What is RACER-DS™?

RACER Decision Support System (RACER-DS ^TM) is a software package that allows for the valuing of contingent environmental liabilities and legal claims associated with contaminated properties. RACER-DS ^TM consists of two modules, namely the Cleanup Cost Module (CCM) and the Third-Party Claim Module (TPCM). The system has been designed to provide information designed to promote more informed decisions about:

Appropriate “environmental discounts” on the purchase price in mergers, acquisitions, and other business combinations.
Appropriate financial reserves for the company’s contingent environmental liabilities.
Appropriate disclosures to the company’s shareholders and the general public in accordance with the rules of the Securities and Exchange Commission.
Use of insurance to manage the risks posed by the company’s liabilities.
The magnitude of costs that may be recoverable from prior owners, prior operators or the company’s historic insurance policies.
Where best to assign the company’s most experienced environmental staff.

The traditional environmental engineering approach for quantifying cleanup costs for a contaminated property is to develop line-item cost estimates for the “best case” and “worst case” scenarios. RACER-DS ^TM takes traditional line-item estimates and builds them into a comprehensive decision model where they can be analyzed in a probabilistic manner. The results of a RACER-DS ^TM analysis enable corporate decision-makers to qualitatively, quantitatively and visually evaluate the implications of their decisions.

Cleanup Cost Module

The CCM is designed to provide a quantitative evaluation of the potential for on-site and off-site investigation and cleanup due to contamination. The elements in the CCM process are:

Review existing site investigation reports and capture relevant information in the RACER-DS ^TM database.
Identify Areas of Concern (AOCs) where contamination is known to exist or potentially exists and which have not been remediated to the satisfaction of the regulatory agencies that have jurisdiction over the contamination.
For each AOC, identify a set of remediation scenarios that address the contamination.
Organize the remediation scenarios into decision/event tree models.
Prepare single-point cost models for each remediation.
Conduct a sensitivity analysis to identify the input variables that have the greatest influence on the resultant cost for each remediation scenario.
Develop probability distributions for each key input variable.
Run simulations to analyze the risk that the actual cost will differ from the expected cost.

Third-Party Claim Module

The TPCM is designed to provide a qualitative or semi-quantitative evaluation (in coordination with a law firm) of the potential for third-party claims due to migration or potential migration of contamination off site. The types of third-party claims that can be evaluated with RACER-DS ^TM include:

Toxic tort (bodily injury).
Property damage.
Natural resource damage.
Business loss/interruption.

Summary

The cleanup cost models and third-party claims analysis that are developed using RACER-DS ^TM are intended to be a dynamic management tool. The models and analyses are dynamic in the sense that they can and should be updated whenever:

Additional site investigations that better define the nature and extent of contamination have been completed or submitted to the regulatory agencies for review and approval.
Risk assessments that establish cleanup levels for contaminated soil, groundwater or other environmental media are completed or submitted to the regulatory agencies for review and approval.
Feasibility studies that define likely cleanup scenarios are completed or submitted to the regulatory agencies for review and approval.
Regulatory agencies mandate or express a preference for a particular cleanup approach or render a decision as to approval of a proposed cleanup approach.