Shari

 

PHASE I ESA Affected by New Regulations

 

On Dec. 30th, the Environmental Protection Agency (EPA) published the final rule updating the AAI (All Appropriate Inquiries) regulations to reference the 2013 version of the ASTM standard (E1527-13) for Phase I site assessments.  The 2013 changes, which are effective immediately, include some changes that will impact the Phase I ESA process. Many of the changes in E1527-13 consist of simplifications, clarifications, or increased detail or guidance on provisions that were already in E1527-05, which will allow Environmental Professionals (EPs) to better discuss and categorize concerns found during the completion of Phase I ESAs. Some for the more significant changes include 1) the inclusion of vapor intrusion; 2) stronger stance on regulatory file reviews; and 3) added and/or revised key definitions. Vapor Intrusion Under the 2013 Standard, vapor impacts must now be considered, similar to the way we have always treated soil and groundwater impact. Prior to this, any potential vapor concerns were usually dealt with as an indoor air quality issue. Even though this change is new to the 2013 Standard, our industry has seen this coming for quite a while now. The US Environmental Protection Agency (EPA) and state environmental regulatory agencies have been developing vapor intrusion guidance for the last few years and PM has been assessing vapor concerns for the past 24 to 36 months during Phase II ESAs. Regulatory File Reviews The issue of requiring regulatory file reviews for the subject and/or nearby sites of concern was a much debated topic for the 2013 revision. In the end, the Standard says that pertinent regulatory files should be reviewed, but it does not necessarily require it be done. The Standard does require, however, that if the EP chooses not to review files, they must give justification as to why they were not. What this means is the EP should review pertinent regulatory files to more thoroughly evaluate whether information exists to conclude no recognized environmental conditions (RECs) or additional investigation is necessary. If the files are not reviewed, the EP should have good reasoning as to why they didn’t review. How do these changes affect you? Vapor Intrusion Phase II ESAs will often include Vapor Sampling – The change to E1527-13 will result in vapor concerns being evaluated as a relevant contaminant pathway in Phase II ESAs. If vapor impacts are present, costs will increase to monitor and/or mitigate (i.e. engineering controls) to meet Due Care/Continuing Obligations. Previous Phase II investigations may not be adequate – Phase II ESAs completed in the past most likely did not properly assess the vapor pathway. Therefore, additional investigation could be necessary. Regulatory File Reviews

• Known Scopes of Work – This may simplify comparing the price and delivery time of a Phase I ESA. For some companies, including PM, file reviews are standard procedure. Others, however, can leave this step out to provide a lower cost bid. Make sure to compare “apples to apples” bids.
• Increased Costs – Reviewing regulatory files often increases the cost of a Phase I ESA. This is why some companies who do not do it as part of their standard scope of services appear to have lower prices.
• More Thorough Information – Reviewing regulatory files often results in more thorough information, allowing the EP to make conclusions and eliminate Recognized Environmental Conditions (RECs).
• Longer Turnaround Time – In many instances, reviewing regulatory files may extend the delivery time for a Phase l ESA. This is due to reviewing the files at regulatory agencies, which takes additional time. The standard industry turnaround time is 3-4 weeks. Consultants who do not include regulatory file reviews as part of their standard scope of service may offer a shorter lead time.

  Revised Key Definitions Several key definitions have been revised/simplified including:

• Recognized Environmental Condition (REC): 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.  De minimis conditions are not recognized environmental conditions.

  For simplification, the 2013 REC definition removed the description of a de minimis condition. Further detail/direction was included in the definition of a Historical Recognized Environmental Condition to include:

• Historical Recognized Environmental Condition (HREC): A past release of any hazardous substances or petroleum products that has occurred in connection with the property and has been addressed to the satisfaction of the applicable regulatory authority or meeting unrestricted residential use criteria established by a regulatory authority, without subjecting the property to any required controls (for example, property use restrictions, activity and use limitations, institutional controls, or engineering controls). Before calling the past release a historical recognized environmental condition, the environmental professional must determine whether the past release is a recognized environmental condition at the time the Phase I Environmental Site Assessment is conducted (for example, if there has been a change in the regulatory criteria). If the EP considers the past release to be a recognized environmental condition at the time the Phase I ESA is conducted, the condition shall be included in the conclusions section of the report as a recognized environmental condition.

  Added Key Definitions The definition of de minimis condition was added to the Standard to read:

• De Minimis Condition: A condition that generally does 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. Conditions determined to be de minimis conditions are not recognized environmental conditions or controlled recognized environmental conditions.

  Another added definition includes Control Recognized Environmental Condition or CREC.

• Controlled Recognized Environmental Condition (CREC): A recognized environmental condition which involves a past release of hazardous substances or petroleum products that has been addressed to the satisfaction of the applicable regulatory authority and that is subject to activity and use limitations. The environmental professional shall list any controlled recognized environmental conditions in the findings and conclusions sections of the Phase I Environmental Site Assessment report.

  This term was added to better categorize sites where previous environmental work has been done and proper regulatory closure or No Further Action (NFA) status has been obtained or otherwise met, but residual contamination is present. While these sites may be viewed as closed according to regulatory agencies, certain use limitations and “due care” is necessary which may include eliminating the use of groundwater, maintaining surface concrete cover, providing proper notifications, and properly characterizing and disposing of soils, if removed. Other added definitions include the definition of a “release” (for which the 2013 Standard refers the reader to the CERCLA definition), and “migration”. The CERCLA release definition reads:

• “42 U.S.C.§ 9601(22) defines a release as “any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment (including the abandonment or discarding of barrels, containers, and other closed receptacles containing any hazardous substance or pollutant or contaminant), but excludes (A) any release which results in exposure to persons solely within a workplace, with respect to a claim which such persons may assert.”

  And migration has been defined as:

• “Migrate” and migration” refers to the movement of hazardous substances or petroleum products in any form, including, for example, solid and liquid at the surface or subsurface, and vapor in the subsurface (Note: vapor migration in the subsurface is described considered in Guide E 2600; however, nothing in this practice should be construed to require application of the E2600 standard guide to achieve compliance with all appropriate inquiries.).

  Other Changes Other important but less obvious changes include clarifications in Section 6.0 regarding User Responsibilities; a slight reorganization to non-scope considerations as well as adding Appendix X.5 which further discusses non-scope issues; and a revision to the recommended Phase I ESA report Table of Contents. ASTM E-1527 was updated in 2005 as a response to the EPA’s All Appropriate Inquiry Final Rule (40 CFR 312) of 2002, which became effective November 2006. Another much debated topic was whether the 2005 Standard would continue to meet AAI after the 2013 version was published, and the conflict of picking one or the other in satisfying AAI requirements. For some, the jury may still be out on this topic, however, the environmental consulting industry will very likely adopt the 2013 Standard right away, and new purchasers of commercial real estate (including bank’s foreclosing on loans secured by commercial real estate) should be having Phase I ESAs completed to the 2013 Standard if AAI liability protections are desired. As with most things, change can present uncertainty and anxiety. However, for most environmental consultants of good quality, the revised 2013 ASTM Standard will not create significant changes in how their Phase I ESAs are conducted, and presents an opportunity to clarify certain issues needed from the 2005 version.

   

  Shawn Shadley | Regional Manager / Senior Consultant PM ENVIRONMENTAL, INC.

MARKET HIGHLIGHTS – OFFICE

• Office building sales continued to improve in 2013, with the number of sale transactions up 28% over 2012.. Over 1.12 millions square feet of office space was sold in 2013, with the majority of buildings sold less 20,000 square feet.

• Sales dollar volume of office properties reflected the market trend of the sale of smaller sized properties. $117,255,092 in office space was sold in 2012, compared to $36,458,680 in 2013. The vast change is attributed to the large turnover in downtown office building ownership in 2012.  While the 2012 market represented several out-of-state investors, 2013 sales showed more local owner-user activity.

• Office leasing activity is up in both downtown and the suburbs.  Average gross rent rates for suburban office space range from $10 – $18 per square foot, while the average gross rent rates for downtown space is $15 – $22 for class A space.  Large office construction projects such as the planned Arena Place, and renovation of buildings show exciting activity in the office market.  The cost of parking is a consideration of potential owners or tenants, who are seeking buildings that can provide low–to-no cost parking options.

• Buildings formerly considered office space are being converted to residential – apartments or condominiums – which have decreased the availability of downtown office space.

MARKET HIGHLIGHTS – INDUSTRIAL

• Market conditions continued to improve in 2013, with over 2.74 million square feet of industrial space sold, compared to 2.5 million square feet sold in 2012.  Available prime industrial space is scarce, as the inventory of quality industrial properties becomes smaller.

• Sales dollar volume of industrial properties also increased substantially over 2012.  $56,337,030 in industrial sales were reported in 2013, compared to $42,791,475 in 2012, representing an increase of nearly 32%.

• Industrial property values have recovered much of their losses, and are approaching levels not seen since before the recession.

• Lease rates vary greatly, depending on the type, size, location, quality, and condition of the industrial property.  Overall, lease rates are rising. “The availability of quality industrial properties is significantly reduced from just a few years ago,” stated Stu Kingma, SIOR, an industrial specialist with NAI Wisinski of West Michigan. “The continued expansion of the market, and the resulting lack of quality industrial properties for sale, has translated into higher demand for lease space.  As a consequence, lease rates have risen noticeably in various sectors with landlords beginning to enjoy a much more favorable leasing market.”

MARKET HIGHLIGHTS – RETAIL

¨ Market conditions improved significantly in 2013, particularly in the prime retail corridors (East Beltline, 28th Street SE, and the Grandville/Rivertown area).   The Grandville/Rivertown area is poised to add several new retailers planning to open in early 2014.  Shoe Carnival, ArtVan Pure Sleep, and  Gordman’s soon be operational.  Planet Fitness has opened  in the Rivertown/Grandville area and the 28^th St. SE area, within recently renovated Centerpointe.  The completion of the Centerpointe project has resulted in a large volume of leasing activity in the area.  Another retailer new to the West Michigan area, Garden Ridge, is renovating space in Jenison, in the building formerly used by Target .  A Walmart supercenter is under construction near 54^th St. and 131, and expansions of the Grandville and 28^th St. Walmart stores to supercenters is nearly complete. The Tanger Outlet in Byron Center is on track to open in 2015, capping a large volume of retail growth in the southern part of Kent County.

¨ Sales volume of retail properties increased by 37% in 2013 over 2012 and prices stabilized due to increased demand and quality supply being  absorbed in the main corridors. Landlords are starting to regain control and increase rents.  As competition for space grows, consumer confidence slowly elevates, and vacancy rates drop.

¨ The number of retail sale transactions increased 13% in 2013. The shrinking of the gap between list and sale price shows that values are rising and buyers are willing to pay more for properties than last year because greater opportunity is present in the market.

¨ Retail leasing activity is up.  In the primary retail corridors, vacancy rates have fallen and “class A” available space is limited.  Lease rates are slowly increasing, and there are fewer landlord concessions being incorporated into lease transactions. Secondary and tertiary markets are improving, but the pressure on pricing and concessions continues.

¨  A marked increase in new retail construction in the prime retail corridors shows a continuing of  increased demand for business expansion and new business entering the West Michigan area.