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    NOTICE: Environmental Due Diligence for Real Estate Transactions

    The United States Environmental Protection Agency (“EPA”) took its final step to phase out ASTM E1527-05, the standard for conducting Phase I Environmental Site Assessments utilized by environmental professionals and parties since 2005. Starting October 16, 2015, environmental professionals and parties must use the updated 2013 version of the standard, ASTM E1527-13, or the Federal rule, when conducting Phase I Environmental Site Assessments to potentially qualify for the liability defenses available under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA” a.k.a. “Superfund”). These liability defenses are often essential when acquiring property in real estate or mergers and acquisitions deals.
     
    Final Rule
    A final rule published in the Federal Register on October 6, 2014, amended the EPA’s “all appropriate inquiries” (“AAI”) rule under Superfund by removing recognition of the 2005 standard.  As noted above, the final rule will take effect on October 16, 2015, which the EPA believes will give parties enough time to become familiar with, and implement, the 2013 version of the standard. This final EPA rule is the most recent, and likely the last, step in the process of adopting the 2013 standard for conducting environmental assessments and removing use of the 2005 standard.

    Affected Parties
    Several parties and industries will be affected by this final rule including: Real Estate, Insurance, Banking and Investment, Environmental Consulting Services, State and Federal Governments, and parties seeking brownfield funding and/or protection from Superfund liability.
     
    The rule does not, and will not, impact parties who acquire(d) properties between November 1, 2005 and October 16, 2015 (final rule effective date) and used the 2005 ASTM Standard to comply with the AAI rule.
     
    What Does it All Mean?   
    If your company or organization is looking to hire an environmental professional to conduct a Phase I Environmental Site Assessment, be sure that the chosen environmental professional is using the most up to date standard for conducting that assessment, ASTM E1527-13.
     
    Along those same lines, it will be important to understand the differences between the new and old standard to ensure that your Phase I Environmental Site Assessment addresses the topics needed to establish your AAI defense. The major differences between the new and old standard are: (1) newly defined and revised terms; (2) a new requirement to assess possible indoor air quality impacts from vapor intrusion pathways; and, (3) changed requirements for the evaluation of past releases of hazardous substances.
     
    Simply put, if your company or organization is in the process of reviewing environmental reports for either the purchase or sale of property, including Phase I Environmental Site Assessments, particular attention should be paid to the standards utilized by the environmental professional and cited in the environmental reports.