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U.S. EPA Approves Use of Updated ASTM Phase I Standard for Specific Properties

ASTM International recently updated its Phase I environmental site assessment standard for assessing large rural and forestland properties.  This Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process for Forestland or Rural Property, E 2247-16 (2016 rural property standard), replaces a 2008 version, numbered E2247-08. Purchasers of real property who intend to use the rural property standard for a closing on or after March 14, 2018, must use the 2016 standard.

Proposed purchasers seeking to establish the innocent purchaser, bona fide prospective purchaser or contiguous property owner defenses under the Comprehensive Environmental Response, Compensation and Liability Act must comply with the United States Environmental Protection Agency’s (U.S. EPA’s) All Appropriate Inquiries (AAI) standard at 40 C.F.R. pt. 312 prior to the purchase of the property.  While purchasers may follow the AAI criteria set forth in the regulations, most purchasers follow either the E1527-13 Phase I standard (defined below) or the 2008 rural property standard when performing pre-purchase Phase I environmental site assessments, as both standards are specifically identified in the regulation as satisfying AAI.

Effective March 14, 2018, the 2016 rural property standard replaces the 2008 standard for use in meeting AAI under EPA’s regulation. (Purchasers of real property who intend to use the rural property standard for a closing before March 14, 2018, however, may still use the 2008 standard.)  This change is of particular importance to solar and wind projects proposed for large tracts of rural and farmland property, as it allows for less rigorous onsite assessment than the site visit requirements used for assessing commercial and industrial properties, Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process, E 1527-13 standard.

Since Phase I environmental site assessments originated in 1986, the review of large rural and forestland properties has been difficult and time-consuming due to the site reconnaissance requirements alone.  The 2008 rural property standard alleviated some of the difficulties in the site reconnaissance requirements for assessing large rural tracts of property, as more particularly described in an earlier summary.

The 2016 rural property standard adds updated terminology that is used in the companion E1527-13 standard, but more importantly, changes some language that limited the more widespread use of the 2008 version.  First and foremost, the 2016 rural property standard eliminates the somewhat arbitrary 120-acres-or-more size requirement for use of the standard and simply requires the property to be “forestland” or “rural property.”  The standard includes a much broader definition of rural property, allows some alternative sourcing for agency records, and designates a specific time limit of 20 calendar days for receipt of materials requested by the consultant for review in completing Phase I.  The 20 calendar days requirement offers the benefit of an outside time limit, but also ensures that a Phase I environmental site assessment will take at least 20 days to complete if requested documentation is not received earlier. The 2016 rural property standard also relaxes some of the site visit criteria.

United States: New Standard Of Care Document On Environmental Due Diligence (“Phase I”)

Article by Jerrold Samford and Andrea L. Rimer

Troutman Sanders LLP

The GeoProfessional Business Association (GBA) – formerly known as ASFE – recently released a new study on the standard of care for conducting Phase I environmental site assessments.  This document is the fourth in a series of studies the organization has produced since the inception of the due diligence process in the early 1990’s.  The study is an evaluation of approximately 200 Phase I reports from across the country, written between 2007 and 2010. The results of the study will be a valuable tool in determining whether a Phase I conducted during that time period meets the standard of care or not.

In completing the study, the GBA compared the Phase I reports to the elements of the ASTM Standard E1527-05, applicable during the time period of the reports, to see whether the reports included the elements of the ASTM standard. Although nearly all of the reports stated they were completed in accordance with the ASTM Standard, the committee reviewing the reports concluded that not a single report actually complied with every component required by the Standard. Consequently, the GBA study finds that strict compliance with the ASTM standard does not constitute the standard of care for conducting Phase I evaluations of commercial real estate.

The committee’s conclusion could become critical in legal actions where the issue at hand is whether appropriate environmental studies were completed prior to completion of the transaction. The GBA study could be used to show a court that because strict compliance with the ASTM Standard is not commensurate with the standard of care, a purchaser could still be in compliance with the All Appropriate Inquiry provisions of CERCLA even if some of the elements of the ASTM Standard had not been completed.

The study is available through the GeoProfessional Business Association at www.geoprofessional.org.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

This article was first published on the Troutman Sanders website.

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About the Authors

Jerrold “Jerry” Samford is an environmental compliance specialist at Troutman Sanders.  He is a certified professional geologist in the State of Virginia, a licensed professional geologist in the States of North Carolina and Kentucky.

Andrea L. Rimer is a partner at Troutman Sanders.  She has a national practice representing clients on transactional and regulatory matters involving brownfields redevelopment, hazardous site investigation and cleanup, hazardous waste management, and state and federal Superfund and voluntary remediation programs.

 

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