Environmental Protection

An Unwelcome Intruder

A guide to what environmental professionals should know about vapor intrusion and its impact on real property transactions

Vapor intrusion. If you haven’t yet heard the term, you soon will: A growing environmental concern that has made national headlines, this indoor air quality issue develops when rapidly evaporating chemicals from polluted soil or groundwater make their way to the indoor air of overlying buildings, similar to the way radon enters homes. With its ability to affect human health—vapor intrusion can cause a wide range of symptoms including eye irritation, respiratory problems, headache, nausea, and in extreme cases, cancer—plus its potential to lower property values and expose building owners to liability, it’s no wonder this pressing problem is being given considerable attention by the environmental, legal and regulatory communities. Although there is still a great deal of uncertainty about vapor intrusion, and how to measure its effects on human health, recent case law proves that vapor intrusion is a real business and health risk with widespread implications.

Sleuthing for Suspect Sites

Sites that are most likely to be susceptible to vapor intrusion issues are those associated with operations involving volatile organic compounds (VOCs) and semi-VOCs. According to Blayne Hartman, Ph.D., a partner with H&P Mobile Geochemistry, common VOC sites include those with underground storage tanks, piping and refueling operations, and in colder climates, homes with internal oil tanks. Dry cleaners, engine and parts cleaning areas with vapor degreasers such as TCE and TCA, and any circuit board manufacturer are also suspect. Sites associated with the past use of semi-VOCs (e.g., naphthalene, polychlorinated biphenyls and pesticides), such as former manufactured gas plant sites and those with electrical power facilities, are particularly problematic, according to Hartman, because risk-based screening levels are typically very low.

As such, environmental professionals, particularly those involved in property assessments and indoor air quality studies, should familiarize themselves with the issues surrounding this pressing problem, along with the new ASTM (formerly known as the American Society for Testing and Materials) vapor intrusion standard anticipated to be published by the end of the year.

Background and Stakeholder Liability A relatively new concern that went unrecognized until the 1990s when the Massachusetts Department of Environmental Protection began to focus on the issue, vapor intrusion today is a widespread problem, potentially affecting thousands of sites nationwide. What’s more, the issue not only affects building occupants, who can become sick, it can impact every stakeholder in the real estate deal. Particularly, site owners and investors can find themselves stuck with a property that has a vapor intrusion problem left undiscovered prior to purchase. In turn, vapor intrusion can lead to liability, property value losses and stigma damages. Lenders, too, are not immune from the impact, since property, likely used as collateral, can become devalued or the borrower’s ability to pay back the loan compromised.

Despite the recent widespread scientific and regulatory attention given to vapor intrusion, confusion continues to surround the issue. Major questions include how to test for vapor intrusion, what limits are acceptable, and how best to tackle the problem. Yet with so much at stake for building occupants and property owners, the issue cannot be shelved until it is better understood.

“It’s an issue that is continually growing,” says Michael Mooradian, REA, an environmental professional with PSI Inc. “Today there are concerns about sick buildings, and people are more aware that subsurface contaminants may have a human impact beyond direct skin contact or ingestion.”

“Recent trends indicate that vapor intrusion is becoming more and more of an issue for lenders and attorneys,” says John Burkart, an environmental professional with LandAmerica. “Verification of the issue is warranted by lenders, especially if the property is residential. In my experience, vapor intrusion sampling to secure loans has increased 10 percent in the past year alone.”

Thomas Warn, an environmental professional with Terracon Consultants, Inc., says that vapor intrusion could have a huge impact on risk-based closures, for example, the “cap it” or “pave it” method of remediation on redevelopment sites. “Many clients have developed risk tolerance for groundwater issues originating off-site in urban areas where groundwater is not a potable resource. Since groundwater to indoor air is a potential pathway for vapor intrusion, this may cause people to rethink their risk tolerance regarding impacted groundwater, which will likely cause changes in redevelopment strategies in the urban cores,” he says.

Current Guidelines Inconsistent In an attempt to address the growing concern over vapor intrusion, in 2001 the U.S. Environmental Protection Agency issued its Draft Guidance for Evaluating the Vapor Intrusion to Indoor Air Pathway from Groundwater and Soils. The agency says the federal guidance, which was updated in 2002, will be revised as appropriate when the state-of-the-science improves.

Meanwhile, dozens of states have responded to the issue on the legislative and regulatory front, with several publishing their own, often conflicting, vapor intrusion guidelines.

Further complicating the issue is the fact that the standard environmental commercial property investigation—the Phase I environmental site assessment— does not typically include a vapor intrusion assessment, mainly due to a conflict in the current industry standard. On the one hand, it can be argued that vapor intrusion should be included in ASTM’s E 1527-05 Phase I standard under the definition of recognized environmental condition (i.e., “…release of any hazardous substances or petroleum products…into structures on the property…”). On the other hand, one could argue that the standard specifically excludes vapor intrusion under Section 12, which lists indoor air quality as a non-scope consideration.

ASTM’s Impending Vapor Intrusion Standard Because the environmental industry today relies on a site assessment standard with a conflicting position, and because vapor intrusion is already impacting commercial real estate, it was clear that the industry needed a consistent approach to guide vapor intrusion assessments. In October 2005, ASTM International approved a Vapor Intrusion Task Group (E50.02.06) charged with developing a national standard. The committee’s goal is that its vapor intrusion procedure be used “reasonably and early on” in property transactions, so as not to slow down the real estate deal. Committee members, including regulators, environmental consultants, lawyers, lenders, property owners, developers and investors, are working closely with EPA, states, lender professional organizations such as the Environmental Bankers Association and the Mortgage Bankers Association, and industry groups such as the American Petroleum Institute, Halogenated Solvents Industry Association and the Aerospace Industries Association. Committee Chairman Anthony Buonicore, PE, BCEE, expects that the standard will be approved in the fall and ASTM will publish it by year-end.

Environmental professionals see it as a welcome addition.

“By establishing uniform guidance as to how an assessment is performed and evaluated, the document will have a positive impact on both consultants and clients,” predicts Mooradian.

Burkart agrees. “ASTM’s efforts will bring to light potential vapor migration into buildings constructed over or near impacted sites. The standard will increase awareness of a vapor problem and assist lenders in evaluating potential risk concerns.”

Warn predicts that initially the industry will be confused about how best to comply with the standard, but in the end it will be widely adopted.

“The consulting community will need to educate clients on the best options available to manage business risks during due diligence and site redevelopment projects. Eventually, I believe the standard will provide substantial guidance that will allow for more consistency in how potential vapor intrusion issues are assessed.”

Tackling This Emerging Challenge When it’s released, the new ASTM standard will provide environmental professionals with criteria to determine when vapor intrusion needs to be considered and guidance on how to go about tackling the issue. Until then, any site with known or suspected contamination should be considered as a potential source of vapor intrusion, which, like other nonscope Phase I issues such as mold and lead-based paint, can materially impact the value of a property and lead to legal headaches for property owners.

To represent an environmental concern, vapor intrusion requires a source, an inhabited building, and a pathway from the source to the building occupants. Contaminants may exist in the soil, groundwater or as vapor clouds; overlying or nearby structures may be at risk. Risk level, the toxicity of the compounds in question and the exposure factors such as time, rates and ventilation are key factors in determining risk.

“As consultants, we are recommending a vapor intrusion assessment when certain conditions exist,” says Mooradian. “If VOCs are detected in the subsurface as part of a Phase I or II environmental site assessment, we often recommend a soil-gas survey to provide us with information on the magnitude and extent of these compounds.”

When assessing the problem, environmental professionals (EPs) should know that sites in certain databases raise red flags. These include Superfund (National Priority List) sites, Comprehensive, Environmental Response, Compensation and Liability Information System (CERCLIS), treatment, storage and disposal sites in Corrective Action (CORRACTS), state hazardous waste sites, leaking underground storage tank sites, landfill sites, current and former dry cleaning facilities, former manufactured gas plant sites and current and former gas stations. According to Buonicore, even sites with “no further action letters” from state agencies may present a vapor intrusion problem.

“New York state recently reopened more than 400 formerly closed sites due to suspected vapor intrusion contamination,” he says. “Furthermore, an informal survey of state dry cleaner trust fund programs revealed that only two state programs take the vapor intrusion pathway into account when ranking sites. Most focus on groundwater contaminant levels and whether groundwater is used for drinking water purposes. Buyers and lenders can no longer rely on the determination of these state programs, i.e., the site ranking, when evaluating risks posed by these sites.”

e-Sources
For more information on vapor intrusion, visit the following Web sites:
ASTM at www.astm.org;
U.S. Environmental Protection Agency at /www.epa.gov/correctiveaction/eis/vapor.htm,
Interstate Technology & Regulatory Council at www.itrcweb.org/teampublic_Vapor.asp.

Prior to tackling the vapor intrusion issue, EPs should first check state requirements, and if guidance has not been established, consider following EPA’s 2002 draft guidance document.

“Here in California, there is an advisory on active soil-gas investigations where protocols have been established to ensure reproducibility of the data and consistent testing methodologies. The use of these protocols in conjunction with the California EPA guidance entitled Use of California Human Health Screening Levels (CHHSLs) in Evaluation of Contaminated Properties provides not only a methodology for testing for subsurface vapors but also guidance concentrations based on health risk,” says Mooradian. “Because we work across the United States, we frequently run into the problem that guidance has not been established in the state in which we are working,” Mooradian continues. “In those instances, we take a conservative look, taking into account the local hydrogeology and proposed land use. In the West, we often follow California guidance due to the lengthy history of this type of testing in the state and the generally conservative nature of their guidance,” he says.

Post-ASTM standard, Mooradian will still recommend following state requirements.

“In states where guidance is already in place, those guidelines will probably be more extensive and take precedence, considering that most transactions are concerned about the likely possibility of regulatory intervention on a property. In jurisdictions where there is no guidance, ASTM’s standard should be welcomed because it provides a consistent approach to a vapor intrusion assessment.”

With all the publicity surrounding vapor intrusion, it is difficult to imagine that a lender or property purchaser would agree to forego a vapor intrusion assessment if asked.

“As an environmental professional,” Buonicore advises, “speak with your clients if you believe that vapor intrusion can potentially impact the real estate transaction, particularly if the property is located in a state with vapor intrusion regulations or a vapor intrusion policy. In the final analysis, clients depend on their environmental consultants to advise them on any environmental issue that can impact property value.”

Buonicore believes it would be difficult to completely ignore the issue, especially in states with active and well-publicized vapor intrusion programs.

This article originally appeared in the 10/01/2007 issue of Environmental Protection.

About the Author

Dianne Crocker is senior economist and managing director of EDR's Market Research Group. With 15 years of experience in the environmental industry, Crocker provides strategic data and analysis on environmental due diligence trends to environmental consultants, lenders, corporations, and other parties involved in commercial real estate transactions.

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