Tip Sheet – Talking to Your Clients About Vapor Migration Risk

Environmental professionals view vapor migration/intrusion as one of their greatest technical challenges, according to EDR Insight’s latest market survey. The prospect of introducing a client to another type of risk in today’s competitive market can be daunting. Some clients may not be all that receptive to hearing about vapor-related risk, especially if will delay a property deal or add to the cost of an assessment. There is also frustration because clients do not understand why vapor is an issue on loans or refis that might have sailed through due diligence in the past.

To help address these challenges, EDR Insight hosted a webinar on February 7, 2012 entitled “Two Experts Share Intell on Vapor Intrusion in the Real World.” David Gillay, a leading environmental attorney (former environmental engineer) and head of the Environmental Transactional Practice Group at Barnes & Thornburg, joined John Sallman, a senior principal and environmental department manager in Terracon Consultant’s Dallas office to give EPs solid advice about addressing VI on every project.

“Vapor intrusion creates a classic case of conflicting interest where we as professionals want to make sure that we help clients manage releases of chemicals into the subsurface and protect public health, while at the same time, helping our clients buy and sell properties. Finding that balance with vapor intrusion has been a real problem.” (Gillay)

Based on webinar content, below is an EDR Insight Tip Sheet on how to bring clients up to speed on vapor migration/intrusion risk:

1. Start by educating yourself.

  • Regulations and guidance on vapor migration/intrusion risk are evolving at a rapid pace. Stay up to speed on what’s happening in states where you operate.
  • The U.S. EPA is updating federal guidance on VI for the first time in 10 years. The expected November 2012 release will be surrounded by a great deal of training and public outreach to raise awareness about VI risk.
  • Thirty-two states now have guidance in place with additional states expected to follow after EPA’s guidance is out.

“As more states adopt regulations, it pushes a move toward having to start evaluating vapor intrusion risk as part of the standard Phase I ESA practice.” (Sallman)

2. Do not be afraid to educate clients upfront.

  • Vapor migration/intrusion issues can limit a client’s access to financing, so it is important to make them aware in order to avoid surprises.

“A little bit of cost on the front end can save clients a lot of heartache on the back end.” (Sallman)

  • Advise clients that vapor intrusion, even if they did not cause it, can result in litigation resulting from tenant and other third party suits. Moreover, the stigma of vapor intrusion may contribute to tenants breaking a lease and leaving the property, to say nothing about how difficult it will be to attract new tenants. When the property is sold in the future, this may result in significant devaluation.
  • There are a growing number of VI litigation cases against environmental professionals. If you do not talk to clients about VI on a project, it could open you up to potential liability.

“The sharks are circling the water, so consultants need to protect themselves and make sure they’re not part of the feeding frenzy.” (Sallman)

  • With lenders in particular, education is critical. They have a much lower tolerance for all types of risk in this downturn, and with vapor, they tend to be far more risk averse.

“In general, because lenders don’t understand VI, they fear it more. So take the opportunity to sit down with them and answer their questions. Getting your clients to come to a greater understanding helps everybody.” (Sallman)

    • VI gives environmental professionals an excuse to get in front of clients. It is an important and timely opportunity to educate, consult and, most importantly, position themselves as experts.

 

3. Bring vapor migration/intrusion up on all of your Phase I ESA projects.

  • Due to an attorney requirement, a new lender scope or a new state regulation, your clients will need to deal with vapor migration/intrusion, especially in states with reopeners.

“Encourage your clients to get out in front of this issue before they have a state regulator, a plaintiff, or a neighboring site owner asking them questions about whether VI from soil or groundwater contamination is creating an issue with the use of their property.”(Gillay)

  • Understand that vapor migration/intrusion risk will come as a surprise to some clients, and they won’t be happy about it.

“Clients don’t like to hear bad news and they’re going to want to shoot the messenger so you have to get a little bullet proof and be ready to deal with these issues.” (Sallman)

  • Phase I ESA updates are one of the most common ways that vapor surprises are being discovered, especially if a client is refinancing using a different lender-driven scope.

“Now all of a sudden, your client has a problem that never showed up four years ago.” (Sallman)

  • Be prudent in evaluating potential vapor migration/intrusion sources, especially off-site ones.

“I think we’re going to start seeing more RECs identified in Phase I ESAs, especially as vapor awareness moves on. And if ASTM changes E 1527-05 to include vapor, we will definitely see that.” (Sallman)

4. Document client communications on vapor migration/intrusion.

  • Don’t assume clients will remember that you warned them about potential vapor migration/intrusion risk. If your client does not want you to complete a vapor migration screening evaluation, at a minimum, document that conversation.
  • Never limit your scope to exclude vapor migration screening on projects involving residential uses or sensitive uses like day cares or schools.

“You run a much higher risk of being dragged into potential lawsuits when VI affects people’s children or homes, and there is a different standard of care when you are dealing with sensitive populations like the elderly or young children.” (Gillay)

5. Start a formal internal training program.

  • Establish companywide training on vapor migration/intrusion risk. Meet frequently to share insights and client experiences.

“Everyone’s dealing with VI a little bit differently so it is extremely helpful to come up with some formal internal programs for how you’re going to deal with it. Training helps not only with educating staff but ensures consistency in approaches company-wide.” (Sallman)

  • Look for EPA training sessions on the new guidance. Take your clients with you or distribute fact sheets to clients afterward. Take advantage of ASTM’s new course on E 2600-10 (either in-person or on-line).

“If you take what ASTM has come up with in E 2600-10, and you couple it with a Phase I, I think you get a pretty good handle on how to assess vapor migration and make recommendations to your clients.” (Gillay)

Vapor intrusion is still a relatively new issue, but one that is changing rapidly, so it is critical that anyone involved in real estate understand the risk and how it can be managed. For more on how these two leading VI experts address today’s top technical challenges, click below to listen to the replay of EDR Insight’s webinar entitled “Two Experts Share Intell on Vapor Intrusion in the Real World.”

 

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