New York City building owners and tenants are required, prior to any significant demolition or alteration work, to perform environmental testing to determine if “asbestos‐containing material” or “ACM” (defined as material containing more than 1% asbestos) is present at the work site. If ACM is found, the project is subject to onerous regulations regarding notifications, management, abatement, handling and disposal of the potentially harmful materials.

Vermiculite is a naturally occurring mineral frequently used as a component in thermal insulation and spray‐on fireproofing materials – including a WR Grace product known as “Monokote” that was applied to structural steel during the construction of many buildings. Prior to 1990, an estimated 70% or more of the vermiculite used in the United States was extracted from a single mine in Libby, Montana. The Libby mine, however, was found to have veins of naturally occurring asbestos within its vermiculite and was closed in 1990.

In 2005, New York State law was modified to designate “vermiculite insulation” as a “Suspect Miscellaneous ACM” that must be treated as ACM unless proven otherwise by approved laboratory testing. In April 2011, however, the New York State Department of Health (DOH) stated in a “FAQ” publication that “there is currently no approved analytical methodology to reliably confirm vermiculite as non‐asbestos containing.” This conclusion was reiterated by DOH in “informational letters" issued in June and August 2012, which stated that testing of asbestos content became less reliable as a material’s vermiculite content increased. Thus, material found to contain 10% or more vermiculite was required to be treated as ACM regardless of laboratory analysis, using previously accepted testing methods, indicating an asbestos content of 1% or less. Only where the material contained less than 10% vermiculite would the results of the previously approved laboratory methods continue to be considered.

In response to DOH’s action, individual real estate owners, real estate and business industry associations, working together with environmental consultants and laboratories, began the arduous process of developing alternative vermiculite testing methodologies for presentation to DOH’s Environmental Laboratory Approval Program (ELAP). At least two alternative methodologies, both of which involve the removal and/or isolation of vermiculite from the underlying material, are working their way through the ELAP approval process. DOH is considering both methodologies, and has indicated that it intends to approve one or both as accurate and reliable means by which to measure asbestos content in vermiculite‐containing materials. The approval process, however, originally estimated to take from two to six months, now appears likely to take significantly longer than expected.

On July 9, 2013, DOH issued an “interim guidance letter” modifying the position set forth in its 2011‐12 publications by providing “a testing alternative for materials containing vermiculite, to be used until new testing methods are established that effectively remove vermiculite from test samples and accurately identify asbestos.” The July 9th letter specifically states that it “supersedes and replaces” DOH’s prior “FAQ” publication and 2012 “informational letters,” thereby eliminating the non‐rebuttable presumption that materials containing 10% or more vermiculite must be treated as ACM.

Under DOH’s new guidance, “thermal systems insulation (TSI), surfacing material, or other presumed ACM (PACM) or miscellaneous suspect ACM” must be tested, using ELAP Certification Manual Item 198.1 testing (a stratified point counting method), to determine their vermiculite content. If the material in question contains 10% or less vermiculite, additional testing pursuant to Item 198.1 may then proceed to determine if the material has more than 1% asbestos (the ACM threshold). If the material contains more than 10% vermiculite, however, testing of its asbestos content may go forward using ELAP Item 198.6 (a gravimetric reduction method).1 If the Item 198.6 testing indicates that the material has an asbestos content of 1% or less (below the ACM threshold), the work may proceed as a non‐asbestos project provided the reported test results include a “conspicuous disclaimer” stating:

“This method does not remove vermiculite and may underestimate the level of asbestos present in a sample containing greater than 10% vermiculite.”

Although specifically delineated as “interim guidance” applicable only until a vermiculite removal and/or isolation methodology for asbestos testing receives ELAP approval, DOH’s July 9th letter has immediate and significant repercussions for the New York real estate industry. No longer are work projects subject to onerous asbestos regulations solely because of the presence of vermiculite‐containing materials that may or may not, in fact, contain greater than 1% asbestos. Rather, if existing approved testing methods (ELAP Items 198.1 and, if applicable, 198.6) indicate that a material is not ACM, work will be permitted to proceed as a non‐asbestos project provided the appropriate disclaimer is contained in the reported test results.

In some respects, however, DOH’s new guidance creates additional uncertainty. It is unclear, for example, what will happen if Item 198.6 testing allows a project to go forward as non‐asbestos work, and later testing using a subsequently‐approved vermiculite removal and/or isolation methodology indicates that ACM is or was present. It is also difficult to predict how contractors and labor unions will respond to DOH’s disclaimer language – which seemingly acknowledges that a non‐asbestos finding following Item 198.6 testing might not, in fact, be accurate – or how that language could be used against a building owner or its agents in toxic tort litigation that could arise years later. An argument could be made that the required Item 198.6 disclaimer nullifies any potential defense that an owner justifiably relied on state‐sanctioned testing to confirm the absence of ACM on a jobsite. Although many owners will deem these risks negligible, some might choose to delay work until a final testing methodology is approved or to abate and avoid risk entirely.

Many environmental consultants have indicated that they will sign‐off on a project’s non‐asbestos status to the extent permitted by DOH’s new guidance. It will be some time, however, before the full ramifications of DOH’s reversal, and the potential risks and liability exposure to a building’s owner, can be identified and meaningfully evaluated. We will continue to monitor this situation and provide updates as additional relevant information comes to light. If you have any questions in the interim, please do not hesitate to call.