Engineering Inc. - May/June 2006 - 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
Engineering Inc. - May/June 2006

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