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.
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 http://www.partneresi.com/city/phoenix.php
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.
A Phase I Environmental Site Assessment is a generally accepted report for evaluating the environmental liability associated with a property, and is frequently required by lenders.
An environmental consultant conducting a Phase I ESA gathers information regarding a property to evaluate whether past or present activities may have caused contamination of the soil or groundwater. If the Phase I ESA uncovers a recognized environmental condition (REC), the environmental consultant will usually recommend a Phase II ESA, which involves invasive soil or groundwater testing. Their information sources when conducting a Phase I ESA may include the following:
-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
-Oil & gas maps
Geology & Hydrogeology
-Ground water flow
-Fire department and other local agencies
-State & federal environmental agencies
Interviews & Document Review
-Tenants, owners and property managers
-State & local regulators
-Review provided reports
The widely 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 E1527-05 Standard for Phase I Environmental Site Assessments has been accepted by the EPA as meeting the requirements of All Appropriate Inquiry. The EPA’s All Appropriate Inquiries Rule governing the scope of Phase I Environmental Site Assessments went into effect on November 1, 2006 and provided specific scope requirements for a Phase I ESA to meet the requirements of CERCLA’s (Comprehensive Environmental Response, Compensation and Liability Act, commonly known as the Superfund law) innocent land owner defense.
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.