Damon Morey, LLP
John T. Kolaga & Lydia H. Beebe
October 14, 2013
Published on August 15th, the proposed “all appropriate inquiry” (“AAI”) final rule would have amended the current regulatory framework to include ASTM E1527-13 as an acceptable standard for satisfying Phase I environmental site assessment requirements. This rule would have allowed the 2013 ASTM standard to be used as an alternative to the ASTM E1527-05 standard, the latter of which was issued in 2005. Because of the many adverse comments that were filed in response to the 2013 rule, the EPA announced that it will withdraw the rule, review it, and address those comments in a new rule. The EPA has not stated when the new rule will be issued.
“All appropriate inquiry,” also called environmental due diligence, is the process of evaluating real property for potential environmental contamination and potential liability for that contamination. Phase I assessments are non-intrusive reviews of the current and past use of a property, designed to determine whether the potential for contamination exists. The assessments inform potential buyers, lenders, insurers and others of potential environmental liabilities and risks.
Critics of the EPA’s proposed rule argued that only one version of E1527 should be permitted to be used, stating that permitting two different standards for conducting Phase I environmental assessments would cause confusion in the marketplace by allowing two different levels of due diligence to be equally acceptable. Because of its additional features, the 2013 standard was expected to cost more to implement than the 2005 standard. Opponents also argued that allowing both standards of due diligence to co-exist would create a two-tier system of due diligence, allowing those sensitive to costs to use the less expensive option while others, such as financial institutions, use or require the more expensive 2013 standard.
In addition to the increased cost, the proposed ASTM E1527-13 standard is different than ASTM E1527-05 because it updates the definition of “recognized environmental condition”; updates the definition of “historical recognized environmental condition”; adds a definition for a so-called “controlled recognized environmental condition”; and revises the definition of “migrate/migration” to specifically include vapor migration.
Because of the EPA’s withdrawal of proposed rule, developers, buyers, insurers and lenders will not have to grapple in the near future with the quandary of which standard to use for Phase I assessments. We will continue to keep you updated on this area as we learn more about the EPA’s anticipated revised rule regarding environmental due diligence.
This article is being provided for informational purposes only and not for the purposes of providing legal advice or creating an attorney-client relationship. You should contact an attorney to obtain advice with respect to any particular issue or problem you may have. In addition, the opinions expressed herein are the opinions of Mr. Kolaga, and Ms. Beebe and may not reflect the opinions of Synergy Environmental, Inc., Damon Morey LLP or either of those firms’ clients.