Law and the Environment

Will New ASTM Standard for Assessing Vapor Intrustion Wreak Havoc on Phase I Environmental Site Assessment Process?

Sitting at a Starbucks at in Dallas, Texas, I'm looking North at a Chevron-branded station owned by TETCO.  This is clearly noted on the sign with regular gasoline at $3.19 per gallon.  Clearly I am sitting downhill from the station, and if my client were buying the shopping center, my first suggestion would be testing the groundwater to see if the underground storage tanks containing various grades of gasoline or diesel below the gas station/convenience store have leaked and contaminated the property--under the Starbucks.  When I visit this site after dropping my daughter at school, I see the capped groundwater monitoring wells.  I would venture a guess that the hundreds of people who walk over or park on top of them have no idea what they are?  The two charming elderly women sitting outside the women in front of me have no idea that their may be gasoline and diesel 10 or 20 feet below their feet.  In reality, they probably have no reason for concern.  But a new standard for assessing risk from vapors from soil and groundwater may create havoc for real estate developers and banks.

Thinking about these issues is no different from any day in the office as an environmental lawyer.  (The "office" having grown with laptops, Blackberries, and cell phones to be about anywhere I am, ergo sitting in Starbucks with my T-Mobile connection blogging about an environmental issue--the mobile environmental lawyer.) Tanks leak.  Piping leaks.  People drive off and pull of the hose dispenses or otherwise spill fuels.  This is nothing new and has been going on for decades.  What is new is an ASTM standard for assessing the risk that those chemicals in the soil and groundwater are turning into vapor and getting into a building?  Could this new standard wreak havoc on the Phase I environmental site assessment process?  Could it be that I'm breathing benzene as I sit here typing this message?

It's actually unlikely.  My toxicologist friends working who work with me to assist clients in advising clients who remediate contaminated sights say it is highly unlikely in most instances.  In fact, they tell me it is when you fill up your car that you get your biggest shot of benzene--a known human carcinogen. 

So why the ASTM standard for assessing these risks if in fact they are so unlikely?  In the environmental regulatory world I live in as a corporate environmental lawyer since I graduated from Harvard Law School over 20 years ago, the regulatory agencies have begun to focus on these issues.  Yes, primarily in California, where all environmental regulatory programs tend to start (California has enacted and will be implementing a climate change greenhouse gas program before the Congress passes a bill), and the Texas environmental agency has not really tackled this issue and does not necessarily require that it be assessed.  Reportedly, the California agency is going back to sites closed under old rules that did not require vapor intrusion analysis and requiring that the sites be re-examined.  EPA has issued guidance documents on the subject of vapor intrusions and how to test for it.

As regulatory agencies and scientists begin to look at vapor intrusion into buildings, these issues have come up in real estate transactions in many parts of the country.  Real estate developers, real estate investment trusts, and banks then start to ask questions and the environmental lawyers and environmental consultants that work for them in their transactions start to ask questions.  Is vapor intrusion a problem?  What are the concentrations of chemicals in buildings that may arise from human sources in the ground (in soil and groundwater)?  Do such concentrations present a risk to people who work, live, visit these buildings?

The new ASTM standard is titled "Standard Practice for the Assessment of Vapor Intrusion into Structures on Property Involved in Real Estate Transactions" (E-2600-08). Roger Smith of Weston in Dallas provided this summary of the Standard.

The standard provides for a tiered approach to assessing and mitigating vapor intrusion conditions (VICs):

Tier 1

– Screening Level Assessment conducted with information typically gathered for a Phase I ESA (current and previous property use, location relative to potential sources, etc.) to decide if a potential vapor intrusion condition (pVIC) is present. It would make sense to include a request for a E 2600-8 Tier 1 VI screening level assessment along with the standard ASTM E1527 Phase I ESA. Since the assessment is based to a large degree on information gathered for the Phase I, there should be little additional cost associated with the screening levels assessment.

Tier 2

– Screening Level Assessment conducted by comparing information typically gathered in a Phase II ESA (soil and groundwater analytical data) to risk-based concentrations (look-up values) to decide if a pVIC is present. The Tier 2 VI assessments will mostly likely be requested whenever a standard Phase II ESA is requested. Since this is comparison to look-up values, there should be little additional cost associated with the Tier 2 screening level assessment.

Tier 3

– Vapor Intrusion Condition Assessment using modeling, soil gas samples, sub-slab vapor samples (from within buildings), and/or indoor air samples to decide if a VIC is present. This would be conducted when it has been determined that a pVIC is present that could affect current or future development on the property. The least expensive approach is likely to be modeling using existing data. This is typically a very conservative approach that may overestimate the risk of a VIC. If additional sampling is needed, the cost for conducting a VI assessment would typically be less than the cost for a Phase II assessment of the property.

Tier 4

– Vapor Intrusion Mitigation by building design, institutional controls, or engineering controls (removal of source, barriers, or mitigation systems). The scope and cost would be highly variable for Tier 4. For new construction, all three options are available. For existing construction, you are typically looking at the options for engineering controls.

The Standard is dense and may cause insomnia for even an environmental lawyer or consultant, but it does have potential implications for real estate transactions.  While it is not a part of the Phase I Site Assessment Standard which is used on almost all commercial real estate transactions, it is an add on to this standard.  It may in time become a standard practice to evaluate soil vapor intrusion.

If this happens, it may raise new issues and confusion in the commercial real estate market.  Banks will be unfamiliar with it and may be skiddish about chemical vapors and buildings.  What we need is to try to educate the real estate and banking industry about these issues.  While it will take time, it may be important not to scare off buyers and banks over vapor intrusions.

First, real risks may be rarely found.  The concentrations necessary to create a risk to workers in office buildings and industrial or warehouse settings are probably going to be rare.  People may need to work in buildings for 20 or 30 years, which is rare these days.  For residences, the concentrations are probably rarely going to raise a concern.  Second, for new buildings a vapor barrier can be constructed to prevent vapors from entering structures.  For old buildings, steps can be taken to vent the vapors.

Environmental assessments have become a standard practice in the real estate industry.  If vapor intrusion assessments become more commonly a part of those assessments, we need to be sure they don't become a source of undue alarm.  As commercial real estate faces the collateral damage of the subprime mortgage debacle, we need to take care that a new environmental concern and potential risk does not hamper transactions and the health of the market.  Understanding the scientific realities and real risk analysis is the first step in this process. 

Municipal Setting Designations in Texas: Frequently Asked Questions

In 2003, the Texas Legislature passed a bill that created the Texas Municipal Setting Designation statute. The Texas Municipal Setting Designation (“MSD”) program provides a means to address the problem of contaminated shallow urban groundwater by authorizing the Texas Commission on Environmental Quality (“TCEQ”) after approval from local governments to create municipal setting designations to restrict the consumption of the contaminated groundwater.

We have prepared this set of answers to the Frequently Asked Questions we receive in our Municipal Setting Designation Practice, with the hope that it will help those not knowledgeable about the program to realize its benefits.

What are the risks of drinking urban groundwater?

Shallow urban groundwater can be contaminated by a variety of industrial sources, gas stations, dry cleaners, or other commercial activities, as well as disease vectors from various sources such as leaking private sewer lines and public sanitary sewer systems.  In most cases, shallow urban groundwater should not be consumed without testing and perhaps treatment.

What is a Municipal Setting Designation or MSD?

A Municipal Setting Designation identifies an area of contaminated groundwater that is not being used for drinking water purposes and ensures that the groundwater underneath that designation is not consumed in the future.  Before the TCEQ will issue an MSD, the groundwater has to be either deed restricted so it cannot be consumed or a city must have passed an ordinance restricting the use of the groundwater.

What does an MSD do?

Once issued, an MSD certificate restricts the ability of people to drink or otherwise use groundwater for potable purposes under the designated area.  Because shallow urban groundwater is rarely used at all let alone for drinking, it makes little sense to clean up this water to drinking water standards.  With an MSD, the cleanup level is changed so cleanup does not have to meet drinking water standards.  Since the area is supplied with a public drinking water source, the groundwater in these urban areas is very rarely used.

What does an MSD not do?

An MSD does not address any other environmental risks associated with urban groundwater.  For example, if the groundwater discharges to a creek or water body, the TCEQ would still require the responsible party to address any adverse impact to the surface water.  The same is true where there might be a risk of vapor from the groundwater rising into a building or other structure to such an extent that it created a human health risk.  Again, the TCEQ would require the responsible party to address those risks.

Where can an MSD be used?

An MSD can only be issued in cities that have a population of 20,000 or more in areas that have a public drinking water supply.

Does the MSD cover the entire area where groundwater may be found?

An MSD can cover one or many properties.  The City of Dallas generally requires that its properties be included in an MSD if they are adjacent to another property where an MSD application has been submitted.  We have pioneered the use of an MSD to address a large area of groundwater contamination covering 42 acres and numerous properties owned by six different parties.

What is the first step in applying for an MSD?

The first step in applying for an MSD is to submit an application to the city where the property is located and request approval of the application from the city council.  The city council must either issue an ordinance restricting the use of groundwater under the property or approve a deed restriction on the use of the groundwater. 

What is the second step in applying for an MSD?

Once approval is obtained from the city, an application must be submitted to the TCEQ.  The TCEQ actually approves and issues the MSD certificate.

Is there an opportunity for public participation?

Yes, most of the cities provide for a public meeting and then meeting before the city council. In the City of Dallas for example, owners of land within one-half mile receive notice of the public meetings.  The initial public meetings provide the community with an informal setting to learn about the MSD process and a particular MSD application and to ask any questions they may have.  The TCEQ also requires that owners of registered wells within five miles of the MSD property receive notice of an MSD application.