Did you know there were changes to the Phase I Environmental Site Assessments?
For the first time since 2005, the U.S. Environmental Protection Agency (USEPA) adopted a revised American Society for Testing & Materials (ASTM) guidance document that sets forth the required tasks to complete Phase I Environmental Site Assessments (ESA’s). A Phase I ESA is required anytime a commercial or industrial property transaction occurs where the buyer (defined as the user) seeks eligibility for environmental liability protections under related USEPA regulations.
The new ASTM Standard, E1527-13: Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process, finalized November 1, 2013, replaces the previous 2005 guidance. USEPA adopted the new ASTM standard on December 30, 2013, in its final rule promulgated under 40 CFR Part 312, the agency’s All Appropriate Inquiries (AAI) standard for environmental due diligence related to real estate transactions. The rule offers certain protections from landowner liabilities established under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA).
Key changes in the methodology of Phase I ESA practice include:
- Relevant federal or state regulatory agency files related to the subject property or related to adjoining or nearby properties that could affect the site should be reviewed by the environmental professional (EP). If the EP chooses not to review files, the EP must provide justification for not completing this task. Midwest Environmental Services has always performed this task where appropriate during the course of Phase I ESA’s.
- The potential for vapor migration onto or originating from the subject property must now be considered and evaluated. USEPA and state regulatory agencies have been developing vapor intrusion guidance over the past few years last few years. A Tier I (i.e., first level) Vapor Migration Screening must be conducted during the Phase I ESA.
Key changes to previously existing terminology plus the addition of new terms include:
- The definition of Recognized Environmental Condition (REC) was revised as follows: the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property: 1) due to any release to the environment, 2) under conditions indicative of a release to the environment; or 3) under conditions that pose a material threat of a future release to the environment.
- The definition of Historical Recognized Environmental Condition (HREC) was revised as: 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 or meeting unrestricted residential use criteria established by a regulatory authority, without subjecting the property to any required controls (for example, property use restrictions, activity and use limitations, institutional controls, or engineering controls).
- Before calling the past release a HREC, the environmental professional 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 applicable regulations).
- The new term, Controlled Recognized Environmental Condition (CREC) was define as: a REC involving a past release of hazardous substances or petroleum that has been addressed to the satisfaction of the applicable regulatory authority and that is subject to activity and use limitations, including environmental covenants or deed restrictions. The EP shall list any CREC’s in the findings and conclusions sections of the Phase I report.
- The new term, De minimis Condition, was defined as: A condition that generally does not present a threat to human health or the environment and that generally would not be the subject of an enforcement action if brought to the attention of appropriate governmental agencies. A de minimis condition is not a REC.
- The USEPA definition of Release was incorporated into the new standard as: any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment (including the abandonment or discarding of barrels, containers, and other closed receptacles containing any hazardous substance or pollutant or contaminant), but excludes any release which results in exposure to persons solely within a workplace, with respect to a claim which such persons may assert.
- The term, Migrate or Migration, refers to the movement of hazardous substances or petroleum products in any form, including solid and liquid at the surface or subsurface, and vapor in the subsurface (Note: vapor migration in the subsurface is described in ASTM E2600; however, nothing in this practice should be construed to require application of the E2600 standard to achieve compliance with AAI).
- Enhanced descriptions of what is required of the User of the report, and why it is important. The User of the Phase I ESA report is Midwest’s client. Most Users who are not counseled by an attorney may not fully understand their responsibilities under the AAI standard to assure that they are eligible for CERCLA (Superfund) liability relief. The proposed changes affect and enhance the User’s requirements to conduct a search for environmental liens and Activity or Use Limitations (AULs) related to the subject property and inform the Environmental Professional of any findings, including circumstances where no environmental liens or AULs exist, but where commonly known information about the property exists within the community.
How do these changes affect you, the client/user? According to a major source of agency database information in 2013, the average cost of a Phase I ESA before the new standard was $2,700, and the standard industry turnaround time is three to four weeks.
1. Expect costs for Phase I ESA’s to increase due to:
a) More thorough information must be reviewed, and greater effort on the part of the EP will be necessary. The regulatory agencies’ electronic database information is ever-expanding. Radius Map Reports and historical data reviews are increasing in size, complexity and cost as government agencies digitize historical records.
b) The review of relevant regulatory agency facility records and files may increase costs, although this task has been standard practice for Midwest Environmental Services.
c) The requirement to conduct a Tier I Vapor Migration Screening requires more effort on the part of the EP.
2. Expect a longer turnaround time for delivery of Phase I reports. Review of regulatory records and files may extend the delivery time for a Phase l ESA. This may be due to a larger volume of information that requires review including the possibility of the EP having to review the files at the offices of regulatory agencies.
USEPA has now adopted ASTM E1527-13 as the standard for satisfying AAI. Users of Phase I ESA’s should anticipate that Phase I ESA’s conducted in conformance to ASTM E527-13 will become the market standard in 2014. A prospective buyer of commercial or industrial real estate whose goal is to qualify for CERCLA landowner liability defenses insist the use of the updated ASTM E1527-13 standard to avoid risks related to compliance with the EPA’s AAI standard.
Are you planning to purchase or finance the purchase of commercial or industrial property? Know what is required to protect you or your business from potentially severe environmental liabilities. Midwest Environmental Services, Inc.’s, Consulting Services Division, can assist you with solutions to all your questions related to environmental compliance and risks. Please visit our website at www.midwestenvironmentalservices.com for further information.
Don’t wait to find out that you should have hired a qualified environmental consultant during environmental due diligence. Contact Midwest Environmental Services at (800) 388-5160 or Curt Jones at our Consulting Services Division at (502) 491-0991, and inquire about environmental site assessment services, as well as any environmental compliance training and auditing services needs you have.
Midwest Environmental Services, Inc. is qualified and ready to support your business’ compliance to the myriad of environmental and safety regulations. Midwest Environmental Services continually works to improve our professional services to help ensure that our valuable clients receive prompt, professional attention.