1. © 2013 O’Brien & Gere Major Changes in The Phase I ESA Standard: Implications for Watershed Protection NYC Watershed/Tifft Science & Technical Symposium, West Point Stuart J. Spiegel, O’Brien & Gere September 19, 2013

2. © 2013 O’Brien & Gere Major Changes the Phase I ESA Standard: Implications for Watershed Protection  NOTICE  This material is protected by copyright. No other use, reproduction, or distribution of this material or of the approaches it contains, is authorized without the prior express written consent of O’Brien & Gere. © Copyright, 2013 O’Brien & Gere Engineers, Inc., All Rights Reserved 2 All materials printed on recycled paper.

3. © 2013 O’Brien & Gere ASTM E1527-05: USERS AND PREPARERS  How many people are familiar with ASTM or AAI as Users?  Who is involved as a Preparer of Phase I ESAs?  Who is unfamiliar with the topic? 3

4. © 2013 O’Brien & Gere Phase I ESAs: History, Just the Sound Bites  Comprehensive Environmental Response Compensation and Liability Act of 1980 (CERCLA, Superfund)  Petroleum Excluded  Strict Liability –Liability w/o Fault  Joint & Several Liability  Retroactive Liability  Asset Conservation, Lender Liability and Deposit Insurance Protection Act of 1996  Definition of owner/operator now explicitly excludes a lender who does not participate in management  Innocent Landowner & Bond Fide Prospective Purchaser (BFPP) 4

5. © 2013 O’Brien & Gere Phase I ESAs: So…Who Uses Them  Purchaser/Acquisition  Property  Corporation  Seller/Divestitures  Pre-divestiture evaluation  Leases – Lessee or Lessor  Property Environmental Quality Baseline  Right-of-way, Easement  Farm development easement  Watershed protection  Toll manufacturing 5

6. © 2013 O’Brien & Gere ASTM E1527-05 v. AAI Rule  Key Differences  AAI Rule is a federal regulation issued by USEPA ›E1527-05 is a trade standard of practice that is indicated in AAI as an equivalent method  AAI Rule addresses only substances subject to Superfund; petroleum is explicitly excluded ›E1527-05 explicitly includes petroleum products 6

7. © 2013 O’Brien & Gere Applications in a Watershed – Why?  Property acquisition for watershed protection  Conservation easement  Acquisition of development rights  Pre-restoration assessment  Watershed protection planning 7

8. © 2013 O’Brien & Gere Applications in a Watershed – What? For a watershed, corridor, area or specific property:  Brownfields sites  Disposal sites  Bulk storage facilities  Industrial and commercial facilities - locations  Historic industrial operations  Hazardous material usage  Hazardous waste generation  Environmental compliance violations  LUST facilities 8

9. © 2013 O’Brien & Gere ASTM E1527-05: Key Revisions  Major  Definition of Recognized Environmental Conditions (RECs)  Vapor Migration – not mentioned in E1527-05  Regulatory File Review  Minor  User responsibilities  Industrial/Manufacturing Properties  Appendices  Opinion – More Descriptive than Substantive 9

10. © 2013 O’Brien & Gere Key Revisions: RECs  REC definition simplified  NEW!! IMPROVED!!!  Revised definition of an HREC ›was poorly written, mis-understood, mis-interpreted, mis-used  NEW! NEW! NEW!  Meet the “controlled” REC, or CREC 10

11. © 2013 O’Brien & Gere Key Revisions: RECs  REC definition not consistent with CERCLA  Appeared to be too much variability in how Environmental Professionals (EPs) defined a REC  “environment” not defined  Present version: ›“into structures on the property” not defined, interpreted as vapor intrusion (VI) being a part of this term ›“even under conditions in compliance with laws” – confusion, nobody really knew what this meant. 11

12. © 2013 O’Brien & Gere Key Revisions: RECs  “release” not defined in E1527-05, although it was implied to be the CERCLA definition  Professional Judgment: release identification v. release hunting  Changes that allow inferring of a release and affect degree of obviousness (Sect. 7.3.1/8.3.1) ›AAI: “conditions indicative” of a release. ›Different EPs have the “indicative” line at different points 12

13. © 2013 O’Brien & Gere Key Revisions: RECs  New definition: “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.” “release” and “environment” now defined, as found in CERCLA “in, on, or at a property” was “on a property” By definition, there can’t be an off-site REC 13

14. © 2013 O’Brien & Gere Key Revisions: HRECs  Complaints that old definition was loose and vague  New definition: extensive, five times as long as the old definition!  HREC is not necessarily a REC  Would it be considered a REC today  Especially based on changes in remediation standards over the intervening period 14

15. © 2013 O’Brien & Gere Key Revisions: HRECs  Examples:  Risk-based corrective action, no property use limitations (could build or operate a day care center on the property: HREC but not a REC  If anything has changed to cause an agency to re-look at the property (change in RBCA criteria, concepts of vapor intrusion), then it is a REC 15

16. © 2013 O’Brien & Gere Key Revisions: CRECs (controlled RECs)  What happens if there is a use limitation, even if remediated to satisfaction of regulatory agency?  What if remediated to industrial or commercial use, even with a NFA letter?  What if there are residuals left in place  Practitioners were asked to categorize a:  UST that was cleaned up 10 years ago with some residuals left in place  EPs put this item into all three categories available: ›REC, HREC, de minimis 16

17. © 2013 O’Brien & Gere Key Revisions: CRECs (controlled RECs)  New category: CREC  Considered a REC (subcategory of REC?)  May be considered a “good” REC; may need to educate users/clients that a CREC is not necessarily bad  Will this cause confusion in the marketplace?  hmmmm…... 17

18. © 2013 O’Brien & Gere Key Revisions: How does this affect report “Findings”?  Findings will have 4 categories and hierarchy: Conclusions  RECsYes  CRECsYes  HRECsYes  de minimis conditions No  de minimis conditions are never RECs of any kind !  Will require education of the users/clients re: four categories 18

19. © 2013 O’Brien & Gere Key Revisions: CRECs (controlled RECs)  Summary:  If contamination has not been remediated= REC  Contamination remediated but not to today’s standard= REC  Remediated but restrictions present= CREC, reported as a REC, but it’s a “good” REC  Remediated but no restrictions are present= HREC, not a REC 19

20. © 2013 O’Brien & Gere Key Revisions: Vapor Intrusion (VI)  Clarification of vapor migration throughout  Terms “migrate/migration” will now be defined, and includes “vapor in the subsurface”  E2600-10 (VI Guide) is a referenced document in new E1527-13  Addressed in a revised activity and use limitations (AUL) definition: soil vapor is now included  Contaminated vapor migration/vapor intrusion now specifically excluded from the term IAQ (which was a non-scope consideration)  CERCLA and AAI do not differentiate the form of the release to the environment (solid, vapor, liquid)  VI not to be considered differently than groundwater contamination  so why is this a new concept? Not specific previously, user or counsel would fight inclusion as a REC 20

21. © 2013 O’Brien & Gere Key Revisions: Vapor Intrusion (VI)  Section 2.1: “…use of E2600-10 methodology is not required to achieve compliance with AAI  Can use whatever EP considers appropriate  Must be documented in report  Must be reproducible by another EP  IAQ exclusion had been used as a rationale not to consider vapor migration/intrusion in the Phase I  If the IAQ issue is related to releases of hazardous substances/ petroleum products, then this is a scope item  if vapor migration is eliminated as an issue, then there is no REC 21

22. © 2013 O’Brien & Gere Key Revisions: Regulatory File Review  New Section of E1527, promoted by lenders  If the Target Property or any adjoining property is identified as having a potential issue, pertinent files should be reviewed  “should” is the magic word, not shall  File review not required by AAI  If EP’s opinion is that file review is not warranted, the EP must provide justification in the Phase I report  Rationale likely to be: Not reasonably ascertainable  Accessibility to files  Cost of records from agency  Time frame to obtain records, e.g., FOIA request ›Reasonable time and cost 22

23. © 2013 O’Brien & Gere Key Revisions: Regulatory File Review  Implications  There has always been a difficulty in pricing Phase I ESAs when the EP could not know the extent of the file review that might arise.  Client/user tension with EP when EP claimed significant file reviews not covered in basic Phase I ESA cost. ›Now gives the EP an official out for follow-up costs, but also to designate these issues as RECs.  Typically, an issue on an adjacent property had been ID’d as a REC ›Acknowledges that more information is available directly online. 23

24. © 2013 O’Brien & Gere Minor Revisions: User Responsibilities  A benefit to EPs  Liens and AUL searches the responsibility of the User  Commonly found in recorded land title records  Liens/AULs recorded elsewhere generally not considered to be reasonably ascertainable unless applicable statutes/regulations specify a place  Does not preclude EP from looking for this information in the government records search 24

25. © 2013 O’Brien & Gere Minor Revisions: Industrial/Manufacturing Activities  If there is a history of such uses, then “additional standard historical sources shall be reviewed if they are likely to identify a more specific use and are reasonably ascertainable, subject to the constraints of data failure.” [note: was “should, ” changed to signify importance]  Additional standard historical sources (examples):  Recorded land title records  USGS topo maps  Fire insurance maps  Street directories  Building department records  Zoning/land use records  Newspaper archives  Internet sites 25

26. © 2013 O’Brien & Gere Minor Revisions: Revisions to Appendices  Completely re-written Legal Appendix  Table of Contents for report simplified  New appendix on non-scope business environmental risk (BER) considerations – intended to be informational 26

27. © 2013 O’Brien & Gere Changes Enhance Alignment with AAI  AAI tells what needs to be done but not how to do it  ASTM has a recipe to tell how (process standard)  The changes move ASTM closer to AAI »Christopher McCormack, Esq., Pullman & Comley 27

28. © 2013 O’Brien & Gere Some Final Sound Bites  The Industry’s “dirty secret”: 90% of all Phase I ESAs fall short of existing ASTM standards  ASTM has a mandatory 8 year sunset provision in its standards  Review process started three years ago and has included the USEPA to maintain acceptability as equivalent to AAI  Only 6% of the industry has been tracking the changes  Revised standard due out ~September some time, subject to USEPA/OMB final review  OMB 90 days  USEPA 30 day comment period  Will be effective immediately  Thanks to Anthony Buonicore; briefing was inspiration for this presentation. 28

29. © 2013 O’Brien & Gere Stu Spiegel O’Brien & Gere Stu.spiegel@obg.com Cell: 315-657-6402 29

30. © 2013 O’Brien & Gere 30