Pull up a few youtube videos on how septic systems work and you'll understand this better.As for the gray water goes: as part releasing your inspection contingency require the owner to have the gray water diverted to the septic system per current code prior to closing.

My father is giving me a commercial lot worth $280K contingent on the environmental inspection report.

Underwriting, appraisal, etc, all during your inspection contingency.

I thought you might have bought that house on Chitty, I saw it went contingent.

For instance, fire damaged homes, mold issues, foundation issues, etc...The bottom line is, unless you can make very attractive all cash offers with no contingencies you probably will not be to successful chasing the new hot REO that just came on the market.  

In terms of upside with my as-is acquisiton assumptions, capex plan, and contingency, returns in the 100%+ should be achieved - working with a 3 year timeline before full upside is achieved. 

Facilitates an instant cash offer on another investment property, which sometimes gives you an advantage over someone with a loan contingent offer2.

Once I get a property contingent on inspection could I perform the inspection and save myself the 350?

In USDA I have too much contingencies which is locking me down.  

You can do that with an inspection contingency, although the contingency period typically isn't very long for inspections.