REC stands for Recognized Environmental Condition (REC), and applies to Phase 1 Environmental Site Assessments. Per the American Society for Testing and Materials (ASTM), the term relates to potential releases of hazardous materials into the environment. A Recognized Environmental Condition (REC) is the foundation on which the Phase I ESA stands. The definition of the REC remains relatively similar since its inception in 1993. However, per the 2013 update of the ASTM E-1527 standard, the definition simplifies for better understanding and identification. For example, the prior definition conflicts with the writings of the “Comprehensive Environmental Response, Compensation, and Liability Act,” (CERCLA). Similarly, the prior definition conflicts with the Environmental Protection Agency’s (EPA) definition of “All Appropriate Inquiries.” Updated January 25, 2019.
The following is a summary of the current definition of an REC (within the ASTM E1527-13 standard):
An REC is the existence, or probable existence of a hazardous substance within a property. There are three possible scenarios per the ASTM definition. The first is that the REC is due to a release into the environment. Secondly, the REC is under conditions indicative of a release to the environment. And the third is that the REC poses a significant threat of a forthcoming release to the environment.
RECs may originate at the subject property, or on a nearby or adjacent property. Similarly, an REC can exist further away from the subject site. For example, a regional contamination plume can be an REC for any one of the properties overlying it. Observations of an REC can arise during the site inspection of a Phase 1 ESA. Moreover, RECs may come to light during Phase 1 ESA interviews, and a review of the regulatory and historical. Eliminating data gaps or limitations that impede REC identification is of utmost importance to the value of the Phase I ESA. In the case of long-developed properties, complete records aid in ruling out or identifying high risk use. For instance, historical gasoline stations, dry cleaners, or other industrial/commercial facilities. Basically places where hazardous substance or petroleum product usage is common.
It is important to note that, unlike pre-2013 REC definitions, the definition of a release no longer limits to the ground, groundwater or surface water of a property. In fact, by using the word “environment,” the ASTM additionally includes releases to air. Furthermore, soil vapor concerns are a point of consideration in this definition. These distinguishing factors must be taken into careful consideration when referencing historical on-site Phase I ESAs, or other assessments prior to the 2013 update. The following section discusses examples of how this change may impact a property, even when the land-use has not changed and prior Phase I ESAs don’t identify RECs.
For instance, in this scenario, consider a property which was formerly a fuel service station. At the time the station was shut down, confirmation sampling was a requirement. And a review of the laboratory sample reports suggests that a release of gasoline was present in soil. However, during the closure process, some remedial action in the form of excavation took place in effort to resolve the soil contamination area. As a result, the local environmental agency issued a “no further action” (NFA) letter. And the NFA letter acknowledges minimal remaining concentrations of benzene, toluene, ethylbenzene, xylenes (BTEX).
A 2004 Phase I ESA report for the property categorizes the former release as a “historical recognized environmental condition” due to the “NFA” status of the former case. However, a 2017 Phase I ESA report, per the new standard, reveals that soil vapor intrusion was not part of the prior examination. And as a result, the 2017 Phase 1 ESA indicates a potential soil vapor intrusion risk of BTEX at the property.
This conclusion stands, regardless of the fact the property remains vacant since 2004. Neither the prior environmental case nor the prior Phase I ESA addresses soil vapor at the facility. And according to current regulatory standards and the updated ASTM E1527-13, soil vapor must be taken into consideration to properly rule out any RECs. Furthermore, there is no existing soil vapor sampling data for the property. Therefore, the prior release case now represents an REC. And despite the “NFA” status and prior Phase I ESA conclusion, a Phase 2 Environmental Site Assessment is now the proper recommendation.
An environmental engineering company performs a Phase I Environmental Site Assessment at a dry cleaning facility in 2004, before the update. This facility has a history of PCE solvent usage, which identifies as an REC. In the same year, the REC undergoes further investigation through soil sampling as part of a Phase II ESA. And a detection of PCE in soil is below action levels at that time, thus no further action was necessary. As a result, the consultant recommended no further investigation back in 2004.
Now, after the ASTM standard update, the same company performs another Phase I ESA at the same dry cleaner. Under the current standards, the former dry cleaner also identifies as an REC. This is despite the previous sampling, because soil vapor must now be in consideration. And an additional Phase II ESA becomes a requirement in order to identify soil vapor intrusion risk, as a result of the PCE use.
As evidenced in the prior hypothetical examples, the changing ASTM standard impacted the identification of the environmental concerns. However, changing regulatory standards may also drive this difference. Regulatory action levels may become more stringent, and emerging contaminants identified.
It is in the best interest of all entities involved in real estate transactions that require a Phase I ESA to identify all possible REC. The level of risk in financing, purchasing, or developing a property is not able to be identified without a thorough assessment. Incomplete Phase I ESAs with data gaps that prevent the identification of all REC, ESAs that “write off” REC as lower risk issues, or assessments that do not comply with the ASTM E1527-13 standard may result in unforeseen costs associated with unexpected contamination issues, the loss of the “Innocent Landowner Defense” under CERCLA, and many other legal concerns.