Phase I Environmental Site Assessments……The New Standard has Arrived

On December 30, 2013....the U.S. EPA published an Amendment to the Standards and Practices for All Appropriate Inquires under CERCLA.  The EPA has adopted the American Standards of Testing and Materials (ASTM) Standard E1527-13 to replace ASTM E1527-05 for the purpose of updating the standard, yet still complying with the “All Appropriate Inquiry” rule found in 40 CFR 312.
  

This update by ASTM has been in the works for approximately 3 years. When EPA published the proposed new ASTM standard for inclusion to the AAI rule, there were negative comments received, forcing a full rulemaking process for adoption.  After all was debated and comments taken into effect, the long awaited final rule is published.

With this publication in the Federal Register, EPA will remove all references to ASTM E1527-05, therefore, the new standard should be used going forward for all Brownfield and Phase I Environmental Site Assessments conducted for commercial property transactions.

So what’s new and how will it affect the process of completing a Phase I ESA for brownfields or commercial property transactions?

The major changes include a simplified definition of a recognized environmental condition (REC), clarification of the definition of a historical recognized environmental condition (HREC) and a new REC-the Controlled Recognized Environmental Condition (CREC).  Additionally, the standard clarifies what the environmental professional must collect for data regarding past uses of the property.

The new definition of a REC is as follows: 

“The presence or likely presence of any hazardous substances or petroleum products in, on, or at a property:

•      Due to any release to the environment;

•      Under conditions indicative of a release to the environment;

•      Under conditions that pose a material threat of a future release to the environment.

The new definition of an HREC is as follows: 

•   “A past release of any hazardous substances or petroleum products that has occurred in connection with the property and has been addressed to the satisfaction of the applicable regulatory authority, without subjecting the property to any required controls (e.g., property use restrictions, AUL’s, IC’s, or EC’s)”. 

•    Before calling the past release an HREC, the EP must determine whether the past release is a REC at the time the Phase I ESA is conducted (e.g., if there has been a change in the regulatory criteria). If the EP considers this past release to be a REC at the time the Phase I ESA is conducted, the condition shall be included in the conclusions section of the report as a REC.”

The new REC, definition of the Controlled Recognized Environmental Condition (CREC):  
  
“A REC resulting from a past release of hazardous substances or petroleum products that has been addressed to the satisfaction of the applicable regulatory authority (e.g., as evidenced by the issuance of a NFA letter or equivalent, or meeting risk-based criteria established by a regulatory authority), with hazardous substances or petroleum products allowed to remain in place subject to the implementation of required controls (e.g., property use restrictions, AULs, institutional controls, or engineering controls)…a CREC shall be listed in the Findings Section of the Phase I ESA report, and as a REC in the Conclusions Section of the…report.”

The new ASTM standard has also added to the review and reporting requirements for the environmental professional completing the Phase I such as:

•    Additional regulatory agency file records review,

•    Recognition that jurisdictions vary with respect to the accessibility of records,

•    If the subject property , or any adjoining property is identified in governmental records search, pertinent regulatory files and records associated with the listing should be reviewed – at the discretion of the environmental professional,

•    If in the environmental professional’s opinion is such a file review is not warranted, the environmental professional must provide justification in the Phase I report,

•    The environmental professional may review files and records from alternative sources (e.g., on-site records, user provided records, local government agency records, etc),

•    A summary of the information obtained from the file review shall be included in the Phase I report and the environmental professional must include an opinion on the sufficiency of the information obtained.

As with the previous standard, professional judgment is still key.

One thing that didn’t change is the definition of an Environmental Professional by AAI, which is: 

• Hold PE or PG and three years relevant experience; or 
•  Bachelor of Science or higher in engineering or science and five years relevant experience; or 
• Ten years relevant experience.

Now, how should the Phase I ESA report be formatted with these new REC’s and definitions?

In the Findings section:

• Known or suspected RECs 
• CRECS 
• HRECs 
• De Minimis conditions

In the Conclusions section:

• Known or suspected RECs 
• CRECs

In a final note, the new ASTM standard has placed greater emphasis on vapor migration and is now recognized as a migration pathway for contamination.

Vapor migration, what is it?

• ·    Migration or likely migration of plume or soil vapors to another property;

• ·      Plume is a form of effluent in water or emissions in air;

• ·     Any type of property can be affected, and can lead to serious health conditions;

• ·     74% of commercial lenders are aware of Vapor Migration; only 1 in 5 has it included in the bank’s due diligence policy.

The definition of migrate/migration amended to include vapor is as follows:
“The movement of hazardous substances or petroleum products in any form, including for example, solid, liquid at the surface or subsurface, and vapor in the subsurface.”

Also added, the definition of “activity and use limitation.”

Defined as: “legal or physical restrictions or limitations on the use of, or access to, a site or facility: to reduce or eliminate potential exposure to hazardous substances or petroleum products in the soil, soil vapor, groundwater or surface water on the property…”

ASTM E2600-10 “Standard Guide for Vapor Encroachment Screening on Property Involved in Real Estate Transactions”, is referenced in the ASTM E1527-13 Standard as guidance for the Phase I ESA report preparation regarding vapor migration. 

There is just one more thing, as for the person(s) using the Phase I ESA report for environmental liability protection, there a few responsibilities:

• Generally the user provides known environmental lien and AUL information to the environmental professional that is preparing the report.  However, environmental professional can still conduct a search for institutional controls and engineering controls in government records search, 

• And, if the user does not communicate to the environmental professional the information usually required, the environmental professional should put significance of this shortcoming similar to other data gaps, and

• The User’s responsibility is emphasized and possibly enhanced. The user must disclose commonly known information and discrepancies with purchase price and full market value.

So as I started out, the new standard is changing, clarifying definitions and how to word the new inclusions of REC’s and environmental data file reviews in the Phase I ESA report. The environmental professional and end user of the Phase I must be clear in not only findings, but what the report will hold with regard to liability protection.

The most common question with regard to the new standard, is what about pricing and turnaround time?  GSI Engineering will continue to provide first class service while meeting or exceeding the needs of our clients.  As with anything, time will tell what the market will do with regard to pricing, as it always has.  When clients demand more for less, there will be someone who leads the way with efficiency and conduct, then there will be all the others.

GSI’s environmental professionals work with many agencies, real estate professionals, title companies, banks and attorneys to complete Phase I ESA’s in a timely and cost effective manner. After more than 40 years in the business, GSI has completed thousands of Phase I ESA’s, across the United States. 

GSI’s customer service is next to none while working with all our clients whether cities, counties, buyers, sellers, real estate developers and financing institutions to complete the most comprehensive, responsive service.

Authored by:

Blane Wood-GSI Wichita

GSI Engineering LLC