EFAB Draft: Use of the Financial Test and Corporate Guarantees in RCRA Programs



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    EFAB  DRAFT
(   The Use of the Financial Test and
r» !
   Corporate Guarantees in RCRA


           Programs
          August 15-16,2005

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DRAFT 08/04/2005.

A ratio of current assets to current liabilities of greater than 1.5; and
(B)Net working capital and tangible net worth each at least six times the sum of
current closure and post-closure care costs estimates being covered by the test; and
(C) Tangible net worth of at least $ 1D million; and.
(D) Assets in the United States amounting to at least 90 percent of total assets or at
least six times the sum of the current closure care cost estimates being covered by the
test.
• -I
Alternative II: '
(A) A current rating for the owner or operator's most recent bond issuance of AA,
AA, A or BBB as issued by Standard and Poor's or Aaa, Aa, A or Baa as issued by
Moody's;
(B) Tangible net worth at least six times the sum of current closure and post-closure
care cost estimates being covered by the test; and
(C)T>ngiWeneV^r£ 6f^ //;; ^; .,-,.. \ .
(D) Assets in the United States 'amounting to at least 90 percent of total assets or at
least six times the sum of the current closure and post-closure care cost estimates
being covered by the test.

In 1991, EPA proposed revisions to the financial test for hazardous waste facilities (50
FR 30201, July 1, 1991). The proposed revisions, which to date have not been the
subject of final action by the agency, would change the financial test requirements by
requiring compliance with one of two ratios under Alternative I, and modifying the
remaining ratio requirements to specifically ensure coverage pf the closure and post-
closure costs and have minimum net worth/working capital remaining. The goal of the
proposed 1991 revisions was to address concerns that the test was less predictive of
potential bankruptcies, and did not allow some large financially sound companies to use
the financial test ' '' -^ -.:.•:••.
:': ..-I'1- , ', • - • - :.; ;. ,- ",', ' . .. .• ..-:•-
Agency Questions -.-•;,. •'• .;••

In its charge to the Board, the agency posed the following concerning the financial test
and'corporate guarantee: .

EPA and its state government partners seek general advice on how to improve the
financial test and corporate guarantee. Specific questions that have arisen
include:

• What are the strengths and pitfalls of the financial test and corporate
'guarantee? ' • • r .--:•.'••••-. -;".''"- •
• Should EPA adopt the financial test proposed in 1991 for hazardous waste, or
have advancements in financial analysis provided better potential tests in the
meantime?' ; " " ":-'-'•''• ' ••'•••-•• •-••-•• . . •'••:•.,.
• What, if any, new or different financial tests or protections might be
appropriate? ' ' !";' ' p-'v' •'• /. "•'•'".';-;
" • Should EPA continue to allow corporate siblings to guarantee the obligations
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DRAFT 08/04/2005
          necessary to assure that the risks presented by its use are not appreciably
          larger—or less acceptable- than when the test was adopted.  These parties
          warn that any proposal to modify the test would cause disruption among the
          regulatory community in meeting their requirements under the test.

       •  We believe that the use of independent credit analysis, i.e., credit ratings, is a
          cost-effective mechanism  for demonstrating financial assurance and should
          continue to be an alternative for those companies that have investment-grade
          ratings on their debt Many of the large public companies that are obligated to
          provide  financial assurance are participants in the debt  markets and carry
          ratings  on their bonds.  Also,  they help address the  limited capacity for
          undertaking extensive credit analysis by state regulatory bodies!  We do
          caution, however, on the definition of the ratings that may be used to
          demonstrate financial assurance:  the requirement isi the Inmost recent rating".
          Many 'companies issued secured debt (With collateral or m^rtgage^ple^g^)' that
          would carry a higher rating as a result 'of Tthat securitizatioii.  The  rating
          requirement should be.the "senior  unsecured", or "senior  implied"  rating
          which is a statement of fundamental credit quality without regard to specific
          pledge of assets.

        • We note that we have seen very little information concerning the utilization—
          or non-utilization—of the financial test by small publicly-owned entities and
          by privately-owned entities. Because such entities are not subject to the same
           financial requirements imposed on large public companies and/or do not face
          .the, same scrutiny  from government financial regulators, and because their
           financial Situation may not be as transparent or confirmed by reliable third-
           parties, their potential use of the financial test as a means of providing
           financial assurance raises concerns beyond those one might have when large
           publicly owned companies use the financial test.  [This'suggests that it might
           be desirable to distinguish,between the large publicly owned companies and
           smaller or privately owned entities in constructing and applying the financial
           test requirements.)

        •  Another potential distinction that can be made between entities that might use
           the financial test is  whether the entity essentially is only in the  waste
           business—or alternatively whether it has one or more captive TSDFs that are
           only a relatively small part of its overall business operations.

         •  Finally, because the financial tests are expressed as multiples of the estimated
           closure  and  post-closure  costs, confidence in the,integrity and. relative
           accuracy of those estimates is integral to whether the  financial test provides
           adequate .assurance.   To the extent the .financial test  is being used with
           reference to projected corrective action costs, the timing of the imposition of
           the financial assurance requirement as well as the determination of the amount
           to be secured have to be carefully considered in tandem  with the structure of
           the financial test itself.
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DRAFT 08/04/2005
We believe that it is premature at this time to respond specifically to the first three
questions posed:

• What are the strengths arid pitfalls of the financial test and corporate
guarantee?
• Should EPA adopt the financial test proposed in 1991 for hazardous waste, or
have advancements in financial analysis provided better potential tests in the
meantime? . .
• What, if any, new or different financial tests or protections might PC
appropriate? .

However, we believe mat there are some, modifications' tKat coildi ^ohflnce the
strength of the current financial test, particularly for those entities that do not use bond
ratings, as a mechanism for determining financial capacity. As a starting point, we
believe that a well-grounded test has the following characteristics:

1. Transparent and objective: Enables the regulated community to assess its ability
to meet the standards and allows the regulatory community, and the public at
large, to determine compliance
r , '.,'..
2. Comprehensive: Addresses both financial performance and financial position to
assess market dynamics; incorporates a liquidity test; addresses reinvestment; and
considers the overall performance of the industry in which the regulated party
operates '• •' ' ' ; ' ' •' ' ' ' '".. '
. ' ' •' '•"-._••'• .'•'•-",' '*.•'•' '.'.• •
3. Rigorous: Not susceptible to manipulation '"' - , =:

4. Historical and dynamic: Examines and incorporates trends. The current test
requires the regulated party to meet the test on an annual basis! However, credit
quality is not measured through static data, but is observed in changes in an
individual firm's circumstances as well as the industry .in which itoperates. A
firm that is today financially sound but economically uncompetitive may see rapid
deterioration in its financial position. r ' .

The current test is transparent and objective, but falls short on some of the'other criteria.
The board recognizes that the Agency seeks to have the test fulfill a least-cost criterion.
Inevitably; there will be a tension between this goal and the goal of transparency, with a
"comprehensive" test. 'There is a real risk that additional comprehensiveness of a test
will come at the expense of a test that is much more cdmplex, difficult to understand and
administer—arid that marginal gains in reduction of risk have to be weighed against .those
potential'costs;' "'''''' ''-' ^';:i:: • '•'" "•'" '• •••' ' • '•• ''-•' •' '-'"•"' ''••'"•"> '•"• 'i<:;----
••'•'» ' • • " "V
•".. '••-• ; '; • /•.';•• '\. ;' • " J .',*'• .- ' ••.'.';". .'.'* ".': -" ' , 's.. :." •'."''. \f '.,'•
Some elements of current financial analysis practice that are not reflected in the current
test -and how the financial test might be modified to incorporate mem so as to provide a
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DRAFT 08/04/2005
better reflection of fundamental credit quality- include:

1. An examination of trends in operating revenue and operating income. The agency
might consider a benchmark decline, with adjustments made for changes in business
scope that would result in a failure of the test. Such a test would provide some
assessment of general business direction and dynamics.

2. Earnings before interest, taxes, depreciation and amortization (EBITDA) is a
common calculation used in corporate financial analysis. A test that establishes a
threshold EBITDA for each of a period of three years against an owner/operator's
current closure, post-closure care, corrective action cost estimates and any other
environmental obligations would gauge the business's ability to generate annual
operating income to cover ongoing obligations.
., ° i. '(>.-. "'••• •• • . . • , . . :'..'• • .... • .1 . ,i .V'. . '.. .'•' .-.-.-,.

3. A thriving business continues to invest in its physical plant An improved test
might require a minimum ratio of capital expenditure to depreciation.

4. The net assets test should be modified to require a minimum level of liquidity (i.e.,
cash or marketable securities).

5. A high degree of leverage has proven to be a key determinant in corporate
insolvencies. An improved test would establish maximum thresholds for
indebtedness related both to cash flow and financial position. :

[Is it possible for us to formulate -what cm additional regulatory requirement based on
each of these elements -would look like—they wouldn't need to be polished but it might
increase some members comfort level with the recommendations if we could scope out.
what the regulatory language might look like—i.e. how would the test look after it was
reformulatedto ^include 'them.}'

We would also note that: •' .

1. A number of terms used in the regulations establishing the financial test may need
to be redefined to make them consistent with current financial industry practices
and accounting board pronouncements. For example, the concept of "net worth"
needs to be defined to incorporate those terms, such as "net assets" shown in
financial reports of publicly held companies.

2. The current financial test includes a requirement of $10M minimum tangible, net
worth. This requirement would appear designed to preclude small and marginal
. firms from utilizing this financial assurance alternative. The passage of several
decades since the requirement was adopted would suggest that it be increased to
•account for inflation arid perhaps even revisited to see if it continues to represent a
logical cut-off point for qualifying for the financial test.

In addition, we also acknowledge that there are some other factors the agency may
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DRAFT 08/04/2005 ' ,

need to consider in deciding whether or not to change the current financial test and
increase the complexity of the test. First, the agency might need to consider whether
such changes—either individually or in total- would bring reductions in financial risk
commensurate with any lost opportunity costs on the part of the agency and regulated
community in putting such changes in place and complying with them.

Second, the agency might wish to consider the extent to which any proposed changes
would make it significantly more difficult for federal and state regulators to review
financial information provided by firms and to assess its compliance with the regulatory
requirements. It may not be realistic to expect that agencies will have or be in a position
to acquire internal resources to provide the level and quality of detailed analysis that
financial institutions and credit reporting agencies have access to. Options for addressing
these concerns might include modifying the regulations to rely more heavily on third
party certifications—or having agencies outsource the analysis—both of which raise
additional issues. : ' ' '••";-'• ••' '' -' '•••"•' ..-• •<"*'••>
".'' ..,'.."' • . . •"":"... :•.-'.' -'•;':,".. .•.••'.•"•:• V., ' ".
[Tentative conclusions/recommendations—once we have completed the analysis of
the 1991 proposed changes, -we need to formulate responses to the queries put to the
Board in this and the preceding question.

A second possible conclusion would be along the lines of- Current financial
analysis/assessment of creditworthiness practice utilizes a number of measures that are
not included in the current financial test used by EPA. Those measures include not only
dynamic elements that consider changes in the firm and its industry over time but also
measures of liquidity and firm vitality and viability. If adopted by EPA, they would
provide the regulators with a broader-based assessment of the fundamental credit quality
more akin to that used by the private sector. At the same time, such changes could
increase the complexity of the judgments the regulators would need to make.]

• Should EPA continue to allow corporate siblings to guarantee the obligations
of another subsidiary or should guarantees only be allowed for parents and
higher level companies?

/ don't know that we have fully vetted this issue. I am uncomfortable responding here.

• Does the current level of disclosure of cleanup obligations in financial
statements provide sufficiently reliable information for use of a financial test?

The level of disclosure will vary among obligated parties, particularly as a function of the
potential obligation relative to its overall scope of business operations! Generally, the
independent auditor will render a judgment'on materiality^ \Thus, for some regulated
parties, the cost of clean-up obligations may not'be/sufficiently .material 'torequire
disclosure in their financial statements. . V , .'','. V ."'" "•

• Some states do not allow the corporate financial test. Would applying this
approach more broadly be advisable?
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DRAFT 08/04/2005
To the extent the test  has  worked  reasonably well (which is what the absence of
documented problems seems to suggest), then Its broader use in states which do not allow
it now could have some  advantages: (1) large public companies appear to prefer meeting
the financial test, particularly where it is demonstrated through the bond rating as it is
cheaper and more straightforward than having to pay a third-party for insurance or
qualifying a captive to provide insurance; (2) our workshop in New York in June 2004
suggested that changes in third party mechanisms, particularly insurance, may make these
more expensive and less available.

If the agency decides at some point to go forward with changes to the financial test—
either to address past problems and/or to increase its comfort level that an improved test
would be better position  it to avoid unfunded, site, problems in the future—or to be
utilized for other categories of facilities to which it might be extended—the Board would
be pleased to work with the agency to develop specific proposed changes. We would also
note that the Board has identified looking at the financial assurance requirements of other
federal agencies as a potential source of ideas for  an  enhanced financial test  If the
agency believes it would be desirable for the Board to do so, it will add this to  its work
schedule.

We will, of course, be pleased to respond to any questions you or the agency may have
 concerning this initial report and we look forward to continuing to work with the agency
as this project continues into its next stage.

                            Sincerely,
 Lyons Gray
 Chair

 Remaining issues:

 Mining cases
 Adequacy of test v. fraudulent behavior
 If you choose to revise the test, do this.
 Context overview;
A. Stanley Meiburg
Executive Director
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                      EMERGENCY RESPONSE
              QUALITY ASSURANCE SAMPLING PLAN

                                FOR
                *
                 HURRICANE KATRINA RESPONSE
                 Screening Level Sampling for Sediment
                  in Areas Where Flood Water Receded
                      SOUTHEAST, LOUISIANA
                              Prepared by

                U.S. Environmental Protection Agency Region 6
                            1445 Ross Avenue
                            Dallas, TX 75202
                              214-665-9780
                             September 2005
THIS DOCUMENT WAS PREPARED BY EPA. IT SHALL NOT BE RELEASED OR DISCLOSED IN WHOLE OR IN PART WITHOUT THE EXPRESS,
WRITTEN PERMISSION OF THE EPA.

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                            EMERGENCY RESPONSE
                     QUALITY ASSURANCE SAMPLING PLAN

                        HURRICANE KATRINA RESPONSE
                        Screening Level Sampling for Sediment
                        in Areas Where Flood Water Receded
                            SOUTHEAST, LOUISIANA
                               SIGNATURE PAGE
Chris Peterson                                           Date
U.S. EPA Region 6
Operations Chief
Regional Response Center
Kathleen Aisling                                         Date
U.S. EPA Region 6
Technical Specialist
Regional Response Center
Randy Sturgeon                                          Date
U.S. EPA Region 3
Technical Specialist
Regional Response Center
THZS DOCUMENT WAS PREPARED BY EPA. IT SHALL NOT BE RELEASED OR DISCLOSED IN WHOLE OR IN PART WITHOUT THE EXPRESS,
WRITTEN PERMISSION OF THE EPA.

SECTION TITLE PAGE

1. INTRODUCTION ... ............ .......... ............ .......... ........1
1.1 PROJECT OBJECTIVES 1
1.2 PROJECTTEAM 2
1.3 QASP FORMAT 2
2. SITE BACKGROUND 2
2.1 SITE LOCATION AND DESCRIPTION 3
2.2 SITE CONCERNS 3
3. SAMPLING APPROACH AND PROCEDURES .3
3.1 OVERVIEW OF SAMPLING ACTIVITIES '., 3
3.1.1 Health and Safety Plan Implementation 3
3.1.2 Community Relations 4
3.1.3 Coordination of Pesticide Sampling with the State 4
3.2 SAMPLING/MONITORING APPROACH 4
3.2.1 Sampling 4
3.2.2 Sampling and Sample Handling Procedures 6
3.3 SEDIMENT SAMPLING 6
3.4 SAMPLE MANAGEMENT 6
3.5 SAMPLE EQUIPMENT DECONTAMINATION 7
3.6 SAMPLE PRESERVATION, CONTAINERS, AND HOLD TIMES 7
4. ANALYTICAL APPROACH. —7
5. QUALITY ASSURANCE 11
5.1 QUALITY ASSURANCE SAMPLES ( 11
5.2 SAMPLE CHAIN OF CUSTODY PROCEDURES : 11
5.3 PROJECT DOCUMENTATION 13
5.4 DATA VALIDATION 17
111
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US EPA REGION 6. - Screening Level Sampling for Sediment in Areas Where Flood Water Receded, Quality Assurance
Sampling Plan, Hurricane Katrina Response Support, Southeast Louisiana	
                                    APPENDICES

APPENDIX  TITLE

A     Data Quality Objective

B     Standard Operating Procedures

C     EPA Region 6 Media Specific Screening Levels
TABLE


Table 4-1 Requirements for Containers, Preservation Techniques, Sample Volumes, and

          Holding Times
                                            IV


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WRITTEN PERMISSION OF THE EPA,

Under the authority of the Comprehensive Environmental .Response, Compensation, and
Liability Act (CERCLA) of 1980, and tasking by FEMA under ESF #10 of the National
Response Plan, EPA Region 6 has prepared this Quality Assurance Sampling Plan for EPA
Region 6 Response and Prevention Branch to conduct initial assessment activities of residential
areas where floodwaters from Hurricane Katrina have receded. This Quality Assurance Sampling
Plan (QASP) describes the technical scope of work to be completed as part of this Emergency
Response. The objective of this initial sampling is to determine the nature and type of
contaminants that may have impacted residential areas due to migration of hazardous materials
by flood. Further assessment may be warranted based on the results of this initial sampling,
and/or if the particular residential area is located near an area of potential concern (such as an
area of known chemical storage), and will be addressed in a subsequent QASP. In addition, the
information collected during this phase may be used to develop a plan for further detailed
sampling of residential areas in the affected parishes. Initial sampling will be performed at 24
sediment (residue) locations within an area no larger than one-square mile area to be determined
by EPA. These locations will be residential areas in southern Louisiana parishes where flood
waters have receded to such an extent that the public can be allowed to return. Exact sample
locations will be determined in the field by sampling personnel.

1.1 PROJECT OBJECTIVES
The objective is to determine the nature and type of contaminants in sediments in residential
areas where flood waters have receded. Sediments samples will be analyzed for volatile organic
compounds (VOCsX-semi-volatile organic compounds (SVOCs), pesticides, herbicides, PCBs
and metals, fecal coliform, total petroleum hydrocarbons and percent moisture. This information
will be used to help assess the presence of hazardous substancs in residential sediments and the
potential for exposure of residents to contaminants in sediments.

The objective will be achieved by collecting 24 grab samples with duplicates from surface
sediments sample locations in residential areas of southeast Louisiana where flood waters from
Hurricane Katrina have receded.
1
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WRITTEN PERMISSION OF THE EPA.

The OSC for this assessment is Gary Moore. Gary Moore will direct all field activities. The
sampling may be conducted by several field teams. Each field team will coordinate with Gary
Moore in determining the location for sample collection in the field, collecting samples as
necessary, logging the activities at each sample location in the field-logbook, verifying the
sample documentation, and utilizing SCRIBE software.

1.3 QASP FORMAT
This QASP has been organized in a format that is intended to facilitate and effectively meet the
project objectives. The QASP is organized in the following sections:

• Section 1 - Introduction
• Section 2 - Site Background
« Section 3 - Sampling Approach and Procedures
« Section 4 - Analytical Approach
" Section 5 - Quality Assurance

Appendices are attached with the following information:

• A Data Quality Objective
• B Standard Operating Procedures
• C EPA Region 6 Human Health Medium-Specific Screening Levels

2. SITE BACKGROUND

On 25 August 2005, Hurricane Katrina made first landfall on the south Florida coast, then
crossed the state and greatly increased in intensity as it moved over the Gulf of Mexico. On 28
August 2005, Hurricane Katrina turned north and made second landfall on the south U.S. coast,
causing massive damage and flooding to broad areas of Alabama, Louisiana, and Mississippi.
EPA Region 6, which has responsibility for the State of Louisiana, has sent and is continuing to
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WRITTEN PERMISSION OF THE EPA.

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US EPA REGION 6. - Screening Level Sampling for Sediment in Areas Where Flood Water Receded, Quality Assurance
Sampling Plan, Hurricane Katrina Response Support, Southeast Louisiana
send personnel and resources to Louisiana to address hurricane damage. EPA Region IV is
providing assistance to the States of Mississippi and Alabama

2.1 SITE LOCATION AND DESCRIPTION
Areas of southeast Louisiana where Hurricane Katrina flood waters have receded.

2.2 SITE CONCERNS
The primary concern being addressed by this QASP is to screen for hazardous substances, which
are hazardous to human health and the environment, in areas where flood waters have receded.
3. SAMPLING APPROACH AND PROCEDURES

Samples collected by EPA Region 6 will be used to evaluate the types of contaminants present.

3.1 OVERVIEW.OF SAMPLING ACTIVITIES

The EPA OSC and designated sampling personnel will determine appropriate sample locations.
EPA will use SCRIBE software to manage sample data in an electronic format

3.1.1 Health and Safety Plan Implementation

Health and Safety operations will be conducted consistent with activities and responsibilities of
the Incident Command System (ICS). All field activities will be conducted in accordance with a
site-specific health and safety plan (HASP). The Field Safety Officer (FSO) will be responsible
for implementation of the HASP during all field investigation activities. All EPA contractors and
subcontractors will be required to conduct their activities according to the guidelines and
requirements of the HASP.
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Community relations may require additional EPA involvement due to the general nature of the
site. It is anticipated that the EPA OSC will be available at all times, and community relations
issues will be directed to the EPA OSC. If the EPA OSC is not present, the sampling personnel
will manage community relations in the field as directed by the EPA OSC.

3.1.3 Coordination of Pesticide Sampling with the State

The Louisiana Department of Agriculture and Forestry (LDAF) has sole state authority over
pesticides, including use, sale, commercial/industrial container disposal, spills, contamination,
and site remediation of pesticide producing or pest control operating facilities within the state of
Louisiana. EPA will consult with LDAF on pesticide issues in Louisiana if pesticides are found
in this screening level analysis. Dick Watkins is Region 6's point of contact on pesticides issues
in Louisiana.

3.2 SAMPLING/MONITORING APPROACH

All samples will be collected in accordance with the US EPA Environmental Response Team
standard operating procedure 2012 (Appendix B). The specific sampling procedures are
described below.

3.2.1 Sampling

The area to be sampled will be a residential area where the public is or could return at this time.
Twenty-four samples will be collected over ah area not exceed one-square mile. The EPA OSC
will determine this area. The number of samples (24) was selected based on time constraints
(i.e., in order to collect all the samples in one day). The area of one-square mile was selected
based on the team's judgment that this number of samples would not provide meaningful
screening level information if collected over a larger area, and based on logistical concerns in
trying to cover a larger area.

For this screening level analysis, biased sampling was selected as the most appropriate method in
order to give the highest probability of finding contamination. Therefore, efforts should be made
4
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US EPA REGION 6. - Screening Level Sampling for Sediment in Areas Where Flood Water Receded, Quality Assurance
Sampling Plan, Hurricane Katrina Response Support, Southeast Louisiana
to bias the samples toward areas that are more likely to contain elevated levels of contamination,
such as areas that contain oily sediments or large stains. The 24 samples will be spread
throughout the sampling area at locations determined by field personnel (GPS coordinates of
samples will be documented). The field personnel may decide not to sample certain areas based
on safety and logistical concerns.

All samples will be grab samples collected from the surface by scraping the surface with the
appropriate sampling device. Efforts should be made to collect samples that contain finer
grained sediments and limit collection of coarse or debris laden sediments. Also, the sample
must be of the deposited material and not contain the previously existing soil. The sample will
be placed immediately into appropriate sample containers.

Samples will be collected from residential yards or, if access is an issue, from such areas as parks
or streets to be determined by the field personnel. This plan assumes that level of contamination
in sediment samples collected outside the homes will be approximately the same as the level of
contamination found in samples collected inside the home. Therefore, to avoid access and safety
issues, sediment samples will only be taken from outside the homes.

The EPA OSC will be notified, and concurrence will be obtained, should significant deviations
from the planned sampling scheme be necessary (e.g., due to security concerns). Details
regarding deviations of the QASP will be documented in the site logbook.
)
The samples will be delivered to a laboratory to be specified prior to sample collection. Volatile
organic compounds (VOCs), semi-volatile organic compounds (SVOCs), metals, pesticides,
herbicides, polychlorinated biphenyls (pcbs), total coliform analyses, and total petroleum
hydrocarbons (TPHs) analyses will be conducted, utilizing 1) EPA Publication SW-846, test
methods for evaluating solid waste, physical/chemical methods, and 2) the environmental
microbiology proficiency analytical testing (BMPAT) program testing (the holding time is 24
hours).
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Samples will be collected using equipment and procedures appropriate to the matrix, parameters,
and sampling objective. The volume of the sample collected must be sufficient,to perform the
laboratory analysis requested. Samples must be stored in the proper types of containers and
preserved in a manner appropriate to the analysis to be performed.

AH clean, decontaminated sampling equipment and sample containers will be maintained in a
clean, segregated area. All samples will be collected with clean decontaminated equipment. All
samples collected for laboratory analysis will be placed directly into pre-cleaned, unused glass or
plastic containers as appropriate based on the particular analytical method. Sampling personnel
will change gloves between each sample collection/handling. All samples will be assembled and
catalogued prior to shipping to the designated laboratory.

3.3 SEDIMENT SAMPLING

EPA Region 6 will collect 24 sediment samples (plus all appropriate quality assurance samples)
as part of the emergency response task to document the type of contaminants in residential areas
where flood waters have receded. Quality assurance samples will be collected at the frequency
of one duplicate sample for every ten field samples (total of three). Duplicates will be collected
concurrently from particular sample locations.

3.4 SAMPLE MANAGEMENT

Specific nomenclature that will be used by EPA will provide a consistent means of facilitating the
sampling and overall data management for the project. The OSC must approve any deviations
from the sample nomenclature proposed below.

Sample nomenclature will follow a general format regardless of the type or location of the sample
collected. The general nomenclature consists of the following components:

• Geographic location.
• Collection type (grab).
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US EPA REGION 6. - Screening Level Sampling for Sediment in Areas Where Flood Water Receded, Quality Assurance
Sampling Plan, Hurricane Katnna Response Support, Southeast Louisiana
• QA/QC type (normal, duplicate, etc.).
• Sequence - An additional parameter used to further differentiate samples.

Sample data management will be completed utilizing the EPA-provided Forms II Lite software,

3.5 SAMPLE EQUIPEMENT DECONTAMINATION

The nondisposable sampling equipment used during the sample collection process will be
thoroughly pre-cleaned before initial use, between use, and at the end of the field investigation.
Equipment decontamination will be completed in the following steps:

• High-pressure water spray or brush, if needed.

• Non-phosphate detergent and potable water wash to clean the equipment.
j
» Final potable water rinse.

• Equipment air-dried.

3.6 SAMPLE PRESERVATION, CONTAINERS, AND HOLD TIMES

Once collected, samples will be stored on ice at 4 degrees Celsius in coolers while at the site and
until submitted for laboratory analysis. The samples will be sent by common carrier to the
laboratory or driven by the field personnel. See the holding times in Table 4-1 below. Of
particular note is the 6-hour holding time for fecal coliform.

4. ANALYTICAL APPROACH

Samples collected by EPA during the sampling task will be delivered to EPA-designated
laboratories for VOCs, SVOCs, total metals, pesticides, herbicides, PCBs, fecal coliform
analyses and total petroleum hydrocarbons, utilizing EPA publication SW-846, Test Methods for
Evaluating Solid Waste, Physical/Chemical Methods and EMPAT Program testing. In
determining the nature and extent of potential contamination, analytical results (on a dry weight
7
THIS DOCUMENT WAS PREPARED BY EPA. IT SHALL NOT BE RELEASED OR DISCLOSED IN WHOLE OR IN PART WITHOUT THE EXPRESS,
WRITTEN PERMISSION OF THE EPA.

-------
US EPA REGION 6. - Screening Level Sampling for Sediment in Areas Where Flood Water Receded, Quality Assurance
Sampling Plan, Hurricane Katrina Response Support, Southeast Louisiana	
basis) will be compared to EPA Region 6 Human Health Medium-Specific Screening  Levels
(MSSLs) for soils in addition to site-specific background levels.  The sediments in these yards
may become part of the soil. Additionally, the analytical results will be compared to background.
The EPA Region 6 MSSLs are provided as Appendix C.  Table 4-1 below provides requirements
for containers, preservation techniques, sample volumes, and holding times.
THIS DOCUMENT WAS PREPARED BY EPA. IT SHALL NOT BE RELEASED OR DISCLOSED IN WHOLE OR IN PART WITHOUT THE EXPRESS,
WRITTEN PERMISSION OF THE EPA.

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Quality assurance will be conducted in accordance with this Quality Assurance Sampling Plan.

5.1 QUALITY ASSURANCE SAMPLES

The number of QA samples is based upon the assumption that the screening samples (covered by

this report) will be conducted in one day. Quality assurance/quality control (QA/QC) samples

will be collected according to the following:

• Sampling equipment rinsate blanks will be prepared by pouring laboratory grade
deionized water over non-disposable sampling equipment after it has been
decontaminated and collecting the rinse water in sample containers for analyses.
These samples will be prepared to demonstrate that the equipment decontamination
procedures for the sampling equipment were performed effectively. The sampling
equipment rinsate blanks will be prepared each day that non-disposable sampling
equipment is used. It is estimated that two equipment rinsate samples will be
collected during sampling activities.

• Field blanks will be collected when VOC samples are taken and are analyzed only for
VOC analytes. The field blank consists of American Society of Testing and Materials
(ASTM) Type II reagent grade water poured into a VOC sample vial at the sampling
site. It is handled like an environmental sample and transported to the laboratory for
analysis. Field blanks are used to assess the potential introduction of contaminants
from ambient sources (e.g., gasoline motors in operation, etc.) to the samples during
sample collection. Field blanks shall be collected and submitted once per day that
VOC samples are collected.

• Material Spike/Material Spike Duplicates will be prepared using a known weight of
material and added to a split sample of known weight. The material will be
thoroughly mixed to provide a consistent proportion of sample and spike material
throughout the sample.

• One duplicate will be collected for every 10 samples. A total of three duplicates will
be collected for the 24 samples.

5.2 SAMPLE CHAIN-OF-CUSTODY PROCEDURES

EPA/Contractor will utilize SCRIBE desktop and SCRIBE Enterprise for all sample

documentation and chain-of-custody (COC) preparation needs. Because of the sensitive nature of

sample collection, the possession of samples must be traceable from the time the samples are

11
THIS DOCUMENT WAS PREPARED BY EPA. IT SHALL NOT BE RELEASED OR DISCLOSED IN WHOLE OR IN PART WITHOUT THE EXPRESS,
WRITTEN PERMISSION OF THE EPA.
-------
US EPA REGION 6. - Screening Level Sampling for Sediment in Areas Where Flood Water Receded, Quality Assurance
Sampling Plan, Hurricane Katrina Response Support, Southeast Louisiana
collected until they are introduced as evidence. After sample collection arid identification, the
samples will be maintained under the COC procedures. If the sample collected is to be split, the
sample will be allocated into similar sample containers. Sample labels completed with the same
information, as that on the original sample container, will be attached to each of the split samples.
All personnel required to package and ship coolers containing potentially hazardous material will
be trained accordingly.

A COC record will be completed each time a sample or group of samples is prepared for shipment
to the laboratory. The record will repeat the information on each of the sample labels and will
serve as documentation of handling during shipment. A copy of this record will remain with the
shipped samples at all times, and the member of the sampling team who originally relinquished the
samples will retain another copy. EPA/Contractor personnel will complete a COC form for all
samples sent to the EPA designated off-site laboratory.

Samples relinquished to the participating laboratories will be subject to the following procedures
for transfer of custody and shipment:

" The COC record will accompany samples. When transferring possession of samples,
the individuals relinquishing and receiving the samples will sign, date, and note the
time of the sample transfer on the record. This custody record documents transfer of
sample custody from the sampler to another person or to the laboratory.

• Samples will be properly packed for shipment and dispatched to the designated
laboratory for analysis with separate, signed custody records enclosed in each sample
box or cooler. Sample shipping containers will be custody-sealed for shipment to the
laboratory. The preferred procedure includes use of a custody seal wrapped across
filament tape that is wrapped around the package at least twice. The custody seal will
then be folded over and stuck to the seal to ensure that the only access to the package is
by cutting the filament tape or breaking the seal to unwrap the tape.

• If sent by common carrier, a bill of lading or airbill will be used. Bill of lading and
airbill receipts will be retained in the Hurricane Katrina Response Support file as part
»
of the permanent documentation of sample shipping and transfer.
12
THIS DOCUMENT WAS PREPARED BY EPA. IT SHALL NOT BE RELEASED OR DISCLOSED IN WHOLE OR IN PART WITHOUT THE EXPRESS,
WRITTEN PERMISSION OF THE EPA.
-------
US EPA REGION 6. - Screening Level Sampling for Sediment in Areas Where Flood Water Receded, Quality Assurance
Sampling Plan, Hurricane Katrina Response Support, Southeast Louisiana
S.3 PROJECT DOCUMENTATION

Field Documentation

EPA/Contractor will perform field documentation of site activities during all fieldwork. The
primary methods of documentation will be completion, of a field logbook and production of
photographic documentation. All documents will be completed legibly and in ink. Any
corrections or revisions will be made by lining through the original entry and initialing the
change. The following field documentation will be maintained:

Locational Data

LatitudeAongitude ("lat/long") coordinates will be collected and documented with
environmental related data samples. This is in addition to, and not precluding, other critical
location identification data that may be needed to satisfy individual program or project needs,
such as depth, street address, elevation or altitude.-

1. A goal of 25 meter level of accuracy will be achieved; managers of individual data
collection efforts will determine the exact levels of precision and accuracy necessary to support
their mission within the context of this goal. The use of global positioning systems (GPS) is
recommended to obtain lat/longs of the highest possible accuracy.

2. Program data managers must collect and document the following information:

« Latitude/longitude coordinates in accordance with federal mteragency
Coordinating Committee for digital Cartography (FICCDC) recommendations. The coordinates
may be present singly or multiple times, to define a point, line, or area, according to the most
appropriate data type for the entity being represented. The format for representing this
information is:

+/-DD MM SS.SSSS (latitude)

+/-DDD MM SS.SSSS (longitude)
13
THIS DOCUMENT WAS PREPARED BY EPA. IT SHALL NOT BE RELEASED OR DISCLOSED IN WHOLE OR IN PART WITHOUT THE EXPRESS,
WRITTEN PERMISSION OF THE EPA.
-------
US EPA REGION 6. - Screening Level Sampling for Sediment in Areas Where Flood Water Receded, Quality Assurance
Sampling Plan, Hurricane Katrina Response Support, Southeast Louisiana .
where:
Latitude is always presented before longitude
DD represents degrees of latitude; a two-digit decimal number ranging from 00
through 90
• DDD represents degrees of longitude; a three-digit decimal number ranging from
000 through 180.
• MM represents minutes of latitude or longitude; a two-digit decimal number
ranging from 00 through 60 r
• SS.SSSS represents seconds of latitude or longitude, with a format allowing
possible precision to the ten-thousandths of seconds.
• + specifies latitudes north of the equator and longitudes east of the prime meridian
- specifies latitudes south of the equator and longitudes west of the prime
meridian
3. Specified method used to determine the lat/long coordinates (e.g., remote sensing
techniques, map interpolation, cadastral survey)

4. Textual description of the entity to which the latitude/longitude coordinates refer (e.g.,
north-east corner of site, entrance to facility, point of discharge, drainage ditch).

5. Estimate of accuracy in terms of the most precise units of measurement used (e.g., if the
coordinates are given to tenths-of-seconds precision, the accuracy estimate should be expressed
in terms of the range of tenths-of-seconds within which the true value should fall, such as "+/-0.5
seconds").

6. Recommended labeling of the above information is as follows;

"Latitude"

14
TffiS DOCUMENT WAS PREPARED BY EPA. IT SHALL NOT BE RELEASED OR DISCLOSED IN WHOLE OR IN PART WITHOUT THE EXPRESS,
WRITTEN PERMISSION OF THE EPA.
-------
US EPA REGION 6. - Screening Level Sampling for Sediment in Areas Where Flood Water Receded, Quality Assurance
Sampling Plan, Hurricane Katrina Response Support, Southeast Louisiana
"Longitude"

"Method" ' .

"Description"

• ' "Accuracy"

Field Logbook

The field logbook is a descriptive notebook detailing site activities and observations so that an
accurate, factual account of field procedures may be reconstructed. The individuals making
them will sign all entries. Entries should include, at a minimum, the following:

• Site name and proj ect number.
• Names of personnel on-site.
• Dates and times of all entries.
• Descriptions of all site activities, including site entry and exit times.
• Noteworthy events and discussions.
• Weather conditions.
• Site observations.
• Identification and description of samples and locations, including GPS coordinates
(latitude and longitude).
• Subcontractor information and names of on-site personnel.
• Dates and times of sample collections and COC information.
• Records of photographs.
• Site sketches.
15
THIS DOCUMENT WAS PREPARED BY EPA. IT SHALL NOT BE RELEASED OR DISCLOSED IN WHOLE OR IN PART WITHOUT THE EXPRESS.
WRITTEN PERMISSION OF THE EPA.
-------
US EPA REGION 6. - Screening Level Sampling for Sediment in Areas .Where Flood Water Receded, Quality Assurance
Sampling Plan, Hurricane Katrina Response Support, Southeast Louisiana ^^^
Sample Labels

Sample labels will be securely affixed to the sample container. They will clearly identify the
particular sample and should include the following information:

• Site name and proj ect number.
• Date and time the sample was collected.
• Sample preservation method.
• Analysis requested. % . •
• Sampling location.

COC Record

A COC record will be maintained from the time of sample collection until final deposition.
Every transfer of custody will be noted and signed, and each individual who has signed it will
keep a copy of the record. The COC is discussed in Subsection 5.2, Sample Chain-of-Custody
Procedures.

Custody Seal

Custody seals demonstrate that a sample container has not been opened or tampered. The
individual who has custody of the samples will sign and date the seal and affix it to the container
in such a manner that it cannot be opened without breaking the seal.

Photographic Documentation

Photographic documentation will be used by EPA/Contractor to document site conditions and
activities as site work progresses. Initial conditions should be well documented by
photographing features that define site-related contamination or special working conditions.
Representative photographs should be obtained of phase of site activity. The photographs should
show typical operations and operating conditions as well as special situations and conditions that
may arise during site activities. Site final conditions should also be documented by photograph
as a record of how the site appeared at completion of the work.
16
THIS DOCUMENT WAS PREPARED BY EPA. IT SHALL NOT BE RELEASED OR DISCLOSED IN WHOLE OR IN PART WITHOUT THE EXPRESS,
WRITTEN PERMISSION OF THE EPA.
-------
US EPA REGION 6. - Screening Level Sampling for Sediment in Areas Where Flood Water Receded, Quality Assurance
Sampling Plan, Hurricane Katrina Response Support, Southeast Louisiana
All photographs will be date-stamped and should be provided by using a film camera, a digital
camera, or a video camera capable of recording the date on the image. Details of each
photograph should be recorded in the logbook with the location of the photographer (including
GPS coordinates), direction the photograph was taken, the subject of the photograph, and its
significance (i.e., why the picture was' taken). Where appropriate, the photograph location,
direction, and subject should also be shown on a site sketch.

5.4 DATA VALIDATION

All finalized data provided by the laboratory will receive a 10 to 20% validation following
USEPA Contract Laboratory Program National Functional Guidelines for Organic Data Review
(January, 2005), USEPA Contract Laboratory Program National Functional Guidelines for
Inorganic Data Review (October, 2004), and the Regional Protocol for Holding Times, Blanks,
and VOA Preservation (April 13, 1989). This validation will conducted by a contractor
independent from the laboratory. The electronic preliminary data provided by the laboratory will
be provided in a Staged Electronic Data Deliverable (SEDD) format and undergo an initial
compliance screen using the Automated Data Review (ADR) software.
17
THIS DOCUMENT WAS PREPARED BY EPA. IT SHALL NOT BE RELEASED OR DISCLOSED IN WHOLE OR IN PART WITHOUT THE EXPRESS,
WRITTEN PERMISSION OF THE EPA.
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APPENDICES
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APPENDIX A

SEDIMENT DATA QUALITY OBJECTIVE
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DATA QUALITY OBJECTIVE NO. 1
HURRICANE KATRINA
MEDIA OF CONCERN: Sediment (Residue)
Residue (sediment) samples will be collected from areas where flood waters from Hurricane
Katrina have receded to screen for the presence of hazardous waste (potential contaminants of
concern) that could present an unacceptable risk to human health and the environment,
including residents either revisiting or occupying their residences.
Are there potential chemicals of concern in sediment, represented by a sample, based on
comparison to residential screening benchmarks?
IDENTIFY THE ALTERNATIVE ACTIONS
THAT MAY BE TAKEN BASED ON THE
DECISIONS.
If any contaminant exceeds the specified
benchmark in the sediment, the sediment will need
for further characterization (unless the area is near
the vicinity of a known chemical storage area).

If no contaminants exceed the specified
benchmarks in sediment, no further screening will
be necessary for contaminants being analyzed.
IDENTIFY THE INFORMATIONAL
INPUTS NEEDED TO RESOLVE A
DECISION.
Contaminant concentrations in sediment
samples collected from where Hurricane
Katrina flood waters have receded from
residential areas.
IDENTIFY THE SOURCES FOR EACH
INFORMATIONAL INPUT AND LIST THE
INPUTS THAT ARE OBTAINED
THROUGH ENVIRONMENTAL
MEASUREMENTS.
Sediment samples from where Hurricane Katrina
flood waters have receded from residential areas.
Analytical results from VOC, SVOC, pesticides,
herbicides, metals, PCBs, BAC-T, and TPH.
BASIS FOR THE CONTAMINANT
SPECIFIC ACTION LEVELS.
For sediment, EPA Region 6 Human Health
MSSLs (unless constrained by limits of
detection).
IDENTIFY POTENTIAL SAMPLING
TECHNIQUES AND APPROPRIATE
ANALYTICAL METHODS.
Grab samples of surficial sediments that appear to
be predominately fined-grained .

Locations from yards (specific yards to be
determined in field [if access is an issue, samples
shall be collected from locations such as parks or
streets]).

See Table 4-1 QASP
-------
DATA QUALITY OBJECTIVE NO. 1
HURRICANE KATRINA
MEDIA OF CONCERN: Sediment (Cont'd)
DEFINE THE DOMAIN OR GEOGRAPHIC
AREA WITHIN WHICH ALL DECISIONS
MUST APPLY.
SPECIFY THE CHARACTERISTICS THAT
DEFINE THE POPULATION OF
INTEREST.
DEFINE THE SCALE OF DECISION
MAKING,
DETERMINE THE TIME FRAME TO
WHICH THE DATA APPLY.
DETERMINE WHEN TO COLLECT DATA.
IDENTIFY PRACTICAL CONSTRAINTS
ON DATA COLLECTION.
Location within a southeast Louisiana as
determined by EPA where the public is being
allowed to return.
Contaminant concentrations in sediment at the
sample locations.
The 24 samples will be collected from an area
no larger than approximately one-square mile.
The analytical data will apply until such a time
as additional sampling activities are conducted
and/or response actions taken.
Samples will be collected during the field
sampling activities.
Inclement weather.
SPECIFY THE PARAMETER THAT
CHARACTERIZES THE POPULATION OF
INTEREST.
SPECIFY THE ACTION LEVEL FOR THE
DECISION.
DEVELOP A DECISION RULE.
The concentrations of chemicals identified in
sediment samples.
For sediment, EPA Region 6 Risk-Based
Concentrations for residential exposure to soil
(unless constrained by detection limits).
If any result in a sediment sample is above the
contaminant specific screening level, then
further characterization may be necessary
(which would be addressed by a QASP for a
future phase).
-------
DATA QUALITY OBJECTIVE NO. 1
HURRICANE KATRINA
MEDIA OF CONCERN: Sediment (Cont'd)
DETERMINE THE POSSIBLE RANGE OF
THE PARAMETER OF INTEREST.
Contaminant concentrations may range from
non-detect to above the screening values for
sediment
DEFINE BOTH TYPES OF DECISION
ERRORS AND IDENTIFY THE
POTENTIAL CONSEQUENCES OF EACH.
Type I Error: Deciding that the specified area
represented by the sediment sample does not
exceed the specified screening level when, in
truth, the sediment concentration of the
contaminant exceeds its screening level. The
consequence of this decision error is that
contaminated sediment exists in a
neighborhood, possibly endangering human
health and the environment This decision
error is more severe.
DEFINE BOTH TYPES OF DECISION
ERRORS AND IDENTIFY THE
POTENTIAL CONSEQUENCES OF EACH.
Type II Error: Deciding that the specified area
represented by the sediment sample does
exceed screening level when, in truth, it does
not. The consequences of this decision error is
that further characterization would take place
thereby delaying the time when residents may
return.
ESTABLISH THE TRUE STATE OF
NATURE FOR EACH DECISION RULE.
The true state of nature when the sediments
are decided to be below the screening levels
when in fact, they are not below the screening
levels, is that further characterization may be
necessary. The true state of nature when the
sediments are decided to be above the
screening levels when in fact, they are not
above the specified action levels, is that
further characterization may not be necessary.
DEFINE THE TRUE STATE OF NATURE
FOR THE MORE SEVERE DECISION
ERROR AS THE BASELINE CONDITION
OR THE NULL HYPOTHESIS (H0) AND
DEFINE THE TRUE STATE FOR THE
LESS SEVERE DECISION ERROR AS THE
ALTERNATIVE HYPOTHESIS (H3).
H0: The sediments represented by the sample
are above the screening level.
Ha: The sediments represented by the sample
are below the screening level.
-------
DATA QUALITY OBJECTIVE NO. 1
HURRICANE KATRINA
MEDIA OF CONCERN: Sediment (Cont'd)
ASSIGN THE TERMS "FALSE POSITIVE"
AND "FALSE NEGATIVE" TO THE
PROPER DECISION ERRORS.
ASSIGN PROBABILITY VALUES TO
POINTS ABOVE AND BELOW THE
ACTION LEVEL THAT REFLECT THE
ACCEPTABLE PROBABILITY FOR THE
OCCURRENCES OF DECISION ERRORS.
False Positive Error = Type I
False Negative Error = Type II
The assignment of probability values is not
applicable to this.DQO because these samples
are being collected for baseline and screening
purposes.
REVIEW THE DQOs.
Review results of this screening level
sampling event(s) to determine if modification
of this DQO is necessary and/or determine
what other steps may be necessary.
In developing the DQOs, the team considered the potential exposure routes for residents of
dermal exposure, incidental ingestion, and inhalation. These exposure routes, and other risk
scenarios will be characterized more fully, and utilized in the development of DQOs for
subsequent sediment sampling plans.
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-------
APPENDIX C
EPA Region 6 MSSLs
See:

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