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New Phase I Environmental Assessment Standard Just the Starting Point for Managing the Purchase of Contaminated Property

duchesneau, peter, manattOn December 30, 2013, the U.S. Environmental Protection Agency (“EPA”) adopted ASTM E1527-13, an updated Phase I environmental assessment standard for performing all appropriate inquiries to establish landowner liability protections under the U.S. Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”).  This new Phase I protocol clarifies the previous standard for all appropriate inquiries, which is an important first step, but not the only one for establishing landowner liability protections.  With the adoption of ASTM E1527-13, buyers of potentially contaminated property should take the opportunity to revisit the other requirements and scope of landowner liability protections.  By doing so, prospective purchasers will not only better their chances of effectively establishing such protections, but can also better manage risks that may fall beyond them.

CERCLA Landowner Liability Protections

Under CERCLA, existing property owners are strictly liable for the cleanup of contamination of their property, including new owners who acquire the property years after the contamination occurred.  To promote the development of contaminated property, on January 11, 2002, President Bush signed the Small Business Liability Relief and Brownfields Revitalization Act, Public Law 107–118 (‘‘the Brownfields Amendments’’), which amended and clarified CERCLA by establishing three forms of landowner liability protections for new owners of contaminated property: the bona fide prospective purchaser (“BFPP”), the contiguous property owner, and the innocent landowner.

To qualify for these CERCLA landowner liability protections, the Brownfields Amendments provide that parties purchasing potentially contaminated property must comply with a number of requirements, including undertaking ‘‘all appropriate inquiries’’ into the ownership and use of the property prior to purchase.  On November 1, 2005, the EPA promulgated regulations that set standards and practices for all appropriate inquiries and authorized the use of ASTM E1527-05 to comply with the rule.

ASTM E1527-13 Phase I Standard

In November 2013, ASTM International published ASTM E1527-13, “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process,” replacing ASTM E1527-05.  In many respects, ASTM E1527-13 is the same as its predecessor.  However, the new standard contains some important revisions, including a clarification that all appropriate inquires must include an assessment of vapor migration and vapor releases on, at, in or to the subject property.  Other revisions to the standard include updated definitions of “Recognized Environmental Conditions” (“REC”), “Historical Recognized Environmental Conditions,” and “de minimis conditions,” as well as the addition of a new form of REC, “Controlled Recognized Environmental Conditions.”  ASTM E1527-13 also contains additional requirements pertaining to regulatory agency file and records review and clarification of the “User” obligations.

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