EPA’s New Standard for Conducting Environmental Site Assessments
H. Michael Keller
On November 1, 2006, EPA's new standard for conducting environmental due diligence in real property transactions went into effect. If you are contemplating a commercial purchase of real property, and want to ensure the best protection against potential legal claims for contamination existing on the property, you will need to follow the new standards for performing a Phase I Environmental Site Assessment ("Phase I ESA") as prescribed. Furthermore, the new standard also requires that the Phase I ESA be conducted by a qualified "Environmental Professional."
Known as the "All Appropriate Inquiry" or "AAI" Rule, the new standard establishes regulatory requirements for conducting all appropriate inquiries into the previous ownership, uses and environmental conditions of a property for purposes of securing certain liability protections under the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA or Superfund). CERCLA imposes liability on past and present property owners and others for cleaning up hazardous substances that have been or may be released into the environment. The AAI rule also applies to persons seeking Federal grants for evaluating brownfields projects.
Landowner liability protections under CERCLA include the Innocent Landowner, Bona Fide Prospective Purchaser, and Contiguous Property Owner defenses. These affirmative defenses only apply within the liability framework of CERCLA and do not protect against liability arising under other environmental laws, such as laws governing solid and hazardous waste, toxic substances, and air and water quality, or under tort law. Anyone seeking to qualify for these defenses must perform a qualifying Phase I ESA prior to acquisition, and thereafter, continue to comply with applicable legal obligations and take reasonable steps to prevent continuing releases of hazardous substances on or from the property, prevent threatened future releases, and prevent or limit human, environmental, or natural resources exposure to earlier releases.
In response to the new AAI Rule, the American Society for Testing and Materials (ASTM) revised its existing Standard Practice for Environmental Site Assessment: Phase 1 Environmental Site Assessment Process. The current ASTM standard is designated ASTM E1527-05. The AAI Rule accepts the use of the new ASTM standard for performing a Phase I ESA in connection with the acquisition of real property.
The Rule and Standard explicitly define the qualifications of an "Environmental Professional" and require that the Phase I ESA be prepared by or under the supervision of a qualified Environmental Professional.
The new AAI Rule and ASTM Standard change prior practice in several other important respects, including:
In light of the AAI Rule's detailed regulatory requirements, it is incumbent on prospective purchasers and their environmental consultants and attorneys to ensure that the level of inquiry into environmental conditions is sufficient to secure the landowner liability protections under CERCLA.
To view the full text of the AAI Rule and supporting information, visit the EPA's website at http://www.epa.gov/swerosps/bf/regneg.htm.
Known as the "All Appropriate Inquiry" or "AAI" Rule, the new standard establishes regulatory requirements for conducting all appropriate inquiries into the previous ownership, uses and environmental conditions of a property for purposes of securing certain liability protections under the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA or Superfund). CERCLA imposes liability on past and present property owners and others for cleaning up hazardous substances that have been or may be released into the environment. The AAI rule also applies to persons seeking Federal grants for evaluating brownfields projects.
Landowner liability protections under CERCLA include the Innocent Landowner, Bona Fide Prospective Purchaser, and Contiguous Property Owner defenses. These affirmative defenses only apply within the liability framework of CERCLA and do not protect against liability arising under other environmental laws, such as laws governing solid and hazardous waste, toxic substances, and air and water quality, or under tort law. Anyone seeking to qualify for these defenses must perform a qualifying Phase I ESA prior to acquisition, and thereafter, continue to comply with applicable legal obligations and take reasonable steps to prevent continuing releases of hazardous substances on or from the property, prevent threatened future releases, and prevent or limit human, environmental, or natural resources exposure to earlier releases.
In response to the new AAI Rule, the American Society for Testing and Materials (ASTM) revised its existing Standard Practice for Environmental Site Assessment: Phase 1 Environmental Site Assessment Process. The current ASTM standard is designated ASTM E1527-05. The AAI Rule accepts the use of the new ASTM standard for performing a Phase I ESA in connection with the acquisition of real property.
The Rule and Standard explicitly define the qualifications of an "Environmental Professional" and require that the Phase I ESA be prepared by or under the supervision of a qualified Environmental Professional.
The new AAI Rule and ASTM Standard change prior practice in several other important respects, including:
- scope of the onsite investigation
- interviews of adjoining landowners under certain circumstances
- broader range of documents to be reviewed
- documuntation of data gaps
- scope of opinions of the Environmental Professional
- identification of environmental liens
- inquiries into the specialized knowledge of the user of the report.
In light of the AAI Rule's detailed regulatory requirements, it is incumbent on prospective purchasers and their environmental consultants and attorneys to ensure that the level of inquiry into environmental conditions is sufficient to secure the landowner liability protections under CERCLA.
To view the full text of the AAI Rule and supporting information, visit the EPA's website at http://www.epa.gov/swerosps/bf/regneg.htm.
Copyright 2006. Published for general informational purposes only, and should not be construed as legal advice. If you need legal advice please consult with your attorney.