination in sediment has been a big concern in the Central Valley lowland areas of California. But associate researcher from the University of California, Michael Singer has unearthed new information and considerations utilizing modern topographic datasets and modeling to track mercury-laden sediment. Singer hypothesizes that the progradation process resulting from 10-year flooding events within the valleys below the Sierra Nevada Mountains are the key to understanding and tracking the presence of mercury. Singer has connected the mercury amalgamation process, which was used to extract gold from the mountains during the 19th century with the current high incidence of mercury in regional delta sediment.  

    Documented by Singer, the progradation process results from a combination of flood driven fan erosion and sediment redistribution over time into the valley. Of particular note are the floods of 1986 and 1997 of the Yuba River, which churned up deep river valley sediments containing toxic remnants of the gold mining amalgamation done more than 150 years prior.

    The ecological impact of mercury presence throughout the sediment is significant because mercury is taken up into the food webs. This coupled with regional shifts in climate, poses a huge risk to the lowland ecosystems and the human population because many people eat fish from this system.

    The initial discovery of the connection between the sediments and the gold mining was happenstance as the research team identified huge pockets of coarser sand in amongst sediment. This led them to ask why there was so much sand in the area.

    “We thought that was quite strange because the floodplains around us were so much finer — composed of silt and clay materials,” recalled Singer. “So we followed the signs and ended up in a huge sand mine. They were mining sand by the truckload for the construction industry and said they would be doing so for at least the next several decades.”

    Singer posits that because the upstream Yuba was the biggest gold-mining drainage of all the Sierra drainages used in the 19th century, it made sense to suspect the presence of possible mercury.

    The research team compared gold rush data with modern topographic datasets, which showed that the Yuba River was progressively cutting through the sediment and in the process leaving behind massive contaminated terraces along the riverbank. Flood data and modeling indicate that these terraces move only when a flood event is big enough to saturate them so that the terraces fail and the mercury-laden sediment is carried and driven downstream.