The title of this blog post may make many in the environmental consulting and legal business laugh. "Of course not…" most would certainly reply. With Phase I’s governed by two ASTM guidance documents and the EPA "All Appropriate Inquiries" Rule (AAI), how can there be such variations?
The answer is that a Phase I environmental assessment requires professional judgment. Not all consultants will look at the same site conditions the same way. As an example, take a look at the website in which environmental consultants debate various technical issues associated with due diligence. Read the debate over how to handle "dirty floors" or "old dry cleaners" when performing a Phase I.
In both instances, the consultants couldn’t come to total agreement as to whether these particular situations should be identified in the report as "Recognized Environmental Conditions" (RECs). Of course, the REC determination is critical because it impacts the process for securing liability protection under U.S. EPA’s Innocent Landowner or Bona Fide Purchaser Defenses.
Changed Definition of a REC
As discussed in a prior post, U.S. EPA published a rule that allows entities to utilize either ASTM E1527-05 or E1527-13 guidance in performing Phase I consistent with the AAI Rule. My prior post reviewed some of the key difference between the two standards.
In considering how professional judgment impacts Phase I reports, examine the proposed changes to the definition of REC. The changes were intended to "clarify" the definition and promote greater consistency among environmental professionals in writing Phase I reports.
The old definition (E1527-05) defined REC as:
"The presence or likely presence of any hazardous substances or petroleum products on a property under conditions that indicate an existing release, past release, or a material threat of a release of any hazardous substances or petroleum products into structures on the property or into ground, groundwater, or surface water of the property. The term includes hazardous substance or petroleum products even under conditions in compliance with laws."
Comments received during preparation of the revised ASTM standard- E1527-13 were that the definition of REC was confusing or ambiguous. The changes made to the definition were intended to add clarity.
The revised definition of REC in E1527-13 is as follows:
"The presence or likely presence of any hazardous substances or petroleum products in, on, or at a property 1) due to any release to the environment; 2) under conditions indicative of a release to the environment; or 3) under conditions that pose a material threat of a future release to the environment."
Let’s take a closer look at some of the differences between the two definitions:
- "Into structures on the property" versus "environment"– I’m sure consultants could debate how these terms should be interpreted. It appears that by removing the "into the structures" language relative to release means that there must be some indication contamination made it into either the soil, groundwater, surface water or indoor air.
- For example: simply having staining on a concrete floor may not be enough to conclude there was a release to the "environment." There should be evidence of drains or cracks that could serve as a conduit for contamination. Of course, as evidenced by my link above, not everyone may agree.
- "Ground, groundwater or surface water" versus "environment"– Some had debated under the old REC definition whether a Phase I included evaluation of releases to indoor air through vapor intrusion. Most thought the old definition includes indoor air, the new definition and other changes in E1527-13 make clear the indoor air through vapor intrusion is to be considered.
Keep in mind, lawyers don’t write the Phase I report. They can provide comments or advise their client relative to the conclusions. It is the consultant who exercises the professional judgment which includes the findings detailed in the Phase I report.
Be Comfortable with the Consultant Selected
Regardless of changes in E1527-13 which were intended to promote greater consistency, there will still be big differences in how consultants write their Phase I reports. You simply can’t remove professional judgment when such vague terms are utilized.
Why should you care? The exercise of professional judgment could result in major difference in whether potential liabilities are investigated. Or, such a difference could result in more expensive due diligence when a consultant is very conservative in how they view a site.
Prior to engaging a consultant to perform a Phase I, it is advisable to go beyond just written proposals. It would be prudent to interview the consultant to learn about their philosophy in performing Phase I’s. As the customer, you should be comfortable with that philosophy because it impacts your exposure and bottom line.
When performing such an interview, make sure you talk to the consultant who will actually be performing the Phase I, not just anyone in the company. There can be wide disparities even among consultants in the same firm.