Environmental Assessments/Corrective Activities-Remediation

Introduction

Lenders, developers, investors, property management companies, building owners are becoming increasingly aware of the impacts of environmental issues and situations on the real estate market. ECI assists its clients in assessing environmental liabilities by conducting in accordance with State guidelines and the American Society for Testing and Materials (ASTM). Our environmental site assessments include:

• Phase Is which are conducted to identify initial concerns for a site associated with environmental hazards.
• Phase IIs which are conducted to assess the potential impacts to a subject property.
• Phase IIIs which are also known as corrective activities or remediation. Phase IIIs identify the scope of work for corrective activities and/or remediation and usually involve the monitoring, treatment and/or removal of impacts to soil and groundwater.

Phase Is:

Guidelines for Phase Is (per ASTM E 1527-05):

• The results of an inquiry by an Environmental Professional.
• Interviews with past and present owners, operators, and occupants of the facility for the purpose of gathering information regarding the potential for contamination at the facility.
• Reviews of historical sources, such as chain of title documents, aerial photographs, building department records and land use records, to determine previous uses and occupancies of the real property since the property was first developed.
• Searches for recorded environmental clean-up liens against the facility that are filed under federal, state or local law.
• Reviews of federal, state and local government records, waste disposal records, underground storage tank records, and hazardous waste handling, generation, treatment, disposal and spill records concerning contamination at or near the facility.
• Visual inspections of the facility and of adjoining properties.
• Specialized knowledge or experience on the part of the defendant.
• The relationship of the purchase price to the value of the property, if the property was not contaminated.
• Commonly known or reasonably ascertainable information about the property.
• The degree of obviousness of the presence or likely presence of contamination at the property, and the ability to detect the contamination by appropriate investigation.

Guidelines for Transaction Screens (Limited Phase I Assessments):

Transaction Screens represent a reduced scope of work from a Phase I ESA. The Transaction Screen assessment uses ASTM E1528 as a minimum standard. The TS is the simplest method of evaluating a property for environmental concerns. The greatest value of the transaction screen is probably as an initial investigative tool for less expensive properties. If no evidence of environmental concerns is found, this may provide enough assurance to the parties involved. Or, the transaction screen may reveal information that should be investigated further by a trained Environmental Professional.

Guidelines for Record Search with Risk Assessments (RSRAs or Environmental Screening):

Record Search with Risk Assessments reports were introduced in the past two years as an alternative to Phase Is or Transaction Screens.

A “Records Search with Risk Assessment” means and includes (1) a search of the government databases identified in 40 CFR § 312.265 for an AAI compliant Phase I as well as a search of the historical use records (including reverse directories and fire insurance maps in cities where they are available) pertaining to the property and adjoining properties; and (2) a risk assessment by an Environmental Professional based on the results of the records search as to whether the Property is either “high risk” or “low risk” for contamination.

Guidelines for Phase IIs:

As normally a requirement of commercial real estate transactions, an environmental assessment is conducted, well known in the industry as a Phase I report or Phase I Environmental Site Assessment (ESA). If, during the initial investigation, “Recognized Environmental Conditions” are present, a Phase II Environmental Site Assessment (ESA) may be necessary. In some cases, a Phase II ESA may be undertaken to establish a quantitative baseline for environmental conditions at a site. Phase IIs are usually conducted on gas stations that have underground storage tank systems, dry cleaners, some automotive and equipment service facilities and many industrial and manufacturing facilities.

The Phase II ESA usually requires an intrusive investigation into subsurface soils and/or groundwater to determine if the “recognized environmental condition” has actually impacted the subject property. In some cases, Phase IIs are conducted to determine impacts from an adjacent property to satisfy the innocent purchaser defense under the EPA CERCLA regulations.

Phase II reports (Subsurface Investigations) are normally prepared on the following:

• Gasoline service stations that have been in operation over two years.
• Any facility that contains underground storage tanks that have been in the subsurface over two years.
• On site dry cleaning operations (dry cleaning plants) that have been in operation over two years.
• Industrial and/or manufacturing facilities that store, handle, process and/or distribute environmentally sensitive or environmentally hazardous chemicals, fluids or materials.
• Sites that were previously used for one of the uses outlined above.
• Landfill sites or sites that have been used legally or illegally for storage of hazardous chemicals, fluids or materials.

The scope of Phase II Site Assessments should generally include the following:

• A subsurface investigation should be conducted to determine if the subsurface soils and/or groundwater have been impacted by releases in the past. This will be conducted by drilling of a number of borings to appropriate depths, and collecting soil samples from them and, when reached, groundwater samples. The selected soil and groundwater samples should be delivered to a qualified laboratory for analysis.
• A site characterization should be conducted, to provide a description of the local soils, geology, and groundwater conditions and depth, and well as gradient determinations.
• A report should be prepared to include recommendations and findings.

Guidelines for Phase IIIs (corrective activities/remediation):

Phase III ESAs should be performed whenever a Phase II ESA reveals contamination that is either above local standards or considered dangerous to human health. The purpose of Phase III ESAs is to further delineate the full extent of the contamination. Depending on the types of contaminants identified, Phase III ESAs vary in cost, duration, and scope.

All activities conducted after the reporting of a leak, spill or incident in the subsurface soils or groundwater are considered corrective activities. The scope of corrective activities is dependent upon the State review and standards and the condition of the subsurface soils and/or groundwater. The scope for the majority of sites that have contamination consists of site monitoring, where monitor wells are installed and the groundwater is surveyed at monthly, quarterly or annual intervals for contaminant levels and the degradation of such. Some of the sites that are considered to be significantly contaminated undergo site remediation activities, where the soils and/or groundwater are either removed, treated or filtered. This process is normally followed by a monitoring period.

On either of the above scenarios, once the State determines that the site is stabilized through either monitoring activities or a combination of remediation and monitoring activities, the State will issue a letter confirming such, which is also known as “no further action” letter.