EPA Publishes Proposed Amendment to All Appropriate Inquiry Rule: Significant Environmental Due Diligence Changes on the Horizon

August 20, 2013
Michael C. Gross
MGKF Special Alert

On August 15, 2013, the United States Environmental Protection Agency (“EPA”) published a Proposed Rule in the Federal Register to amend the existing “All Appropriate Inquiry” (“AAI”) regulations, the federal environmental due diligence practices and standards relevant to ensuring a landowner’s ability to comply with the limited defenses to CERCLA liability.  Specifically, the Proposed Rule incorporates the yet-to-be published new ASTM Standard E1527-13 into the existing AAI regulations such that use of the new standard would be an alternative to the current E1527-05 standard as a method for a landowner to demonstrate compliance with AAI.

While ASTM E1527-13 will not be published in final form until after the Proposed Rule is final, the draft of  ASTM E1527-13  circulated to EPA for approval prior to the publication of the Proposed Rule contains several key areas of change that will affect how environmental due diligence is conducted, including:

1.  Revised Definition of “Recognized Environmental Conditions”:  ASTM E1527-13 revises the existing definition of “Recognized Environmental Condition” ("REC"),  changes the definition of  “Historic Recognized Environmental Condition” and creates a new definition for “Controlled Recognized Environmental Condition,” which would be defined as a  REC resulting from a past release of hazardous substances that has been addressed to the satisfaction of the applicable regulatory authority with hazardous substances allowed to remain in place subject to the use of institutional or engineering controls.

2.  Vapor Intrusion Considerations:  A new definition of “migration” makes clear that vapor intrusion issues are to be assessed during the Phase I process and are not to be deemed “non-scope" indoor air quality issues by environmental professionals.  ASTM’s E2600-10 Standard (Standard Guide for Vapor Encroachment Screening on Property Involved in Real Estate Transactions) is also referenced in ASTM E1527-13 as an appropriate method for environmental professionals to assess vapor intrusion considerations during the Phase I process.  This revision will invariably bring vapor intrusion concerns to the forefront of any environmental assessment.

3.  Regulatory File Reviews:   If a property that is the subject of a Phase I review (or any adjoining property) is identified in a government records search, a pertinent review of regulatory files and or records associated with the listing should be reviewed.  If the environmental professional concludes a file review is not warranted, it must provide justification for that decision in the Phase I report.  Since the lengthy time involved in requesting and reviewing agency files can often conflict with the “deal time” considerations of a Phase I, this revision and its implications should be considered early in the Phase I process.

Additional revisions to the ASTM standard include changes to the “User Responsibilities”, new considerations for industrial/manufacturing properties and reorganization of the appendices to the Phase I report. 

EPA’s Proposed Rule is subject to a 30 day comment period (comments to be received by September 16, 2013) and barring receipt of any adverse comments will become effective immediately thereafter due to the use of “direct rulemaking” by EPA.  In the preamble to the Proposed Rule, EPA indicates it is not seeking comments on ASTM E1527–13 as the Proposed Rule merely recognizes ASTM E1527–13 standard as compliant with AAI.  ASTM has indicated that it will immediately publish the new standard once the Proposed Rule becomes final.  For more information on the proposed AAI revision or ASTM E1527-13 and how these changes will impact the environmental due diligence process, please contact Michael Gross or Michael Nines.