EPA Revises "All Appropriate Inquiries" Process, Adopts ASTM Standard

The revised ASTM standard sets forth the process for conducting Phase I environmental site assessments (ESAs) and evaluating environmental conditions at properties for purposes of qualifying for landowner liability protections pursuant to section 101(35)(B) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. § 9601(35)(B), and for conducting site assessments using EPA brownfields assessment grants under CERCLA section 104(k)(2)(B)(ii), 42 U.S.C. § 9604(k)(2)(B)(ii). Current EPA regulations require parties seeking to obtain protection from potential liability under CERCLA as innocent landowners, contiguous property owners, or bona fide prospective purchasers, as well as applicants for/recipients of brownfields grants, to conduct Phase I ESAs pursuant to the requirements of ASTM E1527-05 (the prior version of ASTM E1527-13) and ASTM E2247-08 (the standard for Phase I ESAs for forestland or rural property). EPA's direct final rule regarding ASTM E1527-13, once effective, will afford those parties a new standard for satisfying the AAI requirements and, in turn, strengthening defenses and limiting liability under CERCLA.

Although the updated ASTM E1527-13 standard is similar in many respects to the prior version, it contains several significant changes that will impact Phase I ESA practices conducted pursuant to the standard. Most notably, ASTM E1527-13 was revised to expressly provide that Phase I ESAs must consider vapor migration in evaluating possible recognized environmental conditions (RECs) due to concerns regarding potential vapor intrusion. Vapor intrusion occurs when vapor-phase contaminants migrate from subsurface sources into buildings, thereby potentially posing health and safety risks to building occupants. Historically, the potential for vapor intrusion has been an area of environmental concern that was overlooked by purchasers of property, their environmental consultants, and regulators, but it has received increased attention over the past several years. Under the revised ASTM E1527-13 standard, the terms "migrate" and "migration" are specifically defined to include the movement of hazardous substances in any form—solid, liquid, and vapor. In other words, the potential for vapors to migrate is considered another pathway of contamination just like contamination found in groundwater and soil. Moreover, the revised standard provides that consultants should assess vapor migration using the ASTM E2600-10 standard, the "Standard Guide for Vapor Encroachment Screening on Property Involved in Real Estate Transactions," or another appropriate alternative methodology. Therefore, consultants conducting Phase I ESAs must now determine the potential for vapors to migrate through pathways from onsite and offsite sources and, if such a potential exists, identify it as a REC.

ASTM E1527-13's focus on the vapor migration risk is consistent with EPA draft guidance issued on April 11, 2013, that requires more evaluation of vapor intrusion as part of investigations and remediation at contaminated sites. Likewise, the revision reflects the growing trend among state regulatory agencies to require vapor intrusion to be evaluated and, if necessary, mitigated as a condition to site closure.

Other noteworthy revisions to the ASTM E1527 standard include the following:

1. The definition of the term "RECs" was simplified to mean releases to the environment from substances in, on, or at a property, which is consistent with the definition of the term "release" under CERCLA. It also excludes releases that occur inside of a structure on property from a source within that structure.

2. The term "historical recognized environmental condition" (HREC) was clarified to mean a contaminated condition that has been remediated to the satisfaction of a regulatory agency, as evidenced by the issuance of a no further action letter or regulatory closure, without any property use restrictions.

3. The term "controlled recognized environmental condition" (CREC) was added to refer to a REC that has been cleaned up to regulators' satisfaction, but unlike an HREC, contains residual contamination allowed to remain subject to activity and use limitations (AULs), other use restrictions, or institutional and engineering controls (e.g., risk-based corrective action).

4. The standard includes more stringent requirements for regulatory file reviews, which are searches and reviews of certain public records and files regarding property.

5. The standard now requires searches for environmental liens and AULs in recorded land title records, and in judicial records for jurisdictions where environmental liens and AULs are recorded therein and in any other location specified by statutes/regulations.

The new ASTM E1527-13 standard likely will expand the scope of, and drive up the costs associated with, property cleanups as well as due diligence activities conducted in connection with real estate purchases and transactions if a party opts to conduct a Phase I ESA pursuant to that standard. Any party who may be involved in such transactions in the future would be best served updating their due diligence policies to reflect the new requirements of the ASTM E1527-13 standard, particularly with respect to the consideration of vapor migration.

Keywords: litigation, expert witnesses, ASTM E1527-13, CERCLA, environmental site assessments, brownfields assessment grants, vapor migration, recognized environmental conditions, regulatory file reviews

Margaret Hill is with Blank Rome LLP in Philadelphia, Pennsylvania. 

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