New Standard for Phase 1 ESA’s

USEPA recently proposed a rule to recognize ASTM E1527-13 as sufficient to satisfy all appropriate inquiries investigation under CERCLA. ASTM E1527-13, issued as the environmental assessment industry’s standard for Phase I Environmental Site Assessments (ESAs), changes the old ASTM E1527- 05 standard with regard to the following:

A new category of Recognized Environmental Condition (REC), known as a Controlled REC (CREC). CRECs are specifically designed to identify environmental conditions which are controlled, but could still give rise to obligations for the property owner in the future. Therefore, the category of Historical RECs (HREC) now covers only those historical RECs that are completely addressed, with no future restrictions. This new category resolves the ambiguity with regard to HRECs that may give rise to future obligations, as opposed to completely remedied HRECs.

Expansion of the obligations of an environmental professional when conducting an ESA to include (i) searches of the judicial records in a county clerk’s office to locate and report environmental liens (ELs) and activity and use limitations (AULs), and (ii) a heightened reporting requirement regarding regulatory file reviews. Previously, environmental professionals and title companies routinely searched real property deed records for ELs and AULs, but not judicial records. This posed the risk that certain ELs and AULs might not be identified for the property owner. Also, environmental professionals previously were permitted to forgo reviews of regulatory files for adjacent properties. ASTM E1527- 13 does not require that such reviews take place in every instance, but does require the environmental professional to explain, in detail, why such a review is not warranted in each instance where one is not conducted.

Increased focus on vapor migration risk for properties. In recent years, vapor migration on properties has been increasingly important for lenders, among other parties. Often, it was unclear whether an ESA should include an analysis of vapor risk. ASTM E1527-13 amends the definition of “release” and “migration” to include vapor contamination, in addition to contamination of the soil and groundwater. Going forward, environmental professionals will likely treat vapor migration risk more directly in ESAs rendered on properties, though the new standard does not include any requirement that an ASTM E2600 screen assessment for vapor be conducted in every instance.

EPA approved the new standard in December 2013. Property owners should note that the EPA is not requiring that all ESAs be conducted in accordance with the ASTM E1527-13 standard. The prior standards (including the EPA Final Rule (40 CFR part 312), ASTM E1527-05, and ASTM E2247-08) are still acceptable for purposes of satisfying EPA requirements in conducting ESAs. But, for purposes of meeting the EPA’s “all appropriate inquiry” standard under CERCLA to establish the bona fide prospective purchaser, contiguous property owner, and innocent landowner liability protections, ESAs conducted in accordance with the new ASTM E1527-13 standard will entitle the property owner to CERCLA’s landowner liability defenses.

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