The primary goal for a Phase I Environmental Site Assessment (ESA) is to identify recognized environmental conditions (REC) on a parcel of real estate within the scope of Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). This is only one requirement to satisfy the Landowner Liability Protections (LLPs); however, it will also present information in order to evaluate the business environmental risk tolerance of the associated parcel.
Now that the new definitions in the recently updated ASTM E1527-13, the standard for conducting Phase I ESAs, have been approved, you may be asking yourself questions like: How will these revisions change how an environmental assessment is performed, reviewed, or executed? Do the revisions change recommendations? To read an in-depth analysis of the changing landscape of Phase I ESAs, you can read my colleague Kathryn Peacock’s article here. In this blog, let me compare some of the key differences between the definitions used in the old standard (ASTM E1527-05) and the recently approved standard (ASTM E1527-13).
Recognized Environmental Condition (REC):
E1527-05: The presence or likely presence of any hazardous substance or petroleum products on a property under conditions that indicate an existing release, a past release, or a material threat of release of any hazardous substances or petroleum products into structures on the property or into the ground, groundwater, or surface water of the property. (ASTM 3.2.74)
E1527-13: The presence of likely presence of any hazardous substances or petroleum products in or on at a property; 1) due to any release to the environmental; 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 change in the definition of a REC will not change how an assessor evaluates a property; however, the proposed change will aide in confirming or eliminating the presence of a REC for assessors, project managers, lenders, general counsel and/or the property owner. In essence it levels the playing field, so to speak, because the new definition actually helps to justify the reasoning behind recommendations in the environmental site assessment. Typical REC rationale is based on the regulatory (active or closed status), distance, inferred groundwater flow direction and/or presumed gradient. The newly approved revisions more clearly state the conditions and can be referenced by client relationship managers to the client.
Historical Recognized Environmental Condition (HREC):
E1527-05: 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. A past release of any hazardous substance or petroleum products has occurred in connection with the property and has been remediated, with such remediation accepted by the responsible regulatory agency. (ASTM 3.2.39)
E1527-13: 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.
The biggest clarification to the definition of a HREC is the addition of the wording “or meeting unrestricted residential use criteria established.” Previously, the environmental professional would likely have taken this into consideration during the assessment, but now it is clearly stated that it should be referenced for additional support of the determination of a HREC. The Environmental Professional will need to carefully investigate the agency documentation, as it does not always clearly stated under what criteria site closure was achieved (residential, commercial or industrial). If it was closed according to anything other than the criteria for residential sites, the Environmental Professional now will need to consider the below newly added definition of a Controlled Recognized Environmental Condition.
Controlled Recognized Environmental Condition (CREC):
E1527-05: Not defined.
E1527-13: A REC resulting from a past release of hazardous substances or petroleum products that has been addressed to the satisfaction of the applicable regulatory authority, with hazardous substances allowed to remain in place subject to the implementation of required controls. (ASTM 3.2.18 proposed).
The key to understanding the Controlled Recognized Environmental Condition (CREC) is understanding what it means to have “controls” in place on a property. Controls can be (but are not limited to) activity and land use limitations (AULs). AULs can be utilized for many restrictions. For example, they may indicate that no private water wells can be installed on the property, or that re-development of a property is restricted to commercial use only unless further investigation is performed. Defining a CREC requires knowledge of relevant risk-based corrective action (RBCA) levels, and of the process through which a site has reached a closure or no further action status.
Here’s an example: a site in the state of Missouri was utilized a retail petroleum station, had a release and was granted a closure status as a non-residential property. Typically, this would be considered a CREC. However, in this particular instance, an AUL is not in place on that particular property, and it was closed under non-residential criteria. Therefore, it is implied that it cannot be redeveloped as a residential property without additional investigation. Based on this conclusion, the site is granted a no further action status under residential and/or domestic use criteria.
In short, the ASTM E1527-13 revisions are not likely to change how the environmental assessment is conducted, but they do aide in the justification of RECs, HRECs, and CRECs. It will be up to the environmental professional (EP) and others involved in the real estate transaction to understand the definitions and categorize the environmental concerns identified.