Ten Insider Tips to Reduce Your Environmental Remediation System Operations and Maintenance Costs

So, you’ve just spent a lot of time and money designing and installing that in-situ environmental remediation system at your facility.  You were assured that the system will remove contaminants from the soil, soil gas and/or groundwater but it will take a few years or more to achieve regulatory endpoints.  At least the big headaches and costs have passed. Or have they?

It’s tempting to exhale a bit once your remediation system is up and running.  The construction crews have cleaned up, regulators have turned their attention elsewhere and your facility operations can get back to normal. Your operations and maintenance (O&M) budget has become a part of your annual planning.  But just because things have quieted down, it doesn’t mean you should stop paying attention to the costs.  Are you getting the most bang for your buck, especially over the long term?

The tips offered below are based on over 30 years of designing, building and operating environmental remediation systems. While no two situations are the same, there are certainly commonalities that contribute to the success and efficiency of an O&M program.  It is our hope that you will benefit from our experience and be able to deploy your O&M dollars as effectively as possible.

  • Understand your regulatory end-points before you commit to your remedy. You’ve spent a lot of time and money in the assessment stage trying to quantify the extent and magnitude of your subsurface contamination. You now want to know how much this will cost to clean up. Before you think remediation costs however, it would be advisable to engage an environmental consultant who can also assess the human and ecological risks associated with doing less or no remediation.  In many cases and in many jurisdictions, you may have options to scale back your remedial response based on the risk to humans and the environment.  Why design and operate a remediation system to attain generic cleanup standards when you don’t need to?

Even if you already have an active remediation system, its not too late to evaluate risk-based end-points. You may be closer to the end than you think.

  • Think O&M costs in the system design phase. Most remediation systems are designed for the full extent of contamination on day one. System designers don’t like to fall short on the equipment specifications, so many designs also include an additional performance buffer. That seems right for the first few months of your O&M program when the contaminant mass is at its most enriched and readily accessible state.  However, contaminant mass removal rates tend to drop off significantly over the early phases of the remediation program and then level off into a steady long-term phase. From fairly early on, the system is essentially over-designed.  Each month, more O&M dollars are spent for less mass removed.

During the design phase of your remediation project, ask for projections of anticipated O&M costs for both the “initial-mass” removal phase as well as an “average mass” removal phase.  Also ask for expenditures along the life-cycle of your projected project.  The long-term O&M costs are typically significant enough to factor into your initial design decisions.

Another way to save O&M dollars at the design stage is to make system-checks more efficient.  For example, an operator that has to visit and open each recovery vault or wellhead just to collect the days data will remain on the clock much longer than one who has all the valves and monitoring ports in a centralized location. Not only can significant cost savings be realized by reducing the operator’s time on-site, the operator will be in a much better position to collect performance data accurately and make the best optimization adjustments.

  • Do you need a hammer or a Q-tip, or both? As noted above, most remediation systems are designed with “day one” in mind.  The big “hammer” approach may have been necessary during the early stages, but to a lesser and lesser extent over time.  O&M dollars are increasingly spent on system upkeep and utility costs rather than toward moving the remediation project forward.  For various reasons, there seems to be a tendency to stick with an as-designed remedial approach long after its cost-effective life has past.

Be sure to have your consultant evaluate the cost-benefits of modifying the remedial approach in the later stages of the remedial program.  This “adaptive site management” approach can often identify a reduced-effort tactic (Q-Tip) that can make a real difference in your annual costs.

  • Are you paying for a system operator or a meter reader? All in-situ remediation systems require some degree of human operations and maintenance. The key is to hire O&M services that have the knowledge to maximize remedial progress.  An experienced system operator will measure and manage key performance metrics in each particular system to maximize the effectiveness of the remedial program during each and every site visit.

A great operator has the experience to anticipate system “upsets” which reduce unplanned downtime and costly repairs.  They also understand the difference between “preventative” maintenance and “reactive” maintenance.  We have seen that the right operator can single-handedly expedite the overall remedial timeframe and significantly reduce O&M expenditures.

If you are getting a lot of surprise invoices associated with unforeseen repairs or your system always seems to be “down” due to malfunctions, it may be that your system operator is really just a meter reader.

  • The long-term costs of the low-cost providers. Over a long haul, owners understandably seek to reduce their annual O&M costs through a competitive bid process. O&M responsibilities can change hands many times over the years; each time a successive operator picks up where the last one left off.  Tolerance for underperforming equipment and band-aide maintenance becomes the norm. While the unit rate of the latest operator is incrementally lower than their predecessor, the progress made on the overall remedial program continues to diminish.  Further, there is an inherent lack of motivation to be efficient and get the remediation project done. The low-cost provider simply doesn’t want the work to end.

We understand the rationale behind lowering costs. Such savings can be used elsewhere in your organization for greater benefit.  For that, we offer the next Tip.

  • Understand where your O&M dollars are going? It is important to recognize if your O&M costs are associated with equipment and consumables or if they are the result of personnel, or both. Are you spending a lot of money on electricity keeping your pumps and treatment devices running while little to no contaminant mass is in the process stream?  Are you spending a lot of personnel time collecting a mountain of data that never changes?  Are your processes constantly failing from organic or inorganic fouling that causes system downtime and increased maintenance events?  There are solutions to all of these common situations.

By first understanding the root cause of your O&M expenditures, you will be in a better position to potentially make a big difference in your annual budget.

  • Renewable verses consumable treatment devices – what’s the difference. Treatment devices can be classified in many ways. For this tip, we are going to talk about renewable verses consumable treatment devices.  A renewable technology is a device that does not diminish treatment capacity over time regardless of the amount of contaminant mass it has treated (catalytic/thermal oxidizers, skimmer pumps, soil vapor extraction systems, etc.).  A consumable technology is one that diminishes capacity as treatment occurs (granular activated carbon (GAC), sorbents, bag filters, etc.).

The application of renewable and consumable technologies is often dependent upon the amount of contaminant mass and the rate at which it is being treated.  Generally speaking, the more abundant and robust the contaminant mass, the more cost efficient it is to use renewable technologies.  Conversely, low mass situations can be better suited for consumable remedies. For example, a thermal or catalytic oxidizer is frequently a good choice for a soil vapor extraction system at the early stages of a remediation program.  Abundant mass is removed requiring off-gas treatment prior to being discharged to the atmosphere.  Using GAC at this early stage would be cost prohibitive as the abundant mass would quickly render the carbon “spent”; requiring frequent and costly change-outs. As the mass reduces over time, more O&M dollars are spent on the oxidizer (capital/lease costs, utility costs) than would be spent substituting for GAC.  This same concept of “dollars spent per mass removed” can apply to other technologies.

The key is to know when it is cost efficient to switch from a renewable to consumable process.  A good system operator can track mass removal rates verses treatment cost and recommend the proper time to switch treatment devices.  It is important to have your consultant pay attention to such details.

  • Consider telemetry and remote monitoring. Modern communication technology is cheap.  Sending a human to randomly check on a system is not.

Design or add telemetry systems into your remediation system that can be accessed via remote computer, can “call out” when performance metrics fall out of range and provide some data on system faults.  With even the simplest telemetry systems, the frequency of O&M visits can be dramatically reduced. Further, technicians can be more informed of system upsets and mobilize prepared to conduct the necessary maintenance.

Which brings us to “down-time”.  When a system is “found down” during a routine site visit, the technician is often unprepared or doesn’t have time left in the day to conduct the necessary repairs. Thus, another visit on a later date is scheduled.  Added cost and down time!  Also, without telemetry, we often don’t know if the system went down a day ago or a week ago.  Down time can easily add up to months or even years of prolonged operation and expenditures.

Note that we recommended simple telemetry systems.  Which leads us to the next tip.

  • Bells and whistles? Being able to open and close valves from a hundred miles away is a necessary function for some industries (pipelines, chemical plants, etc.). Being able to access real-time data to your office computer can also have benefits.  There are times when spending more to have such functionality is essential (e.g., critical safeguard, real-time discharge compliance, etc.).  We don’t consider such critical and essential design features to fall into the bells and whistles category.

Often, we’ve seen design features that only marginally add to the overall necessity of the system but add significant cost. Some can actually hamper the O&M process by becoming a maintenance item on their own.  Regardless if you are in the design stage or late in the overall remediation program, we recommend that you evaluate if the extra bells and whistles are truly necessary to attain your remediation goals.

  • Conduct an Annual Optimization Review. Very few in-situ systems operate exactly as designed.  Initial system designs are based on inherently limited data and an educated prediction of performance. The most accurate performance data becomes available only after the system has been activated.  Also, operational parameters and site conditions can change over time.  For example, groundwater elevations rise and fall, impermeable surfaces can be removed or upstream stormwater paths can be redirected.  These and many other factors can affect how the remediation system performs.

It is important to consider your remediation program as an iterative process, so routinely evaluate the status of your remediation program.  Instead of spending the same O&M dollars year after year to keep the same system “running”, recognize that circumstances have likely changed.

We recommend that you conduct annual “optimization reviews” with your system operator.  Many of the tips listed above can be evaluated during this review.  Not only will you discover considerable savings, you will also be confident that are getting the most bang for your buck.

Brownfield Science & Technology, Inc. (BSTI) is an earth sciences company specializing in environmental assessment, remediation and consulting services for public and private clients. We use science, human talent and state-of-the-art tools to guide our clients through environmental challenges. If you would benefit from deep expertise, responsiveness and been-there-done-that capability, then we may be the right firm for you.

For more information, contact:

John Kollmeier                                     Tony Finding

Senior Vice President                           V.P., Director of Remediation Technologies

jkollmeier@bstiweb.com                      tfinding@bstiweb.com

(610) 593-5500                                    (610) 593-5500

 

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12 Best Practices To Avoid Pipeline Construction Environmental Shut-Downs and Fines

Since 2005, innovative technologies such as hydraulic fracturing (i.e., fracking) and directional drilling (trenchless technologies) have made it possible to access valuable hydrocarbon resources from Pennsylvania’s Marcellus and Utica shale deposits. Domestic natural gas production has increased to the point that Pennsylvania produces 19% of the total output; which ranks #2 behind only Texas (24%).

The increase in natural gas production has triggered a demand for additional pipelines across Pennsylvania and the surrounding region to deliver product to market safely and efficiently. To construct a new pipeline, energy companies must navigate complex environmental regulations, permits, and technical obstacles. Any misstep along the way can result in costly operational shut-downs, public relations challenges, sizable fines and lengthy project delays.

Every pipeline installation location faces unique challenges. The purpose of this paper is to identify some of the more common causes of environmental, regulatory and permit violations that can result in work delays, fines and public relations challenges. The information below is presented in no particular order of importance. It is our hope that this paper can serve as a valuable guide to energy companies and pipeline operators as they plan and implement their pipeline construction projects.

Establish clear lines of communication

Insufficient responses, reporting delays, inattention to permit details and work crew variabilities have all been factors in pipeline construction shut-downs and fines. Communication challenges become more complex when the project involves multiple contracting parties.

Governing authorities will not accept a lack of communication at the project level as a valid reason for not complying with permit conditions. Repeated failure to promptly comply with permits can risk a forced work stoppage, imposed fines, and/or additional legal penalties.

A robust Communications Plan should be generated and implemented at all levels of the project. A clearly-outlined project personnel structure and chain of communication is vital to the Communications Plan. Timeframes and processes to report instances of non-compliance are also an important part of the plan. Managers and on-scene inspectors must be fluent in permit reporting requirements. They should also have the authority to obtain the information they need in a timely fashion. Enabling a process for field crews to identify and report potential issues to inspectors and managers can save valuable time and kick-start mitigation efforts. A self-regulating project can keep regulators from becoming overly involved with day-to-day oversight.

Proper soil segregation and restoration of open-cut wetlands

When open-cut trenching methods are used to cross wetland areas, soil segregation is important to maintain the integrity of the resource during restoration efforts. Specifically, wetlands underlain by an impermeable “fragipan” soil horizon are at risk of drainage if not properly restored.

Wetlands with endangered and/or threatened species, such as bog turtle habitat, will likely require additional measures to avoid long-term impacts and may not even be approved for open-cut crossing methods.

It is recommended that during initial trench excavation, a wetlands specialist or similarly-qualified expert is present to verify that soil horizons are carefully removed, segregated, and staged during construction. Following pipeline installation, complete and appropriate restoration of the wetland should be documented and approved by the expert.

Prepare for water infiltration within conventional bore excavations

Conventional bore crossings typically require the excavation of pits to attain a direct bore path beneath the feature to be crossed. Storm water runoff and/or groundwater infiltration into the pits may necessitate significant water management measures including temporary settling and containment structures. Often, additional space is needed to construct water management structures. Special attention to permit conditions is important to avoid management and discharge violations. Also, the time required to purchase/rent additional land for work space or to modify a permit can result in delays on the order of weeks.

It is recommended that a pre-construction evaluation of bore crossings take place to improve the understanding of the subsurface. This information can be used to design construction plans for crossings that add in contingencies for expanded dewatering and storm water handling requirements.

Maintain erosion control devices (ECDs) to prevent runoff into wetlands, streams and other waterways

Continual inspection and upkeep of ECDs is necessary to prevent runoff from the construction site into water bodies and other resources. Over time and multiple storm events, ECDs become less effective and need to be repaired or replaced to avoid unpermitted discharges to waterways and/or complaints from the public.

It is recommended that personnel be assigned to directly inspect ECDs on a regular basis as well as just prior to and after any storm events. Sufficient resources should be allocated to repair ECDs expeditiously.

Maintain construction operations during permitted work hours

Most municipalities and townships have ordinances specifying the permissible hours of operations for construction activities. Installation contractors are under pressure to make progress and may opt to work beyond the permitted timeframes. Especially in areas of increased public scrutiny, such actions may trigger noise and/or nuisance complaints from nearby residences. Habitual violations of such ordinances can risk temporary shutdown or revocation of local permits.

It is recommended that site supervisors be fully informed of and comply with all local rules and work timeframes. Daily work logs should always verify the actual hours of operation.

Systematize process for changes to construction methods/techniques

Often a construction method/technique change can make good tactical sense given in-field conditions or circumstances. However, such changes often require modifications to existing permits which will necessitate regulatory review and approval.

Failure to follow permitted construction methods or techniques can result in the suspension of all permitted activities, extended delays, and fines for failure to comply.

It is recommended that a thorough and detailed Communications Plan be adopted, and all personnel be trained on its content to prevent these issues from impacting the project.

Be careful in the selection of drilling fluid additives

Additives to drilling fluid can help overcome challenges during pipeline installation. Depending on the circumstance, it may be advantageous to adjust the pH, add bactericides, corrosion inhibitors, or other agents to the drilling fluids. The Pennsylvania Department of Environmental Protection maintains a specific list of approved drilling fluid additives.

In most cases, on-scene modification to a drilling fluid may make tactical sense but it does require approval. Further, use of an unapproved additive may be a permit violation and could result in fines.

It is recommended that all construction personnel be trained on the use of approved additives and that any reformulation of drilling fluids on the job site require supervisory level approval. Routine audits of drilling materials are also suggested.

Minimize inadvertent returns of drilling fluids into uncontrolled areas

Trenchless technologies, such as Horizontal Directional Drilling (HDD), utilize circulated drilling “mud” to advance a bore path through the subsurface often to cross underneath a major roadway or a sensitive environmental resource. Sometimes, the pressurized drilling mud will travel through natural subsurface pathways such as rock fractures and reach the ground surface. This is known as a “frack out” or inadvertent return (IR). IRs that enter waterways, wetlands, or ponds may be viewed as unpermitted discharges and subject to fines. In addition, IRs may cause property damage to nearby structures or roadways.

An IR can be quite visible to the surrounding community and often creates a public relations challenge. Exacerbating the problem, once an IR occurs, it will have a higher chance of reoccurring once drilling resumes due to the establishment of that preferential pathway.

It is recommended that a thorough geotechnical investigation be conducted in all areas that will likely involve HDD methods prior to actual drilling. Although nothing can detect all possible subsurface structure and fractures, the geotechnical investigation can predict areas where IRs would be more likely to occur. Reducing the length of an HDD bore to a minimum greatly reduces the risk of an unwanted IR. In high-risk areas or threatened or endangered species habitat, it may be advantageous to evaluate installation methods other than HDD.

Minimize the effects on potable water resources caused by trenchless technologies

As presented above, HDD drilling mud has the potential to migrate through the subsurface and can enter nearby domestic water supply wells. Although drilling mud is non-toxic, affects can range from increased drinking water turbidity to complete infiltration with drilling fluids.

Also, a horizontal bore may intercept a local aquifer which could cause drainage back through the borehole and lower the groundwater level. If groundwater levels drop below supply well pump depths, the local water supply may be lost. Affected users must be supplied immediately with alternative water sources and a long-term solution for their water needs will need to be addressed; possibly involving the installation of a new water well or connection to a publicly-owned water supply.

As noted above, it is recommended that a thorough geotechnical investigation be conducted during pre-construction in all areas of planned HDD activity. In addition, all potable water wells in the area should be identified and monitored before, during and after construction activities.

Promptly report unpermitted incidents/conditions

Accidental situations occur during pipeline construction that sometimes result in unpermitted conditions. Self-reporting a mistake or incident is inherently difficult, especially when on-scene workers are facing daily productivity pressures. Most permits have specified time frames to voluntarily report occurrences of non-compliance. However, failure to report such occurrences within the time frames can incur additional penalties to the project, including the stoppage of work.

It is recommended that thorough training of on-site personnel be conducted so that all personnel recognize when an unpermitted situation occurs, thereby minimizing the reliance on individual discretion. It is also recommended that a clear and timely process for reporting occurrences is adopted.

Maintain clean and orderly project access points

Pipeline installation requires that work be conducted in remote areas. Access to the construction sites is often over temporary gravel roads originating from a nearby public road. Construction permits require that project access entries along public roadways remain clear of mud and debris that can be tracked along with construction vehicles.

Such access points may be the only point of interaction with the local community. Failure to maintain good housekeeping and public sensitivity in these areas can result in public nuisance complaints. Continued problems of this kind could risk the revocation of local construction permits.

It is recommended that sufficient cleanup personnel are dedicated to maintaining public roadways.

Adopt a realistic and usable PPC Plan

In addition to IRs, unpermitted discharges to public waterways can occur due to fuel spills, hydraulic line failures, etc. In most cases, a Preparedness, Prevention and Contingency (PPC) Plan will be required for pipeline construction sites. The PPC Plan will include best practices to avoid such spills, methods to document the cleanup measures taken, and how to prevent further violations of permitted conditions.

Having mitigation supplies on hand at the time of a release is an important, and sometimes overlooked factor in response efforts. Lack of adequate procedures and/or cleanup equipment can allow spills to migrate to nearby waterways, resulting in permit violations, fines and work delays.

It is recommended that a PPC Plan be developed using practical and applicable techniques. Also, all countermeasure equipment should be readily available so that any job-site spills can be contained and cleaned up with minimal migration away from the loss area. The on-hand presence of cleanup and countermeasure supplies should be verified before construction activities begin.

he above summary represents our viewpoint and what we’ve witnessed to be the common environmental-related reasons causing construction delays, job-site shutdowns, public relations challenges and fines. This paper is not meant to be a comprehensive list of all possible issues that could be encountered during linear construction of pipelines.

Brownfield Science & Technology, Inc. (BSTI) provides qualified and experienced Environmental Inspectors, Professional Geologists, Geotechnical experts, Biologists, Environmental Scientists, Technicians and Engineers in support of the pipeline installation industry and operators.

BSTI’s website is www.bstiweb.com

Copyright 2018 BSTI

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Ten Insider Tips of an Outstanding Environmental Consulting Firm

  1. They understand their client’s business interests

One of the most critical errors environmental consultants can make is immediately getting lost in the technical and regulatory details of a project without ever fully understanding the business goals of their client. Oftentimes, the client will not know what affect the details of their business, business dealings, interests, or history may have on the overall project. Realizing the importance of these details late, or worse not at all, can be disastrous and costly. An outstanding environmental consultant will begin every project with a management level consultation focused not on the technical aspects but on the nuances of the business and its objectives.    Illuminating the specific business factors that can influence outcomes nuances in the early strategic planning of a project helps to ensure an optimal outcome.

  1. They make their science work for you

Throughout the past two decades, the environmental assessment “industry” and the regulators have developed many binary decision processes. These may include comparing soil concentrations to screening values (pass/fail), identification of oil sheens (yes/no), determination of impacts to groundwater (yes/no), assessing off site impacts (yes/no), etc. Many property transactions, litigations, and remedial strategies have failed miserably because of this process. Good consultants do not push the panic button when these binary screenings fail and quickly shift to a mindset of using their scientific skills and persuasion to figure out a way to attain your goals.

  1. They understand the purpose and limits of guidance documents

Technical guidance documents and standards come in all shapes and sizes and are applied in many ways. They are mostly designed to either provide information, standardize a protocol or procedure, or, provide clarity for regulatory programs. Sometimes they are over used and are forced onto projects (by consultants OR regulators) with little regard to their applicability of the situation. Good consultants know how to refer to them or use them for the benefit of the client. They also know when to challenge them when they are being misapplied in whole or in parts. Understanding why they were made, who wrote them, and how they were adopted is critical in this process.

  1. They have a high level of industry involvement

It is one thing for a consultant to pop in on a conference here and there to see what is going on in the industry and earn continuing education credits. It’s another thing to participate in developing guidance documents, publish papers, speak at conferences, and volunteer time for board positions with key industry groups. These consultants are at the forefront of science and technology and are industry leaders; the kind of people you want leading your project.

  1. They take professional development seriously.

Unfortunately, professional development is sometimes viewed as only a perk offered to employees because it is something the company is supposed to do. A secret to all good consulting companies is that professional development is not just offered but required as part of the employee’s performance plan. Strong professional development programs also include internal training on ethics, communication, and value-based decision processes.

  1. They know when and how to apply decentralized decision making

Clients expect a quick response to their needs and concerns.  But adequate responsiveness is difficult to achieve when decision making authority is highly centralized.  A good consulting company empowers its staff to use their full abilities and judgement to respond to client needs quickly and efficiently.  This is particularly apparent when managing field operations where well qualified staff with the freedom to make tactical decisions can be the only way to complete work in dynamic environments. On the other hand, some functions, for example project budgeting, benefit from centralized processes to ensure consistency and reliability.  Good consulting companies find a balance between centralized and decentralized decision making which gets things done reliably and efficiently.

  1. They know their position and can communicate their limitations

All consultants should know their specific role in the project team and not act as something they are not. For example, consultants should not provide legal advice, but can make you aware when they think you may need it. All consultants have limitations whether individually or organizationally. Pricing structures may not fit for your scale of project, there may be gaps in technical knowledge depending on what is required, geographic challenges, conflicts of interest, and response time delays due to workload.  Some of the limitations may not turn out to be significant for any individual project but it is the duty of the consultant to bring these issues up for discussion relative to the project when they could affect performance.  Honesty and openness is a key to the business relationship.

  1. They have good business partners

Your “go to” consultant should be able to find you reliable, efficient and honest solutions to your challenges WHETHER OR NOT they perform the work in-house or not. Good consultants have good partners to fill gaps in technical services, provide added geographic coverage, and provide added horse power when needed. Typically, a company with good business partners (some of which may be competitors in some markets) is a sign of a company that is trustworthy, honest, and good to do business with.

  1. They have environmental chemistry expertise and credentials

Much of the work of environmental consulting revolves around interpreting chemistry data. When this job is left to those without a good grasp of environmental chemistry principals, the outcome is often based on oversimplified binary decision making (see item 2 above). A good consulting company includes staff with enough depth of understanding to interpret the varied layers of meaning in chemical data be they health risk, regulatory, or forensic. This allows chemical data to be used in a way that brings out the potential benefits embodied in the data, in addition to managing negatives, in a way that supports the client’s business interests. Having staff educated and trained in chemistry far beyond Chem 101 and 102 is critical.

  1. They can define and describe their company culture as a strength

Every organization has a culture.  Some have a culture which is written in list form, on a plaque, based on ideals and reviewed weekly if not daily. Other organizations may have no awareness of culture and resultingly have their employees act and think like their immediate influencers (good or bad). This too is a culture. If you ask your consultant about his/her company culture, the response should be immediate, be presented with positive energy, and be described from both an employee and client perspective.  Culture will be revealed throughout your interactions with the consultant.  You should know ahead of time what you are getting in to.

This paper was written not by business or management experts but by people who have interacted every day for decades in the environmental consulting industry.  Like every other industry, there are outstanding firms, average firms and below average firms. By definition, average and below average firms represent one half of the choices that you have for your project. It is our hope that the tips listed above will help you identify an outstanding firm for your needs.

Brownfield Science & Technology, Inc. (BSTI) provides qualified and experienced Environmental Inspectors, Professional Geologists, Geotechnical experts, Biologists, Environmental Scientists, Technicians and Engineers in support of environmental challenges to companies in the Mid-Atlantic region.

Author:

Tripp Fischer, P.G.

V.P. Principal Hydrogeologist

610-800-7255 (c)

tfischer@bstiweb.com

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Ten Insider Tips for Reducing Environmental Risk in Commercial Real Estate Transactions

When buying or selling commercial and industrial real estate, stakeholders often conduct a wide range of inspections and inquiries as part of their due diligence.  Legal, financial, zoning, permitting, and environmental risk are all typically considered. This article will offer tips for buyers and sellers when conducting environmental due diligence.

Why Conduct Environmental Due Diligence

Business owners have become accustomed to environmental regulations governing their manufacturing processes and storage of chemicals.  However, such environmental regulations and practices are relatively new compared to the century of industrialization in the United States. Much of the industrial contamination found in our soil and water is the result of at-the-time, unregulated practices. Further, identification of emerging environmental contaminants continues as measurement techniques become more sensitive and sophisticated.

The reason for conducting environmental due diligence is to avoid (unknowingly) buying someone else’s issues. While there are some limited protections and paths of recourse after the fact, the “you bought it, you own it” principal applies most of the time.  Failure to consider the environmental conditions of a property prior to a transaction can result in a disparity between actual value and the purchase price, impose regulatory encumbrances, limit the future use and value of the property, complicate the anticipated return on investment (ROI) and bring costly and distracting litigation. Which is why environmental due diligence is an essential part of commercial and industrial real estate transactions.

The typical starting point for environmental due diligence is the Phase I Environmental Site Assessment (ESA).  This involves the buyer or buyer’s representative hiring a reputable consultant to conduct a prescribed scope of work that investigates the past and current use, if any, of materials of concern at the property and neighboring properties. The investigator will interview site personnel, collect historic directories, evaluate historic aerial photographs, investigate disposal practices, and visually inspect the property.  Neighboring properties will be investigated through state and local files and databases. Soil and groundwater samples are not collected under the typical ESA so the findings tend to be subjective and qualitative. If recognized environmental conditions (RECs) are suspected, additional investigation may be recommended (i.e. Phase II activities).

In most states, there is no regulatory requirement to force stakeholders to conduct environmental due diligence.  However, most lending institutions now have requirements as a part of loan approval, especially when the real estate is being used as collateral. However, given the financial risks involved, anyone buying or selling commercial or industrial real estate should recognize that it is just a good business practice to evaluate environmental conditions prior to settlement. Buyers have the primary burden of evaluating all potential risks associated with a particular real estate transaction.  However, sellers can also take measures to increase the pool of interested buyers, facilitate the process, and get their asking price.

Tips for Buyers and Sellers

The following are environmental-related tips and tactics that we’ve found to make the biggest impact during a commercial or industrial real estate transaction.

  • Bring in your experts early and build the right team

Once you’ve decided to sell or buy a property or business, identify your transaction support team as early as practicable. Your team will likely consist of an attorney, a real estate broker, a financial professional and support personnel such as environmental professionals, builders, land planners, architects, etc.  Because environmental matters involve both technical and risk management angles, we often work closely with and frequently directly for attorneys. Your attorney is often the most well-connected and experienced with environmental consultants and will likely already have a reputable firm in mind.  By building your team early, you will have an advantage of “seeing” potential hurdles and paths forward while the agreement of sale is being negotiated.

Buyers have the opportunity to conduct due diligence and therefore are most often engaged with environmental professionals. However, sellers often benefit from having environmental experts in their corner. Phase I ESAs are largely based on professional opinion and represent a buyer’s interests. Sellers should have knowledgeable representation to interpret the technical jargon and to help arrive at satisfactory final position. We recently supported the seller of a multi-tenant industrial complex in Pennsylvania.  Because the out-of-state buyer’s consultant was not well-versed with how to apply state-wide cleanup standards, they incorrectly claimed that the property had issues requiring costly remediation. We were able to correct the understanding and demonstrate that our client’s property was compliant with prevailing regulations.

A buyer can be tempted to hire an environmental consultant who has prior experience working on the seller’s property. While the familiarity may seem like an advantage, we recommend that buyers retain consultants that are completely independent from the seller.

  • Sellers should get out ahead of the due diligence process before listing the property for sale

Sellers usually know well in advance if they will be selling their property and/or business.  Surprises during the transaction are rarely beneficial to either party. The early stages are the best time to assemble documents, conduct an internal audit of the facility and identify the key issues that will likely arise during the buyer’s due diligence. Often, a seller can close an information gap or take steps to mitigate an issue before engaging a buyer. By removing as many unknowns as possible, the seller can attract more competitive buyers, decrease transaction time, and set a more defensible asking price.

We were approached by a seller in New Jersey to conduct a pre-sale assessment of their environmental conditions in 2017.  Because of a complicated ownership trail, their in-house environmental files were incomplete and fragmented. We requested and retrieved files from the NJDEP regulatory offices and were able to provide our client with an indexed package of all information on the public record. As part of the process, we were also able to resolve a few minor regulatory issues and data gaps. By doing this simple upfront work, we had an early look at the same information that the buyer’s Phase I team would see and were able to remove the “surprise” moments that could have otherwise disrupted the deal. It is a simple step that has tremendous benefits.

We are not suggesting that sellers contract their own Phase I ESA with the intention of offering it to prospective buyers.  A Phase I ESA is a tool most aligned to represent a buyer’s best interest.  A seller’s perspective is often much different.  Further, we do not recommend that a buyer accept a seller’s Phase I because of this conflict of interest.

  • Run all environmental due diligence processes through your attorney

Whether you are a seller or a buyer, it would be prudent to position your attorney between you and your technical team.  This relationship can preserve the confidentiality of data and opinions produced as well as offer a risk management perspective into the overall advice to you.

This is especially the case where sellers are gathering information prior to offering a property for sale.  Over many occasions, we’ve conducted regulatory file reviews and facility audits on behalf of a seller where legacy issues, permits, possible violations, and regulatory correspondence are retrieved. The environmental professional is capable of identifying the technical aspects and to what degree regulatory issues may be of concern.  However, many of the findings require legal and regulatory interpretation in which the environmental professional is not qualified to handle, nor should they.

For buyers, your attorney can work with your environmental professional to identify the most significant risks identified during the due diligence process.  Those risks should be quantified, to the extent practicable.  Most frequently, the risks are valued based on the strategic objectives of the buyer which, once again, is beyond the expertise of the environmental professional.

  • Have comprehensive language pertaining to environmental matters in the agreement of sale

When environmental matters arise during the due diligence process, it is most advantageous to have the rules and expectations clearly defined in the agreement of sale. To what degree will the investigation expand without seller approval? What is the agreed and acceptable end-point to any cleanup activities?  Who will pay for additional investigation and cleanup costs?  How will the gathered data be disclosed and shared? And most importantly, how will unresolved environmental risks be allocated and managed?

Too often, an agreement of sale will not include sufficiently robust environmental language.  The result of which can be a tense negotiation over environmental risks with the entire transaction hanging in the balance.

  • Sellers should consider whether you want to manage post-closure obligations or not

When environmental matters are discovered, they can either be resolved prior to closing or resolved after closing.  Some matters can be “cleaned up” quickly.  An underground storage tank can be removed for example. However, some environmental matters are more risk-related or require time beyond which the transaction is willing to withstand. In such cases, both sellers and buyers must agree on the mechanism to retain or transfer the risk and obligation. For this to happen, it is important that the environmental investigation proceed to a point where the risk can be quantified, to the degree practicable.

Where regulatory authority is involved, most states offer Buyer-Seller Agreements of which the state stands between the buyer and seller and the obligation of each party is clearly articulated. When a regulatory issue is not the main driver, there are many contractual and financial solutions such as escrow agreements, purchase price off-sets, insurance packages, or contractual agreements that can help get deals closed.

Our experience has been that sellers do not want to retain responsibility post-closing.  Similarly, we typically see that buyers do not want the sellers to remain involved and prefer to control all activities that survive closing.

  • Be the “User” even when your lending institution controls the process

Frequently, conducting environmental due diligence is a condition of loan approval. As a matter of convenience to the loan customer, a bank will contract directly with an environmental firm to perform a Phase I ESA. In this case, the bank is often named the “User” of the Phase I. Buyer’s should request to also be named a “User” or obtain a Reliance Letter that allows them to be a party to the Phase I ESA. This simple move can afford the buyer certain protections and recourses should unknown environmental conditions be identified in the future.

  • Agree on how to handle all due diligence data prior to starting any investigative work
    When a buyer begins environmental due diligence, the Phase I ESA is typically considered confidential and used for the benefit of the prospective purchaser.  If further investigation is conducted such as soil and groundwater sampling, the resultant data can become problematic for the existing landowner. In many jurisdictions, information that indicates a non-compliant environmental condition must be acted upon in accordance with regulatory processes.

This issue is yet another reason to use your attorney as your due diligence quarterback. An attorney will work with the environmental professional to determine the particular rules within the regulatory jurisdiction and manage information accordingly. While there may be no way to avoid a mandatory reporting of data, having a data management plan in advance of investigative work will avoid unwelcomed “surprises”.

  • Buyers should conduct the Phase I ESA within six months of the anticipated settlement date
    The All Appropriate Inquiry (AAI) rule in CERCLA mandates a minimum scope of work for Phase I ESAs. Buyers should assure that the scope of work proposed by their environmental professional complies with the AAI rule and/or the ASTM Standard Practice 1527-13.

Generally, the usable “shelf life” of a Phase I report is 180 days.  Between 180 days and one year, an existing Phase I can be reused provided it is updated appropriately. Buyers should plan ahead and negotiate a sufficient due diligence period.  Depending on the complexity of the property, an environmental due diligence period of one month should be considered a minimum with three months being a more common timeframe.  Very complex properties may require six months or more.

  • Ask your consultant to explain what their findings really mean to you
    Users of Phase I ESA reports should press their consultants to frame issues within context of the property use and potential risk to the parties. For example, we have a client who wanted to purchase a commercial property in Delaware, but a neighboring dry-cleaning facility had caused the shallow groundwater in the area to become contaminated. If the issue was left there, the buyer would rightfully think his deal wasn’t favorable. However, our evaluation of the issue identified that potable water was provided to the area by public utility and the affected shallow groundwater flow direction was away from our client’s site. Furthermore, there was never any use of dry-cleaning solvents on our client’s property so it was highly unlikely that our client would ever be held responsible for the nearby contamination. The identification of contaminated groundwater at an adjacent property could represent a deal killer. But when discussed in context of risk to our client, a different story surfaced.  Our client purchased the property.
  • Reduce risk by reducing the most impactful uncertainties
    With regard to environmental matters, it is unlikely that you will get a precise answer to all of the questions.  We simply can’t know what is going on down to the parts per million range under a building or in an aquifer without conducting a fairly comprehensive study.  A Phase I ESA is by no means a comprehensive study. The environmental due diligence process is a phased approach that starts in general inquiry and moves toward more detailed investigation.  As potential environmental issues are identified, additional time and funding is required to determine if the potential issue is a real issue (e.g., Phase II Investigation).  Defining the extent and magnitude of a real issue may require even more time and funding. This process can be frustrating to those wanting answers and paying the bill. It is important to challenge your environmental professional to determine if additional expenditure will justify the value of additional information. The delta between what is known and what is not known is considered risk.  Risk tolerance can vary widely among stakeholders and circumstances.  Through a combination of information and risk management tools, the key is to reduce the risk to within a calculated and acceptable level for your transaction.

Brownfield Science & Technology, Inc. (BSTI) is an earth sciences company specializing in environmental assessment, remediation and consulting services for public and private clients. We use science, human talent and state-of-the-art tools to guide our clients through environmental challenges. Whether you are trying to maintain compliance at your facility, looking to buy or revitalize an industrial property or responding to regulatory obligations, we know that you have more important things to do than tackle the situation yourself. If you need expertise, responsiveness and been-there-done-that capability, then we may be the right firm for you.

Author:

John Kollmeier

Senior Vice President

jkollmeier@bstiweb.com

610.806.5184

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The Importance of Reusable Water Bottles

 

How are you hydrating this summer?

It’s hot out. Really hot. And it’s getting hotter with July just around the corner. As a fair-skinned and freckled person, I know some of the major dangers of this hot weather. My daily checklist looks something like this:

checkSunglasses

check50+ Sunscreen

checkGlamorous, yet practical summer hat

 

Now I know not everyone gets the pleasure of wondering “will I look like a lobster today?” after summer fun in the sun, but there is something else on my checklist that everyone should remember to grab:

 

checkFilled reusable water bottle

 

When it comes to necessities, water is pretty high on the list considering we humans can only survive about three days without it. Fortunately for a number of us on this planet, we don’t have to worry about being able to get a drink of water today. We can access water from our sinks at home, through hookups in modern-day fridges or by just popping into the convenience store down the street and picking up a disposable water bottle.

 

However, I have an issue with that last choice. I’ll admit, it is pretty nice to be able to pick up a disposable water bottle in a convenience store because it is just that: convenient. What isn’t so nice and convenient is the cost of disposable water bottles over time to the consumer and the environment.

 

 

 

Just say “No” to disposable.

At a young age, I developed a stigma towards buying water. Why would I buy something that I can get for free out of the sink? Truth be told, it wasn’t quite free considering there’s always a water bill at the end of the month (something I’ve learned now that I’m older and wiser); but it’s still much more affordable than buying bottled water (about 2,000 times cheaper actually according to The Story of Bottled Water).

 

In his piece Message in a Bottle, Charles Fishman points out that the average American goes through about 167 plastic water bottles a year. Last time I checked, water bottles averaged around $2.00 a pop. That’s a lot of money to be wasted on plastic each year. No thanks.

 

What I didn’t realize before I started working at BSTI was the huge impact that plastic water bottles have on something that wasn’t my bank account; the environment is greatly affected by disposable plastic water bottles.

 

The day I started working at BSTI, I was given a gigantic reusable water bottle.

 

reusable water bottle
No joke, it’s a big bottle.

 

Inside the bottle was a handy little fact sheet about why BSTI supports the use of reusable water bottles.

BSTI Waterbottle Insert
Tough to read? Click the image to enlarge it.

 

This fact sheet brings attention to the environmental impact that plastic water bottles create. Not only does it point out that tap water is more regulated than bottled water, the fact sheet also brings to attention that plastic doesn’t degrade naturally. It states, “Less than 15% [of plastic water bottles are] recycled. The rest stay with us forever.”

 

Forever is a long time. With more and more plastic being produced each day due to people purchasing more and more disposable plastic water bottles, it’s sure to get very crowded on our planet in the future. Just look at what it’s already done to our oceans.

 

 

 

Stop, think and choose #refillnotlandfill

Good habits don’t happen right away, so I’m not expecting everyone to do a 180 and use only a reusable water bottle immediately. But next time you go to grab a disposable water bottle at a convenience store, consider your wallet and your planet. Fill up one of those plastic water bottles sitting in your passenger seat, or send me a message and we’ll figure out how to get you a free BSTI water bottle.

 

 

BSTI Bottle Collage 2

 

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Tales from Academia: Ryan Hupfer on the R/V Roger Revelle

ryan blog filled

Recently, I read about the christening of the R/V (Research Vessel) Neil Armstrong at the famous Woods Hole Oceanographic Institute (WHOI). In 2010, the U.S. Navy announced the construction of two new research vessels. After working with the scientific community to design the ship, the competition to operate the new vessel began. Later that year, the Navy awarded the job to WHOI. Outfitted with a modern array of oceanographic instruments, the ship is dedicated to studying climate change and the chemistry, physics and biology of our oceans.

 

This news made me reminisce of my own experiences in academia. Before working at BSTI, I attended graduate school at Rutgers University – New Brunswick, an R1 school where the oceanography and geology departments were closely knit. After establishing myself at Rutgers, I was fortunate to be in the right place at the right time when an opportunity to sail and sample ocean sediment arose.

 

RV Roger Revelle
The Research Vessel Roger Revelle

The R/V Roger Revelle planned to sail from Alotau, Papua New Guinea, to Manila, Philippines, making stops to collect ocean sediment cores and geophysical data. The cores and data collected from this expedition would later go on to be used to study climate change and ocean dynamics in a region known as the Western Pacific Warm Pool. Not only would I be able to take part in gathering the climate data that many take for granted in textbooks, I would get to go to an exotic location to do so! With the encouragement of my advisor (even though I would miss a month of classes), I applied to take part in a month-long oceanographic cruise in the western Pacific Ocean.

 

I was elated when I found out that I was selected. I packed my bags, and before my first semester of graduate school I boarded my flight from New York’s John F. Kennedy Airport to begin my journey half way around the world.

 

Papua New Guinea Coast - RV Roger Revelle
Coast of Papua New Guinea

 

Alotau, Papua New Guinea – September 4th, 2013

Airport and wallaby - RV Roger Revelle
(Top) The bustling Alotau airport
(Bottom) A wallaby!

I finally arrived in Alotau after what felt like three days. We had two days in Alotau, so I met up with the primary investigators and other graduate students, explored the town, took in the sights, swam at the local beaches and sampled the local suds. I took a liking to South Pacific Lager (aka SP to the locals), a crisp, refreshing lager that will quench your thirst and make you forget about even the muggiest Alotau nights; it had an iconic logo as well. I kept my eyes peeled for wallabies and birds of paradise, but unfortunately I only saw the former. Before I knew it, we boarded the ship and were on our way to Manila.

 

Ocean core extraction - RV Roger Revelle
Core coming up from the abyss

Once we became acquainted with the ship and I got over my initial seasickness, the science began. I was assigned to the night crew, working midnight to noon. This seems like a nightmare when you first think about it, but in hindsight I preferred it to working during the day. With temperatures in the mid 80’s and the humidity being high as can be, sweating through your clothes was common; within an hour it would appear as if you had fallen overboard.
It was much better to be in the cooler temperatures of the night. Adjusting to working at night was easy since the local time was 12 to 13 hours ahead of the U.S. East Coast. This made 1 AM out there the same as 1 PM back home. It also felt pretty cool to say “I’m on the night crew;” but I digress.

 

Over the next four weeks, I helped collect ocean sediment cores, seismic data and surface water samples along with the three other grad students and the post-doctoral researcher on my shift. Obtaining the sediment cores took up most of our time, the process taking all five of us to hoist the sections of the core overboard as they came up from the abyss. Imagine lifting an eight-foot section of PVC pipe filled with wet sand and mud; it was hard and at most times dirty work. Needless to say, my arms were toned by the end of the trip.

 

Retrieving Core and working - RV Roger Revelle
(Top) Team retrieving ocean sediment core
(Bottom) Hard at work on the R/V Revelle
Multicore and core - RV Roger Revelle
(Top) The multi-core
(Bottom) An extracted core

A second method of collecting ocean sediment cores involved loading and unloading a machine called a multi-core. This arachnid-esque device could collect eight 3-foot cores at once. The device was lowered then pulled up with the cores rigged to snap shut and collect a sample at the sediment-water interface. While these were much lighter than the long cores from the ocean floor, they were often half filled with water and therefore much more cumbersome when it came to packing them.

 

Once we had a substantial backlog of cores and started travelling, our focus switched. With the cores aboard, we analyzed the sediment with a gamma logger to quantitatively differentiate clay from sand and silt.

 

We continued collecting seismic data (which only took one person) and spent time splitting the cores in half, describing the contents and photographing them. After the qualitative descriptions, we packaged the cores so they could be shipped back to the U.S. where they would eventually be sampled and analyzed.

 

 

 

 

Manila, Philippines – October 3, 2013

After about a month, the science team departed the R/V Revelle in Manila, Philippines. While Manila was much more urban and developed than Papua New Guinea, it was still an interesting experience. Despite sleeping only a handful of hours, I wandered the streets around the hotel in which I was staying. I ate Filipino food from a roadside shack, which seemed intimidating at first but ended up being delicious. I ordered a chili oil noodle stir fry, which had a good kick to it, and sautéed kangkong (known as water spinach in English) with tofu, which satisfied my umami taste buds and my desire for fresh greens after being restricted to long-lasting boat food for the past month. I also drank coconut water straight from a coconut which was husked right before my eyes, and developed a love for rambutan and lychee while feeling the stares of many Manilans.

 

I stuck out like a sore thumb; I towered over almost all passersby, and my long hair and beard gave me a unique look. Despite the staring, the trip ended with a great dinner for all of the scientists that was hosted by a researcher at the local university. After a few hours of sleep, I woke, gathered my things and made my way to Ninoy Aquino International Airport for the long trip home.

 

Mayon Volcano - RV Roger Revelle
View of the Mayon Volcano

 

Home – September 4th 2013

Going on an oceanographic cruise was a great experience. Not only did I get to visit exotic places, I gained some great skills and learned some great lessons that I still use at BSTI today. Logging so many cores on the ship made me confident in my abilities and helped me realize what is useful to describe in a log. Like scientific investigations, soil boring investigations (which are similar to sediment core investigations except smaller) almost always involve something to be done, whether it be screening the boring with a PID, describing the core, collecting a sample or just taking legible notes and keeping them in order. I realized I must make good use of the time I have in between borings to get everything done, even when the time in between is minutes rather than hours or days. The work on the cruise may have been different from what I do now, but I will always cherish the skills and good habits I developed on that great adventure.

 

 

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5 Ways to Celebrate Earth Day from Your Desk

 

Earth Day - banner

Every April 22nd, people get to take a day to celebrate our Earth and demonstrate how we care about the future of our planet. Something I quickly noticed about BSTI when I started working here is that every day is Earth Day. From the company garden to coworkers devoting time to community service and planting trees, the world of BSTI truly believes in taking care of and giving back to the world in which we live.

In the past, I would have labeled myself as Earth conscious. I’ve come to realize that I’m more of a newbie to helping the Earth compared to my coworkers. On his bio page, Nicholas Santella has a caption of “Nothing should be wasted.” I don’t think I’ve ever met a person who truly believes in utilizing everything as much as Nick. Thanks to Nick and the rest of the BSTI crew, I have learned five very simple ways that everyone can help the Earth from their desk.

 

1. Reduce your use.

Stopping to think “do I truly need to use that?” has made the biggest impact on reducing my usage of resources. A simple choice of not printing that e-mail or writing on that post-it can make a big impact on how much paper I use in a year, or better yet in my lifetime. Think about all the trees that won’t need to be cut down because I decided to use my computer calendar instead of a piece of paper to note “Remember to call back Carly.”

If you find you’re pretty conscious about paper, you can also take a look at your energy use. Do you really need that second monitor powered on all the time? Is there a light in your office that doesn’t really need to be turned on at the moment? All of these choices help to reduce your environmental impact while you work.

Reduce your use - Earth Day

 

2. Reuse your resources.

A big landfill issue is plastic water bottles. Plastic is made to last and too many plastic items end up taking up space in trash heaps or polluting our water systems. BSTI is a big advocate for reusable water bottles – a simple way to help you save money and save the earth. Keep a reusable water bottle at your desk and save yourself the cost and space of having all those other plastic bottles in your life.

Reuse - Earth Day

 

 

3. Recycle everything you can.

Don’t throw that junk mail or plastic food container into the trash; put it in the recycling bin. It’s so easy to recycle nowadays that I’m still not used to it. Some areas don’t even require you to fully rinse your recyclables anymore; you can just put them in the bin.

 

Not sure what you can and can’t recycle in your area? Want to know where you can recycle those #3 plastic bags? I’ve found How2Recycle is a great resource for getting answers about local recycling rules and finding locations to recycle those not-as-common items.

Recycle - Earth Day

 

 

4. Donate what you don’t use.

You may not have a use for that organizer on your desk any longer, but someone else could be searching for that exact organizer to help improve their level of organization. Better the item goes to someone who needs it than ditched, alone and unloved in a landfill where it will sit for who knows how long.

 

Donation centers I have donated to include Goodwill and Habitat for Humanity, but a quick search on the web can bring up more donation centers close to you.

Donation - Earth Day

 

 

5. Bring a plant to work.

Take care of the planet by taking care of a piece of it. Earth Day isn’t only about planting trees. There are so many interesting plants you can grow right on your desk. Nurture a flower or vegetable from your desk, then donate it to a local park or plant it in your own garden at home and start growing your own food.

Plant - Earth Day

 

There are many more ways you can celebrate Earth day throughout your workday; try carpooling with coworkers you like or picking up litter you find as you walk or ride your bike to work.

 

Let us know how you celebrate Earth Day, and leave us a comment below!

 

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