Note Updated Procedures for Conducting ‘All Appropriate Inquiries’ Under CERCLA
The U.S. Environmental Protection Agency (EPA) recently finalized a rule that updates the standards and practices for assessing the environmental conditions of a property prior to its acquisition. Specifically, EPA now recognizes the ASTM International’s E1527-13, Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process, as compliant with its “all appropriate inquiries” rule under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). Notably, parties purchasing potentially contaminated property must conduct “all appropriate inquiries” into prior ownership and use of the property at issue – prior to its purchase – in order to qualify for protection from CERCLA liability.
The newly revised ASTM E1527-13 standard improves the process for parties who choose to undertake all appropriate inquiries, according to EPA. “[It] provides some clarifications and additional guidance for the environmental assessment of commercial and industrial properties and the determination of whether there are recognized environmental conditions or conditions indicative of releases or threatened releases of hazardous substances at a property.”
EPA announced that it intends to withdraw reference to E1527-05, the prior and superseded version of ASTM’s Phase I Standard Practice, through a further rulemaking process.
Who Conducts ‘All Appropriate Inquiries’?
“All appropriate inquiries,” or AAI, is a process of evaluating a property’s environmental conditions and assessing the likelihood of any contamination. Parties purchasing potentially contaminated properties – and seeking to limit their CERCLA liability in conjunction with the property purchase -- may use the ASTM E1527-13 standard to satisfy the AAI rule (or comply with EPA’s regulations at 40 CFR Part 312), according to EPA. Specifically, prospective purchasers must conduct AAI to obtain certain liability protection under CERCLA as (1) an innocent landowner; (2) a contiguous property owner; or (3) a bona fide prospective purchaser. The AAI standards and practices also are relevant to the brownfields site characterization and assessment grant programs. Again, any party who wants to conduct AAI under CERCLA may follow EPA’s AAI rule at 40 CFR Part 312 or use the new ASTM E1527-13 standard.
The reason typically given for conducting a Phase I environmental site assessment is to qualify for innocent purchaser protections under certain major state and federal environmental laws (see above). Similarly, lenders commonly require environmental due diligence to avoid making a loan on an environmentally impaired property. More generally, a Phase I environmental site assessment is often an important part of the due-diligence process prior to property acquisition, (e.g., fixed/support facilities associated with construction operations), lease renewal, redevelopment, or foreclosure.
How E1527-13 Differs from E1527-05
The new ASTM E1527-13 standard clarifies that AAI must assess the real or potential occurrence of vapor migration and vapor releases on, at, in or to the subject property. The E1527-13 standard also places more importance and provides additional guidance on the regulatory agency file and records review requirements, to standardize the verification of information obtained from agency databases. In addition, the standard clarifies and simplifies several definitions (e.g., “Recognized Environmental Condition (REC),” “Historical Recognized Environmental Condition (HREC),” “de minimis condition,” “release” and “migrate/migration”) and adds a new definition of a “Controlled Recognized Environmental Condition (CREC).”
For More Information
ASTM's updated Phase I environmental site assessment standard is available for purchase at http://www.ASTM.org.
Additional differences between the 2005 and 2013 environmental site assessment standard are discussed in the final rule preamble and EPA’s “Summary of Updates and Revisions to ASTM E1527 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process: How E1527-13 Differs from E1527-05” posted in EPA Docket ID No. EPA-HQ-SFUND-2013-0513.
If you need more information, please contact AGC’s Senior Environmental Advisor Leah Pilconis at pilconisl@agc.org.