Panel discussion from the 2013 Client Summit Pat Coyne, Moderator Panelists: John Sallman, Terracon Julie Kilgore, Wasatch Kathryn Peacock, Partner Engineering & Science

2. Upcoming revisions to the ASTM
1527 Standard

3. ASTM 1527-13 Standard
For the first time in eight years, there is a revision to
the ASTM protocol for conducting Phase I ESAs.
While the key areas of change are known, the ways
that EPs and lenders are responding to them is not.
In this track, we will dig into three specific areas of
change to illuminate how firms may adjust
practices. A panel of insiders will candidly share
their views on the new requirements, managing
client communication in the areas of REC’s, vapor
and agency file reviews, and E 1527-13’s impact on
delivery time and pricing.

4. Kathryn Peacock
• Serves as the Western Regional Manager for
Partner Engineering and Science, a national
environmental and engineering due diligence
consulting firm. Kathryn has been practicing in
the environmental and engineering due diligence
field for over 12 years.
• Kathryn has worked on thousands of
transactions, subsurface investigations, and site
remediation projects. Her clientele includes
many of the nation’s largest lenders, real estate
investors, and corporations.

5. John Sallman
• Assistant Director of Environmental Services at
Terracon Consultants, Inc. Prior to this role,
John was Office Manager of Terracon’s Fort
Worth office and Environmental Department
Manager of Terracon’s Dallas office. John’s
expertise is in Phase I ESA’s, risk based
corrective action and brownfields projects. As
an original member of the ASTM 2600
committee, John helped craft the current
standard for vapor encroachment screening.

6. Julie H. Kilgore
• President of Wasatch Environmental, an
environmental science and engineering firm
based out of Salt Lake City, Utah.
– 20 years experience
– Chair of Committee E50 on Environmental
Assessment, Risk Management, and Corrective Action
– Chair of E1527 the task group
– Served on the ASTM International Board of Directors
– Appointed by EPA as one of 25 negotiators to assist
EPA in developing All Appropriate Inquiry regulation

7. Background
• Sunset provision – if not revised, standard
would sunset.
• Could either re-ballot as is, or make some
changes.
• Key consideration: Don’t mess up alignment
w/ EPA AAI Rule.
• Task group’s mission: strengthen & clarify
more than change.

8. Agenda
• Focus on three areas
• Impacts on cost and pricing
• When is it coming out?

9. Key Revisions
• Major
– RECs
– Vapor Migration
– Regulatory File Reviews
• Minor
– User Responsibilities
– Industrial/Manufacturing Properties
– Appendicies

10. REC, HREC, CREC

11. REC, HREC, CREC
• Received over 100 questions in the two webinars we hosted in
March and April on the topic of HREC.
• EP’s are trying to apply the concept on real world scenario’s
they are familiar with.

12. RECs
• REC definition “simplified”
• Revised HREC definition
• New definition: “controlled” REC (CREC)

13. Simplified REC Definition
• Old Definition:
– “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.”
• New Definition:
– “the presence or likely presence of any hazardous substances or
petroleum products in, on, or at a property: (1) due to any
release to the environment; (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.”

14. Revised HREC Definition
• Here's the -05 HREC definition
• 3.2.39 historical recognized environmental condition—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. The final decision rests with the environmental professional
and will be influenced by the current impact of the historical recognized
environmental condition on the property. If a past release of any hazardous
substances or petroleum products has occurred in connection with the property
and has been remediated, with such remediation accepted by the responsible
regulatory agency (for example, as evidenced by the issuance of a no further
action letter or equivalent), this condition shall be considered an historical
recognized environmental condition and included in the findings section of the
Phase I Environmental Site Assessment report. The environmental professional
shall provide an opinion of the current impact on the property of this historical
recognized environmental condition in the opinion section of the report. If this
historical recognized environmental condition is determined to be a recognized
environmental condition at the time the Phase I Environmental Site Assessment is
conducted, the condition shall be identified as such and listed in the conclusions
section of the report.

15. Revised HREC Definition
• New Definition
– “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, without subjecting the
property to any required controls (e.g., property use
restrictions, AULs, IC’s, or EC’s). Before calling the past
release an HREC, the EP must determine whether the past
release is a REC at the time the Phase I ESA is conducted
(e.g., if there has been a change in the regulatory criteria).
If the EP considers this past release to be a REC at the time
the Phase I ESA is conducted, the condition shall be
included in the conclusions section of the report as a REC.”

16. New CREC Definition
• “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 (e.g., as evidenced by the issuance
of a NFA letter or equivalent, or meeting risk-based
criteria established by regulatory authority), with
hazardous substances or petroleum products allowed
to remain in place subject to the implementation of
required controls (e.g., property use restrictions, AULs,
institutional controls, or engineering controls)…a CREC
shall be listed in the Findings Section of the Phase I ESA
report, and as a REC in the Conclusions Section of
the…report.”

17. REC-HREC-CREC Relationship
Contamination
in, at or on the
target property.
Is it de minimis? Has it been
addressed?
Would
regulatory
officials view
cleanup as
inadequate
today?
Are there
restrictions?
YES
NO
NO
YES
REC
(“Bad REC”)
De minimis
(“Not a REC”)
NO
CREC
(“Good REC”)
HREC
(“Not a REC”)
YES
YES
NO

18. CREC Example

19. In your Phase I Report
• List in FINDINGS
– RECs
– CRECs
– HRECs
– De minimis conditions
• List in CONCLUSIONS
– RECs
– CRECs

20. For the panel…
• Best practice for communication and
education?
• The REC, HREC, and CREC system can be a
little confusing at first. What is the best way
to teach it to staff and clients?
– “Good REC vs. Bad REC”?
– Flow charts?

21. Vapor

22. Vapor Migration
• No differentiation between state of matter:
– Solid, liquid, or gas
– Refer to CERCLA definition of “release” and “environment”
• Definition of “migrate”
• E2600-10 is a referenced document in 1527
– You can use it or any other vapor screening standard, just
document a replicable practice.
– Addressed in revised AUL definition
• Contaminated vapor migration now clarified to be
associated w/ a release.
• Driven by legal community. They wanted vapor included.
• If vapor migration or encroachment is eliminated as an issue, then
logically, vapor intrusion is a moot point.

23. Migrate/Migration Definition Added
• “refers to the movement of hazardous
substances or petroleum products in any
form, including, for example, solid and liquid
at the surface or subsurface, and vapor in the
subsurface.”

24. Vapor and 1527
• “The EPA will come out with vapor guidance
this year, and the ASTM 1527 standard will
clarify vapor as a consideration. What do you
think the impact will be on our market?”
• “Do you expect the EPA guidance for VI will be
consistent with 1527-13?”

25. • “Does my Phase I ESA need to address vapor
intrusion into buildings on my target property
if I’m dealing with a situation where vapors
are potentially migrating onto the property?”
– Emphasis added
• “vapor pathway”

26. Vapor and 1527
• “Have you seen vapor impacting any clients
deals?”

27. Vapor and 1527
• “In a recent article on REIT.com, David Farer,
chairman of the environmental department
with Greenbaum Rowe Smith & Davis LLP
noted that more investors are paying
attention to the issue of vapor intrusion. Do
you agree?”

28. Regulatory File Reviews

29. Regulatory File Reviews
• New section added, 8.2.2
• If TP or adjoining is identified in gov’t records, “pertinent
regulatory files and/or records associated with the listing
should be reviewed” at the EP’s discretion.
• If EP deems it not warranted, or not reasonably
ascertainable, the EP must provide justification in the Phase
I report.
• EP may use files from alternative sources such as on-site
records, user provided records, records from local agencies,
interviews w/ agency officials, online resources, etc.
• Summary of information obtained from the file review shall
be included in the Phase I report and EP must include
opinion on the sufficiency of the information obtained.

30. Regulatory File Reviews
• Challenges inherent
– High variability of availability across states
– Research project canvassed all 50 states
• Variability of TAT from instant to months
• Variability in access includes internet, phone (verbal), email,
and regular mail.
• Variability of cost from free to prohibitive
• Variability in number of pages/documents from very few to
prohibitive
• Variability in distance traveled
– Result: High variability in current practices

31. Process is different in every state

33. Current Practice
• Survey of 400 EP’s last year.

42. Questions
• What are your suggestions for how my firm
can adequately account for the effort/cost of
visiting regulatory agency offices to review
files of adjoining properties in my Phase I
price? I have no idea at the proposal stage
whether or not there are any problem
properties adjoining my target property or
how extensive any files are that may be
available.

43. Questions
• How will the revision impact pricing?
• Which areas will impact pricing?
• Which will not?
• How will firms communicate changes to their
clients?

44. Kathryn Peacock, Partner Engineering & Science
Copyright 2013 by RMA | March 2013 The RMA Journal 73

45. When will it come out?

46. Q&A
• How did the task group engage w/ the SBA to
make sure the standard was embraced by
them?

47. • Ballot closed October 17, 2012
• Negatives ruled non-persuasive in follow-on ballot that closed January 9,
2013
• Final standard submitted to EPA for formal approval (to issue a ruling that
the standard is AAI-compliant)
• EPA plans to publish both the proposed rule (with a 30 day public comment
period) and the final rule simultaneously in early summer
• Assuming there are no objections to the proposed rule, the already
published final rule becomes effective 30 days after the public comment
period ends (likely becoming effective around Labor Day)
• ASTM would then immediately publish the standard (as E1527-13) and the
standard would be effective immediately
Status of ASTM E 1527 Revision Process