I came across this conundrum today when talking with an architect friend. Neither of us are involved in the project, but word gets around-- fairly small consultant community here.
A rural regional school is trying to earn two LEED credits, the value of which is on the order of $750,000 in reimbursements from the state school building authority.
The Phase I (I am told) recommended testing for pesticides based on historic agricultural use. The building project was apparently carried through and is now in the wrap-up phase without the testing having been done. The LEED reviewers have reportedly said do the testing or say goodbye to the LEED credits. The school board doesn't want to do the testing and the project architect has apparently asked the environmental consultant to backpedal the recommendation to get the school out of the requirement, but that report is proably a few years old now and I doubt the consultant would like to do that.
I'm not up to speed on LEED requirements but it is my understanding that LEED requirements for schools essentially want a yes/no answer for contamination of any sort, and don't distinguish between RECs, de minimis, exempt pesticide residues, etc.--you present either a clean Phase I, a Phase I with RECs and a clean Phase II, or the Phase II finds release and release has been cleaned up to residential standards.
The sad thing is, I know this area and the main historic use was (and still is) family dairy farms.
What do you all think?
During a Phase I of an upscale hotel (built 2001), we observed about 1 gallon of hydraulic oil leakage into the outer annulus of a hydraulic elevator cylinder bore. A drip leak was actively occuring at the surface from the piston/cylinder. Within the 16" borehole is a 12" PVC casing that contains the hydraulic cylinder and piston that extends 80 feet deep. Within the outer annulus, between the PVC and borehole, 4 INCHES of oil was indicated on a weighted rope that went to 18 feet below grade (where weighted line stopped). Have not yet reviewed the design drawings, but suspect that the outer annulus has a bottom seal (possibly concrete) at this depth. However the side wall may be clay and/or bedrock.
Additionally, the PVC casing contained oil (and presumably water) up to near top of casing (8" freeboard). Elevator installer indicates the water may have been placed in the PVC during installation (for lowering cylinder into place) and not pumped out.
My opinion is de minimis, and not a REC, IF the drawings indciate a bottom seal is in place in the outer annulus. Of course their needs to be better housekeeping, water/oil pumped out of annulus and PVC casing, followed by a fixed seal at top of borehole.
I would welcome your opinion on de minimis or REC under the stated assumptions. Also, would this warrant notification by owner to Connecticut DEP as a release?
Whirlpool has hired an environmental management consultant to conduct extensive testing at its former Clyde site, Whirlpool Park, to determine whether or not the ground is contaminated. According to Jeff Noel, a vice president of the company, “About 200 compounds will be screened for in the roughly 360 samples that will be taken from the site.”
The testing comes in response to two major class action lawsuits brought on by homeowners whose properties sit on the land once used by Whirlpool. The plaintiffs claim that the company dumped hazardous waste materials on the land and also burned toxic materials, releasing benzaldehyde into the land. Several homes that have been tested do contain elevated levels of benzaldehyde.
Together, the environmental lawsuits total $755 million. The plaintiffs claim that the toxic materials lingering in the properties have caused a number of grave health concerns and in some cases, even death. The area has gained the sordid reputation as a cancer cluster and the property health of several homes is in question.
Whirlpool denies improper handling of waste materials and released a statement: “Whirlpool did not use the park as a dump site and never authorized dumping of any waste at the site.”
The company is now focusing on using rational principles to determine what the extent of the contamination is, and if any chemicals are found, if they be causing the illnesses affecting the plaintiffs. "I want to make sure that we keep focused on the facts and focused on the science," says Noel. “We want to do this in a very exhaustive and scientific way to get the results we need.”
The plans are expected to last a few weeks and include testing “soil, surface water, stream sediment, fill materials, soil piles, and ground water,” says the company.
we've posted about the Coves of the Highland case involving a busted subdivision project on what turned out to be partially located on former WW2 bombing and gunnery range. In the latest decision, the Court of Appeals for the Fifth Circuit agreed that bond counsel had no obligation to ensure environmental due diligence in connection with issuance of municipal bonds that were issued to pay for the development. The purchaser, the community development district and two banks did not perform any environmental due diligence. Meanwhile, the bond fund that purchased the bonds has settled its claims with the underwriter and underwritier's counsel.
Last week I presented my state of the market address at EDR’s Annual Client Summit. The week before, I asked our mix of registrants to characterize the state of the market in their own words. There were only three rules:
Some had a tough time with rule #1 and sent a paragraph. Only one found rule #2 impossible, and the majority followed rule #3 beautifully (trained by market to be fast responders, I suppose). Here’s how the input shook out: the state of the market in the unedited words of today’s environmental professionals and risk managers at financial institutions.
So, are the dog days over? Yes, I think so. The market—in a number of noticeable ways—is looking a little more predictable, and in many ways, better.
What I presented in Arizona was my own characterization of the state of the market in 10 words or less (well, technically 11, counting “and”):
These pressures are part of the world we’re in right now when companies are trying to make money any way they can in a tough market. Pressure gives firms in opportunity to differentiate and figure out a way to meet clients’ needs better than anyone else through efficiency, personalized service, trust, expertise and services.
I am optimistic. It’s a very exciting time for our market. After a prolonged period of uncertainty, we’re seeing a revival of investor confidence as the economy continues to recover. Opportunities for property assessment services are growing not shrinking. There are strong drivers, strong competitive pressures and the need for greater sophistication.
The dog days, I believe, are over.
I am doing Phase I for buyer on a warehouse in an industrial area of Newark and found the following subject property history from the Sanborn Maps:
"Printed foam warehouse" (1970s-2000s) with adjoining as "tin can factory and warehouse"
"Elec. Supply Co warehouse" (1950s) with adjoining as "tin can factory and warehouse"
"Standard Sanitary Manufacturing Co." (1931) with adjoining properties as "Lexington Electric Corp" and "Tube Co. Inc-MFGs Metal Tubing"
Vacant land (1908) with adjoining property as "Leather Co.- with tan yard"
Vacant land (1892) with adjoining property as "tannery"
I think adjoining property's tannery is a REC and metal tubing & tin can factory sound very suspicious too, but couldn't find info on sanitary manufacturing.
My questions are:
1. Do you happen to know if sanitary manufacturing in 1930s is a REC?
2. Do you happen to know how metal tubing factory and tin can factory operated in the past?
3. Would you recommend sampling due to adjoining properties' history anyway even if sanitary manufacturing turns out to be non-REC? (It appears some of the adjoining properties are going through investigation for groundwater contamination already.)
Please advise. Thanks.
It’s looking flat…
We’ve been hearing for a few years now (thanks to Thomas Friedman) about how U.S. companies are looking to international neighbors for growth and development in terms of business. All sorts of activities and jobs are being outsourced. We are seeing an increase in international trading activity; U.S. consumers buying foreign goods and visa versa (brought to you by the internet, in most cases).
Where did all this “flat” talk come from? Here’s a fun fact… In 1492, when Columbus sailed the ocean blue (sing the song if you know it), he wasn’t trying to prove the world was round. That was done by our friends Pythagoras (you know him & his theorem from high school geometry: a2 + b2 = c2), Aristotle and Eratosthenes in various centuries B.C.E. A few years later…in 2005… Thomas Friedman declared the equivocal “flatness” of the world through ten aspects that he believed were leveling the global playing field. Those included the collapse of the Berlin Wall, Netscape (which went public at $28), workflow software, offshoring, outsourcing, personal digital devices and more. Friedman said “By ‘flat’ I did not mean that the world is getting equal. I said that more people in more places can now compete, connect and collaborate with equal power and equal tools than ever before. That’s why an Indian in Bangalore can take care of the office work of American doctors or read the X-rays of German hospitals.”
Cut to the first quarter of 2013 and you’ll hear the conversations of environmental professionals discussing which countries they’re providing services in and what challenges they’re running into in the process. This concept of the world being “flat” has stuck and now it’s creating opportunities for environmental professionals, investors and financial institutions.
In a recent EDR Insight brief, a few industry professionals including a land and property director, senior VP and manager for a large financial institution, attorney and Health, Safety, Security, and Environment leader at a technologies company discussed various aspects of what environmental professionals and lenders should expect when working overseas.
EP Opportunities… and Roadblocks
Though it may be surprising to some of you, there are a few firms working on environmental due diligence at the international level. In EDR Insight’s 1Q13 State of the Market survey, EPs were asked what challenges they were coming up against on international projects. Of the challenges mentioned by industry EPs, the top five included:
1. Different regulatory and legal requirements
2. Language and communication barriers
3. Ease of access to sites and security risks
4. Lack of accessible, consistent and reliable historical property data
5. Absence of consensus-based international protocol (ASTM E 1527 equivalent)
These challenges took me back to a chapter I taught in my Small Business Management course early on in the spring semester...how to take your business overseas and maintain growth. Whether you’re part of a small firm or national organization, you still need to go through the same process when attempting to provide property assessment services on a global scale.
What's a challenge without a solution?
So, now that we’ve identified what issues EPs that are already out there providing international services are running into, how do we avoid or work around them? And more importantly, if you haven’t attempted to expand yet, but want to, where do you start?
Being a prior student and current part-time professor of entrepreneurship, I’m all about the existence of a business plan, particularly with international expansion. This is a different game your firm will be attempting to play and writing out a separate plan should be on the top of your list. Now, the level of detail obviously doesn’t have to be too in-depth, but it would be good to iron out a few key things.
The “tops of the trees” that your basic overseas plan should include:
1. a unique service (which all EPs have already…check that box)
2. a market for you service
3. the appropriate managerial skills or expertise about your services & business (Note: you have to be successfully sustaining your firm here if you want to attempt to succeed somewhere else)
4. financial capability
Once you’ve identified that you can fulfill these four pieces of your business plan and have thought through how you’re going expand, you’ll be off and running (…or flying).
The next thing you’re going to want to think about is HOW you’re going to expand. Some options include:
1. Exporting: selling your services in a foreign country.
2. International licensing: entering into an agreement that allows your firm to sell the rights to use a business or service process to another business in a foreign country (This may not be the best option given the criteria and requirements needed to be an EP).
3. International joint venture: entering into an agreement where your firm and another business (often in the country where you’re planning to work) form a temporary partnership to conduct site assessments in a market that neither your business nor the other could satisfy alone. A strategic alliance is similar to a joint venture, but is less formal.
4. Direct investment: setting up a permanent location in another country
Depending on various aspects, like the level of available capital you have, your firm’s willingness to work with another firm either here or overseas or the markets you’re planning to target, the choice you make about the expansion method is up to your firm and should be part of you international business plan. Adopting one of these expansion methods alone can help you avoid some of the pitfalls and challenges that EPs have experienced already. For example, one of the top challenges EPs are facing that was mentioned in the survey was language and communication barriers. With a joint venture, not only would you get help through the maze of local culture and language barriers, you would also have help in understanding local business practices and legal requirements by partnering with another business (if you can find one that strategically makes sense for you to partner with). Working with companies on the ground in the areas you’re planning to provide services in can help you learn which laws and regulations apply to your business and where you might run into potential security and site access risks. Each of the above expansion methods have their pros and cons, but generally they can help you avoid facing a few of the above-mentioned challenges from the get-go.
Also important to note, there are four cultural factors that are important to consider when determining where you’re going to offer your services.
2. Social Systems
Religion and education are particularly important. For example, with religion, you need to make sure that if you’re hiring employees from the area in which you’re working, you’re respecting their religious holidays and observances. Depending on the country, religious ceremonies and masses may be during what we would consider “normal working hours” and it’s important to respect those customs. For the types of services that you would be offering, education is going to be of the utmost importance. Again, if you’re hiring staff, you’d want to ensure they have the proper education. As well, you need to understand the educational level of those that will be paying for your services so that you can sell the value of what you do in the most effective way that you can. These are just a few basic examples, but these are things that can keep you from hitting roadblocks if you prepare and do your research in advance.
It will be easier to sell the value of your services in some countries, particularly in the UK and Western Europe, as that area is particularly up on trends with sustainability, and in some cases, environmental regulations. According to the 1Q13 survey, the countries/continents seeing the most Phase I ESA activity are Canada, South America, Western Europe, Asia and Mexico.
The Challenge of Information & A Consistent International Protocol
When deciding how to expand, partnering with other organizations can help you avoid challenges “on the ground” in the areas in which you’ll be providing site assessment services. However, those decisions won’t help you with the challenges of lack of accessible and complete information. To me, it seems that the availability of historical data and other property information may be something that will continue to improve and develop at the international level as more and more EPs either continue or start to do work in areas outside of the U.S.
As for a consensus-based international protocol similar to that of ASTM E 1527, there is an organization, the International Standards Organization (ISO), that develops and publishes international standards that aim to ensure that products and services are safe, reliable and of good quality. These standards help companies access new markets and are strategic tools for reducing costs when working on the global scale. For example, the ISO 9000 is a popular standard for organizations looking to implement a quality management system. The ISO 14000 Environmental Management collection helps organizations that are looking to identify and control their environmental impact and improve environmental performance. Within that collection is ISO 14015, Environmental Assessment of Sites and Organizations (EASO), which EPs may want to take into consideration when conducting Phase Is abroad.
These overseas opportunities are only going to grow moving forward, especially in countries currently pursuing rapid development of infrastructure and cities to support growing populations, ever-changing technology and new industries.
"Green" holds a dual meaning here. The first is money... Investor drivers in the energy market are bringing money to the table, with more and more investors showing interest in green buildings than ever before. The second is sustainability... More investors have started to consider sustainability in their decision making, particularly as sustainable buildings hold many advantages including higher occupancy rates, better price appreciation and lower operating costs, to name a few.
Though going green isn't necessarily easy, more states, cities and commercial property owners/managers across the country are developing and embracing strategies for making buildings more energy efficient, primarily by adopting benchmarking programs. These programs require building owners/managers to report their energy usage data to a computer program that can use the information to determine a building’s "green rating" by comparing its stats to similar buildings.
Behind this trend are a mix of regulatory & economic forces that focus on sustainability and energy use, which create opportunities for environmental due diligence professionals in the area of energy audits, with some national EP firms already establishing divisions, within their organizations, dedicated to performing energy audits and recommending building improvements.
So, what does this trend mean for EPs? How do you snag a piece of the action?
While energy audits may not be poised to integrate into Phase I ESAs just yet, they "are sometimes stand-alone studies" and "increasingly are being procured as part of a long range capital planning exercise". Where there are regulations, there is a need for energy-related services. So, opportunities are greatest in metro that already have disclosure and benchmarking requirements. Attention to building energy performance looks like it will only increase, especially as more European investors look to place their capital in commercial real estate in the U.S.
Learn more about energy audit drivers, sustainability investments and why the U.S. lags behind Europe on the sustainability front, green law drivers, what you need to know regarding the BEPA Standard and catch of glimpse of the total number of buildings benchmarked by state.