Engineering Inc. - May/June 2006 - (Page 40)

RISK MaNaGEMENt HOw TO MINIMIzE RISkS FROM PHASE I ESA SCOPE LIMITATIONS By Thomas E. Warn and Michael J. Yost E nvironmental engineering professionals are facing any Phase I ESA project that involves a data gap? Given today's busi- increasing difficulties in maintaining the delicate balance ness climate, this is not a realistic option, as clients are demanding to between satisfying client requests for timely, cost-effective pay less, not more. Phase I Environmental Site Assessment ESA reports and Should they note every data gap as significant to avoid this risk? meeting professional standards of care. This approach will also likely result in a current client becoming a Environmental professionals routinely receive client requests to former client, as the approach denies the professional the ability to be perform Phase I ESA projects without the requisite client-provided the consultant that the client expects her/him to be. information. But today's fast-moving, competitive financial markets How does the professional note a data gap as insignificant, but require many Phase I ESA clients to minimize the efforts and costs continue to transfer the risk of the data gap back to the client, where associated with these reports. And professionals are constantly being it rightfully belongs? pressured to find ways to be more efficient or eliminate review activi- In these cases, the professional must make a project-specific analysis ties that might normally be performed. to determine the significance of the data gap within the context of From a risk management perspective, this trend of cost and effort the specific site. A property located in an industrial brownfield downsizing should cause area, for instance, will likely have environmental professionals to more relevant environmental lien re-examine both the way Phase or activity and land use restric- I ESAs are performed and how tion information than a green- reports allocate the risks associ- field area site. The significance ated with the client's decision to of the data gap will differ as a reduce preparation activities. result. Potential liability always exists Specifically, clients must be when an environmental profes- warned that it is possible that the sional does not receive all the data gap, while believed to be information needed to perform insignificant, could uncover an a project. It is not uncommon to REC. Finally, and most impor- be involved in disputes where a tant, clients must be warned that Thomas E. Warn Michael J. Yost lack of client-provided informa- if they are unwilling to take on tion occurs, only to later find the risk of potentially missing an that Recognized Environmental Conditions RECs are not discov- REC, they should perform the activity that will alleviate the data gap. ered as a result. Using the environmental lien/activity and use limitation example, Under ASTM 1527-05, the professional is now responsible for the professional should warn that there is a possibility that a review noting data gaps in the Phase I ESA that the environmental profes- could locate information that would indicate the presence of an sional believes to be significant. This pushes the requirement of the REC. If the client cannot tolerate the risk of such a possibility, the professional from merely documenting the client's decision to professional must recommend the information be provided or requiring a warning to the client of the potential risks involved performed by the consultant despite it potentially being considered of allowing a data gap. insignificant. It also raises a practical problem for the professional in determin- The risk appears to have shifted back to the professional when ing whether the data gaps are significant. Even an insignificant gap a data gap is allowed. A project-specific approach to analyzing carries risk that the missing data could find an undiscovered REC. data gaps and adequate client warnings regarding the specific risks If an REC is later discovered that would have been found had the involved should help shift the risk back to the client. It is the client data gap not occurred, the client and possibly his or her lawyer is who is required to provide the data, and the client should take on the going to characterize the data gap as significant. The practical result accompanying risk. n is that the professional and not the client may take on the risk of data gaps if the report does not carefully discuss them and the risks Thomas E. Warn is a principal with Terracon Consultants, Inc. and involved. serves as Terracon's director of environmental services. Michael J. Yost Where does this leave the professional? Should they now refuse is Terracon's general counsel for risk management and litigation. 40 ENGINEERING INC. MaY / JUNE 2006

Table of Contents for the Digital Edition of Engineering Inc. - May/June 2006

From ACEC to You
News & Notes
Market Watch
Legislative Action
Firm Footing
Bush Addresses ACEC Members
Engineering Excellence Awards
Minimize Risks from Phase 1 ESA Scope Limitations
Business Insights
Managing Sales Ethics . . . Avoiding a Slippery Slope
Members in the News
One on One

Engineering Inc. - May/June 2006