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Symposium Highlights The Importance of Accurate Radon Testing

Radon – a naturally occurring radioactive, carcinogenic gas that can migrate into a property through water or air– poses a serious health threat, especially in certain areas of the country (see this EPA map for zones with high potential for elevated radon levels).  Many states, including California and Illinois, require radon testing and disclosure during real estate transactions (for an article about the effects of radon on real estate deals see here).  The EPA recommends that all homes be tested for elevated levels of radon regardless of geographic location or zone designation, and many lenders include radon testing in their due diligence requirements.  While radon testing in and around real estate transactions can be done quickly and inexpensively, accuracy is critical to adequately assess health risks to occupants.

What The Experts Were Saying At The 2014 International Radon Symposium 

Promoting high quality radon evaluations was exactly the mission of the 2014 International Radon Symposium that I attended in South Carolina last week.  The convention highlighted (among many topics) protocols for conducting radon measurements in multifamily buildings, as described in a 2012 document published by the American Association of Radon Scientists and Technologists (AARST).  Key themes and recommendations for radon testing procedures that came out of the panel discussions included:

  • More accurate, short-term results would be obtained by conducting 4-day radon tests.
  • Apartment occupants whose apartments are not being tested should be notified and required to follow the closed building conditions before and during the radon testing period to prevent “Stack effect” influence on the subject building(s).  Stack effect usually creates a negative vacuum, drawing more soil gasses and radon into the building.  When to notify occupants?  At least 2 weeks before testing begins, with a reminder 48-hours prior to the commencement of radon testing.
  • Radon assessors should consider following AARST’s Time-Sensitive Testing Protocols (which correspond to the EPA’s Home Buyer’s and Seller’s Guide to Radon).  This means either:
    1. conducting 2 short term passive (i.e. charcoal) tests at the same time in the same location.  Our HUD team utilizes this testing approach on all projects located in EPA Radon Zone 1; or
    2. testing the unit with a continuous monitor.
  • The results of a single, short-term passive test should not be used as the basis for determining whether to mitigate an area.  If recommending long-term passive testing, tests should be performed over a period of as close to a year as possible ensuring that the test period includes multiple seasons.
  • Mitigation should take place when results of the radon test are twice the action level, which is 4.0 picoCuries (pCi/L) as established by the EPA.  Specifically:
    1. Mitigation should be considered if the initial test results I <4.0 pCi/L but >2.0 pCi/L (EPA states that no level of radon is safe);
    2. Mitigation should be performed if long term test results are >4.0 pCi/L; and when averaged test results are >4.0 pCi/L
  • To accurately determine whether the building versus the unit should be mitigated, consult with a mitigation professional.

Posted in Environmental Due Diligence, Real Estate Due Diligence.

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Assessing the Assessor – key to ensuring a valuable Phase I ESA report

There are plenty of things that determine the quality of an environmental site assessment: but the expertise; diligence and experience of the assessor conducting the Phase I Environmental Site Assessment is arguably the most important.

I recently wrote a blog that explores the fundamental pillars of the ESA process that contribute to the level of quality in a report, and offers a helpful checklist for what to look for when selecting the right due diligence firm and assessor to perform your Phase I ESA.

In short, the assessor must be able to take into account context – such as the type of transaction, the client’s risk tolerance, the intended purpose of the subject site etc – to create a valuable report.  Any environmental conditions (such as Recognized Environmental Conditions [REC]; Historical Recognized Environmental Conditions [HREC], or Controlled Recognized Environmental Conditions [CREC]) must be thoroughly researched and analyzed, and accurately reported. The Environmental Professional must have extensive knowledge of all applicable regulations (such as the recently updated ASTM E1527-13 standard), and be able to appropriately interpret and effectively communicate data and make recommendations to the client.  Lack of experience on the assessor’s part will result in a Phase I ESA report that is less than useful.

To read in more detail red flags and things to look out for when selecting the right environmental consultant who will be able to deliver the Phase I ESA report you can rely on to accurately and reliably evaluate the environmental liability associated with your real estate asset, check out my full blog here.

Posted in Environmental Due Diligence, Phase I Environmental Site Assessments, Real Estate Due Diligence.

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File Reviews: digging to uncover business environmental risks

Agency file reviews have always been a part of a Phase I Environmental Site Assessment (ESA) to identify the potential for Recognized Environmental Conditions (REC) and assess business environmental risk associated with a property. But under the newly approved ASTM E1527-13 standard, file reviews are now far more pertinent than before.  Section 8.2.2 of the ASTM E1527-13 standard states that if the target property or any adjoining property is identified in the government records search, ‘pertinent regulatory files and/or records associated with the listing should be reviewed’. This is at the discretion of the environmental professional (EP), but an explicit explanation must be given in the Phase I ESA report if he or she decides a review is not warranted.

So what exactly is the purpose of the file review? What issues does it aim to identify; what are the things the EP is looking out for; and which agencies is this information obtained from?

File Reviews: obtaining information from agencies

While the process is a little different for each agency, nowadays it is relatively easy for an EP to request information from most regulatory agencies. Many have online Freedom of Information Act (FOIA) records request forms or a dedicated contact person for information requests.  For example, the Kansas Department of Health and Environment (KDHE) uses a request form that can be submitted online or faxed, while the Missouri Department of Natural Resources (MDNR) has a dedicated email address that the EP can send requests to. Both agencies will send a confirmation stating your request was received and provide an estimate of the cost, if applicable.

But what kind of information is the EP actually looking for?  Well, based on the Phase I ESA site visit, environmental database review and any interviews that were conducted, the EP will have a good understanding of what type of site is being assessed and what kinds of Recognized Environmental Conditions (REC) are likely.  For instance, if the Phase I ESA is being performed at a retail petroleum station, it’s likely that the files will be researched to find evidence of UST permits and compliance documentation (such as tank tightness testing and reports).  The EP may even go as far as to verify additional third party financial assurance and see if any claims have been made against or for the property.  Now, if it is found that the retail petroleum station has had a release, additional reports and documents providing critical information about the release itself will be reviewed to determine substance, quantity and location of release, and whether remedial actions or monitoring activities were undertaken. There are many files associated with petroleum operations and the file review process can get rather extensive!

Using file reviews to determine risks

File reviews can be conducted independently, or as part of a Phase I ESA to help confirm or eliminate the potential for a recognized environmental condition (REC), controlled recognized environmental condition (CREC) or a historical recognized environmental condition (HREC) to exist at the subject site.  If an environmental condition does exist, the file review will help the client to better understand the extent of the impact, whether corrective measures were taken and whether the release was closed (and if so, whether it was closed with restrictions or not).

File reviews are all about determining the level of business environmental risk involved with a real estate asset.  Under the new E1527-13 standard, file reviews must be conducted on both the target property and the adjacent property identified in the regulatory database search. Just how deep the EP should dig depends on the client’s tolerance for environmental risk!

Posted in Environmental Due Diligence.

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Phase I ESAs in Motor City – how things are a little different in Detroit

The Phase I Environmental Site Assessment (or ESA), considered by many in the real estate and finance industries as the most essential form of environmental due diligence, can vary in complexity and challenge when conducted in a city with a storied industrial history known as the automotive capital of the world.  The development of Detroit in the early 20th century was shaped in part by the designs of Detroit architecture firms Smith, Hinchman, and Fields (now SmithGroupJJR), credited with the design of the Ford Piquette Avenue Plant, and Albert Kahn Associates, credited with the design of the Packard Motor Car Company factory, the half-mile-long Ford River Rouge Complex, and numerous other industrial buildings throughout the region.  This historical industrial development has impacted the way Phase I ESAs are conducted today, including warranting the close scrutiny of local records from unique sources.  Environmental Professionals (EP) in the Detroit market should be familiar with several key resources to provide thorough environmental site assessment services and adequately address business environmental risk.

Environmental Records Search in Detroit

Phase I ESAs typically begin with a search of environmental records.  Because the development of many parcels in Detroit predates the availability of modern heating sources such as natural gas, the review of oil record cards at the City of Detroit Buildings, Safety Engineering, and Environmental Department (BSEED) is an important first step.  Oil records cards often date back to the early 1900s, and include documentation of heating oil tanks as well as underground storage tanks (USTs) for fueling or bulk chemical storage.  Building permits from BSEED also date back to the early 1900s, and provide details on historical occupants that may not show up in other records.  Historical occupants can also be identified by visiting Bresser’s Information Service and reviewing criss-cross directories.  Bresser’s is a family-owned business that has operated since 1946, from the post-war era all the way through the era of Dan Gilbert’s Rock Ventures acquisitions and the Detroit bankruptcy.  Criss-cross directories list occupants by street name and number, and are extremely helpful when evaluating the potential for environmental conditions.  City of Detroit Fire Department records are another local source for information regarding the past uses of properties in Detroit.  Fire Department inspection records, which often include sketches of storage locations for hazardous materials, are maintained to support effective fire fighting and to protect first responders.  Another key environmental record that environmental professionals review is the collection of Sanborn Fire Insurance Maps available fromEnvironmental Data Resources, Inc. (EDR) or the Detroit Public Library.

What’s the Next Step?

The question that always comes up at the start of a Phase I ESA is “What do we do if we find something of concern?”.  The good news about Phase I ESAs in Detroit is the fact that historical records are widely available, which can help to support the performance of all appropriate inquiry into the environmental history of real property. But these same records may also indicate that additional assessment to determine recognized environmental conditions is warranted.  Typical next steps include a Phase II Environmental Site Assessment consisting of soil, soil gas, and/or groundwater sampling to determine whether the historical uses have impacted the property.  One of the benefits to performing this additional assessment at the time of acquisition is the opportunity to prepare a Baseline Environmental Assessment (BEA), which affords liability protection for existing impact to new owners or operators of impacted property in Michigan.  Experienced environmental professionals in the Detroit market have many record sources and tools to support your environmental due diligence, whether you need a Phase I Environmental Site Assessment or an assessment that goes deeper.

Posted in Environmental Due Diligence, Phase I Environmental Site Assessments, Real Estate Due Diligence.

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ASTM Definitions: the Black, White and Grey

Frequently in the area of real estate due diligence, persons who retain consultants for a Phase I Environmental Site Assessment (Phase I ESA) may find themselves questioning the terminology or even the acronyms utilized by the consultant.  ASTM International has developed the international terminology used to provide an “even playing field” of understanding when it comes to Phase I ESAs and other environmental reports used in real estate due diligence.  What, where, when, by who, why or even how the assessment is conducted does not matter as long as there is a common understanding of the definitions.

Common ASTM International-defined terms include a Recognized Environmental Condition (REC), Historical Recognized Environmental Condition (HREC), and the newly proposed term Controlled Recognized Environmental Condition (CREC).  Each environmental assessment has its own unique structure and issues, and every client has different specifications and risk tolerance levels that affect how environmental conditions are determined.  This means that how these black & white ASTM definitions are applied to environmental liabilities becomes a ‘grey’ area, and can be confused by the most seasoned Phase I ESA reviewer.

The primary goal for a Phase I ESA is to identify environmental liabilities or “recognized environmental conditions” on a parcel of real estate within the scope of Comprehensive Environmental Response, Compensation and Liability act (CERCLA).  This is only one requirement to satisfy the Landowner Liability Protections (LLPs); however, it will also present information in order to evaluate the business environmental risk tolerance of the associated parcel.  How environmental liabilities are determined comes down to how the ASTM terms are used throughout the Phase I ESA report.

Recognized Environmental Condition (REC)

Black and White Definition of a REC: ASTM defines a REC as the presence or likely presence of any hazardous substance or petroleum products on a property under conditions that indicate an existing release, a past release, or a material threat of release of any hazardous substances or petroleum products into structures on the property or into the ground, groundwater, or surface water of the property.  The term includes hazardous substances or petroleum products even under conditions in compliance with relevant laws.  The term is not intended to include de minimis conditions, which are not recognized environmental conditions (ASTM 3.2.74) and generally do not present a threat to human health or the environment and that generally would not be the subject of an enforcement action if brought to the attention of appropriate governmental agencies.

Grey Definition of a REC: the term REC is applied by the environmental professional based on the findings during the site reconnaissance, historical research and/or current and historical use of the commercial real estate being evaluated.  Once the determination as a REC has been made, the next steps taken depend on the risk tolerance of the client.

Even Greyer Definition of a REC: A client receives a Phase I Environmental Report and sees “Recognized Environmental Condition, further investigation may be required.” Translation: “We have issues.”

For example, a leaking underground storage tank (LUST) located just over the property line may be in compliance with the regulatory agency and corrective action measures but it still may pose a material threat of release of petroleum products to the subject property – it all depends on the information readily available to the environmental professional.  Absence of information concerning the extent of the contaminant plume onto the subject property may be considered a REC. On the contrary, if the plume does not extend on to the subject property, it may not be considered a REC.

Here-in lies the grey area: depending on the risk tolerance of the client or proposed activities of the potential new occupant, what kind of recommendation should be made? Two separate recommendations, unless a client prefers to omit recommendations, could satisfy the client risk tolerance: one option may be to recommend a periodic review of the compliance files for the facility, and a second option would be to conduct a limited subsurface investigation or a baseline assessment along the property line.  It all comes down to the individual client needs and their risk tolerance.  Because of this, notifying clients upfront if a REC is identified to establish which option best suits their risk tolerance can help save time and money for all parties involved.

Historical Recognized Environmental Condition (HREC)

Black and White Definition of an HREC: ASTM defines an  HREC as an environmental condition which in the past would have been considered a recognized environmental condition, but which may or may not be considered a recognized environmental condition currently.  A past release of any hazardous substance or petroleum products has occurred in connection with the property and has been remediated, with such remediation accepted by the responsible regulatory agency. (ASTM 3.2.39)

Grey Definition of an HREC:  This term is generally applied to release incidents that have been addressed to the satisfaction of the regulatory agency and subsequently closed and granted a no further action letter.  The key is closure by the regulatory agency.  Just because a past release was considered “closed” doesn’t necessarily mean there is no current environmental concern – for example, a historic dry cleaning operation identified during the Phase I ESA.  As such, the final decision for a REC to be considered an HREC or vice versa is at the sole discretion of the environmental professional.

Here’s an example: a UST was removed from the subject property, oversight was performed by the regulatory agency, sampling data was below the action levels and a No Further Action (NFA) letter was issued.  At first look, this scenario would fit nicely into the HREC category, as it was remediated to the satisfaction of the regulatory agency and a NFA was issued.  The underlying information that needs to be considered is the historic and current regulatory action levels. If the action levels have changed to more conservative values and the previous concentrations exceed the current regulatory action levels, the environmental professional may determine this site to be an REC and recommend additional investigation.

Making The Call

With the risk tolerance and client directive in mind, an environmental professional has to consider the regulatory agency records, regulatory status and current impact to the property to determine how to define environmental conditions identified during the Phase I ESA.

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Good Bye Registered Environmental Assessors (REA)

I was saddened to hear that California is discontinuing the Registered Environmental Assessors (REA) Program as of July 1, 2012. A lot of my colleagues, inside and even outside of California, carry this registration and they are definitely deflated by this news.

This really increases the need for a national environmental professional certification program, especially for those that do not meet EPA’s definition of an environmental professional designation through a professional engineer or registered geologist certification plus three years of experience.

There are several organizations that offer environmental professional certifications but there is not one that is universally recognized. It would be helpful for the EPA to give its blessing to one program that appropriately certifies professionals as meeting or exceeding the EPA’s definition of an environmental professional under the All Appropriate Inquiry rule, but that could be a long and drawn out process.

Options for Environmental Professional Certification

Some of the available certification programs are:

- Academy of Board Certified Environmental Professionals – Certified Environmental Professional (CEP) program

- National Registry of Environmental Professionals – several certifications including REPA and REP

- International Society for Technical and Environmental Professionals (INSTEP) – Licensed Environmental Professional

- Institute for Professional Environmental Practice (IPEP) – Qualified Environmental Professional

- Institute of Hazardous Materials Management – Certified Hazardous Materials Manager (CHMM), which is mostly used for Phase II ESAs and subsurface investigations.

State Environmental Licenses

State certifications:

- Nevada: requires the Certified Environmental Manager (CEM) designation for those conducting Phase I ESAs

- Other states have remediation professional certifications that are also used in the practice of environmental due diligence:

o Connecticut: Licensed Environmental Professional (LEP) program for site remediation

o Massachusetts: Many use the Licensed Site Professional as an EP designation

o New Jersey: Licensed Site Remediation Professional

o New York: Qualified Environmental Professional

In case you didn’t see the news on the REAs, here is the email sent to REAs by the State of California:

As part of the Budget, on June 27, 2012 the Governor also signed SB 1018 (Committee on Budget and Fiscal Review, Chapter 39, Statutes of 2012). Among a number of other things, SB 1018 has repealed the Department of Toxic Substances Control’s (DTSC) authority for the Registered Environmental Assessors (REA) Program. As of July 1, 2012, the REA Program will no longer exist.

DTSC proposed the elimination of the REA Program in this year’s budget considerations, primarily because DTSC believes that the program is unnecessary and unenforceable, and more importantly, it is largely duplicative of and inconsistent with federal environmental professional standards that have been adopted since the creation of the REA Program. DTSC believes the elimination of the REA Program will standardize requirements for environmental professionals conducting environmental assessments under other statutory programs, and make them consistent with federal requirements.

REA I 2012 Annual fee payments received and the processing fee for new, five year renewal and reinstatement applications that were “pending” review will receive refunds in four to six weeks after July 1, 2012. REA II will receive a prorated annual fee refund and the processing fee for “pending” applications.

Please note that the online registry will no longer be available after July 1, 2012.

We would like to thank you for your past support and participation to the program.

Sincerely,

DTSC Management

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Reporting Chemical Compounds Used in Fracking

As of February 1, drilling operators in Texas are now required to report the chemical compounds used in hydraulic fracturing or “fracking” operations, the process used to extract natural gas from the ground. Fracking has caused controversy over the potential that it can contaminate groundwater and well water.

In addition, they will have to report the amount of water used, which should be of great interest because of the drought there. Several other states have put this requirement in place.

Click here to read the story.

Posted in Uncategorized.


Cleaning Up Indoor Air

According to researchers, people in developed countries spend 90 percent of their time indoors, potentially breathing air polluted by emissions from indoor sources, such as formaldehyde. One approach to improve indoor air quality is to increase the amount of fresh air intake, the old “dilution is the solution to pollution”.  But increasing fresh air intake brings with it increased energy consumption of energy for heating, cooling and humidifying/dehumidifying.

Members of the Indoor Environment Department of the Lawrence BerkeleyNational Laboratory’s Environmental Energy Technologies Division (EETD) have developed methods for reducing levels of indoor formaldehyde concentrations with a synthetic catalyst and evaluating reduction of other volatile organic compounds with activated carbon fiber filters.

Click here to read the article.

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Freddie Mac Environmental Report Updates / Revisions

On May 31st , 2011 Freddie Mac updated their requirements for Phase I ESA environmental reports.

The most significant of Freddie Mac’s environmental report updates is a requirement to indicate in the Phase I ESA whether the state in which the property is located has a State Super Lien Law.  Super Liens would allow environmental authorities to place a first priority lien on the Property as a result of environmental hazards.  Numerous states currently have Super Lien laws in effect, including Connecticut, Hawaii, Louisiana, Maine, Massachusetts, Michigan, New Hampshire, New Jersey, and Wisconsin.

Another Freddie Mac ESA revision is a clarification that the opinion that a Property contains no asbestos-containing materials (ACM) cannot be based on the Property’s construction date.  Freddie Mac requires that the consultant either render a professional opinion on whether the building contains asbestos, that opinion not being based solely on the age of the building, or conduct sampling of suspect ACM. In lieu of conducting sampling, an O&M Plan may be recommended if the material is:

  • Undamaged non-friable; and
  • Non-hazardous in its current form, condition and location.

An abbreviated O&M plan is allowed for undamaged, encapsulated friable joint compound, if that is the only suspect material.  If sampling is conducted, a qualified professional must analyze the samples utilizing polarized light microscopy and dispersion staining.

Other revisions include:

  • The minimum number of units to be inspected and/or sampled
  • Requires that Freddie Mac approves O&M plans prior to the loan origination date
  • Clarifying the inspection requirements for PCBs
  • Revisions to form 1103

Visit our Freddie Mac due diligence webpage for a full rundown of the revisions.

Posted in Environmental Due Diligence.

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LSRP Program

The New Jersey Department of Environmental Protection (NJDEP) created the Licensed Site Remediation Professional (LSRP) program last year to help expedite the cleanup of contaminated sites.  The program was created by the Site Remediation Reform Act (SRRA), which was signed into law in May 2009, and gives LSRPs the ability to oversee the day to day management of remediation sites, rather than waiting for NJDEP approval to proceed.

LSRPs are required to meet the same stringent cleanup standards as previously established and are bound by a strict code of ethics; however, the process of remediation will proceed much more quickly under this new program.  This is a welcome change for industrial and commercial property owners and developers that are eager to achieve site closure and return properties to greatest productive use.

Given the relative newness of this program, there seems to be a shortage of LSRPs in New Jersey.  The NJDEP anticipated  receiving 5,000 applications upon the inception of the program.  To date, less than 500 certifications have been processed.  Partner Engineering and Science’s David Umbach is a PG and an LSRP and has been overseeing remediation sites since 1981, including more than 1,000 major oil company UST site removals, Industrial site closures, Brownfields redevelopments, HUD, FHA and SBA funded developments, Industrial waste system closure and construction, Landfill capping and closure,  Lagoon, pond and marina dredging, Wetlands reconstruction, Municipal water supply system designs, Spill Prevention Containment and Countermeasure Plan preparation, ISRA and RCRA compliance, groundwater remediation system design and operation.

Last week the NJDEP issued new guidance on complying with the program, clarifying certain fees, forms and site classifications/scopes of work.  Visit Partner for information on the LSRP program and the recent advisory.

Posted in Building Engineering, Commercial Building Inspection, Environmental Due Diligence, Environmental Soil Testing.

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