EPA Adopts New Standard for Environmental Due Diligence

In a rule published on December 30, 2013, and effective immediately, the U.S. Environmental Protection Agency (EPA) has adopted a new standard (at 78 Fed. Reg. 79319) for conducting All Appropriate Inquiries (AAI) at potentially contaminated sites. Conducting AAI is necessary for prospective purchasers of property to avoid liability under the Comprehensive Environmental Response, Compensation, and Liability Act.

Prospective purchasers may satisfy the AAI rule by complying with the applicable ASTM standard for Phase I Environmental Site Assessments. EPA’s December 30 action means that the applicable ASTM standard for conducting Phase I Environmental Site Assessments is no longer E1527-05, but is E1527-13. The new requirements are expected to make Phase I Environmental Assessments take longer and cost more.

AAI under ASTM E1527-13 will be different in several respects from AAI under ASTM E1527-05. Some of the most significant revisions include:

  • Migration of contaminants: The definition of “migration” has been expanded to include the movement of vapors from hazardous substances or petroleum in subsurface soils and groundwater. This means that the environmental professional conducting the review must consider potential impacts to indoor air quality caused by vapor migration, although the standard specifically states that a full vapor encroachment screening is not required.
  • Definitions: The new standard also includes revisions to the definitions of Recognized Environmental Condition (REC) and Historical Recognized Environmental Condition. A Historical REC is limited to past releases that have been addressed so that unrestricted use of the property is allowed. The standard added a new term—Controlled Recognized Environmental Condition—to describe past releases that have been addressed but contamination remains in place subject to the implementation of required controls.
  • Regulatory agency file and record review: Environmental professionals must review regulatory files pertaining to the listing of the property on state or federal environmental databases to determine whether the listing constitutes an Environmental Condition. If the environmental professional determines that regulatory file review is not warranted in a specific circumstance, the report must include a justification for omitting the review.
  • User responsibility: The user (i.e., the person intending to rely on the report to satisfy AAI and avoid liability) must conduct a title search for environmental liens and limitations on use and must search judicial records if the jurisdiction only records or files such liens and limitations in judicial records. If the user does not perform the search, the environmental professional must note this fact in the report and must opine on the significance of the absence of this information.

EPA plans to propose a rule to remove references to the E1527-05 standard from the AAI rule. However, EPA’s promulgation of the final rule adopting E1527-13 means that the new standard is in effect and all Phase I Environmental Assessments issued after December 30, 2013, should conform to the new standard. A copy of the new standard may be purchased from the ASTM International website.

Topics:  Environmental Assessments, Environmental Liability, Environmental Policies, EPA

Published In: Environmental Updates, Commercial Real Estate Updates, Zoning, Planning & Land Use Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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