Expert Consultant Should Evaluate Land For Vapor Intrusion Before Sale, Lawyer Says

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SAN FRANCISCO—To protect against vapor intrusion liability in real estate transactions, a potential buyer should hire an expert consultant to evaluate the property, including for vapor encroachment and vapor intrusion, a lawyer told a conference May 20.

The buyer also should require full disclosure of pertinent records, including agency records, site investigations, technical reports, manufacturing processes, and what and how chemicals were previously used on the site, according to Edward L. Strohbehn Jr., a partner with Bingham McCutchen LLP.

Vapor intrusion refers to the migration of volatile chemicals from contaminated soil or groundwater into overlying buildings. Volatile chemicals may include volatile organic compounds, select semi-volatile organic compounds, and under some conditions some inorganic compounds, such as elemental mercury, radon, and hydrogen sulfide, according to the Environmental Protection Agency.

A “vapor encroachment condition” is defined by ASTM International (formerly the American Society for Testing and Materials) as the presence or likely presence of vapors from chemicals of concern in the subsurface of a property caused by the release of vapors on or near the property.

Strohbehn made his comments on the last day of a three-day conference called Sustainable Property Transactions: Managing Distressed Assets and Renewable Energy Opportunities. The conference was produced by RTM Communications Inc.; BNA was a co-sponsor.

The study of vapor intrusion and encroachment is a relatively new area and its pervasiveness and threat to human health still largely unknown. The third day of the conference was devoted to the vapor intrusion issues on distressed properties, including brownfields.

EPA Answers to 55 Questions Pending.

Another key action to protect against vapor intrusion liability is to achieve broad, strong seller representations and warranties, Strohbehn said.

A prospective buyer should also not obtain seller releases and waivers of claims—even limited ones, he said. A buyer should, however, obtain seller indemnification for pre-existing conditions and should establish environmental escrow, he said.

In a related area, Strohbehn said EPA is expected to issue soon “55 questions” on vapor intrusion and their answers, which will constitute a form of guidance. He could not speculate to BNA after the panel discussion how this material might relate to final vapor intrusion guidance, expected by the end of November 2012, that would update 2002 draft guidance (209 DEN A-7, 11/1/10).

EPA did not immediately respond to a phone call from BNA requesting comment on the 55-question document.

More than 30 states and several federal agencies, including the Department of Defense and the U.S. Postal Service, have issued vapor intrusion guidance, Strohbehn told BNA after the panel discussion. In addition, EPA Regions 3 and 5 have issued such guidance, he said.

By Pat Ware