EPA's Final Rule Accepts New ASTM Standards for All Appropriate Inquiries

On December 30, 2013, EPA issued its Final Rule which recognized that complying with the latest version of the ASTM Phase I Environmental Site Assessment Standards (E 1527-13) complies with the EPA all appropriate inquiries (“AAI”) rules. Compliance with AAI is a threshold requirement to claim the federal brownfield innocent purchaser, prospective purchaser and contiguous landowner defenses. Previously EPA recognized the earlier version, ASTM E 1527-05, as satisfying the AAI requirements.

The rules take effect immediately. The rule was published initially in August 2013, but EPA withdrew the rules after receiving adverse comments. Most of the objections related to EPA’s proposal to recognize both the 2005 version as well as the 2013 version. These commenters argued that by recognizing two different standards EPA would cause substantial confusion among the regulated community. The Final Rule recommends and strongly encourages that version 1527-13 be used by environmental professionals and prospective purchasers as EPA recognizes the revised standard provides substantial improvement to the previous version by providing greater clarity for prospective purchasers with regard to potential contamination at a property. EPA will issue a new rule that will omit reference to version 1527-05 since ASTM has superseded that standard with 1527-13.

ASTM released the updated E 1527-13 in November 2013. The revisions include very important changes to bedrock requirements of the standards. An environmental professional conducting an ASTM Environmental Site Assessment makes an effort to identify so-called “recognized environmental conditions (“RECs).” If a REC is found and reported, then a user may be required to make additional inquiry in order to comply with the Federal AAI rule. The following are key changes:

• A new definition of “controlled recognized environmental conditions” (“CRECs) for prior releases which are not remediated to unrestricted residential criteria, but may have land use restrictions or other institutional controls. A CREC does not necessarily mean that the institutional control is effective.
• The new ASTM definition of REC clarifies that a de minimis condition is not a REC by removing extraneous verbiage and by creating a definition of de minimis. The previous version was confusing as to whether some de miminis conditions would constitute a REC. A de minimis condition is also not a CREC. The environmental professional is required to document why a condition is de minimis.
• Historic recognized environmental conditions (“HRECs”) are previous conditions that existed on the site that were remediated and received regulatory acknowledgement. The new standards clarify that HRECs apply only to prior releases which have been remediated to CURRENT unrestricted residential criteria. If the criteria has changed since the report, then it may no longer be an HREC and could be a REC or even a CREC.
• The new standards contain a new term, “Migration,” intended to include migration of vapors onto the property at issue; however, it is not an evaluation of the potential vapor intrusion. Thus, the standards may identify sources of migration of vapors, which could become a REC, but the standards do not require an actual evaluation. EPA’s comments to the Final Rules issued on December 30, 2013, indicate that EPA has always interpreted releases within the scope of the AAI rule to include migration, including vapor intrusion. This was never made clear in the AAI rules and could become a legal concern for past Environmental Site Assessments (“ESA”).
• The new standards require the environmental professional to review agency files when there is a standard record source database listing for the property or adjoining land. If the EP chooses to omit the file review, then they must explain rationale in the ESA. The 2005 version of the standards did not require such an extensive review.

The ASTM E 1527-13 standards are much clearer; however, compliance could require additional time and cost. It is important that an environmental attorney review the Phase I as part of a commercial transaction to assure that the report contains a sufficient analysis of all new required elements. An inadequate Phase I ESA could negate the defenses to contamination and subject owners to substantial liability.