With all of the acronyms in the environmental consulting industry, reading a Phase I Environmental Site Assessment report can be a challenge. And if the report contains the acronym REC, confusion may give way to dread. A Recognized Environmental Condition, or REC, is a term used in a Phase I ESA report to identify a particular, potential environmental impairment on a property. However, finding a REC, HREC or CREC in a report is no reason to panic if you have a grasp of what they mean for your transaction.
AAI: The Most Important Acronym
A quick refresher on the importance of the Phase I ESA. All Appropriate Inquiries, or AAI must be conducted to obtain certain protections from liability under the federal Superfund Law (CERCLA). The ASTM E 1527-13 standard is consistent with the requirements of the final rule and may be used to comply with the provisions of the rule. A Phase I ESA report that follows this standard provides you with this protection.
REC: Recognized Environmental Condition
According to the ASTM E 1527-13, a REC is “the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property.” Most people associate RECs with leaking Underground Storage Tanks (UST) that were not properly closed, or property that was once a dry cleaner or a car repair shop, where toxic chemicals may have been used and not disposed of properly. However, RECs aren’t limited to just these types of properties. Greenhouses, orchards, printing facilities, and furniture making plants are a few of the more surprising locations where RECs can be found.
What a single REC, or multiple RECs, mean for your project can vary. “This is why we ask about a client’s transaction,” said Beth Sexton, PM Environmental’s National Manager of Due Diligence. “It helps us frame what needs to be done for the site and manage the risk accordingly.”
As an example, you may have a potential for contamination from an off-site source which you are not liable for, and the only risk of exposure is drinking contaminated water. If your property is on municipal water and you do not plan on installing a well, then in that instance a REC is easily managed
CREC: Controlled Recognized Environmental Condition
A relative newcomer to the ASTM E 1527 standard is the CREC, or a Controlled Recognized Environmental Condition. Added in the 2013 update, a CREC is described as “a recognized environmental condition that involves a past release of hazardous substances or petroleum products that has been addressed to the satisfaction of the applicable regulatory authority, with hazardous substances or petroleum products allowed to remain in place subject to required controls.”
Simply, a CREC indicates that there is known contamination on a property that is being managed by controls, such as use restriction or mitigation methods, which you are required to follow. These controls may include simply refraining from drilling a well for drinking purposes, maintaining pavement covering for parts of the property or installing a vapor barrier and conducting quarterly testing. A CREC is manageable if you have a clear understanding of exactly what is required of you as the owner and operator.
HREC: Historical Recognized Environmental Condition
Finally, HRECs, or Historical Recognized Environmental Condition are defined as, “a past, regularly reported, release of any hazardous substances or petroleum products that has occurred in connection with the property and has been addressed to the satisfaction of the applicable regulatory authority or meeting unrestricted residential use criteria established by a regulatory authority, without subjecting the property to any required controls.”
In a nutshell, an HREC is a release that has been adequately assessed and is not subject to required controls. The conditions were addressed to the satisfaction of the state, and the property can be used as if it were never contaminated (no type of deed restriction or engineered barrier needed).
The 2013 ASTM E 1527 update tweaked the HREC language to only include situations where there had been a release. If there was no release, it cannot be categorized as an HREC.
“Essentially, an HREC means it's all handled and nothing needs to be done,” said Sexton. “We are required to call these out by the ASTM standard.”
The Next Steps
There is no need for panic when you see REC in a Phase I ESA. Sometimes, the remedy may be following simple controls that are already in place. In any case, having an environmental consultant that understands your transaction and can suggest sensible and cost-effective options when a REC is more complicated is key to a successful project.
“RECs don't always require a Phase II,” said Sexton. “Sometimes, they can be managed by using other tools in the toolbox.”
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