Brandy Lipps, vice president of Logic Environmental, which provides environmental compliance and assessment needs, will speak to the GABB on Nov. 29 about environmental due diligence.
The monthly meeting begins at 10:30 a.m. and is preceded at 9:45 a.m. by a free light breakfast and networking session. There is networking with coffee and pastries from about 9:45 to 10:30 and the meeting will last from about 10:30 to somewhere between 11:30 and noon.
Hear her presentation, and view a copy of her PPT presentation:
Attorney Larry Domenico, of law firm of Mozley, Finalyson& Loggins, will sponsor the meeting. Larry practices extensively in the areas of products liability defense, commercial and business litigation, and general litigation. Mr. Domenico also has extensive experience as a business lawyer in assisting start-up and existing businesses. In addition, Mr. Domenico has broad experience in alternate forms of dispute resolution including arbitration and mediation. Mr. Domenico serves as the firm’s managing partner.
Brandy is a graduate of the University of Georgia’s School of Environmental Health Science and has experience in both the laboratory and field investigations. She has been with Logic since 2007, performing environmental assessments and specializing in non-petroleum releases and Brownfields. Her dog, Toby, is currently responsible for office security. Her boss, Chris Fonzi, a GABB member and founder of Logic Environmental, was originally scheduled to speak, but had a last minute scheduling conflict. According to Chris, “She’s an experienced speaker and she’s much more likeable than I am.” Chris and his company are GABB Platinum Sponsors.
In a previous GABB meeting, Chris discussed changes in environmental site assessments.
“For years now, the Phase I/Phase II process of environmental site assessment has been focused primarily on identifying possible sources of soil and groundwater contamination – underground tanks, spills, dump sites, etc. This was the mandate established by the American Society for Testing Materials (ASTM), a private organization that sets the standards for what goes into a Phase I investigation. Although ASTM standards aren’t law, they are close to being the only game in town and virtually all reputable consultants follow them. In January 2014, ASTM revised the standards for what constitutes a Phase I, the first such revision in eight years. The most significant change was the addition of a requirement that all Phase I reports evaluate sites for the possible presence of vapor as a recognized environmental threat. And vapor, as it turns out, is everywhere.” Read more here.
GABB meetings begin with guest and member introductions of name, company and what you do, not a networking or elevator minute. After Chris’s presentation we’ll have a few items of association business and then adjourn the meeting.
There is no cost to attend and there are two parking decks available with free parking adjacent to the facility. Please bring your parking ticket to the meeting for validation.
The meeting is at the South Terraces Conference Center at 115 Perimeter Center Place, Atlanta. For more information about the GABB, contact GABB President Greg DeFoor at 678-644-5983 or email@example.com.Read More
By Michael Wade and Keith Kaylor
Is there an environmental liability lurking in the commercial property your client is preparing to buy?
And how can you find out?
Many commercial properties do have potential environmental issues, and purchasers and lenders may unknowingly be taking on substantial risks from loss of property value or liability for remediation costs. That is why conducting environmental due diligence is crucial.
Fortunately, there are several types of investigations that can be done to minimize the liability.
The regulatory basis for these investigations is the “All Appropriate Inquiries” rule established by the U.S. Environmental Protection Agency (EPA) in 2005. The rule established the level of environmental due diligence required of buyers and/ or lenders wishing to qualify for liability protections from cleanup costs. The industry standard for conducting due diligence investigations is the American Society for Testing and Materials (ASTM) Standard E1527, last revised in 2013.
The most common types of investigations used are:
- Desktop Reviews
Desktop reviews are a low-cost alternative to a Phase I Environmental Site Assessment (ESA), and have a limited scope. They consist of:
- Reviewing environmental databases in order to find hazardous material sites on the subject property or nearby properties;
- Reviewing one historical land use source (usually aerial photographs); and
- Questionnaires filled out by the borrower and loan officer.
Desktop reviews do not include a site visit and do not meet the ASTM standard. Therefore, there is a possibility that environmental issues may remain undisclosed. In addition, if any issues are discovered, they cannot be fully investigated due to the limited scope, and will lead to a recommendation for a Phase I ESA. Unless the lender has other knowledge that the subject property is of low risk, a desktop review is probably best used as a screening tool only.
- Phase I ESA
A Phase I ESA is the industry standard for due diligence investigations. It consists of:
- A review of environmental databases in order to find hazardous material sites on the subject property or nearby properties;
- A review of all readily available historical land use information (aerial photographs, city directories and fire insurance maps, as available);
- A site inspection of the property;
- A review of local government records concerning the property; and
- Interviews of the site owner and/ or occupants.
- Review of environmental agency records to determine if the site is in compliance with regulations (especially important for sites handling regulated materials such as service stations or hazardous waste generators)
Phase I ESAs meet the ASTM standard, but do not include sampling of soil, groundwater, or building materials. This report will identify any potential or actual Recognized Environmental Conditions (RECs) on the subject property. The environmental professional developing the Phase I ESA report may also make recommendations for further investigation to evaluate the presence or absence of contaminants at the subject property, which may lead to a Phase II ESA.
- Phase II ESA
If environmental contamination of soil, groundwater, or soil vapor on the subject property is suspected, a Phase II ESA may be performed to determine if contamination is present. Sample locations should be selected based on areas considered most likely to contain contamination. Samples should be submitted to an accredited laboratory for analysis to ensure the legal acceptance of the analytical data. If contaminant concentrations are above state reporting levels, the property owner has the legal responsibility to report these results to the Georgia Environmental Protection Division (EPD). The EPD may ask for further investigation under the Underground Storage Tank (UST) program for service station sites. Most other sites (such as dry cleaners or auto repair) will be handled under the Hazardous Site Response Act (HSRA) Program.
- UST Investigations
Once a release from a UST site is reported, the EPD will usually require a Corrective Action Plan – Part A (CAP-A). The CAP-A may require additional groundwater sampling and additional research to determine nearby receptors, such as the nearest drinking water well.
Depending on the results of the CAP-A, additional investigations such as a CAP-B and remediation may be required, which can involve substantial costs. However, if the site owner has been contributing to the Georgia UST Trust Fund and is not found to be ineligible, the Trust Fund will reimburse the owner for remedial costs, minus a $10,000 deductible and the cost of the trust fund application. Therefore, it is crucial for lenders to ensure that owners of UST sites are in compliance with Georgia regulations before issuing a loan.
- Brownfields (HSRA) Investigations
When a reported release is minor, the Georgia EPD may issue a “No Further Action” letter. For more seriously contaminated sites, further investigation will be required. Unlike UST investigations, there is not a trust fund to help in remediation cost for HSRA sites, so the buyer may incur extensive liability. This cost liability should be a determining factor in the decision to buy a parcel and should be the driver for conducting environmental due diligence before acquiring land.
If the site goes into foreclosure or resale, the Georgia EPD Brownfields program offers incentives for subsequent owners to assess contamination and remediate the property. The program includes tax incentives, as well as relief from the liability to perform groundwater remediation, if soil contamination has been removed.
In conclusion, an environmental due diligence process can be implemented at various degrees of thoroughness. A buyer or lender should consider the potential liability associated with owning a parcel of land that is known to be contaminated. Liability can be limited through a better understanding of the severity and source of impacts prior to purchase. We recommend utilizing a knowledgeable and experienced environmental consultant and choosing the right level of investigation at the onset to help buyers and lenders to avoid substantial liability issues later.
Michael is the General Manager of BAT Associates, Inc., GABB Affiliate member. Michael is a graduate of Whittier College, earned his Master’s from San Jose State University, and his MBA from the University of New Mexico. Keith Kaylor, P.E., is a graduate of Cleveland State and is responsible for managing Phase I/II ESAs and remediation projects at BAT Associates. Both have performed environmental site assessments and provided environmental and engineering consulting services across several US states over the past 30 years.
5151 Brook Hollow Parkway
Norcross, GA 30071
Fax: 770-242-3912Read More
By Chris Fonzi
Logic Environmental, Inc.
3400 McClure Bridge Road, Suite F602
Duluth, Georgia 30096
ph: 770.817.0212 fax: 770.817.0214
For those of you who feel like global warming, deforestation and the decline in the world’s billfish population are just a little too abstract to be personally compelling, the American Society for Scaring the Hell Out of Everyone announces a completely novel environmental problem – and this one could land smack in the middle of your next real estate deal.
For years now, the Phase I/Phase II process of environmental site assessment has been focused primarily on identifying possible sources of soil and groundwater contamination – underground tanks, spills, dump sites, etc. This was the mandate established by the American Society for Testing Materials (ASTM), a private organization that sets the standards for what goes into a Phase I investigation. Although ASTM standards aren’t law, they are close to being the only game in town and virtually all reputable consultants follow them. In January 2014, ASTM revised the standards for what constitutes a Phase I, the first such revision in eight years. The most significant change was the addition of a requirement that all Phase I reports evaluate sites for the possible presence of vapor as a recognized environmental threat. And vapor, as it turns out, is everywhere.
In this context, “vapor” refers to the migration of gasses from volatile contaminants – like gasoline or dry cleaning solvents – in soil. Let’s say you’re doing a deal on a corner-lot restaurant, built 10 years ago on the site of a former gas station. The Phase I assessment shows that gasoline contamination was reported from the site just before its redevelopment. At that time, the testing showed that the contamination was not very severe and the state environmental department issued a no-further-action-required letter for the release. The station’s underground storage tanks were removed, but no other cleanup was performed and a moderate amount of residual contamination was left in place. (This is standard practice, by the way. Only very rarely do environmental authorities require a site be restored to pristine condition and often allow the owner off the hook without performing any real cleanup at all.)
Historically – and by that we mean, until four months ago – a Phase I on this property would most likely have concluded that the no-further-action letter was a silver bullet, and that the contamination warranted no further investigation. But now, the report may also bear the ominous conclusion that your property has a vapor condition. It might say no more than that, and leave the conclusion unexplained, like an odorous gray cloud above your deal. Or it might recommend some sort of testing. Or it might even recommend some type of modification to the property to mitigate the impact of these vapors.
“Vapor intrusion” is when vapor emerges from the soil into basements or structures and into our personal space.”
“Vapor encroachment”means presence of vapor in soil anywhere on a property – even if the property supports no structures.”
Before we talk about how you should handle this, we need to burden you with two terms of envirospeak jargon: vapor intrusion and vapor encroachment. “Vapor intrusion” is when vapor emerges from the soil into basements or structures and into our personal space. Human exposure to airborne chemicals can be a real issue. Any doctor, toxicologist or Richard Pryor can tell you that one of the fastest ways to get any chemical into your blood is to breath it in. Accordingly, most government studies and environmental guidelines involving vapor have focused on human exposure through vapor intrusion. “Vapor encroachment,” on the other hand, was basically invented by the lawyers of the standards-makers because creating standards for vapor intrusion raised too many legal issues. It means presence of vapor in soil anywhere on a property – even if the property supports no structures. Vapor encroachment is generally not a significant health threat in its own right, but is important mostly as a precursor to vapor intrusion. Vapor encroachment is unlikely to ever be directly regulated.
Distinguishing these two conditions – intrusion vs. encroachment – is important to understanding a central problem with the new Phase I standards. That is, that pointing out a vapor encroachment issue can accomplish very little apart from making everyone involved in a deal uncomfortable. There are no government standards, no reporting obligations and no clear response which arises from the identification of a vapor encroachment condition. Some benchmarks have been established for vapor intrusion, but they are still evolving on a state-by-state basis and Georgia has yet to enact any regulations. While buildings can be tested for vapor intrusion, testing for vapor encroachment (that is, testing away from a structure) rarely serves any clear goal.
The best advice for managing vapor issues – as it is for most environmental issues – is to have a clear goal in mind before either party begins investing time and money into a solution.
Although some draft federal guidelines exist – including screening levels for a range of common contaminants – the government has, for the most part, not really chimed in on the question of how much vapor is too much. For this reason, getting a no-further-action letter or some other government blessing that a vapor condition is “acceptable” may not be an option. The EPA is scheduled to release their final guidance document about vapor very soon (we would be more specific, but the government has goals, not deadlines) and most states, including Georgia, have created vapor intrusion task forces to address this issue.
Testing a building for potential vapor intrusion involves collecting an air samples from beneath the slab of the structure. This can involve the uniquely disruptive step of coring a hole through the floor of a building, but can also sometimes be accomplished by forcing a direct-push probe (imagine a giant steel syringe attached to a pickup truck) at an angle beneath the slab. Expect the cost of vapor intrusion testing to be comparable to other Phase II investigations, typically $2,500 or more.
While testing the air IN the building would seem like a more straightforward approach, it carries several potential problems.
A shocking number of common household or business items can contribute vapors to an environment, including dry-cleaned clothing, new carpet, soaps and lotions, nail polish remover, cleaning supplies, etc. Since most indoor sampling techniques would evaluate the space over a period of time, even a brief exposure to some of these chemicals could cause a false positive. For this reason, a preferable method involves collecting samples from below or near the building slab, then using a computer model or a screening level calculator to predict the indoor air concentration. This also provides a level of liability protection to the property owner, as an estimated result would not carry the same liability as an actual positive sample result from direct indoor air testing.
Fixing a vapor intrusion condition means directing the soil vapors away from the structure. During building construction, this can be as simple as installing a vapor barrier under the foundation. For existing structures, it might involve the installation of a subsurface venting system, or alterations to an existing HVAC system. Once again, however, the absence of government oversight in this area will make it important for buyers and sellers to reach a clear and meeting of the minds as to the goals of any mitigation project.
For the moment, vapor issues are in a nascent and unsettled stage in their development, lacking the predictability which makes other environmental issues easier to quantify and less likely to be deal-breakers. As government regulation and industry practice evolve, vapor will inevitably become easier to manage in a transactional context, even as the frequency of vapor-related issues increases.
Chris is founder and principal of Logic, GABB Affiliate member and a GABB Platinum Sponsor. He is a graduate of the University of Florida and the UF School of Law. He has performed environmental assessments and provided consulting services in more than 20 states during the past 15 years.Read More