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.

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Recognized Environmental Condition- REC

June 20, 2013

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.


De Minimis Conditions

June 11, 2013

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.


Environmental Site Assessment- ESA

May 29, 2013

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.


Phase I Environmental Site Assessment

December 28, 2012

 

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:

 

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 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.


Possible Changes to ASTM E1527 Standard

December 20, 2012

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 latest revisions to the ASTM E1527 were done in 2005, and in 2012 the standard is currently under review for another round of potential changes. The Phase I Environmental Site Assessment scope of work is not anticipated to change dramatically and many of the potential changes serve simply to clarify language. However several potential changes could impact the way Phase I ESAs are conducted or written.

 

For example, a potential new category of Recognized Environmental Condition (REC) has been proposed: the Controlled Recognized Environmental Condition (CREC), which would apply to risk-based closures of contaminated sites. If adopted, this new term would impact the way findings and conclusions are discussed in the Phase I ESA Report, and could potentially impact the report user’s understanding of environmental risk. Certainly the term would require some education of the industry.

 

Another potential change to the Phase I Environmental Site Assessment process is an explicit requirement for regulatory file reviews on adjacent properties. Many environmental consultants already perform these file reviews during the Phase I ESA when deemed appropriate due to high risk information being identified at the adjacent properties (such as a leaking gas station). However, an explicit mandate for these file reviews could impact the cost and timing of the Phase I Report, as well as the environmental consultant’s liability.

A decision will have to be made in 2013 whether to adopt any changes to the E1527 standard, or renew the standard as is.


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