In a move designed to provide greater certainty to those purchasing, selling, or evaluating industrial or commercial properties, the Environmental Protection Agency (EPA) recently proposed to remove any lingering effect of ASTM International’s E1527-05, a nine-year-old industry standard practice for evaluating potentially contaminated sites under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

As explained in detail in our February 24, 2014 E-Alert, “Amended All Appropriate Inquiries (AAI) Rule Offers New Due Diligence Standard, Focuses on Vapor Releases,” the EPA referenced and countenanced ASTM International’s updated framework, E1527-13, as an alternative due diligence standard to ASTM E1527-05.  Issued on June 16, 2014, the Proposed Rule would clarify Phase I Environmental Site Assessment (ESA) standards by replacing ASTM E1527-05 with ASTM E1527-13.  Yet these requirements still leave significant uncertainty in the absence of more detailed guidance about how to conduct vapor intrusion evaluations.

I.  Background

International standards organization ASTM International modeled E1527-05 on the EPA’s All Appropriate Inquiries (AAI) Rule in 2005.  The AAI Rule is a due diligence standard that allows buyers of potentially contaminated properties who conduct an investigation meeting the rule’s requirements to preserve certain defenses to federal cleanup liability under CERCLA when conducting Phase I ESAs.  See 40 C.F.R. § 312 (2013).  The ASTM E1527-05 framework was developed to provide guidance for such investigations, and instructed would-be purchasers to undertake all appropriate inquiries regarding the condition of a property before completing its sale.  Any buyer who conducted such inquiries in compliance with ASTM E1527-05 could then qualify for certain landowner liability protections under CERCLA, including the innocent landowner, bona fide prospective purchaser, and contiguous property owner defenses.

Last December, the EPA amended the AAI Rule to allow a purchaser to satisfy Phase I ESA requirements by following either ASTM E1527-05 or ASTM E1527-13.  See 78 Fed. Reg. 79319 (Dec. 30, 2013).  As explained in our February 24, 2014 E-Alert, the 2013 framework included new regulatory file review requirements, updated definitions of certain key terms, including “de minimis condition,” “release,” “Recognized Environmental Condition,” and “Historical Recognized Environmental Condition,” and expanded ASTM E1527-05’s definition of “migrate/migration” to include vapor migrations.

II.  Proposed Rule

The EPA amended the AAI Rule through direct final rulemaking, an approach whereby an agency publishes a rule and a notice of proposed rulemaking simultaneously because it expects that the rule will prove non-controversial.  But the move nonetheless introduced confusion because in endorsing both ASTM E1527-05 and ASTM E1527-13, it recognized two distinct standards.

Responding to that criticism, the EPA has now proposed to replace ASTM E1527-05 with ASTM E1527-13 for purposes of the AAI rule so as “to reduce any confusion associated with the regulatory reference to a historical standard” and “promote the use of the standard currently recognized by ASTM International as the consensus-based, good customary business standard.”  Amendment to Standards and Practices for All Appropriate Inquiries, 79 Fed. Reg. 34480 (proposed June 16, 2014) (to be codified at 40 C.F.R. 312), at 11.  Besides removing all references to ASTM E1527-05, the Proposed Rule would not alter the substance of the AAI Rule.

III.  Implications

ASTM E1527-13 incorporates new language about the need to evaluate soil vapor risk when conducting Phase I ESAs.  Soil vapor intrusion is of particular focus with respect to TCE and other volatile organic compounds, but can also involve other contaminants.  The EPA has suggested, however, that a vapor intrusion evaluation may already have been required under ASTM E1527-05.  In its preamble to the rule offering ASTM E1527-13 as a new due diligence standard, the agency stated that it “in its view, vapor migration has always been a relevant potential source of release or threatened release that, depending on site-specific conditions, may warrant identification when conducting all appropriate inquires.”  78 Fed. Reg. 79319 (Dec. 30, 2013).  It is unclear, however, whether the EPA intended this statement to reflect near contemporary Phase I ESAs (conducted after ASTM E1527-13 was developed) or instead intended to suggest that the obligation has always existed.  Consequently, there may be future disputes as to whether a Phase I ESA not describing an evaluation of soil vapor intrusion actually satisfied the AAI Rule.

ASTM E1527-13 leaves open a number of key questions about vapor intrusion evaluations.  Neither ASTM E1527-13 nor the AAI Rule describes, for example, what levels in soil gas or groundwater should lead to concern or what levels would require mitigation.  The EPA and various states are developing guidance in this area to further clarify acceptable levels, how evaluations are to be conducted, whether one can evaluate risk based upon groundwater conditions alone, whether an evaluation must consider multiple lines of evidence, what vapor levels would be deemed acceptable in a residential setting, and what actions are required to mitigate risk.[1]

IV.  Conclusion

Consultants have already been transitioning toward the ASTM E1527-13 standard.  Should the Proposed Rule be adopted, ASTM E1527-05 will still satisfy the AAI Rule for properties acquired between November 1, 2005 and the effective date of the new action.  The EPA also anticipates providing for a delayed effective date of one year following any final action, to give those still using the previous framework time to complete ongoing investigations and become familiar with the updated standard.

However, it is important to recognize the potential that the EPA may claim that a failure to evaluate soil vapor, where otherwise appropriate, is a requirement under ASTM E1527-05 and not only ASTM E1527-13.  It is therefore essential that potentially-affected individuals keep current on EPA developments with respect to the evaluation of soil vapor intrusion, and obtain sound and up to date advice from environmental professionals.

 

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Photo of Theodore L. Garrett Theodore L. Garrett

Theodore Garrett, a former Chair of the ABA Section of Environment, Energy and Resources, represents companies and trade associations in federal and state litigation and administrative proceedings, compliance matters and transactions involving federal and state environmental and natural resource matters. He has served…

Theodore Garrett, a former Chair of the ABA Section of Environment, Energy and Resources, represents companies and trade associations in federal and state litigation and administrative proceedings, compliance matters and transactions involving federal and state environmental and natural resource matters. He has served as counsel in more than 50 reported cases concerning air quality, water quality, and hazardous waste matters, and he has also served a mediator and arbitrator.

According to Who’s Who Legal, “Ted Garrett garnered more votes than any other lawyer for 10 consecutive years…. He exemplifies the dedication and commitment of lawyers to not just their clients but also to shaping laws and regulations. Chambers USA’s America’s Leading Business Lawyers states that Ted Garrett enjoys “a longstanding reputation for being ‘a very solid and very smart environmental lawyer’” and “comes particularly recommended for his strengths in disputes.”

Ted‘s extensive experience involves major compliance, regulatory and enforcement issues, particularly concerning air quality, water quality, and hazardous waste matters. His clients have included Intalco Aluminum, Pechiney, Alcan, Rio Tinto, Vulcan Materials, HollyFrontier, Kerr-McGee, Bristol-Myers Squibb, Sensient Technologies, American Petroleum Institute, PhRMA, ASARCO, Baker Chemical, Richardson Vicks, General Motors, Procter & Gamble, American Chemistry Council, Kansas City Power & Light, Dow Chemical, and American Cyanamid. He has been lead industry counsel in cases involving major EPA air and water regulations and has represented clients in numerous Superfund sites including Chem-Dyne, Aceto, Blackbird Mine, Arlington Blending, Stoller, Price Landfill, Holden Mine, Global Landfill, Heleva Landfill, and Britannia Mine.

Photo of Gary S. Guzy Gary S. Guzy

Gary Guzy brings thirty five years of experience in environmental law, regulation, and public policy. He provides counsel to industry leaders in the transportation, energy, technology, and consumer sectors on emerging environmental and clean energy issues. He is skilled at creating strategic partnerships that…

Gary Guzy brings thirty five years of experience in environmental law, regulation, and public policy. He provides counsel to industry leaders in the transportation, energy, technology, and consumer sectors on emerging environmental and clean energy issues. He is skilled at creating strategic partnerships that bring together diverse groups to resolve challenging public policy controversies through close work with industry and environmental community leaders. Gary co-chairs the firm’s Energy Industry Group.

Gary served as Deputy Director and General Counsel of the White House Council on Environmental Quality (CEQ). In this position, he helped develop and guide the Obama Administration’s environmental, public health, and clean energy agenda, bringing business insights to government policy and coordinating policy across government agencies. He spearheaded negotiations that achieved the Obama Administration’s agreement to double motor vehicle fuel efficiency standards and significantly cut greenhouse gas emissions with the support of automobile manufacturers, states, labor unions, environmental and consumer groups, and Congress. Gary also led CEQ’s efforts to modernize permitting and environmental review under the National Environmental Policy Act, and counseled federal agencies on how to fulfill their NEPA obligations for dozens of high profile decisions and assisted in resolving NEPA controversies at numerous complicated sites.

Gary served as General Counsel of the U.S. Environmental Protection Agency and Counselor to the EPA Administrator during the Clinton Administration. He was a member of the Administrator’s senior policy team, setting regulatory, legislative, and communications strategy. He led efforts to design regulatory approaches to protect children’s environmental health, develop and defend new air quality and motor vehicle standards, defend EPA from Congressional oversight investigations, and protect iconic ecosystems such as the Everglades and Yellowstone National Park. He also authored climate change opinions that were later ratified by the U.S. Supreme Court in its landmark decision finding that greenhouse gases are pollutants under federal law.

Gary has also served as the chief legal officer, sustainability officer, and climate strategist for a variety of business organizations.

Photo of Lawrence A. Hobel Lawrence A. Hobel

Lawrence Hobel advises domestic and international clients on policyholder coverage and complex environmental matters and litigation.

According to a recent edition of Chambers USA, sources say that Larry is “very creative in his approach to insurance issues and looks at a complicated…

Lawrence Hobel advises domestic and international clients on policyholder coverage and complex environmental matters and litigation.

According to a recent edition of Chambers USA, sources say that Larry is “very creative in his approach to insurance issues and looks at a complicated problem and finds two or three ways to solve it that others wouldn’t,” and that he is “well spoken, has a fantastic grasp of the case law, is a good strategic thinker and is an all-around strong coverage attorney.”

Larry has served as lead counsel in numerous major coverage actions, and has secured in excess of $1.5 billion dollars in insurance recoveries for extraordinary losses. He has represented policyholders in litigation and negotiations on a broad range of insurance recovery claims and coverage, including first party property damage and business interruption loss, D&O and E&O disputes, privacy and data breach claims, third party toxic tort, asbestos, product liability, property damage claims, and environmental liability coverage.

Clients seek Larry’s counsel and representation on a broad range of environmental issues, including waste and hazardous materials and substances, air, water, natural resources, Proposition 65 and other disclosure laws, and land use siting and permitting. He has represented clients in corporate transactions in due diligence and to resolve environmental issues, including risk and cost allocation, structuring, use of insurance. He has defended clients in governmental enforcement litigation and negotiations, provided regulatory counsel and representation on federal, state and local environmental regulations impacting both project development and ongoing operations, and litigated CERCLA, private property damage and toxic tort disputes.

Larry has recently focused most of his pro bono practice on representation of veterans in benefits disputes.  

Larry has been an Assistant Adjunct Professor of Insurance Law at the University of California, Hastings College of the Law and a panelist at numerous programs on insurance coverage and environmental issues.