The issue of low-ball Phase I ESA pricing reared its ugly head this week yet again—twice, actually. The first was during Wednesday’s ASTM E 1527-05 Task Group call.  In the midst of discussions about potential revisions to the Phase I ESA standard, a fellow member said he’s got a guy in his area charging $800 Phase Is based on God-knows-what (probably not based on current database reports and file reviews, thorough interviews and a site visit by a qualified EP with good E&O insurance). Even worse is the guy’s “so busy right now he can’t see straight.”

The second was when I stumbled on a post started by an EP in a due diligence group on LinkedIn who asked other members: “How sustainable is the practice of completing Phase I ESAs for $650-$750?” She’s getting offers via email and within hours, they’re taken at “these crazy low prices.” Triggering her post is that she’s finishing two Phase Is now at $700 apiece, and for one, the database report alone is nearly 200 pages long. The situation she describes is this:

• A few Phase I clearinghouses have done the marketing and maintain relationships with the huge lenders.
• They bid the work and when they win it, they get the database reports, aerials and Sanborns.
• They sub to a field person and “throw” the data at them.
• The SOW is for the site visit; visits to fire department, building department, etc.; city directories; and then reporting. There are also requirements for submissions at every step and in accordance with a prescribed schedule. Some of the primes even fine the subs for not meeting the deadlines.
• The sub opportunities come via email, sometimes a week or two after the award, which essentially leaves only a week or two to do the work.
• The RFPs often come in batches (5-10 sites at once)
• Bidding’s generally around $700/site
• As for liability insurance, the model is that the contractor needs to have it (and can buy it on a project-by-project basis).
• AND! often, there is asbestos, lead in water, and lead in paint sampling also required.

She posted her question in frustration because she’s now left to wonder if she would do better working at WalMart or McDonalds on an hourly basis, without the hard work, stress and exposure to liability.

Stop the madness! I did a post last spring on Phase I firms charging $1,200 which at the time seems ridiculously low. Now, not even a year later, we’re having conversations about Phase Is as low at $600. This is depressing, especially since I’m just wrapping up DDU so I can appreciate what an intensive research process a Phase I ESA should be.

There’s an important opportunity coming up that allows Phase I ESA professionals to bring this issue to the forefront. As already posted by several others on commonground, EPA scheduled a "listening session" on the federal All Appropriate Inquiries rule next month. It is open to EVERYONE, and is scheduled for the morning of St. Patricks Day in DC. According to EPA’s notice, “The Agency is interested in hearing if stakeholders and the general public are encountering issues with regard to the implementation of the required standards and practices.”

Issues of poor quality Phase Is and the need for tighter professional qualifications are sure to be a focus. They were certainly hot topics during the original negotiations—and they’re an even bigger issue now that economic factors have brought competition to a fever pitch. If you’ve got an issue in the industry with unqualified individuals doing Phase Is for peanuts, here’s your chance to speak up and be heard. Blogger Larry’s already said he’s coming. Hope to see many of you as well. 

Let me know. We can have our first commonground lunch with green beer afterwards. I know a great Irish bar by the train station.

The when/where details are all included here in EPA’s notice. http://epa.gov/brownfields/aai/listening_session.pdf

[NOTE: If you can’t go, you still have the opportunity to weigh in by submitting written comments to: Patricia Overmeyer of EPA’s Office of Brownfields and Land Revitalization,Email: Overmeyer.patricia@epa.gov or by mail at: U.S. Environmental Protection Agency,MS 5105T, 1200 Pennsylvania Ave. NW,Washington D.C. 20460]

This is the 3^rd in my continuing blog series on taking commonground’s DDU 101 course. I last left off with my post on site visits, a collection of posts by fellow classmates about drugs, carnage, gambling and lies. Week 3 was a bit more sedate, but very intense.

I've gone from the wading pool right into the deep end, forced way out of my comfort zone as we moved into the really nitty-gritty aspects of doing a Phase I. Just to give you a sense of how green I feel in this course with other technical EPs, I had NO idea what this picture was. (I do now.)

These were hard modules for my non-engineering mind, and my pace was slow. We covered:

• user responsibilities,
• historical review,
• geology/groundwater and
• common contaminants.

The user responsibilities module was pretty straightforward and I relied heavily on my time watching EPA’s AAI rule written back in 2004-5. The user should fill out questionnaire, but if they don’t (and my classmates said they usually don’t), the EP needs to document it, and then consider the significance of that missing piece in light of everything else they learn about the property in their research. The big question is: how exactly do you assess the significance of what you don’t know?

The historical review section was a bear. We went through every standard historical source in detail (sources, benefits, pitfalls and what to look for). For someone who doesn’t look at Sanborns and aerials every day, this was tough for me. Our assignment was to share what types of historical sources we’ve used. Google Earth and local libraries are widely used—and some interesting local sources I wouldn’t have thought of. Kudos to the classmate who posted that he goes to the local diner and talks to the oldest waiter/waitress he can find. I loved that one! And, imagine how psyched you’d be if you stumbled on a framed photo of your target property’s historical timeline in the hallway of the building you were doing a site visit on like one of my classmates did?

We also had to do a group project and build a site’s history based on a city directory, topo, 5 aerials and 2 Sanborns. I stared at some of the examples like those “magic eye” images…waiting and hoping something obvious would emerge (it didn’t).

Geology/groundwater. The definition section alone (advection, aquitard, piezometric) was enough to send me running for the hills. Once I overcame my fear of the unknown, it was fun getting into different scenarios and guessing at groundwater flow. Now with confidence I can say, “In consolidated sediments, contaminants are transported in groundwater along preferential pathways or zones of secondary permeability.” As I listened to the course content, what I was really thinking was, “Am I going to be tested on this?” (The answer was yes.) This was the hardest quiz so far. I had to calculate rates of groundwater flow, guess at plume direction in a diagram of a highly permeable aquifer and interpret groundwater elevation data in a Phase I.

Roundly out this taxing Week 3 was the module on common contaminants. Trying to decipher the table of common contaminants in this module brought to mind the chorus of Warren Zevon’s Run Straight Down (how's that for an obscure musical reference?). Another doozy of a quiz, but I got through it, and now know what PAHs are most closely related to, what TPH refers to, and what contaminants may be associated with a release from a warehouse.

My brain was whipped after Week 3, and Week 4 looks even more intense, but this is the halfway point to graduation.

I’ll let you know how I fare in modules on: database reports, non-scope items, data gaps, RECs (gulp), and findings/opinions/conclusions.

Sunday night, a few hours before the midnight EST deadline, I finished my second week of the six-week Due Diligence University course. In part due to being on the road at the Environmental Bankers Association meeting last week, I got behind in my one-module-a-day pace and did four modules (file review, municipal offices, site visits and interviews) in one sitting. (I don't recommend this.)

For each module, the process goes something like this: read background material (usually detail on what E 1527 or AAI requires), listen to a pre-recorded presentation from an EP on the in's, out's and pitfalls of each component of Phase I research, take a quick quiz, and then participate in a discussion thread that answers the instructor's questions on a particular topic. 

So far, the course has been a really interesting intensive on specific elements of Phase Is--several of which I never really gave much thought to (e.g., what do you do if you show up for a visit to a municipal office and they can't see you for 10 days? Or what do you do if you get to a site visit and find out that what your client told you was 1 building with 5 tenants is really 5 buildings each with 20 tenants?). I like the forums the best. This is where I'm learning the most from other EPs (new ones and veterans alike).

In this week's DDU forums, the assignments were to share our experience in the following:

• crazy site visit experience
• interesting or challenging time interviewing someone

As I read what my classmates wrote, I was reminded of a commonground thread awhile back where EPs shared their unusual (and in some cases, macabre) site visit stories. I recall creepy posts about dead bodies, skulls, ghosts and another unmentionable that still makes me cringe.

Here are snippets from some of my favorites posted by classmates in DDU last week:

• "One of our field scientists had a body guard who carried a baseball bat escort him during one of his site visits in a really rough neighborhood in Detroit."
• "I do enjoy site visits. If not for them, there is no way I would have been able to get a first-class tour of a tulip farm, RV manufacturer, fish farm, or former copper mine...not to mention all those former gas stations and dry cleaners."
• "I was once at a paper mill with a sign out front notifying everyone of the number of days since someone was hurt or killed."
• "Lots of homeless in vacant urban buildings of course, but I am more frightened at some of our rural sites with 'squatters' because our region also has a meth lab problem." 
• "While conducting the exterior walk, we heard what we thought was a nail gun going off. Minutes later when several police cars arrived, we found out it wasn't a nail gun but a rival gang conducting a 'drive by' on a resident of the property. That effectively ended our site inspection for that day."
• "On a Phase I for a telecommunications company putting cell phone antennas on buildings in DC, I had to go on the roof of the US Import/Export bank located within view of the White House.  Before I could go up, I had to be cleared with the Secret Service so they knew I wasn't breeching security or endangering the safety of the President.  I was told that I had 15 minutes to do my site walk ... I took 10."  
• "I stumbled into an illegal gambling den in the back room of a barber shop in the Bronx. I just played dumb and pretended like it was totally normal, and got out quickly."
• "I had a seller/tenant offer to put a flat screen plasma TV in my truck if I gave the site a clean bill of health."
• "I have had lots of challenging interviews with residential property superintendents with limited English. I've had to resort to a form of sign language or Pictionary that consists of pointing and drawing pictures of tanks, barrels and such."

And now for my absolute favorite:

"I had a site contact repeatedly lick and even eat a small piece of pipe insulation in order to "prove" to me that it was not asbestos. Lab results later determined that it was in fact asbestos."

I never realized how scary, life-threatening, creepy Phase I work was until I took this course. Advice classmates gave the rest of us included: Don't go on site visits without pepper spray. Bring a flashlight. For Pete's sake, tell someone where you're going and when you'll be back.

Site visits can be scary. That alone seems to be to be worth charging $2,000 or more. And, this confirms that I could never be a Phase I professional. I'm too chicken, and furthermore, I have a new-found respect for all of you EPs out in the field.

This week in DDU: modules on user responsibilities, historical review (a whopper), geology/groundwater (yikes) and common contaminants.

I'm at the end of week 1 of the 6-week Due Diligence University course. I've tackled 5 of the 26 modules:

• history of due diligence
• drivers, tools and users
• commercial real estate 101
• standards
• communication

Having never taken an online course before, it's been interesting to navigate my way through. You get one week to go into each module, read the content, answer a forum question (much like the discussion threads here on commonground) and then take a quiz. Grading is instantaneous and you can take the same quiz as many as 4 times (haven't needed to exercise this yet). I'm in with about 40 other students, ranging from a few colleagues of mine, EPs just starting out, others who've done Phase Is for a few years to veterans and a lender who've been involved in due diligence for decades. It's a pretty diverse group but some similar interests too. Outside of work, we run, garden, cook, raise kids (or in one case, will start doing this in about 2 wks), go fly fishing and myriad other things.

The biggest challenge of course is squirreling away an hour of uninterrupted time per day to tackle a module so I don't fall behind.

Here's an example of the things DDU forced me to furrow my brow over this week:

- thinking of an example when a standard (like E 1527-05) impacted my life outside of work (buying a toddler car seat)

- calculating an LTV ratio on a commercial real estate loan

- placing due diligence appropriately into the timeframe of a real estate transaction (is it before or after purchase and sale agreement? is it different for equity vs. debt financed transactions?)

- deciding whether you get more out of an in person communication or an email (you have to pick ONE)

Tough stuff, but I made it.

Next week, I subject myself to modules on:

• file review
• municipal offices
• site visit
• interviews

Since my due diligence experience is limited to a few site visits, I'm more than a little concerned about how I'll fare against the experienced EPs in the class. If I need a life line, I'll let you know.

More to come...

I've been with my present employer for 11 years, and prior to that, with a DC environmental consulting firm. In that time, I can honestly say that I've never gotten choked up at an office holiday party.

Until now.

Last night our CEO was announcing the winners of our "Superlative Awards" to employees who received the most votes from all of us in a variety of categories. With each name called, the honored employee dutifully went up, took their Oscar-like trophy, shook hands with the CEO and sat down.

Things changed when the "Most Likely to Help a Colleague" award was announced. The recipient, an account executive named Noel Roman, shocked us all when he wrapped his 6 foot-plus frame around our CEO to embrace him enthusiastically with both arms. Noel said a few kind words and sat down.

It was when Noel's name was called for a second award that he brought the room to a standstill. This was the big one, the final one of the evening...our company's "MVP."

Noel repeated the hug, and then paused in front of us. He looked at the ceiling for what seemed like a long while. The room fell silent. The side conversations stopped. We all looked at him expectantly. Then he looked back at all of us and spoke in a voice that was ever-so-slightly cracking with emotion.

What he said went something like this: 

"We all come to work together to the same place for the same reason. It's all of us together, working to strengthen the company together. So, I feel like I am accepting this award for everyone here."

In one fell swoop, he changed the tone of the whole event. He was honored. He was humbled. And, best of all, he reminded us all why we do what we do every day.

Noel is one of those unique individuals who brings enthusiasm to his work every single day. But it goes way beyond that. He was the only one to offer help to one of my colleagues as she struggled moving heavy boxes a few months ago. He was among the first to volunteer his time to take the 6-week Due Diligence University Course in October because he knew that it would help him do his job even better. Last year he was among a small group specially selected by an executive committee to participate in the company's first internal mentoring program. A few years back, a team of us trained for the New Haven Labor Day 20K road race, and even though he didn't feel adequately trained by the time race day arrived, he had committed to it, drove an hour at 7am, showed up with his characteristically upbeat smile, and completed a tough race. He's always there with a pleasant attitude, always interested in more than just "how's it going?"

These attributes are not ones that are learned in company training. They're inherent and unfortunately, all too rare.

Last night, Noel raised the camaraderie quotient of our holiday party ten-fold. I thought about what he said during my entire 40-minute drive home. It felt particularly meaningful coming at the end of a pretty tough year in an industry heavy with uncertainty about the present--and anxiety about next year. As someone else said, "I haven't felt a warm feeling like that in a long time." Nor have I.

I hope all of you have a "Noel" in your midst. If not, I hope you get one.

Happy holidays

I wrote a blog at the end of the summer about the bankruptcies of GM and Chrysler. In it, I wondered about the fate of the contaminated sites left behind as these companies filed for Chapter 11 protection. Some of these sites span thousands of acres and have a long list of acronyms characterizing their contamination. In today's market when a buyer can get commercial real estate for a song (assuming they have their own cash, of course), why would anyone touch these properties and risk liability exposure? 

I got the answer to some of my questions from the Wall Street Journal today. Who knew there was an "auto communities recovery czar" tasked with helping communities in struggling auto states cut through the red tape and bring contaminated sites back into reuse? His name's Edward Montgomery and he was brought into Flint, MI to make magic happen when concerns about high cleanup costs stalled the redevelopment of an abandoned auto factory there. His solution was to carve out the part of the 700-acre site with the worst contamination and clear the rest for potential sale to investors. The problem, he said, is "you have this big site right in the middle of your city, and it becomes an symbol of failure when it used to be a symbol of success." By his account, GM and Chrysler have about 110 brownfield properties on their list of assets for sale. If he's as good as they say about getting deals that would've taken years done in months, it could set a new standard for site cleanup. Since I wrote that blog, a swath of old chemical plants and refineries in Delaware became the latest victims of the recession.

On top of these mammoth manufacturing facilities, there are literally thousands of inactive auto dealerships across the country. Last week I had the pleasure of catching up with Neil Chandler at Golder Associates (Mt. Laurel, NJ), a due diligence professional I've known for many years, who reached out after my GM/Chrysler blog. For the past 15 years, Neil's been working with one of the big three auto manufacturers, and now manages their dealership program doing Phase Is, Phase IIs and other types of environmental work on their dealership properties. He attended our workshop last Wednesday in downtown Philadelphia, and bravely and generously agreed to answer a few questions for me on camera after the event about the impact that the recession has had on his work in this area. Watch our interview here.

Companies that manage commercial real estate are increasingly under pressure. Some will completely collapse in this recession, others will be acquired by stronger firms, and still others will be foreced to pare down their number of properties. This adds up to more environmentally stressed sites hitting the market. We can only hope that more experience with these types of transactions will move them along faster and translate into more work for consultants. 

[And special thanks to Neil for fearlessly sharing his thoughts on this topic.]

It seems like there's been a lot in the news about manufactured gas plants. A few weeks back, I posted a "what is this?" pop quiz to see if anyone could identify an MGP in an old photo. Shortly after that, an environmental firm near here issued a PR notice on a project they won to do environmental site assessments and remediation work on old MGP sites in New England, New Jersey and New York. 

Then Monday one of my news feeds on vapor intrusion picked up on a controversy surrounding alleged contamination from a former MGP in Cape May, NJ.

You don't want to be the mayor of Cape May, NJ right now. A utility there is in the process of remediating a former coal gasification plant that operated in town from 1853 to 1937. After cleanup, the utility will relinquish ownership of several properties to the city. The property transfers being done with full indemnity with oversight from the state DEP. The selected cleanup method will involve the installation of a containment wall and monitoring wells around the most contaminated area, with some soil removal.

A few weeks ago, the "nation's foremost expert on former coal gasification sites" made waves by coming out publicly to say that MGPs typically dumped waste in a 4- to 5-block area from the main operation. He went on to note that the town has public housing projects that may have been built on these former dump sites. It didn't help that the local paper also pointed out that the town's planning board turned down a 2006 application from a developer to build condominiums on a site just north of the plant, when the then-mayor noted that there had been health problems in that area for years. There's also a 2003 report on contamination in the "saturated zone" (the footprint of the gas plant), documenting naphthalene detected as high as 6,300 mg/kg.  

It's not surprising that the utility came out refuting the expert's opinion, noting that a comprehensive physical analysis of the former gas plant site and the surrounding areas is in the works, and reassuring the public that proper remediation will be conducted on any areas affected by the operations of the plant. Based on a "thorough review of historical records of the site," the utility does not believe there were any dump sites on properties adjacent to the gas plant.

There's some interesting technical detail in the articles I linked to--worth a look especially if you've done Phase Is on former MGP sites...certainly a lot more technical data than you typically see in local articles. They also provided a mix of Sanborn maps that are being used to identify the location of old structures at the plant site (I put one below).

While this story raises awareness about environmental risks, you have to think it's got everyone in that housing development worried about whether they're living in harm's way.  And just today out of Seattle came a story about a project to build an affordable housing facility that was stalled when developers tested the soil and found the former gas station site was contaminated with 400 times the state cleanup standards for petroleum. The project's now on hold, pending the city undertaking a cleanup that could cost in excess of $1 million.

It's always disturbing to me to read stories about residential developments sited on contaminated sites.  Records of old MGPs, landfills, chemical plants, dry cleaners, gas stations and other environmental red flags are so much more prevalent than they were years ago--and so much easier to get--so the logical expectation is that over time, awareness about site contamination grows and fewer residences are built on hazardous sites. "Fat chance," says the cynic in me who's seen too many stories lately about people finding out the house they're making monthly payments on sits atop a toxic mess.

I do, however, take heart from a conversation I had yesterday with Dan Welby, a colleague of mine who regularly attends conferences for local governments; most recently, the brownfields show in New Orleans.  Municipalities, he said, have come a long way in terms of using environmental data and are getting more comfortable managing the liability of their land holdings. In the past, it was a huge undertaking for a city to map out its contaminated sites or find out what its historical footprint was. It the old days, they'd have to piece together old pdfs of Sanborns. Now it's much easier to map out multiple parcels, overlay historical data and highlight environmental red flags. Conferences for municipalities today typically have tracks to teach city officials how to build inventories of their sites, and a lot of you consultants out there are helping municipal clients do this. The key driver is EPA's brownfields funding. Applying for these dollars is an extremely competitive process. Last year, Dan said there were approximately 800 applications and only a little over 300 got funding. The onus is on a municipality to prove to EPA that they've got brownfields that need to be addressed, and those that do the research have the best chance of getting funding ("If you give us money, we'll clean up this former gas station with hundreds of people at risk around it.").  Those who don't do the research redevelop at their own peril. There are so many stories about cities that developed areas only to find out their mistake years later. One municipality down South undertook a highly-publicized redevelopment project, hit a UST that became a LUST, created a costly problem to fix and created needless embarrassment for the city.

Stories like the one about the Cape May MGP help to make records like Sanborns better understood and could result in them being more widely tapped into by those who play a hand in determining which contaminated sites get redeveloped into what type of uses. The optimist in me hopes that soon there will be no excuse for allowing housing developments to be built on sites with known contamination, but the realist in me knows we have a long way to go.