EPA Gets the Vapors, Part II

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s noted in the post “EPA Gets the Vapors and Commercial Real Estate Feels the Chill,” EPA is now addressing the issue of vapor intrusion – harmful vapors from soil contamination migrating into buildings. The agency is doing so with two guidance documents and with a pending decision about whether to approve the use by consultants of an updated ASTM standard used to clear commercial real estate transactions for environmental problems.

These obscure changes may matter a great deal very soon in the commercial real estate market. The changes are likely to result in many more properties being flagged as having “recognized environmental conditions,” under the ASTM1527-05 as updated in the new 1527-13, requiring Phase 2 sampling and weeks or months of delay in closing transactions.

Many of the affected properties are likely be flagged because soil vapor standards are poorly understood, not because any actual health risk exists. The marketability of many other properties will be called into question because EPA regions are using inconsistent standards for the same kind of soil vapor contaminant. As a practical matter, the most stringent standard may govern the whole country upon the insistence of sophisticated tenants. No retailer, for example, will want either its employees or customers in one state to be invited into a store when volatile organic compound (VOC) levels are such that an evacuation would occur for the same readings in another state.

There is no consensus among environmental consultants on how to interpret petroleum contamination on neighboring or nearby property and its effects on soil vapor. Some consultants insist that onsite soil vapor sampling is needed because of neighboring petroleum contamination, and do so based on facts that would not have previously triggered such sampling. As thousands of gasoline service stations have been closed since EPA’s national underground tank standards became effective in 1988, this problem will often arise in the next few years.

EPA’s guidance on underground petroleum tanks and their cleanup, published for comment in April 2013, may prove very helpful in avoiding needless sampling and delays because the guidance document sets bright-line standards for when petroleum contamination in soil or groundwater beneath a structure requires remedial action to prevent soil vapor intrusion. In at least one recent transaction on which I have advised, the buyer’s consultant insisted that onsite sampling was required to measure VOC vapor because property across the street had some residual petroleum contamination. That contamination had been left behind, with state approval, during the closure and remediation of tanks at an old service station.

Had the consultant applied EPA’s guidance, this delay and extra sampling (which confirmed that there was no cause of concern) might well have been avoided. Alternatively, the seller might have avoided the delay simply by agreeing to install the subsurface ventilation which would have been needed assuming contamination was present. Those ventilation systems can be cheaper than the cost of sampling.

A second proposed EPA guidance document addresses other soil contaminant vapors, including common degreasing solvents which do not decompose in soil as readily as petroleum does. This guidance document may result in EPA and the states revisiting many past hazardous waste site cleanup sites, under both federal and state law. Thousands of cleanup sites may be affected, including many where the parties thought they had finished remedial work long ago. Tens of thousands of buildings may be affected given the urban location and large acreage of some sites.

Because many of these VOCs decompose slowly, this guidance document lacks the physical separation standards of EPA’s petroleum tank guidance and may do little to resolve uncertainties. These uncertainties are made worse by big differences among EPA Regions over safety standards for some common VOCs, such as trichloroethylene (TCE), reportedly found at more than half the superfund sites on the National Priorities List (NPL).

Some EPA Regions are reportedly using values for TCE as low as two micrograms per liter and others 27. The standards are for different kinds of buildings (residential), to address risks to different populations (e.g. pregnant women to prevent cardiac birth defects), averaged over different periods of time (short term vs. three weeks). In practice, evacuations have been ordered based on grab samples at values above the long-term average, even though actual measurement of the long term average may have shown no risk.

Refinements in standards to address different populations, averaging times, and building uses are likely to be lost in real estate or merger situations, where time is of the essence. The quick way to avoid such problems may simply be to install additional subsurface ventilation as a shortcut around lengthy and often inconclusive air sampling within the structures.

For those involved in commercial real estate transactions, as well as those engaged in mergers and acquisitions involving significant real property, be prepared for a bumpy ride on environmental matters the next few years. While not all these bumps are avoidable, delay and expense may be minimized by a willingness to apply EPA’s petroleum tank guidance in appropriate cases, and to commit to install subsurface ventilation systems rather than engage in a lengthy sampling campaign which would result in a recommendation to install just such a system. The avoided delay and sampling cost will often outweigh the cost of installing more ventilation than may be strictly necessary.

- See more at: http://www.pattonboggs.com/viewpoint/epa-gets-the-vapors-part-ii#sthash.mUx8I1sE.dpuf

As noted in the post “EPA Gets the Vapors and Commercial Real Estate Feels the Chill,” EPA is now addressing the issue of vapor intrusion – harmful vapors from soil contamination migrating into buildings. The agency is doing so with two guidance documents and with a pending decision about whether to approve the use by consultants of an updated ASTM standard used to clear commercial real estate transactions for environmental problems.

These obscure changes may matter a great deal very soon in the commercial real estate market. The changes are likely to result in many more properties being flagged as having “recognized environmental conditions,” under the ASTM1527-05 as updated in the new 1527-13, requiring Phase 2 sampling and weeks or months of delay in closing transactions.

Many of the affected properties are likely be flagged because soil vapor standards are poorly understood, not because any actual health risk exists. The marketability of many other properties will be called into question because EPA regions are using inconsistent standards for the same kind of soil vapor contaminant. As a practical matter, the most stringent standard may govern the whole country upon the insistence of sophisticated tenants. No retailer, for example, will want either its employees or customers in one state to be invited into a store when volatile organic compound (VOC) levels are such that an evacuation would occur for the same readings in another state.

There is no consensus among environmental consultants on how to interpret petroleum contamination on neighboring or nearby property and its effects on soil vapor. Some consultants insist that onsite soil vapor sampling is needed because of neighboring petroleum contamination, and do so based on facts that would not have previously triggered such sampling. As thousands of gasoline service stations have been closed since EPA’s national underground tank standards became effective in 1988, this problem will often arise in the next few years.

EPA’s guidance on underground petroleum tanks and their cleanup, published for comment in April 2013, may prove very helpful in avoiding needless sampling and delays because the guidance document sets bright-line standards for when petroleum contamination in soil or groundwater beneath a structure requires remedial action to prevent soil vapor intrusion. In at least one recent transaction on which I have advised, the buyer’s consultant insisted that onsite sampling was required to measure VOC vapor because property across the street had some residual petroleum contamination. That contamination had been left behind, with state approval, during the closure and remediation of tanks at an old service station.

Had the consultant applied EPA’s guidance, this delay and extra sampling (which confirmed that there was no cause of concern) might well have been avoided. Alternatively, the seller might have avoided the delay simply by agreeing to install the subsurface ventilation which would have been needed assuming contamination was present. Those ventilation systems can be cheaper than the cost of sampling.

A second proposed EPA guidance document addresses other soil contaminant vapors, including common degreasing solvents which do not decompose in soil as readily as petroleum does. This guidance document may result in EPA and the states revisiting many past hazardous waste site cleanup sites, under both federal and state law. Thousands of cleanup sites may be affected, including many where the parties thought they had finished remedial work long ago. Tens of thousands of buildings may be affected given the urban location and large acreage of some sites.

Because many of these VOCs decompose slowly, this guidance document lacks the physical separation standards of EPA’s petroleum tank guidance and may do little to resolve uncertainties. These uncertainties are made worse by big differences among EPA Regions over safety standards for some common VOCs, such as trichloroethylene (TCE), reportedly found at more than half the superfund sites on the National Priorities List (NPL).

Some EPA Regions are reportedly using values for TCE as low as two micrograms per liter and others 27. The standards are for different kinds of buildings (residential), to address risks to different populations (e.g. pregnant women to prevent cardiac birth defects), averaged over different periods of time (short term vs. three weeks). In practice, evacuations have been ordered based on grab samples at values above the long-term average, even though actual measurement of the long term average may have shown no risk.

Refinements in standards to address different populations, averaging times, and building uses are likely to be lost in real estate or merger situations, where time is of the essence. The quick way to avoid such problems may simply be to install additional subsurface ventilation as a shortcut around lengthy and often inconclusive air sampling within the structures.

For those involved in commercial real estate transactions, as well as those engaged in mergers and acquisitions involving significant real property, be prepared for a bumpy ride on environmental matters the next few years. While not all these bumps are avoidable, delay and expense may be minimized by a willingness to apply EPA’s petroleum tank guidance in appropriate cases, and to commit to install subsurface ventilation systems rather than engage in a lengthy sampling campaign which would result in a recommendation to install just such a system. The avoided delay and sampling cost will often outweigh the cost of installing more ventilation than may be strictly necessary.

Topics:  ASTM, Contaminated Properties, EPA, Vapor Intrusion

Published In: Environmental Updates, Commercial Real Estate Updates, Toxic Torts Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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