Legal Bulletins

On December 30, 2013, the U.S. Environmental Protection Agency issued a final rule allowing a new standard for environmental due diligence investigations known as ASTM E1527-13. Effective immediately, persons purchasing potentially contaminated properties may use the new standard to satisfy the "all appropriate inquiries" to qualify for liability protection under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). Although EPA has not yet removed references to the previous 2005 standard, it has indicated that it intends to do so in a future rulemaking.

The 2013 standard was adopted by ASTM International in November 2013. According to EPA, the new standard "improves upon the previous standard and reflects the evolving best practices and level of rigor" that will give prospective property owners the information necessary to make informed property purchasing decisions. Revisions to the 2005 standard include the following:

• The definition of a Historical Recognized Environmental Condition (HREC) is clarified to apply only to sites where past contamination has been completely addressed without any restrictions. A new term, "Controlled Recognized Environmental Condition" (CREC), now applies to sites that have been remediated, but where some contamination remains in place subject to land use or engineering controls. These changes likely will increase the number of Recognized Environmental Conditions (RECs) identified in a Phase I report, but will provide more specific information about those RECs, which can help prospective purchasers and lenders make decisions regarding a site.
• E1527-13 adds an explicit obligation to consider possible indoor air issues from vapor intrusion if there is subsurface soil or groundwater contamination. This likely will increase the cost of Phase I assessments by requiring more extensive investigation of sites with volatile contaminant issues, such as former dry cleaners.
• E1527-13 requires environmental professionals to more carefully consider whether regulatory file reviews are warranted for adjacent properties and to explain a decision not to conduct a file review. Additional file reviews will increase the cost of the Phase I assessment, but will also provide a deeper understanding of the site.

Because Maryland's Voluntary Cleanup Program (VCP) follows the ASTM standard directly (rather than waiting for EPA to adopt the standard), the Maryland Department of the Environment already requires the use of the new 2013 standard for all Phase I Environmental Site Assessments submitted as part of a VCP application.

For additional information regarding the new standard or how it may apply to a real estate transaction, please contact Maggie Witherup, 410-576-4145 or another member of our Environmental Practice Group.