U.S. EPA Amends Its "All Appropriate Inquiries Rule" To Reference Updated Standards for Phase I Environmental Site Assessments

by Allen Matkins
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On December 30, 2013, the U.S. Environmental Protection Agency (EPA) amended its All Appropriate Inquiries (AAI) Rule, codified in 40 CFR Part 312, to include a specific reference to the updated ASTM International Standard E1527-13 for Phase I Environmental Site Assessments (ESA). The amendment establishes that compliance by qualified “environmental professionals” with the requirements of E1527-13 will constitute compliance with specific requirements of the AAI Rule and help to establish certain defenses to liability under the Comprehensive Environmental Response, Compensation & Liability Act (CERCLA). In the preamble to its rulemaking, EPA made it clear that it recommends use of the updated (E1527-13) standard. Prospective purchasers and lessees of contaminated properties who seek to claim a “bona fide prospective purchaser,” “contiguous property owner,” or “innocent landowner” exemption or defense to CERCLA cleanup liability should therefore instruct their environmental consultants to comply with the new ASTM standard immediately.

The new ASTM Standard E1527-13 makes some important changes to the prior standard (E1527-05) that has been specifically referred to in the AAI Rule since 2005, and that has been relied upon by prospective purchasers and lessees of real property (and their environmental consultants) to comply with the AAI Rule.

EPA's adoption of last week's amendment to the AAI Rule does not remove the reference to the older standard. Instead, in the preamble to the amendment, EPA stated that it plans to amend the AAI Rule again to eliminate any reference to E1527-05 and make it clear that, to satisfy the AAI Rule, parties must meet the requirements set forth in the newer ASTM E1527-13 standard.

EPA's rulemaking action can be found here.

Key changes in the new ASTM E1527-13 Standard

The new version of the standard leaves intact the structure and most of the specifications of the prior E1527-05 version, but it does include several important changes: 

  • The new standard specifically identifies the risk of vapor intrusion -- the migration into enclosed buildings of contaminated soil vapors -- as a required subject of analysis in an AAI-compliant Phase I ESA. Vapor intrusion is a contaminant pathway that has been the subject of heavy regulatory attention in recent years. The new standard addresses vapor intrusion by referring to it in a new definition of "migrate/migration," and by requiring that environmental professionals consider the significance of the "migration" risk in evaluating the significance of potential off-site sources of contamination on conditions at the subject property. Significantly, in the preamble to last week’s amendment, EPA took the position that the AAI Rule and E1527-05 "already call for the identification of potential vapor releases or vapor migration at a property, to the extent they are indicative of a release or threatened release of hazardous substances," and "vapor migration has always been a relevant potential source of release or threatened release that, depending on site-specific conditions, may warrant identification when conducting all appropriate inquiries." (78 Fed. Reg. 79322). Some environmental professionals, however, may not have understood this to be the case when preparing Phase I ESA's. EPA's comments could potentially make it more difficult for parties who have already acquired or leased contaminated properties to establish their compliance with the AAI Rule if their Phase I ESA's did not evaluate vapor migration at sites where it arguably was warranted. 
  • The new standard includes updated definitions of recognized environmental conditions (RECs) and historical recognized environmental conditions (HRECs), and adds a new definition for "controlled recognized environmental conditions" (CRECs). Henceforth, HREC's are past environmental conditions that have been resolved without the imposition of any land use limitations, such as land use controls in recorded deed restrictions. CRECs are former RECs that still exist at the site but that have been addressed through the imposition of land use limitations. 
  • The new standard revises the definition of “de minimis” conditions, and it alters the definition of “release” to incorporate the broad statutory definition of that term in CERCLA.
  • The new standard requires environmental professionals either to verify information obtained from publicly or commercially available summaries of governmental agency files by actually reviewing the agency files, or to include in the Phase I ESA an explanation of the basis for the professional's opinion why such a verification review is not needed. This could potentially increase the cost of Phase I ESA's and the time required to complete them.

Conclusion

Although the previous ASTM standard will remain “on the books” for some period of time, EPA has made it clear that it recommends use of the updated (E1527-13) standard. It would therefore be prudent for prospective purchasers and lessees of contaminated properties to instruct their environmental consultants to comply with the new ASTM standard immediately. We will provide an updated alert when EPA takes final action, presumably in the near future, to delete the reference to the old standard from its AAI Rule.

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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