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Feb 2014
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February 10, 2014

EPA Approves New Standard for Phase 1 Site Assessments


The United States EPA has approved a new procedure for conducting Phase I environmental site assessments.  The EPA recommends that Phase I assessments be conducted under the new procedure.  However, until the Michigan Legislature amends the Michigan cleanup statute, parties conducting Phase I assessments in Michigan should follow both the old Phase I standard and the new standard.

Both the federal Superfund law and Michigan’s primary cleanup law (known as “Part 201”) allow buyers and lessees of commercial property to avoid liability to clean up pre-existing contamination. These liability defenses (including the well-known “innocent purchaser” defense) are conditional upon the purchaser or lessee satisfying various conditions. A required element of all such liability defenses is “all appropriate inquiry,” or AAI.

The most common method for performing AAI is the Phase I environmental site assessment. The Phase I assessment procedure is prescribed by ASTM International.  Until December 30, 2013, Phase I assessments were to be performed according to the ASTM Phase I standard practice adopted in 2005. That 2005 standard is incorporated into the federal AAI rule (40 CFR Part 312).  In addition, some commentators believe the 2005 standard is incorporated into Michigan’s Part 201.

In November, the ASTM issued a new standard for Phase I assessments. On December 30, 2013, the EPA formally adopted the new ASTM Phase I standard in its AAI rule. Under the amended rule, a Phase I assessment conducted in compliance with the new ASTM standard practice, E1527-13, will be an acceptable means of establishing AAI for purposes of the various conditional defenses to liability under CERCLA and many comparable state laws.

Following is a summary of the changes found in the new ASTM standard.

Summary of Changes

Defined Terms:  The 2013 standard contains a shortened definition of "recognized environmental condition," or REC – essentially, an exception to a “clean” Phase I report.  Substantively, the revised definition of REC is not significantly changed.  However, it should help clarify that a REC necessarily involves a release or a material threat of a release to the environment.  The mere possibility that bad acts might have occurred in the past, in the absence of any evidence of a release or a material threat of a release, is not a REC.    

The new standard also contains a revised definition of "historical recognized environmental condition," or HREC.  Under the new definition, a HREC is a prior release that has been addressed to meet the standards for unrestricted – i.e., residential – use.  This clarification should help prevent future confusion as to how resolved environmental contamination issues of the past should be treated in a current assessment.

The new standard introduces the newly defined term "controlled recognized environmental condition," or CREC.  This term refers to a past release that has been addressed through the imposition of activity and use limitations – for example, a restrictive covenant.  The new CREC classification should help eliminate confusion as to how to treat these properties in a Phase I report.  Importantly, the new Phase I standard does not include any evaluation of a property owner’s or tenant’s compliance with institutional controls.

Vapor Migration:  The new ASTM standard includes a new definition of "migration" that specifically mentions migration of vapors in the subsurface. Technically, this is nothing new.  Phase I assessments have always been required to consider migration of hazardous substances. However, the new definition of “migration” underscores the need to evaluate impacts to a property resulting from migrating hazardous substances in vapor form.  

Record Reviews:  Under the new standard practice, if the "standard environmental record sources" reviewed by the consultant list a subject property or an adjoining property, the consultant must review relevant agency files pertaining to the listing or, alternatively, must provide justification in the Phase I report as to why such review is not necessary.

User Responsibilities:  The 2013 standard practice reflects new emphasis on the "user's" responsibilities. The new standard makes clear that in order to have an AAI-compliant Phase I assessment, the user must fulfill its enumerated obligations, including responding to requests for interviews or questionnaires and reviewing title and judicial records for environmental liens and activity and use limitations.

These changes included in the 2013 Phase I standard practice are expected to improve the consistency and quality of Phase I assessments.

AAI in Michigan

Michigan’s cleanup statute, Part 201, was amended in 2010 to add a definition of “all appropriate inquiry” that refers to the federal AAI rule set forth in 40 CFR Part 312.  In so doing, the Legislature may have inadvertently adopted the federal rule by reference, as it existed in 2010. If a court were to rule to this effect, it would mean that the old ASTM Phase I standard (from 2005) remains the approved method for conducting AAI under Part 201. It is anticipated that legislation may be pursued in the near future to rectify this inconsistency with federal law and adopt the new 2013 ASTM standard under Part 201. In the meantime, to avoid uncertainty, it is recommended that Phase I assessments intended to qualify as AAI under Part 201 be conducted in accordance with both the old 2005 standard and the new 2013 standard.

If you have questions or desire further information regarding this issue, please contact Scott Hubbard at 616.752.2157, shubbard@wnj.com, or any other member of the Resource, Energy and Environment Practice Group. 

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