iThe U.S. Environmental Protection Agency (EPA) issued a Final Rule on December 30, 2013 that approves use of the 2013 ASTM International E1527 standard for Phase I Environmental Site Assessments (2013 Standard) as an approved method for meeting "All Appropriate Inquiry." All Appropriate Inquiry is a component of several affirmative defenses to liability under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). This rule became effective December 30, 2013. While the previous standard may continue to be used, EPA has indicated that it will initiate rulemaking in the near future to remove the prior standard as an approved method.
As we reported previously, the ASTM International “E1527-05 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process” (2005 Standard) has been a tool for complying with EPA’s All Appropriate Inquiry requirements since November 2006. The codification of the ASTM standard at 40 CFR Part 312 confirmed that the 2005 Standard could be used for performing environmental due diligence by purchasers seeking to establish the innocent purchaser or bona fide prospective purchaser defenses under CERCLA. ASTM International's bylaws require standards to be updated and re-issued every eight years; after a three-year process, the organization recently revised the 2005 Standard and presented the 2013 Standard to EPA for approval as a tool to meet All Appropriate Inquiry obligations.
While the revisions to ASTM E1527-05 may not significantly impact the general performance of Phase I environmental site assessments, there are several potentially significant changes that could, for instance, increase the cost of such assessments and the likelihood of identifying recognized environmental conditions (RECs). The changes include:
-
Clarified definitions of RECs and Historical RECs;
-
Addition of the concept of "Controlled RECs," situations in which previous releases at a property that underwent risk-based closures were addressed, but contaminants were allowed to remain in place under certain restrictions or conditions, such as deed restrictions including Notices of Activity and Use Limitations;
-
Addition of vapor migration as a potential migration pathway that must be evaluated; and
-
A presumption that consultants should review agency files (as opposed to treating this as an additional task subject to an additional fee) or explain why such review is not necessary.
EPA received 41 comments on its proposal to adopt the 2013 Standard. Many comments criticized the EPA's proposal to allow users to rely on either the 2005 Standard or the 2013 Standard when performing All Appropriate Inquiry. Commenters worried allowing use of either the 2005 Standard or the 2013 Standard to satisfy All Appropriate Inquiry would fail to establish a system in which one standard practice applies to all transactions, create confusion in the market place and increase the difficulty of qualifying for CERCLA liability protections.
In response to these comments, EPA commended the 2013 ASTM standard stating that its use “will result in greater clarity for prospective purchasers with regard to potential contamination at a property” and recommended its use. Further, EPA stated that while the 2005 standard may continue to be used for now, EPA plans to publish a rulemaking in the “near future” to remove the 2005 standard from the regulations and eliminate its use to meet All Appropriate Inquiry.
