On December 30th, the Federal Environmental Protection Agency (EPA) finally took action trying to address the confusion it caused when it previously issued a final rule recognizing both ASTM 1527-05 and 1527-13 as appropriate standards for conducting Phase I assessment. A proper Phase I assessment is a requirement for establishing the Bona Fide Purchaser Defense under CERCLA. (See prior post).
On the second to last day of the year, EPA published a final rule in the Federal Register (78 FR 79319) recognizing the new ASTM E1527-13 phase I standard practice as an approved method for complying with the All Appropriate Inquires (AAI) rule. EPA also provided new language in the preamble as well as a separate guidance document addressing comments EPA received.
Background on Prior EPA Actions
On August 15, 2013, EPA issued a direct final rule which recognized both E1527-05 and E1527-13 as appropriate standards for conducting environmental due diligence in accordance with the AAI. EPA received negative comments regarding its decision to continue to recognize both standards. Many felt it caused unnecessary confusion. In response to comments, on October 29, 2013, EPA withdrew the final rule.
As a result of EPA's action, there was a two month period where the most up-to-date standard, E1527-13, was not recognized by EPA as satisfying AAI. This caused some attorneys and buyer/sellers of real estate to request consultants to meet both standards.
With the December 30th action, EPA officially recognizes E1527-13 and also indicates it will soon issue a proposed rule removing AAI's reference to E1527-05.
Vapor Intrusion Remains the Big Issue
The biggest differences between E1527-13 and E1527-05 include:
- Revised definitions of RECs, HRECs CRECs
- Greater emphasis on reviews of regulatory files
- Vapor intrusion
(See prior post discussing differences in greater detail)
It is the last bullet point that has caused the greatest confusion and controversy. Some provided comments to EPA expressing their view that under the prior E1527-05 standard consultants did not have to evaluate vapor intrusion. Those commentators view E1527-13 as establishing that requirement for the first time.
However, EPA makes clear in the preamble to the December 30th action that the language in E1527-13 pertaining to vapor intrusion is only an enhancement of the requirements under the old standard. EPA specifically states that E1527-05 "already calls for identification of potential vapor releases or vapor migration."
EPA comments create issues for environmental consultants who did not include evaluation of vapor intrusion as part of Phase I assessments under E1527-05. Failure to do so could be grounds to assert the consultant committed malpractice.
In situations where no such evaluation was performed under an old Phase I, and the building later proved to have vapor intrusion issues, consultants face heightened liability exposure.
EPA action should provide greater clarity to the due diligence community.