RECs and Recommendations

As environmental consultants, we all provide our clients with recommendations following a site inspection, site investigation, removal action or most any type of work we do on a property.  Phase I Environmental Site Assessments (ESAs) often differ in this regard as many clients do not want recommendations, at least not included as part of the written report.  I personally do not provide recommendations in my Phase I ESA reports, unless specifically requested.  I do, however, provide verbal recommendations or a separate letter containing recommendations, depending on the client’s wishes.

But what I want to talk about here is how recommendations following a Phase I Environmental Site Assessment can vary, depending upon whom one is working for.  Now don’t get me wrong.  I am by no means implying that there should ever be any compromise of one’s professional judgment, integrity or ethical standards depending on the client.  Absolutely not, no, never!  But - recommendations can, and should, be specific to your client’s needs and situation and this means they can vary, and often dramatically, from client to client.

An ESA is most commonly requested as part of the due diligence process of a commercial property transaction.  The purchaser of the ESA, often the User, is usually either the seller of the property, or the purchaser of the property, or their representatives (realtors, lenders, etc.).  Regardless of who requested the ESA and who is paying for your professional services, a qualified, reputable environmental professional (EP), in producing the ESA report, will identify recognized environmental conditions as he or she determines them.  A REC, once identified, is a REC, regardless of the user.  Although EPs often disagree in what they might identify as a REC (just see the discussion thread in the Environmental Professionals Group on LinkedIn in response to my last article “A REC is REC, Right?  Wrong!, to see the variety of opinions on a single REC) , I think we all agree that if we identify a REC at a site for Client A, the same REC will be identified to Client B, Client C or anyone else who might ask our opinion.  This is how it should be, however; let’s take the following example to show just how varied our recommendations regarding the REC can be.

Let’s take, by way of an example site, a 15-year old auto repair shop as the subject of an ESA.  The repair shop has multiple auto service bays, each with hydraulic lifts, the type with subsurface hydraulic fluid reservoir sumps.  I believe most EPs would identify the presence of these sumps as a REC, regardless if they were hired by the purchaser of the property, or the seller (maybe some wouldn’t, but lets assume for the sake of this discussion we are all in agreement that the old hydraulic lift’s subsurface hydraulic fluid reservoirs constitute a REC).

If hired by the owner/seller of the property, I would recommend that they do nothing further with regards to this hydraulic sump REC i.e., no follow up investigation is necessary (assuming, of course, the sumps were properly installed, registered (if required by a city or state agency), proper maintenance records in place, there has been no indication of any problems with the lifts and no reason to suspect a release or leak).  With no spills, stains, mysterious losses of hydraulic fluid or no problems with the operation of the lifts, there is no reason to suspect a problem and therefore no reason to go looking for one.   However, if I were hired by the potential purchaser of the property, or their representative, I would, regardless of the condition of the lifts, recommend that they at least consider a Phase II site investigation with focused borings and soil sample collection, around the hydraulic sumps to ensure, as much as reasonably possible, that there has not been a release for any of the sumps and that they are not purchasing a future clean up action liability (this could also aid in establishing the environmental baseline of the property for the new owner).

In both cases, working for either the prospective purchaser or owner/seller, the sumps are a REC and the ESA report would list the sumps as a REC, but the recommendations provided for each are completely different.

New TGM from Hawaii State Department of Health

The Hazard Evaluation and Emergency Response Branch of the Hawaii State Department of Health has been updating its Technical Guidance Document. An excellent guidance document for soil and groundwater sampling and field investigative techniques. Incorporates Multi-incremental sampling. Applicable outside of Hawaii. Visit: http://hawaiidoh.org/ for links.

A REC is a REC, Right? Wrong!

A Recognized Environmental Condition, or REC for short, is a term everyone involved in a commercial property transaction is familiar with.  It is a potential problem area for the perspective commercial property buyer, a red flag to the lender, and often a headache for the seller and buyer both.  Officially defined by ASTM International (ASTM, E-1527-05) as “the presence or likely presence of any hazardous substances or petroleum products on a property under conditions that indicate an existing release, a past release, or a material threat of a release of any hazardous substances or petroleum products into structures on at 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 laws”. 

RECs are most commonly identified by an Environmental Professional during the performance of a Phase I Environmental Site Assessment, or ESA, of a property, prior to a sale or transfer.  The ESA, and the identification of RECs, is an integral part of the buyer’s due diligence efforts and is generally conducted towards providing the buyer with the “innocent landowner, contiguous property owner, or bona fide prospective purchaser” liability limitations under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), or Superfund.

Now while it seems obvious that any well-qualified environmental professional would identify a potential environmental problem area, or REC, on a property (for example leaking oil drums, oil-stained soil, old leaking fuel tank), not all Environmental Professionals see things the same way.  One person’s REC is another’s “other issue” or in some cases, not identified as an issue at all.  While the ASTM E-1527-05 guidance document and the recent All Appropriate Inquiry guidance recently put forward by the EPA  (40CFR 312.10) are the generally accepted standards for conducting an ESA, both guidance documents make it clear that decisions regarding the identifications of RECs are up to the sound, professional judgment of the Environmental Professional conducting the ESA.

Over the last several years I have conducted hundreds of Phase I ESAs and have reviewed hundreds more ESA reports prepared by Environmental Professionals from around the globe.  During this time I have often been surprised at what some Environmental Professional identify, or do not indentify, as RECs, and what some might identify as “other issues” or may not even bother mentioning at all.  The most common example of this discrepancy in REC identification is that related to underground storage tanks, or USTs.  Is a legally installed, double-walled UST, outfitted with interstitial monitoring, overfill sensors, spill devices and a state-of-the-art continuous leak detection monitor, installed at a properly licensed gas station, a REC?   Does this UST present a “material threat of a release”?  Many Environmental Professionals say yes but many other equally qualified and experienced Environmental Professionals, apparently, would say no.  Who is right?

I would make the argument that a UST is a REC.  In my opinion, a material threat of release does indeed exist when thousands of gallons of petroleum product, or other chemicals, are stored on a property, either underground, or above ground, in a single-walled tank, a double-walled tank, in a bunker, in drums, in whatever.   

Not to diminish the importance of a qualified Environmental Professional’s ability to use experience, training and professional judgment to make the REC call, but in the interest of industry standardization and clarity for users of the ESA, I would suggest that a UST is REC is a REC is a REC!

Kevin Kennedy

Kevin S. Kennedy Consulting, LLC

25 Kaneohe Bay Dr., Suite 208

Kailua, HI  96734

808-286-5786

kevin@kskconsultingllc.com

www.kevinskennedyconsultingllc.com