Monday, October 18, 2010

Vapor Intrusion Becoming Game Changer for Diligence

During the 1990s, federal and state remedial programs moved away from requiring that all contaminants be removed from a site and began to implemented risk-based cleanups that focused onpotential risks resulting from exposure to contaminants in soil and groundwater for the anticipated land use. Under this approach, the soil cleanup standards adopted were developed using direct exposure to soil or impact to drinking water. If the soil was covered or groundwater was not used for drinking purposes, the remedial programs would frequently allow residual contamination to remain at the site provided adequate engineering and institutional controls were established to prevent unacceptable human exposures.  
Beginning in 2002, EPA and a number of states began to grow concerned about a third pathway known as vapor intrusion which involves the migration of volatile contaminants through the soil gas into building structures. EPA and the states realized that this contaminant pathway was far more complex than previously thought and that building occupants were being exposed to unacceptable levels of contaminated vapors under scenarios that the regulators had not previously thought possible. As a result, vapor intrusion is now driving many of the remedy decisions across the country.

Not surprisingly, phase 1 environmental site assessments had not customarily looked at the potential vapor intrusion impacts but instead focuses on soil and groundwater contaminant levels. Now, as the loan cycle for properties financed in the 1995-2005 time period begins to turn over, we are starting to get a clearer picture of how much vapor intrusion is changing the environmental due diligence landscape.

Just this past week, I had three loans for commercial properties where phase 1 reports had concluded that a prior or current dry cleaner did not represent a REC. In each case, a phase 2 had been performed around the turn of the millennium that had detected levels of PCE below applicable soil cleanup standards. Subsequent phase 1 reports concluded that the low levels of PCE did not represent a REC or were de minimis because no cleanup would be required for the low levels of PCE in the soils.

However, when the properties became due for refinancing this year, what were previously low levels for soil cleanup levels now exceeded the screening levels for vapor intrusion. As a result, each of these properties either underwent a vapor intrusion assessment or implemented a vapor intrusion mitigation remedy.

These examples illustrate the importance of carefully reviewing the findings and conclusions of prior reports that were completed prior to the advent of vapor intrusion era. Consultants will need to be prepared to explain to their property owners, lenders and attorneys why further investigation may be required when one or more phase 1 reports prepared prior to the middle of this decade may have given the same properties a green or clean bill of health.

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