EPA Rule Adopts Revised ASTM Phase I Environmental Site Assessment Standard as Alternative Means to Conduct All Appropriate Inquiry

By: Christopher P. McCormack

The United States Environmental Protection Agency issued a final rule on December 30, 2013, endorsing ASTM E1527-13, “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process,” as an alternative means of conducting pre-purchase “all appropriate inquiry” (“AAI”) into the prior use and environmental condition of real property. The rule is effective upon publication. The Federal Register notice of the action is here.

The AAI Rule, 40 C.F.R. Part 312, defines the level of investigation necessary to qualify for certain landowner liability protections under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA or Superfund).

The widely-used 2005 version of the ASTM standard was developed in parallel with the original AAI Rule, which expressly cited it as a compliance option. In accordance with ASTM International’s standards development process, the 2005 edition came up for review to confirm consensus and identify provisions in need of updating. The revised version was published in November 2013 following several years of work by a task group comprised of public and private stakeholders including EPA staff.

Highlights of the revised ASTM standard include:

  • New provisions regarding evaluation of the vapor migration as possible “condition indicative of a release;"
  • Revised and expanded “recognized environmental condition” definitions, including a new “CREC” (controlled REC) category;
  • Clarification of the roles of environmental professional and owner in the assessment process; and
  • Clarification regarding the scope of regulatory record review.

As part of the rulemaking process, EPA prepared a concise summary of changes to the ASTM standard. The summary is available from the online docket here.

Most of the changes are incremental. EPA endorsed them as representative of “the evolving best practices and level of rigor that will afford prospective property owners necessary and essential information when making property transaction decisions and meeting continuing obligations under the CERCLA liability protections.”

With respect to identification of “recognized environmental conditions” or “RECs,” the revised standard clarifies the treatment of situations where historic contamination is present on a property and in compliance with regulatory requirements, but subject to institutional or engineered controls. In Connecticut, examples would include residential use limitations under an Environmental Land Use Restriction or Notice of Activity and Use Limitation, or an engineered control variance. Under the 2005 standard, the only available categories were REC, historic REC (HREC) or “de minimis.” Task group discussions revealed no consensus among environmental professionals about which category best fit properties with such controls. The CREC definition is the result, and conforming changes make clear that REC, HREC, CREC and “de minimis” are mutually exclusive categories.

In announcing the final rule, EPA repeatedly stressed that the changes in E1527-13 conform to EPA’s expectations about the conduct of AAI. For example, EPA said that “in its view, vapor migration has always been a relevant potential source of release or threatened release that … may warrant identification when conducting [AAI].” Similarly, EPA said that the new standard’s additional guidance concerning regulatory file review “clarifies that an environmental professional should make efforts to review and document the validity of information found from searches of agency databases.”

Comments on the initial EPA proposal expressed concern about adopting the 2013 version of E1527 without simultaneously deleting the existing reference to the now-superseded 2005 version. In the final rule, EPA announced that it will propose a separate rulemaking to delete reference to E1527-05. Meanwhile, EPA “recommends” and “strongly encourages” use of E1527-13. And with or without a supplemental rulemaking to delete reference to E1527-05, EPA warned that if the “enhanced standards and practices” of E1527-13 are not widely adopted, “EPA may examine the need to further modify” the AAI Rule to require them.

EPA’s adoption of E1527-13 for AAI purposes is most directly relevant where CERCLA landowner liability protections or brownfields grant eligibility are of interest. But EPA’s rulemaking also carries the endorsement that the revised standard “reflects the evolving best practices and level of rigor” expected in environmental due diligence. It thus confirms that the revised ASTM standard will be of interest to users of Phase I site assessments – property purchasers, property developers, financing and lending institutions – whether CERCLA landowner liability protections are a focus of environmental due diligence or not.

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