Controlled Recognized Environmental Condition (CREC)

June 27, 2013

Controlled Recognized Environmental Condition (CREC) is a proposed new term for the ASTM E1527 standard for Phase I Environmental Site Assessments (ESAs).  The Controlled REC concept was introduced to address contaminated sites that have received risk-based regulatory closure, where no further remediation is required but residual contamination still exists at a site and the property is subject to activity and use limitations or “AULs.”  These sites, where contamination is controlled but could still pose ongoing or future obligations on the owner (such as special precautions during construction or grading activities), have been a source of some confusion to the environmental due diligence industry with regards to how they should be classified.  The Controlled Recognized Environmental Condition or “CREC”, if accepted, would be a distinct classification from Historical Recognized Environmental Condition (HREC) and Recognized Environmental Condition (REC). The environmental professional would be required to list any CRECs identified in the findings and conclusions section of the Phase I Environmental Site Assessment report.


Phoenix Commercial Real Estate Due Diligence

January 29, 2013

From drywells to fluctuating groundwater, it is important to have an environmental professional who has regional knowledge of Arizona’s unique challenges to environmental due diligence. Our Phoenix staff is familiar with the many environmental conditions that distinguish Arizona from other parts of the country. The Partner Phoenix office provides Phase I Environmental Site Assessments, Phase II Environmental testing, Property Condition Assessments, and Asbestos Surveys in support of commercial real estate transactions.

Partner provides Property Condition Assessments and Commercial Building Inspections for a wide variety of clients, including; CMBS lenders, Fannie Mae/Freddie Mac lenders, and equity clients. Most of our reports are performed to meet the standards set within ASTM E2018-08 guidelines.

Our Phoenix environmental professionals are knowledgeable of local history and agencies, such as historical fueling stations, the requirements of the Arizona Department of Environmental Quality (ADEQ), and the Water Quality Assurance Fund (WQARF) through the Remedial Projects Section of ADEQ.

Partner has the experience of over 900 projects in Arizona since 2010. Some recent projects and experience that provide insight into our Arizona consulting practice include:

­­-Partner conducted Phase I Environmental Site Assessments and Property Condition Reports, including Roofing, MEP (Mechanical, Electrical, Plumbing), and structural subspecialist inspections, for five medical research facilities throughout Arizona (Glendale, North Scottsdale, Peoria, and Phoenix).

-Partner completed an equity-level Property Condition Assessment (PCA), Phase I Environmental Site Assessment (ESA), and a Geotechnical Peer Review on a two-building medical campus in Phoenix, Arizona. The buildings consisted of 120,380 square feet and three stories, with an additional two-story parking garage. The Equity PCA included specialist inspectors to evaluate the structural, roofing, mechanical and elevator systems.

For more information on Partner’s Phoenix practice visit

Due Diligence in San Francisco

January 10, 2013

When hiring an environmental and engineering due diligence firm for properties in San Francisco, one should be sure that they are familiar with the blend of dense metropolitan areas, suburbs, and agricultural areas that make the Bay Area unique. Many clients look to environmental professionals who have an intimate working knowledge of a particular region, and The City and County of San Francisco is no exception, having a unique history in relation to other cities on the West Coast. The Partner San Francisco team excels at integrating thorough regional knowledge into the Phase 1 Environmental Site Assessment, providing clients with a superior due diligence product.

The San Francisco Partner team provides Phase I Environmental Site Assessments (ESAs), Phase II Environmental testing, Property Condition Reports, Asbestos Surveys, Lead Testing, and Seismic Assessments in support of local and nationwide commercial and multi-family real estate transactions. Having a firm that knows the requirements of local regulatory agencies throughout the course of a Phase I, and if necessary a Phase II, is important. Partner performs Phase II Environmental Testing either in support of a financing decision or to meet the requirements of the San Francisco Bay Regional Water Quality Control Board. Our San Francisco environmental professionals understand the highly variable geology found in the Bay Area due to plate tectonic activity as well as regulatory agencies such as the State Department of Toxic Substances Control (DTSC).

When engaging a firm specifically for a Probable Maximum Loss Report on commercial or multi-family property in San Francisco, it is most important that the local geology is understood and the math correctly reflected.  Partner recently completed 16 Probable Maximum Loss Reports (PMLs) on multi-family properties in San Francisco. The buildings were built in the early 1900s and had several seismic risk concerns.

More recent projects and experience that provide insight into our Northern California consulting practice can be found at

Phase I Environmental Site Assessments in California

January 3, 2013

There are multiple regulatory differences that make California unique when performing a Phase I Environmental Assessment. Having an environmental consultant who understands the details and requirements of the water, air, environmental, city, and county programs in the Golden State can ensure the environmental due diligence process for a commercial real estate property goes smoothly. Partner Engineering and Science, Inc. has extensive experience in California, with offices in San Francisco, Irvine, Corona, San Diego, including headquarters in Torrance, and wide coverage throughout the state. A few of the major statewide differences in California that can impact a Phase I ESA in the state are the following:

-The California Environmental Protection Agency (EPA) published the California Human Health Screening Levels (CHHSLs) in 2005. The CHHSLs provide the user with a chemical specific look up table for what levels of soil gas or indoor air concentrations represent a threat to human health. CHHSLs are not intended to be regulatory numbers, but are often treated as such. CHHSLs are also famously conservative. You need an environmental consultant doing your Phase I ESA that knows how to interpret soil gas and indoor air data in relation to CHHSLs and this requires a lot of California experience.

-In most states the regulations are statewide rules with maybe some variations for cities and counties. In California, the State Water Board grants a lot of power and autonomy to the Regional Water Quality Control Boards. The regional water boards are organized generally by watershed and may split counties. Water boards may have very different regulations. For example, the San Francisco Bay Regional Water Quality Control Board developed Environmental Screening Levels (ESLs) for soil and groundwater contamination, whereas the Los Angeles Regional Water Quality Control Board uses different screening levels including Soil Screening Levels, CHHSLs for soil-gas , and Maximum Contaminant Levels (MCLs) for groundwater.

Certified Unified Program Agencies (CUPAs) have a lot of power in California. CUPAs are city or county agencies that have been more or less deputized to handle certain regulatory functions. An example of a CUPA is the City of Los Angeles Fire Department, which oversees releases from underground storage tanks (USTs), termed leaking USTs or LUSTs. To do proper regulatory due diligence during a Phase I Environmental Site Assessment your environmental professional must understand the California CUPAs.

-The California Environmental Quality Act (CEQA) is California’s equivalent of the National Environmental Protection Act (NEPA). A Phase I Environmental Site Assessment sometimes has to deal with CEQA/NEPA issues like wetlands, endangered species, and/or historical resources as additional scope items.

What is a Phase I Environmental Site Assessment Anyway?

October 7, 2011

The Phase I Environmental Site Assessment (ESA) is a report used to evaluate the environmental liability of a property.  A Phase I ESA is often required by lenders during the financing of commercial real estate. 

The generally accepted standard for conducting a Phase I ESA is the American Society of Testing Materials (ASTM) 1527-2005 Standard, although specific clients and agencies may have additional requirements and standards. The ASTM Standard is based on the Environmental Protection Agency’s (EPA) All Appropriate Inquiry (AAI) Rule, which provides specific guidelines for a Phase I ESA to meet the requirements of a law called CERCLA (Comprehensive Environmental Response, Compensation and Liability Act, commonly known as the Superfund law). Ultimately, an innocent land owner, contiguous property owner, or a bona fide prospective purchaser that wants to meet CERCLA’s requirements must conduct ALL Appropriate Inquiry into the property’s use, history and potential for contamination to obtain protection from potential environmental liability. The AAI Final Rule went into effect on November 1, 2006.

Phase I Environmental Site Assessments are done by (or under the supervision of) Environmental Professionals who meet the requirements of the EPA’s AAI rule. Essentially, an environmental professional 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.

An environmental consultant conducting a Phase I ESA is required to inspect the property, conduct interviews about the property, review historical records of the property and research records available at government agencies. Their information sources may include the following:

 Site Visit

– Inspection of site and observation of surrounding properties

– Note presence of hazardous materials and potential sources of contamination

– Look for evidence of past uses of the property

Historical Research    

-Aerial photos

-City directories

-Building permits

-Topographical maps

-Oil & gas maps

-Title information

Geology & Hydrogeology

-Soil type

-Ground water flow

Regulatory Research

-Fire department and other local angencies

-State & federal environmental agencies

 Interviews & Document Review

– Tenants, owners and property managers

– State & local regulators

– Review provided reports

   This information is evaluated and an opinion is made by the environmental consultant as to whether past or present activities may have caused contamination of the soil or groundwater at the subject property.  If the Phase I Environmental uncovers arecognized environmental condition (REC), the environmental consultant will usually recommend a Phase II ESA, which involves invasive soil or groundwater testing.

Variations or additional requirements to the ASTM 1527-2005 Standard for Phase I ESA maybe necessary for the following agencies and situations:

  •          Foreclosure
  •          HUD Multifamily Accelerated Processing (MAP)
  •          Fannie Mae
  •          Freddie Mac
  •          SBA Lenders
  •          Large Tracts (such as forestland, agricultural, or rural property)
  •          USDA Rural Development
  •          Cell Tower Developers

 While the Phase I Environmental Report is clearly the standard for environmental due diligence, many lenders have come to rely on alternatives reports for low risk assets or low dollar transactions. Some of the more frequently used limited, yet customizable, products are:

– Environmental Transaction Screen (ETS) — meets ASTM 1528-06 Standard Practice for Limited Environmental Due Diligence: Transaction Screen Process.

– Limited Environmental Site Assessment (LESA) – between Phase I and ETS.

– Environmental Historical Report —  investigates whether a site has always been low risk

– Environmental Database — search of government records of spills or environmentally sensitive operations at or near the property

Phase II Environmental Testing

December 26, 2008

A Phase I Environmental Site Assessment is designed to identify recognized environmental conditions (RECs).   Typically, a REC represents the potential for the release of a hazardous substance or petroleum to the subsurface soil.  RECs apply to specific chemicals or to classes of chemicals which may have been used and released on-site.   The Phase II Environmental Site Assessment is designed to confirm the presence or absence of the chemicals of concern on-site.  

Typically, the whole site is not a concern; rather, a specific area on the site is of concern.  For example, the Phase I ESA identifies the drum storage area on the northeast corner of the site to be an area of concern.  The Phase II Environmental designer would obviously locate borings in these areas of concern.

Phase II Environmental Testing almost always involves soil borings.  Soil samples are typically collected and the site’s lithology can be logged on boring logs.   Soil, soil vapor, and/or groundwater samples are collected and sent to the laboratory for analysis.

The environmental professional receives the laboratory data and integrates it with field data such as boring logs and PID readings.   The environmental professional then interprets the data to determine if there has been an actionable release. 

Phase II Environmental Testing can be performed according to ASTM Standard E1903 for Phase II Standard Guide for Environmental Site Assessments: Phase II Environmental Site Assessment Process.

The user of the Phase II should be careful to work with a registered professional such as a registered civil engineer or a registered geologist.   Partner Engineering and Science is a national firm with several qualified and experienced registered professionals.

Phase 1 Environmental Site Assessments

December 7, 2008

A Phase 1 Environmental Site Assessments is designed to identify the environmental risk associated with a real estate asset.   The Phase 1 includes multiple required scope items and these items can be placed into the following four buckets:  

          Site Visit;

          Historical Research into the Use of the Site;

          Regulatory Research.


Most Phase 1s are prepared to meet the scope of work defined by ASTM E1527 – 05 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process.  This ASTM standard is designed to fulfill the requirements of the Federal EPA’s All Appropriate Inquiry rule and therefore qualify the user for the innocent landowner defense as defined under CERCLA.

Other scope consideration might be driven by the ultimate users of the Phase 1 Environmental Site Assessment.    One important stakeholder is the lender in a real estate transaction.  Many lenders have their own scope requirements.  For examples, all SBA Lenders will require the Phase 1 meet the requirements of SBA SOP 50-10.

A Phase 1 should be conducted by an Environmental Professional as defined by ASTM E1527-05. 

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