No environmental professional ever wants to be in the uncomfortable position of having a past Phase I ESA report put under the glaring eye of scrutiny in a professional liability lawsuit. Drawing from years of expertise as an expert witness in these cases, Anthony Buonicore, P.E., BCEE, QEP and CEO of The Buonicore Group, delivered a highly-rated presentation at our Due Diligence at Dawn/Dusk series this year in which he guided hundreds of DDD attendees through five real-world case studies. Each case revolved around a particular element of the ASTM E 1527 standard, including a range of technical topics (e.g., vapor migration, historical research, professional judgment, etc.). The discussion of each case study addressed these questions: Was the “standard of care” provided by the EP deficient? How did the EP’s performance compare with “customary practice”? Did the scope of work meet the requirements in ASTM E 1527? Below is the first in EDR Insight’s Summer School series.
CASE STUDY: Non-Scope Issues
- A prospective purchaser (a reasonably large developer) retained a consulting firm in 1999 to conduct a Phase I ESA on a parcel of undeveloped property and specifically to identify “recognized environmental conditions.”
- Scope of work: ASTM E1527-97
- No evidence of RECs identified.
- Property was acquired and development initiated.
- During the permitting process, the new property owner was advised that:
- Wetlands existed on the property.
- A wetlands delineation investigation was required.
- Wetlands mitigation would be required.
- The extent of the property’s development would likely be limited.
- The existence of wetlands on the property resulted in permitting delays, additional engineering costs, additional surveying costs, mitigation costs, construction delays and an inability to develop the property as planned.
“I relied on my consultant to advise if there were any environmental issues. He’s the expert. He’s supposed to advise me.”
- The consultant was aware the property was going to be developed and should have known that the presence of wetlands could adversely impact this development.
- Had the Phase I consultant exercised reasonable professional diligence and identified the presence of wetlands on the property, the property would not have been acquired.
- The Phase I consultant breached the standard of care for the conduct of environmental assessments and was negligent in the performance of professional services.
- Property owner was harmed and sought damages that were a direct result of the Phase I consultant’s negligence.
“I proposed an ASTM E1527-97 Phase I ESA. It was accepted by the client. That is what I delivered.”
- Under ASTM E 1527-97, wetlands is a non-scope consideration and is not included in the Scope of Work unless the client specifically indicates otherwise.
- The client did not request that wetlands be included in the Scope of Work.
- The Phase I ESA focused on identifying RECs, which are associated with the presence or likely presence of hazardous substances or petroleum products on the property. Thus, the presence of wetlands on the property could not be considered a REC.
- Case was settled by the insurance company that provides the consultant’s E&O insurance.
- The “killer” was in the terms/conditions where the consultant excluded asbestos and lead-based paint.
“If you exclude things like asbestos and lead-based paint, it means you’re including everything else. That was the ‘death knell’ for the consultant being sued here.”
~Anthony Buonicore, DDD, Spring 2015
- Do not assume that a client understands what is or is not included in an ASTM Phase I – many clients still perceive the Phase I as identifying any environmental conditions that may adversely impact a property.
- Include a detailed Scope of Work based on the ASTM E 1527 standard that makes it clear what an ASTM Phase I includes—and does not include.
- Refrain in the Scope of Work from indicating that any non-scope environmental condition is excluded (e.g., “asbestos is not included”).
- If you say an environmental condition is excluded, but at the same time do not specifically exclude every other environmental condition, then all those other environmental conditions not specifically excluded may be presumed to be included!
- You may want to consider using a “such as” clause to clarify that a non-scope condition, e.g., asbestos or wetlands or lead-based paint, is not part of the Scope of Work:
“The SOW meets the requirements of the ASTM E1527-XX standard. The ASTM E1527-XX standard includes Section 13, Non-scope Considerations such as _________, that are not part of the required ASTM SOW unless the client specifically requests otherwise. ”
- If a non-scope condition has been observed in the site recon, it should not be mentioned in the Phase I report – by doing so, you run the risk of having it perceived as included in your Scope of Work.
- Instead, consider contacting your client and discussing what you observed, what might be done about it and what it could cost.
- If the client chooses to add this to the Scope of Work, then send the client a change order with the additional cost involved.
- If the client chooses not to do anything for whatever reason, business or otherwise, fully document this in the project file (not in the report).
Question: You’re on a site visit. You see asbestos. What do you do?
“Don’t ever, ever mention it in the report. The instance you do, you’ve opened up Pandora’s box. Call your client to say “Sam, you might have a problem with asbestos at the property, and here’s what you can consider doing.” Then, document everything and stick it in your work file.”
NOTE TO READERS: Case study 2 will address a specific case involving vapor migration and a former industrial site that used chlorinated solvents. Anthony’s slides from the fall/spring DDD season are posted in their entirety here.