As a commercial real estate professional, it’s important to be aware of due diligence requirements in order to understand and manage risks. Recently, the standard which is used for most Phase I Environmental Site Assessments was revised. In general, revisions are viewed as positive for the commercial real estate industry, but some may cause confusion. This is the first of several posts to discuss details of the revisions. Please check back weekly for additional updates:
- Recognized Environmental Condition (REC): Prior references to releases to soil, groundwater and surface water were replaced with a reference to “the environment”, The change makes the standard more consistent with EPA terminology and clarifies that the migration of contamination in soil vapor may constitute a release. The change provides a clarification of terminology, but is not expected to impact the assessment process.
- Controlled Recognized Environmental Condition (CREC): This new term was introduced to describe situations in which a release has been mitigated in accordance with regulatory requirements, but contamination was left in place above residential cleanup thresholds. In this situation, property owners may be required to maintain engineering controls, or the property may be subject to activity and use limitations such as continued commercial use. Since CRECs have been defined as a type of REC, some real estate professionals may find the term troubling. In general, it is anticipated that most CRECs will require little or no direct action; however, the revised terminology may require clients to rethink their approach to RECs.
- Historical Recognized Environmental Condition (HREC): This definition was revised to apply only when mitigation has resulted in contamination below residential cleanup thresholds. No significant impact on the assessment process is anticipated.
- Review of Regulatory Files: Requirements were revised to encourage Environmental Professionals to review documentation, conduct interviews, or otherwise evaluate likely impacts to the property when the review of a regulatory database reveals certain types of records for the subject and adjoining properties. This addition to the scope of ESAs could result in increased costs to review information, or extended time required to complete the ESA.
If you’d like to talk about how these changes may affect your business, please feel free to give me a call at 877 477 2731 or click the email link below.