EPA Recognizes New Standard for Phase I Environmental Site Assessments in Real Estate Transactions

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Effective December 30, 2013, the Environmental Protection Agency (EPA) has amended its regulations for site assessments in real estate transactions to add a new standard, ASTM E1527-13, as satisfying the agency’s requirements for conducting All Appropriate Inquiries under the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). For parties considering a new real estate transaction, this new standard is more rigorous and may be more costly and time consuming to complete so parties should consider negotiating longer environmental due diligence inspection periods to ensure sufficient time to complete their reviews.

Although EPA strongly urges use of only the ASTM E1527-13 standard going forward, parties may continue to use either the ASTM E1527-05 or the ASTM E1527-13 standard for Phase I Environmental Site Assessments until EPA issues a final rule that removes reference to the former standard. After that time, only Phase I Environmental Site Assessments that meet the ASTM E1527-13 standard may satisfy All Appropriate Inquiries.

Background

EPA adopted the “All Appropriate Inquiries Rule” (40 CFR Part 312) in November 2005. At that time, EPA referenced a standard developed by ASTM International, ASTM E1527-05 “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process,” as satisfying the agency’s rule. Any party seeking to avail itself of the federal CERCLA environmental liability protections for: 1) innocent landowners, 2) bona fide prospective purchasers or 3) contiguous property owners must satisfy the standards and practices established under the “All Appropriate Inquiries Rule” prior to acquiring the property.

ASTM recently issued a new, more rigorous standard for Phase I Environmental Site Assessments, ASTM E1527-13. Among other changes, the new standard makes stronger recommendations for environmental professionals to conduct regulatory agency file reviews, places greater emphasis on identifying impacts to the subject property from vapor intrusion as recognized environmental conditions (RECs) and modifies or adds certain definitions, such as to the definitions of RECs, historical RECs, and controlled RECs.

In its December 30 rulemaking, which was effective immediately upon publication in the Federal Register, EPA amended 40 CFR Part 312 to reference ASTM E1527-13 as satisfying the agency’s requirements under the All Appropriate Inquiries Rule. Currently, the rule recognizes both ASTM E1527-05 and E1527-13 as satisfying All Appropriate Inquiries. However, in its rulemaking EPA indicated the agency intends to publish a proposed rulemaking “in the near future” that will remove from the All Appropriate Inquiries Rule reference to the ASTM E1527-05 standard.