• EPA Proposes to Remove ASTM E1527-05 as an Approved Standard for Conducting Environmental Site Assessments
  • August 12, 2014 | Author: Boyd A. Bryan
  • Law Firm: Jones Walker LLP - Baton Rouge Office
  • One of the most significant sources of liability for cleanup of contaminated sites is the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"). Under CERCLA and its state counterparts, the current owners or "operators" (which includes tenants) of property are potentially liable for the cleanup of existing contamination even if the contamination was caused by another and occurred before the owners' acquisition or the tenants' possession of the property.

    CERCLA provides limitations to environmental liability, however, to three types of landowners: "innocent landowners" who purchase the property without knowing, or having any reason to know, of existing contamination on the property; "contiguous property owners" who own property that is contiguous or otherwise similarly situated to contaminated property owned by another; and "bona fide prospective purchasers" ("BFPPs") who purchase property with knowledge of existing contamination and take "reasonable steps" described in the statute with respect to the contamination after the purchase.

    Also, in a guidance document adopted on December 5, 2012, titled, "Revised Enforcement Guidance Regarding the Treatment of Tenants Under the CERCLA Bona Fide Prospective Purchaser Provision," the Environmental Protection Agency ("EPA") states that it will exercise its enforcement discretion to also give tenants the benefit of the BFPP limitation to environmental liability. Logically, if a tenant takes possession without knowing, or having any reason to know, of existing contamination, it should be protected from liability to the government for cleanup of existing contamination as an "innocent tenant" (similar to an "innocent landowner").

    To qualify for any of these liability limitations, however, the owner or tenant must, among other things, establish that prior to its acquisition or possession of the property, it carried out "all appropriate inquiries" into the previous ownership and uses of the property. In 2005, the EPA promulgated regulations providing that a pre-closing environmental site assessment ("ESA") conducted in conformance with either the EPA regulations set forth in 40 C.F.R. Part 312 or the ASTM E1527-05 standard titled, "Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process," satisfies the "all appropriate inquiries" test. Since then, it has been common practice for prospective purchasers to obtain an ESA of property conducted in accordance with the ASTM E1527-05 standard prior to the purchase of property.

    In November 2013, however, ASTM published an updated standard for conducting ESAs-the ASTM E1527-13 standard. The most significant changes from the prior standard (ASTM E1527-05) include:

    • Vapor Intrusion. The potential release or migration of vapors from contamination on the property, or vapor intrusion into structures on the property, must be considered. As a result, consultants preparing ESAs will need to assess possible indoor air quality impacts from vapor intrusion pathways if there is subsurface soil or groundwater contamination at or near the property.

    • Historical Recognized Environmental Conditions ("HRECs"). The revised definition clarifies that this term is limited to past releases of contamination that has been addressed to a degree that allows unrestricted (e.g., residential) use of the property, under current regulatory standards. Thus, if past remediation does not satisfy current, more stringent regulatory criteria, the remaining contamination may need to be designated as a recognized environmental condition ("REC") instead of a HREC.

    • Controlled Recognized Environmental Conditions ("CRECs"). This term has been added and is defined as past releases that have been addressed to the satisfaction of the regulatory agency (e.g., as evidenced by a no further action letter or equivalent from the agency) but allows contamination to be left in place subject to required controls (e.g., activity or use limitations or engineering controls).

    • Agency File and Records Review Requirements. The new standard provides a framework for verifying agency information obtained from key environmental databases, and clarifies that the consultant should make efforts to review and document the validity of information found from searches of environmental databases.

    In December 2013, the EPA issued a final rule stating that an ESA conducted in accordance with the new ASTM E1527-13 standard will constitute "all appropriate inquiries" as required to establish the limitations to environmental liability under CERCLA. In the preamble to the rule, the EPA recommends and encourages prospective purchasers to use the new standard. This new rule did not remove the prior standard-ASTM E1527-05-as an approved standard for ESAs. However, the EPA announced its intent to publish a proposed rule in the near future to remove ASTM E1527-05 as an approved standard.

    Following through on its stated intention, on June 17, 2014, the EPA published a proposed rule that would remove ASTM E1527-05 as an approved standard for conducting ESAs. In the preamble to the proposed rule, the EPA states that to allow parties an adequate opportunity to complete ESAs that may be ongoing under the ASTM E1527-05 standard and to become familiar with the new ASTM E1527-13 standard, it is proposing an effective date for the removal of ASTM E1527-13 as an approved standard as one year following the publication of the final rule. Public comment on the proposed rule ended on July 17, 2014, but the final rule has not been published.

    Thus, at present, ASTM E1527-05 and ASTM E1527-13 are both approved standards for conducting ESAs. Nevertheless, considering that ASTM E1527-05 likely will not be approved for much longer, prospective purchasers and tenants would be well-advised to obtain ESAs that comply with the new ASTM E1527-13 standard.