USEPA Approves New Phase I Standard for AAI Requirements of CERCLA

Environmental law constructionThe USEPA has published its final rule approving use of the new ASTM Standard E1527-13 when conducting a Phase I environmental site assessment to satisfy the All Appropriate Inquiry (“AAI”) requirements set forth in section 101(35)(B) of CERCLA, and 40 C.F.R. 312.20.  When environmental due diligence is conducted in compliance with AAI, property purchasers are able to assert certain defenses to CERLCA liability, such as innocent purchaser, bona fide prospective purchaser and contiguous landowner.

Though USEPA has adopted the new standard, it also determined that the existing ASTM E1527-05 standard could still be used to satisfy AAI requirements.  This means that parties will have to determine which standard to use for each individual transaction.  Although the new ASTM E1527-13 standard is based on and contains almost identical provisions as ASTM E1527-05, the new standard has several substantive additions that are likely to have an impact on the number of Recognized Environmental Conditions (“REC”) that are identified during the Phase I.

The most significant change, arguably, is the express requirement to consider vapor intrusion.
The new standard clarifies that the definition of “migrate” includes releases that migrate in the subsurface as vapor.  In this respect, the Phase I will need to asses possible indoor air quality impacts from vapor intrusion pathways if there is groundwater or soil contamination at or near the site.

In addition, ASTM E1527-13 adds a new defined term for “Controlled Recognized Environmental Condition” (“CREC”), which references a release that is controlled by an engineering or institutional control.  The definition of a Historical Recognized Environmental Condition (“HREC”) has also been modified by the new standard, such that it applies only in situations where the past contamination has been cleaned up to unrestricted residential standards.

The addition of the new requirement to consider vapor intrusion and the new and modified definitions for CREC and HREC, respectively, will likely not only increase the number of Recognized Environmental Conditions identified in Phase I reports, but may also mean that purchasers, lenders and sellers will be at odds over which standard should be used to complete the due diligence.

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Todd Hooker

Written by Todd Hooker

Todd M. Hooker, Esq., Environmental Litigation Attorney Todd has a broad range of experience representing industrial and commercial clients in the environmental aspects of business transactions, environmental cost recovery actions, defense of federal and state environmental enforcement actions, disputes arising from the purchase/sale of contaminated property, and has litigated cases involving exposure to hazardous and toxic substances. Todd brings a practical and results oriented approach to his practice that includes helping clients avoid problems before they arise so that they can focus on their primary business objectives.

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