State Court Decision Ilustrates Dangers of Inadequately Evaluating Neighboring HRECs

The ASTM E1527 Phase 1 standard contains a term "Historic Recognized Environmental Condition" or HREC. The term was added to the standard in 2000 to provide a tool for consultants to help distinguish between properties 

where there was a release in the past that was satisfactorily remediated with sites that have historic contamination that have not been addressed. Because banks and property owners prefer that phase 1 reports not have RECs, the HREC provides a mechanism to allow the consultant to fulfill its obligations by flagging that there was a REC in the past while preventing the property from being unduly stigmatized by a release that no longer poses a risk to human health or the environment. 

Unfortunately, many consultants do not understand this term or use differing approaches for determining if a former REC can now be considered an HREC. Some EPs identify former releases that have been remediated to satisfaction of a regulator as an HREC. Others will identify a former REC as an HREC where residual contamination remains but the site has properly implemented  post-remedial institutional and engineering controls. Some EPS take the position that only "clean closure" sites may be an HREC while a narrower universe believe once a REC always a REC. 

A recent texas state case illustrates the dangers of not properly evaluating an HREC. In E-Z Mart Stores, Inc v Ronald Holland's A-Plus Transmission & Automotive, 2011 Tex. App. LEXIS 6000 (Ct. App. 8/3/11), E-Z Mart had purchased a site from Mapco in 1989 with an open spill. E-Z Mart remediated site and obtained NFA in 1998.

Meanwhile, Holland A-Plus Transmissions which owned property adjacent to the E-Z Mart site, entered into lease agreement with a cell phone provider to build and lease a cell tower. During drilling for tower, an explosion occurred due to gasoline vapors. The cell company subsequently terminated its lease and Holland was unable to loan for business expansion. Holland discovers benzene 8 times acceptable levels and sues E-Z Mart gas station. 

A series of complex lawsuits followed that resulted in jury trials.  A jury awarded Holland $550K in damages on nuisance and negligence grounds. E-Z Mart appealed. After a series of rulings, the appeals court affirmed the jury verdict in favor of Holland but ruled that the trial court had erred when it refused to allow E-Z Mart to introduce evidence of Mapco's liability.

It is unclear what level of diligence was done prior to the construction for the cell tower. Presumably, the parties believed that the Holland site could not have been impacted by the E-Z Mart site because of the NFA letter. In is unclear if a file review would have produced any evidence to suggest that the levels left behind at the E-Z Mart site could pose a risk to the Holland property. It may be that the contamination was missed during the UST remediation.

Since the late 1990s, the conventional wisdom is that petroleum contamination biodegrades and therefore does not pose a significant risk of vapor intrusion. This is another example of how that common perception may be wrong particularly in urban areas where underground conduits may serve as preferential pathways and significant pavement can reduce the amount of oxygen available for biodegradation.