NOTE TO READERS: EDR Insight is grateful for permission from Nick Albergo, the Vice Chair of the Environmental Assessment, Risk Management and Corrective Action ASTM E50.02 Committee, to share this important article that he authored to clarify the “controlled recognized environmental condition, or CREC, term in the new ASTM E 1527-13. The article will appear in the December edition of the Florida Specifier.
WHAT THE HECK IS A CREC?
I’d like to clarify the controlled recognized environmental condition (CREC) concept within the new ASTM E 1527-13 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process, as I am starting to see definitional creep within our ranks (i.e., amongst Environmental Professionals), as well as within our industry (i.e., attorneys, lenders, developers and other real estate professionals) in general.
The de minimis condition (i.e., 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) has always been a part of the Standard since its initial draft and publication in 1993. At that time, it was (and has remained) envisioned as an indication of a “minor” release, such as petroleum product staining on the supermarket parking lot.
In the 2000 revisions to the Standard, we introduced the concept of a historical recognized environmental condition (i.e., an environmental condition which in the past would have been considered a recognized environmental condition, but which may or may not be considered a recognized environmental condition currently). We reminded environmental professionals (EPs) and Users (often purchasers of real estate) that the final decision to use the HREC concept, rests with the environmental professional and will be influenced by the current impact of the historical recognized environmental condition on the property. If a past release of any hazardous substances or petroleum products has occurred in connection with the property and has been remediated, with such remediation accepted by the responsible regulatory agency (for example, as evidenced by the issuance of a no further action letter or equivalent), this condition shall be considered an historical recognized environmental condition.
In essence, the HREC definition was created as a “fix” to the confusion that was created in the marketplace in connection with pre-2000 vintage Phase I’s that were correctly identifying (at the time) a past release of a hazardous substance or petroleum product as a REC, even though such had been cleanup up to the satisfaction of an applicable regulatory agency. The prior REC designation, in such instances, was negatively impacting Users ability to receive bank loans and insurance, as well as creating other unnecessary “stigmas” in the marketplace.
What neither of these definitions (i.e., de minimis or HREC) anticipated, was the challenges posed by risk-based closure and “self-directed” cleanups. The problem started seeping in with HRECs wherein the term, applied correctly, was offering a false sense to Users that whatever the prior release concern, that such had been “cleaned up” and of no future consequence. As activity and use limitations (AULs) became the regulatory norm for closures, and not the exception, this misinterpretation was also becoming the norm and, of course, as Users were being alerted to certain AUL constraints “after acquisition,” they often viewed the conclusion of an HREC, as a gross misrepresentation of the actual site conditions.
Even worse, the term de minimis, was also being misapplied, especially in instances of self-directed cleanups, where contaminants (by regulation) could remain so as long as such met, for example, commercial versus residential criteria, or that such impacts were below 2 feet (limiting exposure), or that a contaminant plume was “stable or reducing,” or that other local ordinances, resolutions and/or development orders took precedence, necessarily allowing a regulatory agency to “sidestep” issuing a no further action (NFA) or site rehabilitation completion order (SRCO) letter altogether. While it is true that such circumstances could technically meet the de minimis definition (i.e., no obvious exposure or enforcement threat), it was, again, a misuse of the “intent” of the term and, again, resulted in a false sense to Users that whatever the prior release concern, that such was of no existing or future consequence.
The pressure continued to mount as the All Appropriate Inquiry (AAI) regulations were passed and began to take hold, especially in instances of the Bona Fide Prospective Purchaser (BFPP) defense, where “continuing obligations” were required to “maintain” a defense to CERCLA (i.e., Superfund). Recall the requirement, for example, that the User take “reasonable steps” to:
– Stop any continuing releases;
– Prevent any threatened future release(s); and
– Prevent or limit human, environmental, or natural resource exposure to earlier hazardous substance releases.
Failure to recognize that there still remains contaminants that may require future management in this regard (because the Phase I identified such as a de minimis condition or an HREC), is the genesis of where the concept of a CREC originates. This failure to understand the existence of contamination above unrestricted use conditions, was (is) especially disconcerting when you consider that the landowner liability defenses (LLPs) to CERCLA (i.e., Third Party, Innocent Landowner, Contiguous Property Owner, and Bona Fide Prospective Purchaser) are all “Self Implementing,” meaning you don’t need a formal determination by EPA, and thus a User may believe that they have achieved a LLP, but later learn that a court holds otherwise. Furthermore, no administrative rules have been promulgated further defining continuing obligations, and little, if any, instructive case law exists.
In 2013, we introduced the concept of a controlled recognized environmental condition (a recognized environmental condition resulting from a past release of hazardous substances or petroleum products that has been addressed to the satisfaction of the applicable regulatory authority (for example, as evidenced by the issuance of a no further action letter or equivalent, or meeting risk-based criteria established by a regulatory authority), with hazardous substances or petroleum products allowed to remain in place subject to the implementation of required controls (for example, property use restrictions, activity and use limitations, institutional controls, or engineering controls). A CREC remains a recognized environmental condition in the conclusions section of the Phase I Environmental Site Assessment report.
Along with edits to the de minimis and HREC definitions, the CREC determination now captures the continuum of scenarios that were susceptible in the past to misinterpretation by Users, including self-directed cleanups that embrace risk-based closures or the establishment of alternative site cleanup target levels, other cleanups signed off by the regulator but without referencing a formal control (i.e., AUL), petroleum cleanups that rely on natural degradation (e.g., Low-Scored Site Initiative (LSSI NFAs), and other instances where contaminants remain in place and may still pose existing or future challenges to site redevelopment and/or valuation (e.g., low score dry-cleaning sites where significant soil contamination and vapor remains). In fact, we added a definition for migrate/migration in 2013 that emphasizes that “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.
And to “close the loop” so to speak, we modified the HREC definition to ONLY apply when there has been 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 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). And, before calling the past release a historical recognized environmental condition, we emphasized that 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 that could negate the former regulatory decision). With regard to the de minimis condition, we added a last sentence that reminds EPs and Users that a de minimis condition cannot also be a controlled recognized environmental condition.
Having offered this CREC “fix,” that doesn’t necessarily mean we are home free so to speak. There are States where self-directed cleanups are not allowed (e.g., NY), and where reporting is required. Here, self-directed cleanups could result in violations much less additional investigation by the regulator, if discovered after the fact. There are also other States that allow self-directed cleanups, but only by licensed professionals with reporting (e.g., NJ) obligations if the cleanup is not performed by licensed professional or the reporting is not done. In these instances, the EP cannot technically call it a CREC, even though at first glance, such a conclusion may appear applicable.
In general, Users of Phase Is with CRECs should ask the following questions:
– Did the EP review the NFA letter or decision document concluding that the cleanup met State standards or site cleanup target levels (SCTLs)?
– Did the EP identify what the cleanup standard was and if it remains in effect or has been changed since the NFA letter or its equivalent was issued?
– What “controls” were identified as the basis for concluding that the condition is a CREC?
– Has the “control” been properly implemented (e.g., recorded in the land records, working properly, being maintained and/or protective of human health?
– Is the “control” applicable to the site where the self-directed cleanup was implemented? And
– Are there other potential issues (e.g., vapor migration) and whether they are under “control?”
To be clear, I am not suggesting that all of this additional information is always required, or that the gathering of such information should be included as part of the standard Phase I scope (in fact, it’s not required by the Standard), but depending on the User’s risk tolerance, future intended use of the property, and interest in securing one or more of the landowner liability protections to CERCLA, this additional information may prove critical to the process of properly understanding ones’ environmental liabilities. For example, a CREC may apply to regulatory controls (i.e., institutional and engineering controls) BUT MAY NOT adequately address human exposures (i.e., the Continuing Obligations are not met and therefore there is no LLP to CERCLA).
Hopefully, with this background and clarification of the use of the term, CREC, those practicing professionals in the Phase I world and their clients (Users), will be more equipped to recognize the nuances of the REC, HREC, CREC and de minimis definitions and when (and how) they should be incorporated into reports that follow the ASTM Standard or, maybe, at least the good ones will.
ABOUT THE AUTHOR
Nick Albergo is a Professional Engineer with Conestoga-Rovers & Associates, and was one of the authors of the ASTM E 1527, 1528 and E 1903 Standard Practice for Environmental Site Assessments Phase I and II). Currently, he serves as the ASTM E50.02 Vice Chair on Environmental Assessment, Risk Management and Corrective Action.