Written By Sedina L. Banks and Brian E. Moskal
Greenberg Glusker
Los Angeles, California

On November 6, 2013, ASTM (formerly known as the American Society for Testing and Materials) revised its standard for conducting Phase I environmental site assessments, known as Standard E1527-13 (“Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process”).  ASTM E1527-13 is the first revision to the ASTM Phase I standard since its 2005 revision of the standard (known as ASTM E1527-05).

The ASTM standard is a helpful tool for parties seeking to avoid or minimize potential liability under the federal Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA,” also known as “Superfund”).  CERCLA imposes strict liability on current facility owners and past owners, as well as certain other parties, for environmental contamination on a property.  This means a purchaser and current owner of land contaminated by the actions of others could be held liable under CERCLA for cleanup of the property.  Fortunately, CERCLA includes defenses for these situations for so-called “innocent landowners,” “bona fide prospective purchasers,” and “contiguous property owners.”  But to qualify for these defenses, a property owner must conduct “all appropriate inquiries” on or before the date of acquiring the contaminated property, among other requirements.

On November 1, 2005, the United States Environmental Protection Agency (“EPA”) issued the All Appropriate Inquiries Rule that, for the first time, established federal standards and practices for conducting all appropriate inquiries, as a first step to qualifying for one of these elusive CERCLA defenses.  The most important aspect of this rule from a practical standpoint was its endorsement of the ASTM E1527-05 standard for conducting Phase I environmental site assessments.  The ASTM E1527-05 standard provided a blueprint for environmental consultants to follow to ensure compliance with CERCLA’s all appropriate inquiries requirements.

However, because ASTM has recently revised and replaced this standard, there is some ambiguity regarding the applicable standard to follow to ensure compliance with CERCLA’s all appropriate inquiries requirement.  This ambiguity was heightened by EPA’s issuance and subsequent withdrawal last year of a direct final rule that amended the All Appropriate Inquiries Rule to allow use of either the 2013 or 2005 standard.

On December 30, 2013, EPA issued a new final rule, effective immediately, again amending the All Appropriate Inquiries Rule to allow use of either the 2005 or 2013 standard.  However, EPA indicated it intends to publish a proposed rule “in the near future” that will propose amending the rule to remove the reference to the 2005 standard.

There are a few important differences between the 2005 and 2013 standards:

• Vapor intrusion pathway must be considered.  ASTM added a definition for “migrate/migration,” which refers to the movement of hazardous substances or petroleum products in any form, including “vapor in the subsurface.”  This definition means the risk of vapor intrusion into buildings, which is a quickly evolving area of environmental law, must be considered in the environmental site assessment process.
• Simplified definition of “recognized environmental condition” (“REC”).  ASTM simplified its definition of REC to encompass conditions that suggest a release or threatened release of a hazardous substance at the property.  The term is now defined as “the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property: (1) due to release to the environment; (2) under conditions indicative of a release to the environment; or (3) under conditions that pose a material threat of a future release to the environment.  De minimis conditions are not recognized environmental conditions.”
• “Historical recognized environmental condition” (“HREC”) definition limited.  ASTM now defines HREC to mean a past release of hazardous substances or petroleum products that has been addressed to the satisfaction of the applicable regulatory authority or meets unrestricted use criteria without institutional or engineering controls (i.e., property suitable for residential use).  However, a past release that may have previously constituted only an HREC could constitute a REC at the time of the report if, for example, regulatory cleanup criteria have been made stricter.
• “Controlled recognized environmental condition” (“CREC”) definition added.  ASTM added a definition for CREC, which means “a recognized environmental condition resulting from a past release of hazardous substances or petroleum products that has been addressed to the satisfaction of the applicable regulatory authority (for example, as evidenced by the issuance of a no further action letter or equivalent, or meeting risk-based criteria established by regulatory authority), with hazardous substances or petroleum products allowed to remain in place subject to the implementation of required controls.”
• Stricter regulatory file review requirement.  The new standard imposes stricter requirements for conducting regulatory file reviews.  If the subject property or an adjoining property is listed on one or more of the standard environmental record sources that must be searched (e.g., the CERCLA National Priorities List of contaminated sites, the federal Resource Conservation and Recovery Act hazardous waste generator list, etc.), then the environmental professional should review “pertinent regulatory files and/or records associated with the listing.”  If the environmental professional chooses not to conduct this review, he or she must explain why in the Phase I report.  As an alternative to this file review, the environmental professional can review files and records from alternative sources, such as on-site records or user-provided records, and include that information in the report along with a statement that the environmental professional believes this information is sufficient to evaluate RECs, HRECs, CRECs, and de minimis conditions.

What should a practitioner do?  For now, compliance with either the 2005 or 2013 standard will satisfy the All Appropriate Inquiries Rule and potentially allow parties to reap the benefits of CERCLA’s landowner liability protections.  However, ASTM indicated its 2005 standard has been superseded and replaced.  EPA stated in its new rule that the 2013 standard improves upon the previous standard and recommends that environmental professionals and prospective purchasers use the 2013 standard.  So it would be wise for parties to begin complying with the 2013 standard now to ensure maximum potential protection from CERCLA’s onerous liability scheme.

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