EPA Issues Final Rule Allowing New Standard for Phase I Environmental Site Assessments

14 January 2014 Publication
Authors: David M. Bates

Implications for Vapor Migration Issues

On Dec. 20, 2013, the U.S. Environmental Protection Agency issued its final rule on allowing the new American Society for Testing and Materials Standard E1527-13 to be used to meet the "all appropriate inquiry" standard for the innocent landowner defense under the federal Comprehensive Environmental Response, Compensation and Liability Act. This rule has an immediate effective date, so that all Phase I Environmental Site Assessments from Dec. 30, 2013 forward may use the standard.

The ASTM issued the new standard in November 2013. Originally, the EPA concluded that both standards could be used. However, in the recent rule, EPA specifically recommended that ASTM E1527-13 be used rather than the 2005 standard in the Federal Register announcement. The agency stated that it will propose another rule removing the 2005 standard as an acceptable approach for conducting a Phase I ESA. Thus, few environmental professionals conducting Phase I ESA's will likely continue using the 2005 standard.

One of the important issues raised with the new standard relates to evaluation of vapor migration as part of the Phase I ESA process. This has implications for transactions for buyers and sellers, investors and lenders in the context of business transactions in the new year and thereafter. The EPA specifically stated that vapor issues must be evaluated to meet AAI requirements.

Vapor issues have been difficult to rule out and time consuming to investigate and resolve. Care and experience in this area will be necessary to maneuver through vapor issues and attempt to resolve these issues as quickly as possible to allow buyers and lenders to evaluate any risks and develop risk mitigation steps to address these issues in order to close deals.

Several other revisions were made through the new 2013 ASTM standard. These include a revised definition of "historical recognized environmental condition," a new term of "Controlled Recognized Environmental Condition," regulatory agency file and record review and certain other changes.

Gardere Wynne Sewell LLP issued a prior Client Alert on this issue on Nov. 13, 2013. (See "Still in the Air but Landing Soon: EPA's Vapor Intrusion Requirements.")

If you have any questions regarding this alert, please contact Gardere Environmental Attorneys David M. Bates (dbates@gardere.com or 713.276.5355), Jonathan Bull (jbull@gardere.com or 214.999.4050), Scott D. Deatherage (sdeatherage@gardere.com or 214.999.4979) or Frances E. Phillips (fphillips@gardere.com or 214.999.4803).

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