A Recognized Environmental Condition (REC) is defined by ASTM as “the presence or likely presence of any hazardous substances or petroleum products on a property under conditions that indicate an existing release, a past release, or a material threat of a release of any hazardous substances or petroleum products into structures on the property or into the ground, ground water, or surface water of the property. The term includes hazardous substances or petroleum products even under conditions in compliance with laws.” The term REC does not include de minimis conditions.
A Historical Recognized Environmental Condition is defined by ASTM as “an environmental condition which in the past would have been considered a recognized environmental condition, but which may or may not be considered a recognized environmental condition currently.” The determination of whether an environmental condition is a recognized environmental condition (REC) or a historical recognized environmental condition (HREC) lies with the environmental professional, and depends upon how the condition impacts the current or future use of the property. A release that was remediated and given regulatory closure may be considered an HREC unless it is determined to have a significant current or future impact on the property, at which point the environmental professional may deem it a REC.
An Environmental Professional is someone qualified to conduct and/or supervise a Phase I Environmental Site Assessment, based on experience and education requirements. An Environmental Professional or “EP” must possess sufficient knowledge and experience to exercise professional judgment, appropriately evaluate risks and form conclusions regarding conditions indicative of releases or threatened releases at a property. The requirements for an Environmental Professional include:
A federal, state or tribal issued certification or license (Professional Geologist, Professional Engineer or other certification to perform environmental inquiries) and 3 years of relevant full-time experience;
A Baccalaureate degree or higher in science or engineering and 5 years of relevant full-time work experience;
10 years of relevant full-time work experience.
De minimis conditions are defined by ASTM as environmental conditions that “generally do 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 considered a recognized environmental condition. An example of a de minimis condition might be a small, superficial spill of oil that is not anticipated to cause a significant concern.
Business Environmental Risk is characterized by the American Society for Testing and Materials (ASTM) as “a risk which can have a material environmental or environmentally-driven impact on the business associated with the current or planned use of a parcel of commercial real estate, not necessarily limited to those environmental issues required to be investigated in this practice (ESA, ASTM E1527-05). Consideration of business environmental risk issues may involve addressing one or more non-scope considerations.”
The conventional non-scope environmental business risk items alluded to include:
- Lead Paint
- Lead in Drinking Water
- Ecological resources
- Endangered Species
- Cultural and historic resources
- Regulatory compliance
- Industrial Hygiene
- Health and Safety
- Indoor air quality
- Biological agents
Business Environmental Risk is by definition very broad and can encompass many types of risk, not limited to the above list.
The Environmental Site Assessment is a process of evaluating the environmental liability of a real estate asset. Specifically, Environmental Site Assessment or “ESA” is the process of conducting “all appropriate inquiry” into the past or present uses of a property to determine whether the property is impacted by a “recognized environmental condition” (REC). The ESA process includes a site inspection, a review of historical records of the property and research of records available at government agencies. This information is detailed and evaluated in the Phase I Environmental Site Assessment Report, and an opinion is made as to whether past or present activities may have caused a release of hazardous substances or petroleum products at the property. The ESA is the primary tool used to qualify a user for the Landowner Liability Protections under CERCLA. Learn more about ESAs here.
The ASTM E1527-05 Standard is the industry standard used for Phase I Environmental Site Assessments. Fully named “ASTM E1527-05 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process,” the Standard outlines the purpose and use of the Phase I ESA as well as the scope of work to be conducted, including: records review (historical and governmental records); site reconnaissance (inspection of the property and adjacent sites); interviews (with owners and occupants and local government officials); evaluation and report preparation.
The ASTM E1527-05 Standard was formed by the American Society for Testing and Materials (now ASTM International), and is designed to meet the EPA’s condition for All Appropriate Inquiry for environmental due diligence. The E1527 Standard for Phase I ESAs has gone through many versions, the latest being finalized in 2005. The standard is reviewed and revised by the ASTM Committee E50 on Environmental Risk Assessment, Risk Management and Corrective Action.