As public awareness of environmental issues has increased, environmental engineers and consultants have become an increasingly important part of real estate development. The need for environmental expertise began rising as environmental regulations within the real estate industry became more complex and as lending institutions began to require environmental site assessments.

New programs, including risk-based closures and brownfield redevelopment, have made the industry of environmental engineering even more important. These programs allow companies to leave some amounts of certain contaminants in the environment, and it is the environmental engineers and consultants who help regulate safe levels of these contaminants. "We have become more integral in the development process largely because of the risk-based corrective action that has been instituted and the common sense that has come into play as far as clean up of sites as well as the programs like brownfields redevelopment," says Bill Leonard, a principal environmental geologist with Chantilly, Virginia-based ECS, formerly known by its full name, Engineering Consulting Services Ltd.

Sites that previously were not considered viable because of high risk potential or potentially high clean-up costs "are now being considered outstanding real estate deals," Leonard continues. "People are willing to put the money in and do the corrective action and turn those into working properties again. And the environmental consultant is a key part of that."

The Role of Environmental Engineers and Consultants

Environmental engineers and consultants help people in the real estate industry "work their way through state and federal regulations," says Leonard. "We serve the role of a facilitator. Many of those regulations are difficult to understand or are expensive to deal with, and I think that the most important service we have provided is to help them negotiate those regulations and turn properties into viable marketable commodities."

ECS primarily handles Phase I environmental site assessments and Phase II site assessments. The company also removes underground storage tanks and oversees remediation of contaminated sites.

"We are involved initially in the due diligence process on real estate transactions, which would include Phase I environmental site assessments," says Richard Simon, district manager in the New Orleans office of Oakbrook Terrace, Illinois-based PSI. The company is also known as Professional Service Industries Inc.

PSI performs Phase I environmental site assessments (ESA) to determine any potential environmental issues for specific properties. "Basically we try to determine if there are any environmental problems on that property, whether they be onsite, historical or an offsite concern," Simon explains.

If there are no problems, the company recommends no further assessment of the site. If there are potential problems, PSI recommends more testing, called a Phase II environmental site assessment. This assessment includes collection of soil and ground water samples for analysis. If the analytical data that PSI gathers exceeds the regulatory standards, PSI would notify the regulatory agency of the contamination. The company would then submit a work plan to identify the magnitude of the contamination, get that plan approved by the regulatory agency and implement the work plan.

"Based on what we find, there are several different options," says Simon. "One, it could go to a risk-based closure, which is where you take site specific data or site specific characteristics of a property and evaluate that."

Additional analysis determines "what would be an acceptable level of contaminant to remain in place. This allows you to leave more contaminants on a site versus a full-blown remediation. But it is a long, drawn-out evaluation that takes a quite a while to get through the regulatory process," he says.

"If the property goes to risk-based closure, generally a risk assessment determines whether or not there are 'sensitive receptors' in the path of exposure," explains Leonard. "If you have a housing development and you have children playing out in the playground area and some kids potentially eating handfuls of dirt, obviously there is more risk than if you have an office building on that same site. Because the risk factor is greater for an area that is slated for residential development, such sites will require more clean-up."

Another way to handle minimal contamination is to do some remediation, according to Simon. "You could do soil excavation, some groundwater treatment or a combination of both. There may be a situation where an area of a property is highly contaminated. We could remove that area and then we could get a risk-based closure on the remainder of the property."

Hot Topics

"In the environmental industry there has been a constant shift in the focus of what has been the hot button issue," says Leonard. "One of the most important things in the next few years will be the importance of air issues, such as mold. I think that these issues are going to need to be resolved in a lot of areas. It is a big pitfall right now, and a lot of lawsuits are cropping up against builders and developers."

"I think the biggest topic out right now is mold and indoor air quality," agrees Simon. "Fifteen years ago, it was asbestos. Then it became lead paint, but lead paint was never really as big a problem as everybody thought it would be."

Some air quality problems are found in existing or new structures that were not built correctly, according to Simon. "If the building envelope is not constructed appropriately or the roof is not installed correctly, there can be water intrusion, which can cause mold and microbial growth. We have had several projects where there were problems in construction or the building was 'sealed up' while moisture was still within a wall cavity, which caused mold growth in some areas of the building."

"Often with mold and indoor air quality issues -- or 'sick building syndrome,' as it is called -- you can visually identify mold growth," Simon continues. "Sometimes, there is olfactory identification. A lot of times we get involved in projects because personnel that work at that particular facility are having allergy or sinus problems."

Mold growth on the walls of the interior of the structure requires correcting the source of the moisture. After the original problem has been solved mold growth can usually be stopped by using bleach or a fungicide to kill the mold, but sometimes the problems are more severe. For example, "if the mold is on a wall, you might have to cut out the sheet rock wall with the mold, dispose of that and repair the wall," says Simon.

Another issue important to environmental engineers is protecting natural resources. Water, for example. "The water resources for the Atlanta region are very limited. There is a lot of scrutiny over how much water the state of Georgia pulls out of the waterways and how much Alabama and Florida use," comments Jim Hamilton, president and owner of Atlanta-based Southern Civil Engineers, a company that provides civil engineering services to land developers.

Hamilton serves on a governor-appointed council that is dedicated to keeping Georgia's rivers, streams and water sources clean. The Erosion and Sediment Control Overview Council is charged with developing "rules and regulations to promote cleaner waterways and streams throughout the state of Georgia," says Hamilton. "There is so much development activity going on throughout Georgia that we need to do a better job of protecting these streams from construction."

The council includes engineers, architects, developers, contractors and people in the engineering industry. Each member of the 9-person council has spent more than 200 hours reviewing construction sites across Georgia. "We find that a lot of problems occur in rivers and streams during construction if the systems that were designed to protect that site were not designed properly, were not constructed properly or were not maintained properly," says Hamilton. Based on this research and the experiences of each council member, the council is helping to draft new legislation that may go into effect early next year.

"There are some good laws already on the books," notes Hamilton. "We decided to evaluate the laws that we have and to make those laws more streamlined and easier to follow. We decided to better educate everyone involved in the development process. We also decided to come up with better enforcement mechanisms. Construction activity is so vast and widespread, it is hard for the regulating industry to keep a handle on it."

Recommendations the council has considered presenting to the legislature include giving the Environmental Protection Division the ability to hire more people to help enforce laws and instituting mandatory educational programs for all people involved in development.

Hamilton, who serves on the council's education subcommittee, says early discussions have focused on requiring courses for those involved in the land development process, including contractors, developers and professional engineers who design plans for developers. Additionally, regulators who permit development processes will be required to take courses. "And we are looking at requiring you to pass a test to prove you understand the whole erosion and sediment control process," says Hamilton.

The council is working with the Department of Natural Resources, and the two organizations propose to introduce legislation in January 2003. "Between now and then, we are spending many hours meeting with all of the stakeholders in the process, including the development community, contractors and environmental groups. They play a big role in this process," says Hamilton. "We meet once a month and we want anyone who is involved in this process to bring their experience or issues to the table. When we go before the legislature in January, we will have a lot of support for what we are trying to do. We all share the same common goal to keep our rivers throughout the state as clean as possible."

"We are going to be influenced by environmental sensitivity," notes Hamilton. "I think that the water is going to be a big concern that is going to affect not only engineering but will affect the development industry. I think the real estate developers that understand this and take a proactive role to protect our environment are the ones that are going to not only survive and succeed during this time but also those that will be considered good stewards of our land."

Changes in the Industry

"One of the main things that I see about this industry is that we as consultants have to be very re-active to what the market needs. We have to react both to the little issues that occur with our individual clients and to the big changes in the industry," says Leonard. "The focus of the industry can change rapidly. I don't know where the Phase I ESA industry is going to be in 10 years. It may be that the proliferation of insurance will make Phase I ESAs a thing of the past."

In lieu of Phase I ESAs, some lenders are offering environmental insurance that will get developers and owners out of a site that runs into significant environmental issues. "That insurance won't remediate the problem on the property but it basically insures the loan so those people don't end up losing everything if environmental issues are found," Leonard explains.

While Leonard says environmental insurance may not catch on and certainly will not completely replace Phase I ESAs, "it may cut into the number of Phase I ESAs that are done across the country. This is something that people in my end of this industry may need to react to."

"We may become more focused on the evaluation and clean up of properties as opposed to the Phase I ESAs. We may move more into the Phase II and remediation markets in order to replace the workloads if Phase I ESAs begin to drop off," says Leonard.


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