Because of varying state programs, the CREC definition in the new ASTM E1527-13 is creating headaches for consultants-especially in states that allow groundwater pathway elimination and that do not have indoor screening levels for vapor intrusion.
See my article recently published in the Practical Real Estate Journal
wonder how this will impact business models of firms relying heavily on 1099 employees if followed by other lenders? thoughs welcomed! see blog post: http://www.environmental-law.net/2014/07/major-cmbs-lender-requiring-eps-to-perform-site-inspections/
Because of the unique structure of CMBS transactions and the many players involved, environmental due diligence can differ from traditional portfolio lenders and recommendations need to consider the B-Piece Buyers. See blog post for more information at: http://www.environmental-law.net/2014/09/cmbs-environmental-due-diligence-needs-to-consider-b-piece-buyers/
Insurance stands behind reps and warranties made by seller. Can be used for environmental reps in some circumstances. see blog post at: http://www.environmental-law.net/2014/08/rep-and-warranty-insurance-becoming-more-common-in-ma-deals/
Bank made lots of mistakes in this case beginning with inadequate post-closing escrow and foreclosing without retaining consultant to evaluate cost of cleanup. also lots of errors during the trial. see blog post at: http://www.environmental-law.net/2014/09/cal-appeals-ct-afirms-2mm-judgment-against-foreclosing-bank-for-failure-to-complete-remediation-is/
The Environmental Bankers Association’s June meeting in Seattle just wrapped up last week. EBA continued its 20th anniversary celebration with great content as always and lively discussion on how our industry and EBA are changing and moving forward.
Here are 10 takeaway points:
1) Vapor Intrusion Regulatory Drivers: Richard Opper put up a great slide showing the wide variation in benzene action levels from state to state. The point was that our society has not decided what an acceptable health risk is. He also contrasted risk from low levels of vapor intrusion with the carcinogenic risk associated with peanut butter.
2) Vapor Intrusion Legal Drivers: Fred Dindoffer explored how a tort suit can outweigh regulatory demands – even if a site is cleaned up to regulatory standards, a jury could still be convinced that there’s a problem or at least uncertainty about whether there’s a problem.
3) In my presentation I shared a large survey on what commercial real estate professionals think of due diligence. By the way, CRE professionals consider the Phase I Environmental Site Assessment the most important third party report!
4) Mitigation Systems: Wilson Clayton showed a graph on the effectiveness of various remediation technologies, but noted that the proper application of the selected technology can make much more of a difference than which technology you choose. Sigrida Reinis emphasized how critical it is to involve the design engineer for the vapor mitigation system throughout the entire construction process to ensure the system isn’t made ineffective by unapproved change orders.
5) Dan Peltz advised us on how to best purchase environmental insurance – you can’t just purchase a policy “off the shelf.”
6) Bill Tryon offered an idea that we could discuss materiality in a more structured and consistent way to help our clients digest a REC in more business friendly way.
7) New Bank Regulatory Concerns: There was some discussion on the OCC’s increased focus on banks’ vendor management and auditing, and on their consultants’ financial strength and data security. Julie Kilgore commented that unsolicited, borrower-supplied report providers don’t have to meet these high standards – should they? Also noted was the regulatory impact on appraisals: bankers noted a couple recent occasions where the appraiser came back and said “there’s a significant environmental issue at the site – I need to see the Phase I ESA before I go on.”
8) EDR’s head of R&D Richard White presented the concept of an app for Google Glass called “EDR Toxic Site Compass” that would give the Phase I ESA assessor a compass for contaminated sites while out in the field – neat idea.
9) Affiliate members prepared to elect two affiliates to the EBA Board of Governors. Several affiliates got up on their soap box and gave compelling visions for how EBA could be better.
10) We took a very entertaining Duck Boat Tour of the Emerald City on Sunday....great fun as always.
An organization comprised of environmental consultants, lawyers and other stakeholders will be submitting a petition to EPA under a section of the Administrative Procedures Act that requires agencies to review regulations within ten years of promulgation for impacts to small businesses.
Specifically, FIXAAI, the group will ask EPA to tighten the definition for EP and require that EPs actually perform one or more of the AAI-mandated activities-presumably the on-site inspection. It is anticipated that the petition will be filed within a month or so. The proposed rulemaking would likely compel a conforming revision to ASTM E1527.
FIXAAI believes that AAI in its current form is anti-small business. It is causing many owners of due diligence businesses which are small business to go out of business. The current rule is allowing large firms to employ business models that rely on unqualified or under-qualified individuals and engage in anti-competitive practices. Moreover, AAI in its current form undermines the purpose of CERCLA to protect human health and the environment.
The group will be launching a website this week to promote the initiative and enlist support for the petition, We will post when the website is live later this week. FIXAAI is also organizing a social media campaign and other forms of outreach.
A thread on this proposed action is available at my linked-in group where I now conduct most of my social media activities. https://www.linkedin.com/groups/Consultants-Petition-EPA-Modify-FundamentallyFlawed-3607181.S.5848180701152706564?trk=groups_items_see_more-0-b-ttl
I have two scenarios open for discussion.
Scenario #1 - You perform a Phase I ESA for a client. You conclude there are RECs present on the property. Client then comes to you demanding you are wrong and wants you to change the report. You know you are right in your EP opinion. What do you do?
Scenario #2 - You have a main client who owns a large property. A smaller client comes to you wanting to have a Phase I ESA performed on a portion of the land owned by your large client for purchase. You perform the Phase I, concluding there are RECs present. In the midst of the transaction, the small client reveals RECs to large client, stating it may hinder the sale. Large client is upset at you and threatening to terminate relationship. In my opinion, we should not have performed the Phase I for the smaller client. Thoughts on this and if you think it may be considered conflict of interest??
Primary responsibilities will be to perform Property Condition Assessments (PCAs) as well as Project Capital Needs Assessments (PCNAs) in accordance with ASTM standards and local, state, and federal regulations. Project Managers complete all aspects of assessment including all field work, data compilation and report preparation for each project, depending on the scope of work and client needs. Secondary responsibilities to include Construction Loan Monitoring (CLM) services, incorporating up-front construction document reviews and monthly pay application request inspection/reporting. Project Manager may also review PCA inspection reports.
Primary responsibilities will be to perform Environmental Site Assessments (ESAs) in accordance with ASTM Phase I standards and local, state, and federal regulations; as well as, evaluate and recommend cleanup options and risk assessment analysis and costs.
5+ years’ experience conducting and/or managing PCAs, PCNAs, and/or engineering and architectural consulting services
5+ years of experience completing and/or managing ESAs
This plan, dated January 1930, shows two 100-gallon gas tanks associated with a tiny cleaner at the back of a residential property and another cleaner in the dwelling's basement.
In 1930, the site was all single family residential.
The proprietors must have had a pick-up drop off location and brought the clothes here for cleaning.