LIST OF ATTACHMENTS

RD6.1	Procedures for Reviewing Gifts of Real Property for Hazardous Substances, Vice President Baker, University of California, Office of the President, letter to Chancellors, January 12, 1990
RD6.2	"Due Diligence in the Assessment of Toxic and Hazardous Substances When Ground Leasing Campus Property", University of California, Office of the Treasurer, Oakland, CA, Revised April 10, 1990
RD6.3	"Due Diligence Practices for the Assessment of Toxic and Hazardous Substances When Purchasing Campus-Related Real Property", University of California, Office of the Treasurer, Oakland, CA, Revised March 17, 1992

RD6.1 Procedures for Reviewing Gifts of Real Property for Hazardous Substances, Vice President Baker, University of California, Office of the President, letter to Chancellors, January 12, 1990. (see 6.4)

January 12, 1990

CHANCELLORS

Dear Colleagues:

Procedures for Reviewing Gifts of Real Property for Hazardous Substances

The enclosed Procedures for Reviewing Gifts of Real Property for Hazardous Substances are effective immediately. The suggestions received from the campuses, the Office of the Treasurer, the Office of the General Counsel, and the Office of the President have now been incorporated into a final document.

These procedures apply to gifts to The Regents and to Campus Foundations. They are the procedures for reviewing gifts of real property referred to in the Administrative Guidelines for Campus Foundations dated October 13, 1989.

Please note that an outline is enclosed with the Procedures to be used as a guide to assist in their implementation. Also enclosed are several auxiliary checklists, a model for an Environmental Assessment Report, and samples of the Real Property Environmental Certificate for gifts to The Regents and to Campus Foundations.

The Procedures are issued with the understanding that each campus has a designated person or persons with authority to accept gift is on behalf of The Regents, and that each Campus Foundation has a policy clearly establishing this authority. The services of the office of Development Policy and Administration, the Treasurer s Office Real Estate Division, and the Due Diligence Coordinator are available for both University and Campus foundation transactions.

Also implicit in these Procedures is effective communication between campus advancement offices, Campus Foundations, and Environmental health and Safety offices.

I am also enclosing a copy of a recent article on gifts of real property to charitable organizations from the Wall Street Journal. As you can see, our attention to this subject is very timely.

Thank you for your assistance in developing and implementing these Procedures. If you have any questions, please contact Director Englezos at (415)987-9177.

Sincerely,

William B. Baker
Vice President

Enclosures

cc:

Members, President s Cabinet

Director Rogin

Principal Officers of the Regents

Under existing law*, current owners can be held fully liable for cleaning up property contaminated by hazardous wastes, even when prior owners or operators were responsible for causing the contamination. There have been instances in which donors have knowingly or unknowingly given contaminated property to charities. Although a current property owner may be able to sue prior owners and operators to recover clean-up costs, the costs, delay, and legal risks associated with such lawsuits are often prohibitive.

In order to protect the University and Campus Foundations from the high risk associated with accepting contaminated property, the following screening is required for gifts of real property to both The Regents and Campus Foundations. These procedures apply as well to property acquired by bequest, prior to recording of the decree of distribution, or in trust.

The screening process consists of a four-stage investigation modeled on the accepted standards used in current real estate transactions and generally required by lending institutions. A risk assessment is made at the conclusion of each stage. The four stages of the process are described in the following sections.

* These laws include the Federal Comprehensive Environmental Response, Compensation and Liability Act as amended by the SuperFund Amendment and Reauthorization Act (24 U.S.F. 9600 et seq.), the California Hazardous Substance Account Act, and the California Porter-Cologne Water Quality Control Act.

Stage One is completed for all gifts of real property, regardless of type (residential, commercial, or undeveloped), before acceptance and transfer of title.

1. Obtain a title history that includes a chain of title and copies of current and expired property interests, liens, and encumbrances.

   Such histories can be ordered for property offered to The Regents or a Campus Foundation by calling the Real Estate Assistant in the Treasurer s Office. These are obtainable at no charge if title insurance is purchased from the company whose services are made available through the Treasurer s Office.

   The title history should go back to the time the property was first developed or 1914, whichever is later. This type of title history will indicate whether the property was owned by government agencies or private companies that may have handled hazardous materials, and also will reveal recorded leases by such entities.

   (A checklist of high risk industries is provided for reference when reviewing the title history, however, this list should not be viewed as all-inclusive.)

2. Obtain a list of all regulatory agency permits for the site, if applicable (e.g., underground tanks, wastewater discharge, hazardous substances, agricultural chemicals).

   An information guide to regulatory agencies is available from the Due Diligence Coordinator, Office of Long Range Development and Environmental Planning, in the Office of the President

3. Obtain from the donor a completed and signed Real Property Environmental Certificate (see sample provided).

   This includes disclosure of known or suspected environmental conditions affecting the property (e.g., probable locations of asbestos), similar to the disclosure statement required of sellers of real property. (A checklist to assist the donor with this disclosure is provided.)

4. Have a preliminary site inspection performed by a qualified campus* representative or consultant. This inspection should include observation of the adjacent and surrounding area as well. Prepare a summary report of observations.

   (A checklist of red flag items is provided; also, the checklist of high-risk industries will assist with the observation of the adjacent and surrounding area.)

5. Three choices are possible at this juncture:
   1. If it appears, from 1 through 4 above, that the property is likely to be free of hazardous substances, a decision may be made to recommend acceptance of the property.

      At this point a Regents' agenda item proposing the property s acceptance may be submitted to the Office of the President, or the appropriate steps may be taken to accept the under the policies of the Campus Foundation. In either case, the Real Property Environmental Certificate is to be included.

   2. If items 1 through 4 indicate possible problems with the property or surrounding area related to hazardous substances, but the campus wishes to pursue further review, proceed to Stage Two.

   3. The campus may determine that the potential risks outweigh the advantages of acquisition of the property and may decide to proceed no further.

NOTE: It is strongly recommended that the decision at this point, as well as at the end of subsequent stages, be made in consultation with the campus Environmental Health and Safety (EH&S) officer, or equivalent, and the Due Diligence Coordinator in the Office of the President.

*All references to campus include Laboratories and other units, e.g., the Division of Agriculture and Natural Resources.

It is recommended, although not required, that a Stage Two review be completed for all gifts of real property, regardless of type.

NOTE: If at this point, upon consultation with the campus EH&S officer and the Due Diligence Coordinator, it appears advisable to engage the services of a technical consultant, Stages Two and Three will normally be combined.

1. Asbestos samples are obtained from the property and are analyzed, and a report based as these findings is prepared. The analysis and report may be provided by the campus or by an outside firm specializing in this field.

2. 1. A review of the documents in Stage One and a site inspection are performed by the campus EH&S officer or by an experienced outside consultant. This inspection also should take into consideration the adjacent and surrounding area.
   2. Complete an Environmental Assessment Report regarding the property (see model provided).

3. Three choices are possible at this juncture:
   1. If after reviewing the reports from items 1 and 2 above it is determined that no further investigation is needed, or the campus determines that the advantages outweigh the risks, a decision may be made to recommend acceptance of the property.

      At this point a Regents' agenda item proposing the property's acceptance may be submitted to the Office of the President, or the appropriate steps may be taken to accept the gift under the policies of the Campus Foundation. In either case, the Real Property Environmental Certificate and the Environmental Assessment Report are to be included.

   2. If it is determined that a significant potential for environmental risk exists, but the campus wishes to pursue further review, proceed to Stage Three.

   3. The campus may determine that the potential risks outweigh the advantages of acquisitions of the property and may decide to proceed no further.

Stage Three is completed for selected gifts of real property, regardless of type, before acceptance and transfer of title if sufficient potential for environmental risk becomes apparent during the Stage Two review.

1. 1. A technical consultant is engaged, in collaboration with the campus EH&S officer and the Due Diligence Coordinator in the Office of the President.

   2. The technical consultant is instructed to do the following:
      1. Review the Stage One documentation, the Stage Two report on asbestos samples, and the Environmental Assessment Report;

      2. visually inspect the property and the adjacent and surrounding area, preferably recording the results of the inspection through the use of photographs and/or videotapes;

      3. review publicly available documents, including historical aerial photographs and the files of pertinent environmental agencies; and

      4. prepare a report indicating the degree of probability that contamination is present at the site and whether further investigation is warranted.

         If contamination is suspected or discovered, the consultant should provide (a) a preliminary account of its likely source and possible extent and (b) an indication of what further tests should be undertaken.

2. Three choices are possible at this juncture:
   1. If the technical consultant determines that no further investigation is needed, or the campus determines that the advantages outweigh the risks, a decision may be made to recommend acceptance of the property.

      At this point a Regents' agenda item proposing the property s acceptance may be submitted to the Office of the President, or the appropriate steps may be taken to accept the gift under the policies of the Campus Foundation.

      In either case, the Real Property Environmental Certificate (Stage One), the Environmental Assessment Report (Stage Two), and the technical consultant's report are to be included.

   2. If the technical consultant determines that a significant potential for environmental risk exists, but the campus wishes to pursue further review, proceed to Stage Four.

      NOTE: The decision to proceed at this point should be made in consultation with General Counsel as well as with the donor, inasmuch as reporting and-clean-up requirements become issues.

   3. The campus may determine that the potential risks outweigh the advantages of acquisition of the property and may decide to proceed no further.

Based upon the findings in Stage Three, negotiations with the donor, and consultation General Counsel, a campus may wish to proceed with Stage Four.

1. There are significant legal issues that arise if contamination is discovered, including reporting and clean-up requirements. Therefore, the donor must consent to the investigation and acknowledge the reporting obligation that may ensue.

2. Stage Four involves quantitative/qualitative tests that may include sampling and analyzing the soil and groundwater at the property. Site tests should be undertaken in consultation with legal counsel experienced in environmental law and in collaboration with the campus EH&S officer and the Due Diligence Coordinator in the Office of the President. This process may take one to two months and costs are often in the range of $10,000 to $25,000.

3. Two choices are possible at the completion of Stage Four:
   1. If it is determined that there is no significant risk, or the campus determines that the advantages outweigh the risks, a decision may be made to recommend acceptance of the property.

      A Regents' agenda item proposing the property's acceptance may be submitted to the Office of the President, or the appropriate steps may be taken to accept the gift under the policies of the Campus Foundation.

      In either case, the Real Proper Environmental Certificate (Stage One) the Environmental Assessment Report (Stage Two), the technical consultant s report (Stage Three), and the results of the Stage Four investigation are to be included.

   2. The campus may determine that the potential risks outweigh the advantages of acquisition of the property and may decide to proceed no further.

University of California
Office of the Vice President
Budget and University Relations
January 10, 1990

Introduction

Stage One: Document Review & Preliminary Site Inspection

1. Title history (see checklist)
2. List of regulatory agency permits
3. Real Property Environmental Certificate (see sample) disclosure regarding known or suspected environmental conditions (see checklist)
4. Preliminary site inspection (by campus representative)/report (see checklists)
5. Three choices:
   1. GO: Regents/Foundation + Certificate
   2. Stage Two
   3. STOP

1. Asbestos analysis/report (by campus or outside firm)
2. 1. Document review and further site inspection (by campus EH&S or outside consultant)
   2. Environmental Assessment Report (see model)
3. Three choices:
   1. GO: Regents/Foundation + Certificate/Environmental Assessment Report
   2. Stage Three
   3. STOP

Stage Three: Technical Evaluation (may be combined with Stage Two)

1. 1. Technical consultant engaged
   2. 1. Review of Stage One documentation, Stage Two asbestos report, & Environmental Assessment Report
      2. Site inspections/photographs, videotapes
      3. Review of publicly available documents (historical aerial photographs/files of environmental agencies)
      4. Report
2. Three choices:
   1. GO: Regents/Foundation + Certificate/Environmental Assessment; Report/technical consultant's report
   2. Stage Four
   3. STOP

Stage Four: Site Testing

1. Donor consent, acknowledgment of reporting obligation
2. Quantitative/qualitative tests - soil/groundwater
3. Two choices:
   1. GO: Regents/Foundation + Certificate/Environmental Assessment Report/technical consultant's report/results of Stage Four investigation
   2. STOP

1. Landfills, dumps, demolition or dredge spoils disposal sites
2. Oil refinery, well fields, tank farms
3. Metal plating/coatings
4. Metal working: foundries, welding, machining, fabrication (esp. aluminum)
5. Auto, truck, tractor, motor maintenance and repair
6. Transportation depots: bus, truck, railroad terminals or yards
7. Chemical or pharmaceutical manufacturers
8. High tech firms: electronics, electrical, computer
9. Gasoline, fuel service
10. Dry cleaners
11. Salvage, scrap or waste dealers/lots
12. Laboratories: photo/chemical, research, etc.
13. Corporation, construction, equipment yards (public or private)
14. Utility company facilities (gas, electric
15. Lumber yards, sawmills, wood treatment, paper companies
16. Paint manufacturers, distributors, contractors
17. Military facilities (any type, current or prior)
18. Airports, airfields, cropdusting operations
19. Battery manufacturers/recyclers
20. Concrete products fabricators
21. Nurseries or agricultural operations (esp. feedlots)
22. Pesticide, herbicide, fertilizer formulators or applicators/exterminators
23. Food processing, packing, cold storage facilities
24. Tanneries or tallow-rendering operations
25. Drum or barrel manufacturers/distributors
26. Printing shops
27. Asphalt plants
28. Fiberglass or glass product lines
29. Plastic products manufacturers
30. Rubber products manufacturers
31. Mines or sand/gravel quarries/pits
32. Sewage treatment/handling facilities (public or private)

Note: This list should not be viewed as all-inclusive.

Source: Long Range Development and Environmental Planning, Office of the President, University of California

1. Asbestos insulation, etc.
2. Lead paint
3. Chemical or hazardous material storage or handling areas
4. Spills or leaks of any chemicals or hazardous materials
5. Liquid or solid waste disposal areas
6. Leaking underground storage tanks
7. Polychlorinated biphenyls (PCBs electrical transformers or other equipment)

1. Dead, dying, or unhealthy vegetation (possible soil/water contamination)
2. Soil or pavement stains/discoloration (from spills or dumping)
3. Any obvious signs of spillage or residues on property or in buildings
4. Piles of waste or trash or unidentified mounds (what s buried?)
5. Insulation (thermal, acoustical, electrical may contain asbestos ó1980)
6. Odors (especially solvents)
7. Unidentified truck tracks on open lots (possible illegal dumping?)
8. Is property adjacent to dump/landfill, known hazardous waste sites (lists of identified waste sites are available), or high risk industries?
9. Wells (any caps or covers? also may have permit)
10. Wastewater systems (septic tanks, leaching fields, sumps, dry wells; i.e., any systems not connected to city sewer, especially if industrial site)
11. Drums or any other chemical storage or handling areas
12. Maintenance areas (shops or auto/truck repair operations)
13. Ponds, lagoons or unidentified pits and depressions
14. Underground tanks (any caps or fill connections? should have permit)
15. Transformers (or other big electrical equipment<1978 may have PCBs)

Source: Long Range Development and Environmental Planning, Office of the President, University of California

MODEL

1. Property Ownership and Location
   1. Owner(s): Name, address, telephone number Dates of ownership (from/to)
   2. Location of property: Address, county, assessor's map ID, USGS quadrangle

2. Persons Conducting Investigation and Providing Report
   1. Identification of person(s) conducting Stage Two inspection and investigation
   2. Identification of person completing Environmental Assessment Report (if different from B.1)

3. Summary Description of Site

   Brief description of site (in terms of size, land use, extent of development, topography/natural features, and other details of note)

4. Site History and Use
   1. Comments regarding title history
   2. Zoning: Present classification and dates, prior classification and dates
   3. Current uses of site (heavy, medium, light): Industrial, commercial, agricultural, residential, other
   4. Brief description of current uses of site (in terms of product line, chemicals and materials used, wastes generated, waste management and disposal, etc.)
   5. Brief description of former uses of site (give dates and available information as requested in D.4 above)
   6. Current and prior uses of adjacent and surrounding properties
   7. List of regulatory agency permits/violations for the site (underground storage tanks, wastewater discharge, hazardous/flammable/radioactive storage, agricultural chemical application/mixing/disposal, and other applicable permits)
   8. Persons interviewed relative to site history and use (including current owner and current tenant): Name, address, telephone number

5. Site Environmental Characteristics
   1. Site layout information (attach site plan taken from assessor's or USGS map):
      1. approximate property boundaries
      2. building and parking area locations
      3. site utilities (types and locations)
      4. easements
      5. fencing
      6. high voltage power lines
      7. ponds and floodplains
      8. streams
      9. marshes or wetlands
      10. wells

   2. Site specific waste/wastewater information (refer to site plan to show known or suspected conveyance, storage, or disposal areas):
      1. catch basins
      2. septic tanks/leaching fields
      3. sanitary sewers
      4. underground storage tanks and supply lines
      5. above ground storage tanks
      6. lagoons
      7. pits
      8. drainage lines
      9. sumps
      10. ditches
      11. wells (capped or uncapped)
      12. fill connections (suspected or identified)
      13. unidentified cover plates, pipes, mounds of soil, or depressions
      14. other miscellaneous

   3. Site specific characteristics (refer to site plan):
      1. topography and surface water drainage patterns
      2. surface soil or pavement discoloration or texture change
      3. vegetation condition and changes
      4. drums or other chemical storage areas
      5. maintenance areas
      6. odors
      7. unexplained vehicle tracks (possible illegal dumping)
      8. other notable observations

   4. Building inspection:
      1. age, construction, and general condition
      2. previous disclosure of hazardous materials in building
      3. visible signs of corrosion or other evidence of solvent action
      4. visible signs of any spillage or residues
      5. piles of waste or trash
      6. visible signs of asbestos (thermal/electrical/acoustical insulation, sprayed-on fireproofing and plaster, asphalt roofing material, various tiles, transit panels, pipes/lagging, duct wrapping, hoods, drains, etc.)
      7. visible signs of polychlorinated biphenyls (PCBs--transformers, capacitors, electrical switchgear, etc.)

   5. Neighborhood observations (2-4 block radius windshield survey ):
      1. land use
      2. hazardous waste generation/storage/disposal areas
      3. known contaminated sites (toxics/releases/Superfund)
      4. existing monitoring wells
      5. landfills
      6. gas stations and other high risk industries
      7. drinking water supplies (surface or underground within 2,500 feet of site)
6. Risk Assessment
   1. Conclusions (including likelihood of on-site hazardous material contamination, possible sources and pathways of contamination, and off- site problems which may affect the subject site or personnel)

   2. Recommendations for further assessment, if necessary.

1. The property and all operations thereon apply with applicable environmental laws, regulations, and court or administrative orders:
   1. Did (company) maintain all necessary environmental records?
   2. Did (company) undergo any environmental inspections or audits?
   3. Permits for active or abandoned storage tanks?
   4. Proper closure (removal ) of abandoned underground storage tanks?
   5. Permits or manifests for chemical/hazardous material storage, use, handling or disposal on the property?
   6. Air emissions permits or licenses?
   7. Wastewater discharge permits or licenses?
   8. Solid waste disposal permits or licenses?
   9. Agricultural chemical formulation, storage, application of disposal permits or licenses?

2. There are no pending or threatened private or governmental claims, or judicial or administrative actions relating to environmental impairment of the property?
   1. Have any claims been made under (the company's) insurance policies?
   2. Have there been any federal or state enforcement actions against (the company)?
   3. Are there any pending enforcement actions?
   4. Has (the company) entered into any consent decrees or administrative consent orders?
   5. Is (the company) subject to any outstanding administrative orders which require ongoing compliance efforts?
   6. Are there past decrees or orders which require (the company) to meet any continuing compliance obligations?
   7. Have there been any citizen suits filed against (the company)? Have they been resolved?
   8. Have there been any Notices of Violation sent to (the company)? Have they been resolved?
   9. Has (the company) received any Requests for Information, Notice and Demand letters or administrative inquiries from any government entity with regard to its environmental practices?

3. There are no areas on the property where hazardous or toxic substances have either been released, disposed or, or found, other than those that are disclosed below:
   1. Asbestos insulation, etc.
   2. Polychlorinated biphenyls (PCBs--electrical transformers or other equipment)
   3. Lead paint
   4. Urea Formaldehyde foam insulation
   5. Spills or leaks of any chemicals or hazardous materials
   6. Liquid or solid waste disposal areas
   7. Leaking underground storage tanks
   8. Chemical or hazardous material storage or handling areas

Regents

As grantor(s) or that real property in _________________County, State of __________________, known as __________________________________________________________, and conveyed to The Regents of the University of California by gift deed, I/we represent and certify that to the best of my/our knowledge:

1. The property and all operations thereon comply with applicable environmental laws, regulations, and court of administrative orders;

2. There are no pending or threatened private or governmental claims or judicial or administrative actions relating to environmental impairment on the property; and

3. There are no areas on the property where hazardous or toxic substances have either been released, disposed of, or found, other than those that are disclosed below:

________________________________________________________

________________________________________________________

________________________________________________________

Name ________________________ Date ________________

Name ________________________ Date ________________

(For community property, both owners must sign)

Foundation

As grantor(s) or that real property in _________________County, State of __________________, known as __________________________________________________________, and conveyed to [name of Campus Foundation] by gift deed, I/we represent and certify that to the best of my/our knowledge:

1. The property and all operations thereon comply with applicable environmental laws, regulations, and court of administrative orders;

2. There are no pending or threatened private or governmental claims or judicial or administrative actions relating to environmental impairment on the property; and

3. There are no areas on the property where hazardous or toxic substances have either been released, disposed of, or found, other than those that are disclosed below:

________________________________________________________

________________________________________________________

________________________________________________________

Name ________________________ Date ________________

Name ________________________ Date ________________

(For community property, both owners must sign)

RD6.2 Due Diligence in the Assessment of Toxic and Hazardous Substances When Ground Leasing Campus Property, University of California, Office of the Treasurer, Oakland, CA, Revised April 10, 1990. (see 6.4)

A. Three part investigation:

1. Preliminary site assessment
2. Evaluation by professional environmental assessment consulting firm (if needed)
3. Sampling and analyzing soil, groundwater, and, if applicable, building components (if needed

Risk assessments may be made at the conclusion of each phase of the process. A decision tree of the process from one phase to the next follows. It must be noted, however, that many situations will not fit into this process. Accordingly, before and during negotiations, campuses should consult with the offices of the Treasurer, General Counsel, and Long Range Development and Environmental Planning ("LRD&EP") to make risk assessment and determine appropriate action when circumstances deviate from those outlined below.

Contact LRD&EP for a list of qualified firms and master service agreements for performing PhaseIB-Professional Evaluation and Phase II-Sampling.

RD6.3 Due Diligence Practices for the Assessment of Toxic and Hazardous Substances When Purchasing Campus-Related Real Property, University of California, Office of the Treasurer, Oakland, CA, Revised March 17, 1992. (see 6.4)

A. Two Phase Investigation

Phase I - Preliminary Site Assessment (PSA)
Phase II - Site Characterization: Sampling of soils, groundwater, and building components

Risk assessments must be made at the conclusion of each phase of this process. A generalized decision tree of this process follows:

Property appears free of contamination. Evaluate need for further investigation. Proceed with Phase II or acquisition as appropriate.

Potential for contamination is identified. Proceed to Phase II site sampling investigation.

Known of confirmed contamination on site. Re- evaluate benefits of acquisition. Terminate acquisition if risks outweigh advantages.

Property appears free of contamination. Proceed with acquisition.

Contamination confirmed. Proceed with additional site sampling to determine full nature and extent of problem. Negotiate terms for remediation.

Nature and extent of contamination poses significant liabilities. Terminate acquisition.

There is some degree to potential risk involved with every property transaction. Environmental site assessment will always be a condition of any purchase contract unless performed by the University prior to executing the purchase contract. The Phase I Preliminary Site Assessment (PSA) may be performed by the campus if qualified EH&S personal are available. If potential for contamination is identified during the campus Phase I assessment, a qualified professional environmental consulting firm should be contracted to review the results of the Phase I report and conduct Phase II site sampling if necessary. It is strongly recommended that if the property is commercial or industrial or otherwise poses a high risk for contamination, that an environmental consultant be exclusively contracted to perform the work because of the inherent liabilities. Contact the Environmental Assessment Coordinator at Legislative Analysis & Environmental Policy (LA&EP) for a list of currently qualified environmental consultants.

B. Phase I - Preliminary Site Assessment (PSA)

The PSA has 3 major objectives:

1. Technical: determine the need further investigation (Phase II).
2. Financial: determine if the subject property value is impaired.
3. Legal: establish a basis for the innocent landowner defense .

Currently, standard PSA components consist of the following:

1. Identify past and present site ownership and uses.
2. Determine and document site environmental characteristics and setting.
3. Assess hazardous materials and hazardous waste generation, storage, handling, and disposal practices.
4. Inspect structures for asbestos, lead paint, PCB electrical equipment, or any other hazardous building components.
5. Assess off-site hazardous posed by past and present uses of surrounding properties.
6. Develop conclusions about risks of potential problems and make recommendations for the need for further investigation (Phase II).

The PSA investigation must consist of all records review, site inspection, and historical research. A Scope of Work has been developed by LA&EP to specifically dictate how the PSA should be done (see attachment). A standardized PSA report form has also been developed (see attachment). A verbal progress report on the site investigation should be made to campus personnel if there are significant findings or changes to the work plan. A written draft PSA should be submitted to the campus personnel and LA&EP for review prior to issuance of a final report. LA&EP will review the PSA and provide a technical evaluation for the Treasurer s Office. A risk assessment of the situation will be conducted by campus personnel in cooperation with the Treasurer s Office, LA&EP, General Counsel, and consultants if appropriate.

1. Records Review

   Review available records and files of both public agencies and any accessible privately held records for the following information: site history and use; hazardous materials and hazardous waste storage and disposal permits; underground storage tank records; discharge or emissions permits; business hazardous materials plans; reported releases of hazardous materials or known site contamination problems. Public records may be found in a variety of local, county, state and federal agencies, depending on the type and location of the site. For commercial and industrial sites, a questionnaire can be presented to the current owner or operator that requests specific information on current and past operations.

   The California Environmental Protection Agency (Cal EPA) maintains a composite data base of sites that have reported releases of hazardous substances or wastes. This data base (Facility Inventory Database) includes site listings from the Department of Health Services (DHS); Water Resources Control Board (WRCB); and some federal Environmental Protection Agency (EPA) records. No regulatory agency site listings are all-inclusive, and the absence of a site from these lists does not mean there is no problem.

2. Site Inspection

   The site inspection is performed to identify land uses, evaluate owner and tenant activities, and identify environmental characteristics that could impair the condition or value of the real property. Authorization for access to the site (preferably written) must be obtained from the owner prior to entering the property. If permitted, the existing conditions should be documented using photos or videotape. If possible, interviews of knowledgeable on-site personnel should be conducted to gather information about site operations and layout. Aerial photos and USGS topographic maps may assist in this process.

The following red flags or possible signs of contamination or presence of hazardous substances must be noted:

1. Underground storage tanks (USTs): Nearly all USTs in California which contain hazardous substances or petroleum products are required to have permits. Leaking tanks are required to be reported to regulatory agencies. However, some USTs may not have permits and/or may be abandoned, especially on agricultural and residential properties. Look for vent pipes, fill connections and metal caps or plates.

2. Wastewater systems (septic tanks; leaching fields; sumps; dry well; or any other subsurface systems on-site which are not connected to a sanitary sewer system).

3. Drums or any other chemical storage or handling areas.

4. Discoloration of pavement or soils, especially near storm drains.

5. Dead, dying, or unhealthy vegetation.

6. Piles of waste or trash or unidentified mounds.

7. Surface impoundments (pits; ponds; lagoons; unidentified depressions)

8. Any obvious signs of spillage or residues on property or in buildings.

9. Odors (especially solvents).

10. Wells (may be capped or covered).

11. Maintenance, repair or shop areas.

12. Building components which may contain asbestos (generally prior to 1980):
    1. Sprayed-on fireproofing and plaster
    2. Acoustical insulation
    3. Thermal insulation: pipes or lagging; ducts; plenums; boilers and furnaces
    4. Electrical insulation: electrical panels and duct openings
    5. Floor and ceiling tiles and transite panels
    6. Asphalt roofing materials
    7. Electrical equipment such as transformers and capacitors (older than 1979) that may contain polychlorinated biphenyls (PCBs).

3. Historical Research

It is essential to find out as much as possible regarding previous site ownership and uses in order to assess the potential for contamination due to past activities. There are a number of resources available to assist in this process.

1. Title History: this type of title report can be prepared by a title company at a slightly higher cost than an ordinary title report. The title search should go back to the time the property was first developed. A title history report will whether the property was owned by government agencies of companies that likely handled hazardous materials, and will also reveal recorded leases by such entities. State and federal environmental liens may also be included in these records. The Treasurer s Office will arrange for delivery of title documents to the campus.

2. Aerial photos: historical aerial photos can provide invaluable documentation of site use and activity for both the subject site and surrounding properties. Many commercial aerial photography companies can provide coverage of urban areas as far back as 50 years.

3. Maps: historical maps, especially Sanborn fire insurance maps, are often available for urban areas through local libraries or historical societies. Old business directories and other similar historical records may also be available from libraries, societies and public agencies.

4. Interviews with people knowledgeable about the property can provide valuable insight into site history and activities for which no written records exist. Neighbors, former employees and long-time public officials can often provide this information.

Phase I Preliminary Site Assessments will generally take an environmental consultant about 2-3 weeks to complete and cost in the range of $2,500 - $6,000, depending upon the type and size of the property. Consultant cost estimates and turn-around time may vary significantly at any given time, so it is generally recommended that proposals be solicited from several different qualified firms.

C. Phase II - Site Characterization (Sampling)

This phase involves actual sampling and analysis of soils, groundwater, and building components suspected of containing hazardous substances or wastes. This phase may also entail testing of underground storage tanks. Sampling will reveal whether the property is contaminated or if hazardous substances are really present. Phase II investigations require written authorization from the current property owner. There are significant consequences for the owner of the property. Both federal and state hazardous waste laws require that the owner promptly report site contamination to the proper authorities. (University employees may also have an independent legal obligation to report the discovery of contamination if the owner does not.) This will subject the current owner to regulatory scrutiny and the burden of further site investigations and remediation (cleanup). Phase II investigations may also result in diminution of property value and will delay the property transaction.

The consultant will prepare a technical Phase II report consisting of:

1. Nature and probable source(s) of the contamination.
2. Likely extent of contamination in soils and groundwater.
3. Need for further characterization (sampling and analyses).
4. Regulatory standards pertaining to cleanup levels and remedial technology options.
5. A preliminary estimate of costs for additional sampling and remediation (cleanup).

Environmental consultants generally require about 4 - 10 weeks on the average to design and implement a Phase II investigation. In general, costs usually range from less than $10,000 to about $30,000 for this work. Costs and turnaround time will depend on the size of the property and types of containments and sampling required. For example, soil borings typically cost $1,500 each, whereas groundwater monitoring wells cost $3,000 - $6,000 each, depending upon the location and site conditions. Laboratory costs vary according to specific analyses.

Once contamination is confirmed by a quantitative technical investigation, the acquisition as negotiated will probably have to be restructured if the University still wants to acquire the property. The campus must perform a written analysis of risks, costs and programmatic benefits of continuing toward acquisition of the property. A health risk assessment study may be performed at this time to determine the effects of contaminants on persons using the property and the effect on the property itself. Health risk assessments are also essential in determining acceptable containment cleanup levels. The campus must submit copies of its written analysis and any supporting documentation to both the Treasurer s Office and LA&EP.

Contractual negotiation strategies include:

• University requires that the property be cleaned up by the seller and also that potentially affected third parties provide releases from liability to the University prior to purchase. Although this is the most desirable option, it is not always practical. It may be possible to delay closing by entering into an option contract with the seller until contamination issues are better defined or resolved.

• Adjust the purchase price to cover cleanup. Another similar option is to place funds into an escrow account to cover cleanup. The nature and extent of contamination must be well defined and cleanup costs well documented in order to have confidence in this approach. The University should oversee the cleanup to insure that it is done correctly, and therefore control the escrow account. If the seller performs the cleanup, the University may require a specific indemnification from the seller for any future costs incurred by the University due to inadequacy of seller s cleanup. The University may also include a contract provision that the sale may be voided if extensive cleanup costs make the sale no longer economically viable.

• Specific environmental indemnifications must be included in the purchase contract for both known and unknown potential contamination. Indemnifications should not be limited by either time or dollar amount. Terms of the purchase contract must survive the closing of the contract and should be binding upon the successors and assigns of the seller. Contractual language is available from General Counsel. A seller s indemnification can not shield the University from actions or orders by regulatory agencies after purchase of the property. The real value of an indemnification is dependent upon the extent of the financial resources of the indemnitor.

• The seller may retain ownership of specific contaminated areas until those areas are cleaned up, or until some set date. Provisions for purchase of those areas should be negotiated as a part of the purchase contract. All hazardous wastes and materials on the property must be evaluated. Any material which the University does not want to acquire must be properly disposed of. The party responsible for disposal of any hazardous materials must be designated in the contract and access to those materials must be guaranteed.

Reporting Requirements

University personnel involved in property acquisitions must be sensitive to the conflict between the seller s desire not to have to report property contamination to tenants or regulatory agencies, and University personnel s legal obligation as public employees to report known soil and groundwater contamination. The University s reporting obligation should be disclosed to the seller in writing prior to undertaking Phase II sampling investigations. These reporting obligations do not generally apply to the discovery of asbestos or PCBs contained in building materials and structures.

Under Proposition 65, a University responsible party (essentially an employee who is required to file conflict of interest statements) is legally obligated to report known soils or groundwater contamination which may cause substantial injury to public health and safety to local authorities, even if it is not University owned property. Failure to report could result in criminal penalties, including three years imprisonment. Suspicion of contamination (as indicated in Phase I reports) need not be reported. Existence of contamination generally means the results of soil or groundwater sample analyses showing reportable quantities or concentrations of hazardous substances over threshold levels as defined in the Code of Federal Regulations (40 CFR) or as defined in the California Code or Regulations (CCR Title 26, Section 22).

Conflicts will often arise between a seller and the University when a Phase II investigation is undertaken. Sellers will often attempt to have prospective buyers sign confidentiality statements agreeing not to report analytical sampling results. No such documents should be signed by University personnel without prior review by General Counsel.

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