On November 1, 2005, the U.S. Environmental Protection Agency (“EPA”) adopted standards and procedures for performing All Appropriate Inquiries (“AAIs”) under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). The standards adopted by EPA were developed by the American Society for Testing and Engineering (“ASTM”) and required parties purchasing a parcel of land to undertake a thorough investigation of the property’s history to identify potential sources of hazardous contamination.
In August of 2013, EPA issued a direct final rule adopting a revised version of ASTM E1527-05 – ASTM E1527-13 (ASTM rules mandate discontinuance or reissuance of standards following eight years of use). The 2013 rule, however, did not replace the 2005 rule – it provided parties with an alternative standard for conducting AAIs. During the comment period for the 2013 rule, several commentators raised concerns with EPA’s decision to provide two AAI standards with different levels of stringency. In response to the comments, EPA withdrew ASTM E1527-13 in October of 2013.
On December 30, 2013, EPA again released ASTM E1527-13 as a final rule. The new final rule does not yet eliminate ASTM E1527-05 as a standard. It recommends parties follow E1527-13 and notes that EPA will be removing the 2005 version from the standard in the new future.
Significant Changes to the AAI Standard:
There are three notable differences between the two rules. Those differences include the following:
1. Vapor Intrusion – Requirement to Consider: Vapor intrusion risks were not required in typical Phase 1 Assessments. E1527-13 changes this practice by requiring assessments to include considerations of vapors from contaminated subsurface soil or groundwater that could potentially migrate from contaminants and eventually impact indoor air quality.
2. Expanded Review of Relevant Files and Records: E1527-13 has expanded the review process of relevant files and records in two ways:
- Expanded Scope: E1527-05 only required title companies review deeds for title encumbrances. The new standard requires a review of both title records as well as judicial records.
- Greater Narrative: E1527-13 requires Environmental Professions explain their basis for undertaking or not undertaking a regulatory file review in greater detail rather than merely stating a review is not warranted.
3. Revised Definitions and Introduction of New Term - RECs, HRECs and CRECs
- Recognized Environmental Condition (“REC”): ASTM E1527-13 simplifies the definition of RECs by narrowing its scope. The new definition limits RECs to releases or threatened release of hazardous substances at a parcel.
- Historical Recognized Environmental Conditions (“HREC”): The definition of HREC has also been narrowed, limiting it to circumstances where a release has been mitigated to standards set forth by the applicable agency or the parcel is deemed suitable for unrestricted residential use.
Controlled Recognized Environmental Conditions (“CREC”): This new standard adds the term CREC for releases of hazardous substances that have been partially remediated with some level of contamination remaining pursuant to an ongoing mitigation strategy. The term “de minimus condition” should not be used to describe a CERC.
Impact of New Standards:
The new standards are unlikely to impose a significant difference on the way Phase I Environmental Site Assessments are conducted. In fact, many of the changes to the E1527-13 mirror the existing Phase I practices of many large environmental consulting firms. With that said, the impact of the new standards will be apparent. The new CERC standards will result in greater identification of contaminants while contamination once compliant with the previous standards must now satisfy the more stringent HRECs standards. Moreover, additional costs and time will be required to adhere to the expanded scope of the file and record search.