During our fourth webinar on the revisions to the ASTM E1527 Phase I ESA standard, A Dive into the ASTM E 1527 Revisions Through the Lens of Professional Liability, we were fortunate to have Task Group members EBI Consulting’s Elizabeth Krol and attorney Tim Haley. After an informative discussion led by LightBox’s Alan Agadoni, Dianne Crocker moderated a Q&A session as panelists fielded questions from our audience, which included nearly two thousand environmental consultants and lenders from across the U.S. The questions submitted by attendees were too numerous to cover during the live event so, as promised, we are sharing the panelists’ responses to each question below:
Isn’t the decision about a de minimis condition mostly subjective since it isn’t expected to attract regulatory attention?
Elizabeth Krol: “Yes, the idea is that a de minimis condition is one that would not rise to the level of requiring regulatory notification/response, and there is variability between various regulatory agencies geographically; however, there should be some consistent recognition as something minor versus major, so it’s less subjective than one might expect. This is also an area for EP judgment, and assessors should utilize their experience to characterize an issue as de minimis.”
Wondering what the final word is on “requiring” PE’s to be included in the site reconnaissance. Will this be a requirement of the revised standard?
Krol: “The potential requirement of an EP to conduct the site reconnaissance was an area of discussion by the members of the site recon focus group. One Task Group member provided consistent input that an EP should conduct the site reconnaissance. This was raised as a negative ballot which was reviewed by the Task Group and was subsequently voted as “non persuasive.” Therefore, the proposed redline does not have a requirement for the EP to perform the site visit.”
Should an EP keep notes during site visit and/or during report prep AFTER a project is complete?
Krol: “Many companies have document retention policies, so it would be prudent to verify the internal policy of your company. Given the increased focus on documentation in the proposed standard, it would also be wise to capture key site observations in the report. Ideally, there will be photographs collected during the site visit that demonstrate the key information to be conveyed from those onsite observations.”
Sometimes site visits are not feasible due to accessibility issues re: vegetation/terrain/etc. Is the ASTM standard updating to help EPs use technology as tools, for example drones, as helpful tools for photo logs?
Krol: “I think there are a few things to consider here. First, the EP should document their intention to use tools such as drones in their contract and/or scope of work document/proposal. Second, there should be a conversation with client to ensure that there is an agreement regarding whether the use of a drone would supplant an in-person inspection. Likely in many situations, it would not, and a site visit would still be warranted. Either way, document what you plan to do in your proposal and then document what you did in your report.”
I’ve had one or two instances where we addressed a data gap with other information sources, and clients were bothered that the additional sources research (to address the data gap) identified an issue. How does the new standard offer liability protection from these types of claims, or does it?
Krol: “As Tim indicated, the EP’s professional liability comes from the contract, which says what the EP will do. If you as the EP are doing what you said you would do, you have minimized your liability. In a case such as you described, it is very important to have a dialog with clients about their expectations, and perhaps you may even need to be more explicit in your proposal which is your contract and your scope of work. Many of the Users who are active in the Task Group were specific that they would encourage the closing of data gaps with alternative information sources.”
In terms of helping a User with CERCLA liability protection, what is the industry expecting before EPA approves the new standard – citing both ASTM 1527-13 and the new standard? What are the pros and cons?
Tim Haley: “The U.S. EPA regulates whether ASTM E 1527 meets the requirements of the AAI Rule at 40 CFR Part 312. EPA has already decided that ASTM 1527-13 meets those requirements. EPA will undergo formal rulemaking if, as we expect, EPA concludes that 1527-21 also meets AAI. If EPA does what it did last in 2013, the reference of 1527-21 in the federal rules will also coincide with (either immediately, or perhaps by a date certain) the elimination of the reference to 1527-13.
“Your client may want you to perform a Phase I consistent with 40 CFR Part 312 for its own needs. Your client may want you to perform a Phase I to meet the most recent ASTM standard. Your client may want you to perform the Phase I for other reasons. That conversation ideally occurs at the scoping stage, and the outcome of that conversation directs the scope of services that your client needs for its deal purposes.”
Krol: “My advice to EPs and senior reviewers in charge of your organization’s templates: As we transition to a new standard, now is the perfect time to review your report templates, proposal templates and scope of work. It is invaluable to have your lead technical resources internally conduct a thorough QA/QC, and advisable to have your legal counsel review, tighten everything up as you transition to the new standard. Where updates may be needed is based upon where you are now. For those who already have a thorough, detailed approach and an elevated scope, perhaps based upon a clear Scope of Work from a lender with a strong ERM department, which some call “ASTM Plus”, this should be a light lift and less change, yet more so for those who haven’t aligned their templates to current good, commercial, and customary practice for our industry (those that maybe haven’t been doing all the “shall’s” of the current standard). EPs should anticipate that some review/updates to template is warranted.”
Are soil stockpiles/end dump piles of unknown origin always considered RECs?
Krol: “As discussed during the webinar, each site is unique and different and should be evaluated consistent with the information obtained during the Phase I work (i.e., site visit, records review and interviews) to make and justify the REC decision.”
Haley: “The point is you can’t just say ‘soil stockpile of unknown origin and therefore a REC. The REC decision needs to be justified and documented as such in the report. ”
How do we communicate to the user that we cannot protect our (and their) liability and provide sufficient documentation as long as this is considered to many of them to be a commodity worth only $1,500?
Krol: “I really love this point. There was good feedback from users on the Task Group that they are willing to pay more for a better-quality product. I would encourage EPs to have a conversation with their clients and set expectations on both sides from the start.”
Haley: “Pricing is a very common discussion in the scoping stage, and really vital to your contract. I’ll note that there is no pricing requirement or discussion in the 1527 or AAI Rule. You can charge what the user will pay. Understanding and communicating your cost structure outside the scope of the E1527 standard.”
What is the shelf life of a Phase I ESA report? Does the updated standard clarify whether the 180 days runs from the date of the site visit or the date of the report?
Krol/Haley: “The language in the revised standard provides more guidance on this. As has always been the case, each individual component (site visit, report, interviews, records review) must be done within 180 days of closing. Essentially then, the 180 days is measured by the earliest or oldest of all components of the report. The new standard is more explicit in this regard. It also requires listing the date that each component was performed to aid in review.”
Can you say more about the decision tree and the info it will provide?
Krol: “The REC flow chart in the appendix provides guidance for the EP to evaluate information obtained in the course of performing the Phase I ESA (including the site reconnaissance, interviews, database review, and historical research) in the objective of identifying recognized environmental conditions (RECs), including CRECs and HRECs, at the subject property. It may be a helpful training tool that technical managers can utilize to help newer assessors to understand the evaluation of data, including the fact set or fact patterns, to ascertain the presence of a REC onsite.”
Can you discuss potential CERCLA liability of a property owner who leases their property to an industrial tenant who could cause environmental contamination?
Haley: “CERCLA is a strict liability statute, meaning that one need not cause contamination to be liable. Any of the four classes of persons can be liable: current owners or operators of a property; owner or operators of property at the time of disposal; person who arranged for the disposal of hazardous substances at the properties; and persons who transported hazardous substances to a property. CERCLA liability is often joint and several, meaning that any one liable party can theoretically be responsible for 100% of eligible cleanup costs. But in many cases with more than one liable party, liability is often allocated between the liable parties. Additional information on CERCLA liability, including case citations, is included in the legal appendix.
Parties can allocate (or in some cases, just try to allocate) liability via contract (e.g., the lease). That must be done carefully. Consult legal counsel.”
Can you please address the concept of “data gaps” in the new standard and the EP’s responsibility to chase down state and local records to make their determination? COVID has put significant delays on that process, but that doesn’t absolve anything.
Krol: “I agree that it has been a very challenging time to conduct file reviews with agencies. There is a huge backlog of Freedom of Information (FOIA) requests. One improvement in recent years has been the migration to online state agency records such as eDEP in Massachusetts, https://edep.dep.mass.gov/edep/.
“A data gap that does not have a material impact on the ability to complete the objective of the standard is fine to simply note in the report. Using the new term, “significant data gap” allows the EP to highlight to the User that the missing information has the ability to limit or impede the ability of the EP to complete the objective of the standard. The proposed redline provides flexibility for the EP to utilize alternative sources of information in an effort to close these data gaps.”
Regarding meeting current standards, often older releases were investigated and closed with samples analyzed for different chemicals of concern than current regulatory standards require. This does not necessarily mean things are more stringent, but it is difficult to evaluate the conditions relative to current standards. Does the new standard provide guidance for decisions in this scenario?
Krol: “This was an important point of discussion by the Task Group, especially regarding controlled RECs or CRECs, with the primary question for the EP to ask…. does the data support that the site continues to meet this definition, or has the regulatory environment tightened and the site may no longer meet the CREC definition? It is very important for EPs to keep an eye on this and not just accept a prior designation. This is another area where the REC flow chart and the enhanced guidance around REC Determinations is most helpful because you want to make sure you’re asking the right questions especially with respect to CRECs. Ensure you’re going through the thought process and not regurgitating something that was in a prior report (big liability EP trap here…. don’t do that! Independently verify information that you utilize in your report). It’s always important for an EP to work independently and not rely on prior reports – useful information but take with a grain of salt and independently verify your own data! Something that was de minimis before might not be today (e.g., a slow leak or drip over time because a larger release if left unaddressed).”
For documentation, should all sources be included in whole in appendices? Is that the consensus?
Krol: “One important aspect of the Task Group participation was the open dialog between Producers or EPs and Users. One banker shared that their environmental risk management (ERM) team needs to attempt to fill in any data gaps in a Phase I that comes to them for review. They asked that EPs be more-clear regarding what resources they utilized for information – for example, if a FOIA request was submitted to the town engineer, and what response, if any, was received. And if no response was received, that the EP document in their report. They are asking EPs, in order to minimize rework when it comes to them, and to help their team not waste value time (most precious resource in a high velocity deal environment, where everyone is stretched to capacity). If something is a dead end, they don’t want to expend time on rework there, but instead, might pursue another avenue. Providing all sources searched in whole in appendices is both constructive and helps minimize EP liability.”
Is the presence of PCBs contamination, which are regulated under TSCA, CERCLA liability?
Haley: “We discuss PCBs and similar types of COCs in the legal appendix and Business Environmental Risk appendix. In short, PCBs are a CERCLA hazardous substance. If they have been released into the environment, they can be addressed under CERCLA.”
At which time is US EPA statutory approval expected under AAI?
Haley: “The U.S. EPA will need to go through its Federal rulemaking process and respond to all comments. We are hopeful it will not be a long period of time.”
I was a member of -05 and -13, Tim, your view of your CERCLA responsibility is different than mine as a Professional (Licensed). Please highlight a couple of things you look at (e.g., AIA) – I look at the “REC” natural degradation of an oil spot in the driveway. Why is knowing ‘something’ about the CERLCLA thread to 1527 important to you in terms of that oil spot?
Haley: “CERCLA does not contain the word “REC.” Innocent landowners and Contiguous Property owners must acquire property without knowledge or reason to know of any contamination. E.g. “Defendant did to know and had no reason to know that any hazardous substance which is the subject of the release or threatened release was disposed of on, in, or at the facility.” Responsibility under the statute is tied to “knowledge or reason to know” of existing contamination. Certainly the 1527 “REC” qualifies as “knowledge or reason to know” of contamination. But, as you dig deeper, so does the CREC definition and the de minimis definition.
“For those seeking to be a BFPP and acquire a property knowing of contamination, the post-purchase continuing obligations must also be met to maintain liability protection. The steps one would need to take to maintain protections will be different, site specific, and is outside of the 1527 scope (see e.g., ASTM E 2790 on continuing obligations and EPA’s most recent common elements document). My point in that part of the discussion was simply that, as a user of the report, I’m not just looking at whether 1527 report did everything correctly, I’m also looking at what it means for my client post-purchase, where they need to address (or be comfortable maintaining the status quo) for whatever contamination they have knowledge or should have knowledge about.”
With regard to CRECs, I’ve found a few instances where a private entity (prior owner) recorded a use restriction in the deed outside the purview or approval of the state agency. How does ASTM contemplate these types of private notices that have no regulatory authority (per the agency in question)?
Haley: “If it was a self-directed cleanup that meets applicable use limitations (e.g., commercial use, or the like), it would be a CREC. But—if standards changed in the intervening period, it would not be a CREC—that would be a REC. So, for a release covered by a prior owner self-directed clean-up, EP must determine whether it meets current state regulatory standards (CREC) or not (REC).
Ultimately, whether REC or CREC, the user must comply with whatever continuing obligations exist to maintain BFPP status. Also, keep in mind that a CREC is a REC. From a user liability perspective – it’s the same issue regardless: How must you respond to the known release? That question is beyond the scope of 1527 (See e.g., ASTM E2790).”
How do we join the ASTM committee?
Krol: EPs can join ASTM via the following:
One feature that I like to use for an individual, personal invite, is the “invitation” option….
Once a member has joined, they can join the E1527 Task Group via an email request to Molly Lynyak at ASTM HQ. Molly will connect them with Julie Kilgore who leads the Task Group.
Does vapor encroachment have to be discussed in every report, or just when applicable because of nearby sources of contamination?
Haley: “Vapor is a kind of release. If it is identified based on what is observed, it’s required by E1527. (That’s from 1527-13, by the way).”
Note to Readers
LightBox is grateful for the contributions of time and expertise by panelists: Elizabeth Krol, National Client Director, EBI Consulting, Leader of E1527 Task Group’s Historical Research Focus Group and an ASTM-approved Instructor, along with Tim Haley, attorney and partner at Latitude law firm and the co-leader of the E1527 Legal Appendix Group (and PFAS Group).
Stay tuned! Our next webinar, to be scheduled in February 2022, will cover transition, training and implementation tools as the industry adopts the new AST E 1527-21 standard which was just published in early November and is now available for purchase from www.astm.org.