Comments
Interesting perspective and one that I have been a proponent of for years and have blogging on.
If you go to my 2009 blog entitled, "Cercla It's Just a Federal Law" as well as a 2010 blog entitled, "Municipalities Held Strictly Liable: Innocent Landowner Dead" you will see case law and state law that states that ASTM standards are not the answer.
Beyond that, as you aptly point out and I subscribe to, AAI is a non-factor for both consultants in a malpractice suit; as well as the end-user. If you have ever litigated, then you know with 100% certaintly that a jury or judge can do ANYTHING they choose, despite what the law and/or fact dictate.
Thanks Joe - most appreciated and would love to keep these discussions going. As an aside - I will check with our personal lines department on your personal insurance.
If you do a search of the fastest growing industries - they all include "green" industries which includes: renewable energy (solar being by far the largest) and, yes, environmental consulting. The focus on environmental consulting being on 'sustainability.' I have been blogging on this point for some time now as a helpful suggestion to diversify and/or go after new business.
Of course with new ventures comes new regulations, risk, liability and - yes - insurance products. So with renewable energy a big risk is the Tax Credit financing and Power Purchase Agreements. There are specific insurance products to transfer each risk - the risk to investors of not receiving Tax Incentives and coverage for a breach of contract (a breach of the PPA).
Insurance is an absolute fundamental part of the success of the burgeoning industry (renewable energy). It allows for an otherwise tentative investor to participate in the endeavor.
All commercial insurance, including environmental insurance, is in 'soft market.' Which means rates are low as an overall assessment.
Regarding environmental insurance and instituting risk management measures - that is a great idea Joe. However, putting on my attorney hat - if there is known asbestos, lead paint, mold, etc. (issues outside an ASTM report) - there is a regulatory requirement to have an O&M in place.
For example, take any building - office, warehouse, manufacturing; old, updated, etc. If that building has friable asbestos - then no insurance. It would be like insuring a burning building.
It is no different than Worker's Compensation (WC) insurance rates. WC being "normal insurance" required by law for all (but a few) to have. So, if you have Manufacturer X and compared to Manufacturer Y. Manufacturer X has a WC Modification Rate of 1.2 and Manufacturer Y has a .90. The baseline for WC is 1.0; so below that is being proactive and given the company "credits" i.e. a reduction in insurance rates; and above a 1.0 would be a manufacturer that has claims.
Manufacturer Y is paying for its claims because it has a Modification Rate (value to rate the insurance costs) higher than 1.0. So Manufacturer Y should implement additional risk management practices, including; personnel training, updated safety equipment, compliance with OSHA and other requisite regulations, cost sharing incentives for particular departments (i.e. the manufacturing of widgets A reduces its claims so it pays less into the insurance costs than the manufacturing of widgets B that has had several claims because their department does not attend safety courses, etc.).
So long story short - insurance rates are a reflection of risk management and compliance with regulations. And companies are 'rewarded' or 'punished' for best practices.
The best advice for clients - is one that include a comprehensive approach to their operations. Be it purchasing land, developing a Brownfield, manufacturing operations, etc. The client most know all the factors impacting their bottom line: Compliance (legal/regulatory), Risk Management, Risk Identification; and more importantly - Risk Solutions/Transfers including: Insurance, Indemnification,
What I just described is called "Enterprise Risk Management" a very common buzzword like 'sustainability.'
In this day and age, if you are simply identifying problems - you are going to be obsolete.
Thank you for your insight Joe.
Great to the point discussion on Linkedin regarding the value of this topic. Most of the consultants and other attorneys seem to concur that it is pointless to attempt to discern the difference.
Having done it for 16 years (and with a complete understanding of banking/master in banking law) - I would say "take a comprehensiver review with the considerations of the recommendations of the FDIC."
The FDIC recommends more than simply conducting and reviewing a Phase I - which is ONLY risk identification. A bank must by FDIC standards implement risk management - far from simply risk identification.
As part of risk management (or Enterprise Risk Management) there are ways to capitalize on environmentally challenging properties rather than to be 'risk adverse.' The bank needs to understand the local and state regulations much more than federal (i.e. CERCLA / ASTM). I would also caution lenders even on residential lending and environmental risk.
Part of risk management - is considering risk transfer. Numerous "would be" deals are "killed" by Phase II environmental reports. Under regulatory scrutiny "Safe and Sound" lending must consider insurance options to TRANSFER risk - rather than retain it.
Again proof positive that ASTM standards are 100% irrelevant to the end-user. It depends on state law. We had over 5 years of discussion on how "this and that" qualifies for ASTM standards ... and then ... low and behold - they are being changed - yet again.
Most companies today subscribe to "Enterprise Risk Managment." Simply put, they take a holistic approach to business with their overall strategies and stakeholders in mind. Therefore the risk of even conducting a Phase II (when there is no reporting requirement; or requirement to even conduct a Phase II and open a can of worms that does not need to be opened for the sake of opening it) - would be weighed against the opportunity and/or the overall strategic value to the company.
Another reason why due diligence is not risk management or risk transfer. It is simply an attempt at risk identification at best...
Secured Creditor protection as you identified Larry - is applicable at the federal level. States can choose to follow it or not (i.e. be more aggressive in their approach to holding lenders liable for "participation in the management").
However, the Secured Creditor exemption on its face appears to be the one area that the government attempt to be clear as what is exempt and what isn't. It provides a list of "dos and don'ts" for a lender to follow. Again, not applicable to state laws and/or third party liabilities.
And I would caution anyone attempting to use ASTM "AAI" as a risk management tool. Not all states recognize the federal protections and quite frankly, if the Secured Creditor exemption is prone to attach, most certainly the AAI is.
I mean why are the ASTM standards yet again being considered for yet another revision? I thought "as is" they provide an AAI? Or do they? Isn't every site/situation unique and all that an ASTM Phase I can do is attempt to identify/opine about potentional risks?
To conclude:
I spoke to Robin Morgeon, P.E., NH DES - 603.273.7378; robin.mongeon@des.nh.gov and I was Correct. The NH DES has "deleted" (in her own words) 1,3,5 TMD from their "list."
The confusion probably comes from the fact that the "deletion" is from the NH DES's VI IAQ list. This is because, as we all know, the EPA no longer has an IAQ risk level for TMB contaminant - and therefore the NH DES has "deleted it" (a simple phone call answered the question).
Onto better things: You can find the very informative presenters slides at http://bit.ly/lIQ70f
Sadly I spent waaaayyyy too much time wondering how to respond to your comments above Tom. Since I respect you, your opinion and this forum - I will send you my response to your personal email - as it is getting too political and like the Boston Herald, I feel like I would be censored for my point of view....
As far as questioning my comment on 1,3,5 trimethylbenzene - please contact the NH DES. That is exactly how I heard it.If I am wrong - then I apologize for misleading the forum. However, perhaps you could have researched the issue first before just putting it "out there." Despite not being an environmental consultant - I do have a little experience in the environmental industry....
Thanks,
Ed
Thanks Tom. That's scary as my sister/family lives in Deerfield - not all that far away.
And as to cutting the budget/layoffs - it has impacted the private sector severly. It is about time it occurs at the government level.
Please note that recently the MA Department of Transportation just gave 17 employees pay raises. "2 months after sate Transportation Sec. Jeffrey B. Mullan said the economy was too weak to increase salaries for public sector executives, he began handing out raises to 17 managers in his department."
Perhaps those raises could have saved one or two of those jobs. I don't have much sympathy for a corrput government that spends our money frivolously. The last 3 speakers of the House are felons and/or indicted on felony charges. I could go on - but will stop there....