Clearing Up the Confusion About the ASTM E 1527-13 Phase I ESA Standard


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Presented by EDR’s Dianne Crocker and Pat Coyne at the 1/7/14 meeting of the Environmental Professionals Organization of Connecticut. Content provides an overview of the key areas of change in ASTM’s E 1527-13 Phase I environmental site assessment standard, the reactions from environmental professionals, attorneys, lenders and the U.S. EPA as well as an in-depth look at the challenges of conducting agency file review.

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  • In most cases, the database report would contain far less information.
  • Clearing Up the Confusion About the ASTM E 1527-13 Phase I ESA Standard

    1. 1. Environmental Professionals’ Organization of Connecticut: Clearing Up the Confusion About the ASTM E 1527-13 Phase I ESA Standard Tonight‟s presenters: • • • • Dianne Crocker, Principal Analyst, EDR Insight Pat Coyne, Vice President of Marketing, EDR Sam Haydock, LEP, Principal-in-Charge, BL Companies Pam Elkow, Partner, Robinson & Cole LLP January 7, 2014 © 2014 Environmental Data Resources, Inc.
    2. 2. What Just Happened to Our Standard? An Update on the Market Reaction by Dianne Crocker, Principal Analyst EDR Insight © 2014 Environmental Data Resources, Inc.
    3. 3. The Road to Final E 1527-13 Standard • End of 2012: • ASTM Phase I Task Group approved revisions to E152705, submitted to EPA for AAI approval • August 15, 2013: • EPA proposed amendment to AAI rule recognizing E1527-13 • September 16, 2013: • Comment period ended, majority supported EPA‟s decision • November 6, 2013 • ASTM published E 1527-13 standard, -05 became a “historical standard” • December 30, 2013: • EPA published final rule recognizing -13 as AAIcompliant, announced intent to propose removing E1527-05 reference
    4. 4. Why Did ASTM Revise E 1527? • ASTM standards have a maximum 8-year shelf life • Prior E1527 publications: 1993, 1994, 1997, 2000, 2005 • Careful review of the 2005 standard began in 2010 • ASTM‟s Phase I Task Group agreed on two primary objectives: 1. Clarify existing language 2. Strengthen the deliverable
    5. 5. 3 Key Changes for Tonight’s Discussion 1. Vapor migration • Adds VAPOR to the more traditional soil and groundwater pathways for evaluating contamination risk • A lot of confusion/inconsistency in how to handle vapor risk in Phase I ESAs 2. RECs/HRECs (revised) CRECs (new) • Revised definitions of REC and HREC • New definition for “controlled REC” or CREC • More clarity on how EPs define environmental conditions 3. Agency file reviews • Always in standard but more clarity on when they need to be done…and what to do if a review is not done • More attention on standard environmental sources
    6. 6. 1. Vapor Migration Language • E 1527-13 adds new definition of “migrate/migration” (used in many places in E1527) as the movement of hazardous substances or petroleum products in any form, including solid and liquid at the surface or subsurface, and vapor in the subsurface. • References E 2600-10 as a process for vapor encroachment screenings (not required). • Specifically excludes contaminated vapor migration/intrusion from IAQ (which is a non-scope consideration). • Reflects that CERCLA/AAI do not differentiate by form (e.g., solid, liquid, vapor) of the release to the environment.
    7. 7. Prior to E 1527-13: Inconsistency in How Vapor is Treated in Today’s Phase Is • Some EPs automatically included consideration of vapor migration. • Others did so only at a client‟s request. • Likewise, some financial institutions require vapor screens on all Phase I ESAs. • Others do so only on a case-by-case basis. • This is changing as awareness of vapor risk grows.
    8. 8. EPs’ Concerns About Vapor • Don‟t want to be the only consultant in town suggesting to their clients that vapor migration needs to be part of an assessment. • Concerns that clients will think they‟re trying to squeeze more money out of them. • Just don‟t understand it well enough themselves or the process to use for assessing it properly to explain to clients. • Ignored VI because it was always non-scope under IAQ exclusion.
    9. 9. Distinction Between Vapor Intrusion and Vapor Migration • Vapor migration: • Is there a presence or likely presence of hazardous substances or petroleum products on the property due to a release, based on consideration of pathways and how contamination is likely to migrate onto a property? • Within the scope of a Phase I ESA. • Vapor intrusion: • Is vapor present inside a building as the result of a release? • Never part of a Phase I, and is not now under -13.
    10. 10. Reaction to Vapor Language: U.S. EPA • EPA‟s final rule (Dec. 30, 2013): • “EPA wishes to be clear that, in its view, vapor migration has always been a relevant potential source of release or threatened release that, depending on site-specific conditions, may warrant identification when conducting AAI. EPA applauds the revisions made by ASTM International to the updated E1527-13 standard regarding vapor migration.” • “…The new standard makes important revisions to the standard practice to clarify that AAI and Phase I ESAs must include, within the scope of the investigation, an assessment of the real or potential occurrence of vapor migration and vapor releases on, at, in or to the subject property.”
    11. 11. Reaction to Vapor Language: LENDERS • Large institutions required vapor assessments for several years already, particularly for foreclosures or purchases. • Less common at smaller banks, still coming up to speed. • “Vapor really signifies a transition in property due diligence—a transition away from the traditional way of thinking about environmental due diligence only in terms of contaminated soil and groundwater.” ~Mike Tartanella, Capital One at EDR‟s DDD Long Island “We like the E 2600 process for vapor because it ensures a consistent process for vapor across states we lend in.” ~regional New England lender
    12. 12. Reaction to Vapor Language: ATTORNEYS • • • CERCLA and the AAI rule do not allow EPs to overlook the vapor migration pathway and simply consider contamination in the soil and groundwater in making a determination about the presence of RECs in, on or at a property.“ Attorney Bill Wagner, Taft, Stettinius and Hollister LLP “Consultants should not sign a report, in my humble opinion, that a complete Phase I ESA was done if at least the suggestion was not made that vapor be looked at.” Stuart Lieberman, Lieberman & Blecher LLP “Nothing in the underlying law (i.e., CERCLA or the AAI rule) allows for carving hazardous substances or petroleum products in vapor form out of the REC term in the Phase I standard. If an EP disclaims all consideration of vapors in the Phase I ESA report, then it is not an AAIcompliant report.” Christopher Roe, attorney at Fox Rothschild LLP
    13. 13. 2. Family of REC Definitions • • • REC definition simplified HREC definition revised New definition for “controlled” RECs (CRECs) • Applies where past release has been addressed, but residual contamination remains subject to control • Allows for the EP to classify a condition on the site using a less threatening term • Avoids stigma associated with RECs
    14. 14. Impact of New CREC Term • Signals to potential purchasers of properties that not all RECs are necessarily bad or warrant abandoning the deal. • New emphasis on continuing obligations under CERCLA. • Failure to satisfy these continuing obligations could result in forfeiture of otherwise available future CERCLA liability defenses.
    15. 15. Industry Response to New REC Terms • Some confusion on how to make REC vs. HREC vs. CREC determinations. • Generally positive response from users, especially lenders, who are responding favorably to the added clarity.
    16. 16. 3. Regulatory Agency File Review • E 1527-13 contains new section that indicates the EP should do an agency file review if a subject property or adjoining property is identified in any of the standard environmental records sources. • If the EP decides not to undertake such a file review, the justification must be included in the Phase I ESA report.
    17. 17. Reactions from EPs • Impact varies based on what each firm is currently doing. • Huge variability in level of effort. • Major challenge in factoring cost/time of research into original proposal. “File reviews with the long turnaround times will be an issue.” “File reviews are a BIG unknown for each project until you get into the work. Makes competitive bidding a losing game.”’
    18. 18. Overall Expectations on Pricing/Turnaround Time
    19. 19. EPs Score Key Revisions (Time/Cost Impact)
    20. 20. Overall EP Reactions • “Most of this will be client education. Many of the changes are relatively minor.” • “The lenders don’t understand what they want at this point. It makes it difficult for us to format for them.” • “Our company has a formal training program.” • “We will be expected to learn about the new changes independently, outside of the office.” • “[We] already consider all of these issues; for us, it’s just a change in definitions.” • “We have been doing file reviews for 20 years and anticipate no cost impact. Vapor will require some tweaking. REC-HREC-CREC should actually help simplify some reports.”
    21. 21. One Lender’s Reaction • “All of the revisions in -13 are already standard in our scope and expectations. The section I like the most is the one on AFRs. There is no complete Phase I ESA without a file review, in my opinion. And vapor was never not a risk. For us, these changes are not monumental.” ~regional lender
    22. 22. Summary of Impact of E 1527-13 on Pricing Area of Change Expected Impact REC-HREC-CREC evaluation No impact on price Vapor migration screening Additional time (up to 6 hours), added cost (up to $400-500) Regulatory file review Additional time/; highly variable
    23. 23. Who Has Adopted E 1527-13 At This Point? • Many larger institutions switched when E 1527-13 became new industry standard in November. • Others assume the new standard will necessitate an update to their policies, were waiting on EPA or are relying on their environmental consultants to tell them what they need to do. • Federal agencies: • Freddie Mac is requiring E1527-13 since their Guide requires use of the most current standard. • U.S. SBA is allowing a grace period where reports meeting either E 1527-05 or E 1527-13 will be accepted. • Fannie Mae will require the use of E 1527-13 on any reports ordered on or after February 1, 2014.
    24. 24. Education and Awareness Are Key
    25. 25. What You Should Be Doing • Attend events dedicated to the E 1527 revisions. • Ensure that internal staff are aware of the key areas of change, and ready to implement them consistently across office. • Plan for any necessary changes to the internal Phase I ESA process, scope of work and report format, addressing any expected changes in pricing. • Take online courses to get trained. • Educate clients on areas of revision, working with them to update policies to reference current industry standard…
    26. 26. Page 26
    27. 27. For More Information • EDR‟s ASTM Toolkit • EDR Insight • Contains all past research on E 1527-13 and vapor risk • Questions? • Email: • Phone: 203.783.8156
    28. 28. EPOC Demystifying Agency File Reviews Presented by: Patrick Coyne EDR © 2014 Environmental Data Resources, Inc.
    29. 29. Agency File Review
    30. 30. What‟s in them? • Source files • Other examples Page 30
    31. 31. Beyond the database report • This is what was in the DB Report
    32. 32. Details • • • • • • • Two waste oil tanks 500 & 250 gallons Removed in „91 Filled w/ sand & gravel Oversight by FD ESA performed No contamination observed
    33. 33. Driver of Agency File Reviews • Best practice for fully understanding a site • 60% of Phase I’s always or very often include the EP seeking agency files. • How many EP‟s have conducted one? • It is a core ASTM 1527 data element. • New clarification in the ASTM 1527-13 standard
    34. 34. ASTM 1527-13
    35. 35. ASTM 1527-13 • Property or adjoining “hit” in any 8.2.1 database • Agency files should be reviewed • Subject to 8.1.1-7 (reasonably ascertainable, reasonable time and cost) • If not warranted, EP must explain • Alternative sources • Shall include summary of the information reviewed • EP must comment on sufficiency
    36. 36. Challenges • Operational • • • • • • Disparate No standardization Multiple programs Different accessibility Not to mention local Report templates • Business • Educating clients • Fees
    37. 37. Market Research • Survey of EP‟s. • Calling campaign to all 50 state agencies to document processes. • ASTM task group participation. • EP interviews • Discussions with lenders
    38. 38. Survey • 335 total complete surveys • 60% of respondents “very often” or “always” perform agency file reviews in conjunction with their Phase I‟s. • Only 7.2% “rarely or never” • 26% of respondents state that their agency files are available online. • 18% of respondents said they have to travel zero distance, because they can access files online.
    39. 39. When do you do it? • When do they conduct them? • 62% with the Phase I • 31% afterwards
    40. 40. How far?
    41. 41. Available Online?
    42. 42. Once you‟re there… • • • • I had to make an appointment 76% Hours are limited 37% 56% make copies 60% review and abstract
    43. 43. Subject or Adjacents? • What are they looking for? • Not adjoining properties only • Either subject property, or both TP and adjoining
    44. 44. Is it a pain? Respondents don‟t think travelling to the agency office is a pain point. 65% respond that travel to the location is “extremely easy” or “moderately easy”.
    45. 45. A lot of variability • In reading the qualitative responses, a majority of the respondents mention a very high variability in information available, quality of information, access to information.
    46. 46. How long does it take?
    47. 47. How do you charge for it?
    48. 48. Questions Lenders are asking EP Firms • “Remind me…are you completing AFR‟s as a standard part of the Phase I scope of work you conduct for me?” • “Will completing a file review affect the TAT and price of my Phase I?” • “Should we be revising our scope of work to make it more clear whether we expect AFR?” • Regardless of the answers, they want to feel confident that their EP partner has a rock solid understanding of the details of the changes.
    49. 49. NFA:
    50. 50. Questions? • Pat Coyne, EDR • Phone 203.783.8192 • Email