Whether you are a corporate real estate professional, an investor, a lender, or an environmental consultant, you should be aware that on December 30, 2013, the Environmental Protection Agency (EPA) took final action and amended the “All Appropriate Inquiries Rule” at 40 CFR Part 312 to reference the ASTM 1527-13 “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process.” In doing so, the EPA has made it clear that anyone conducting all appropriate inquires may use the procedures included in this standard to comply with the All Appropriate Inquiries Rule.
Some of the biggest changes to the rule that you need to be aware of are changes to the definition of the terms “recognized environmental condition” (REC) and “historical recognized environmental condition” (HREC), as well as the addition of a new term “controlled recognized environmental condition” (CREC).
- The definition of an REC has been re-worded and while it may seem like semantics to a casual observer, the definition is now consistent with the CERCLA definition of a release. What does this mean? A release is defined by CERCLA as “any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment.”
- The definition of an HREC has been elaborated to specify that an HREC can only be called an HREC, rather than a REC, if the consultant has verified that a site has been cleaned up in accordance with current standards, and that no environmental liens, such as activity or land use restrictions, exist.
- Due to the clarification of an HREC, it has become necessary to add a third term – CREC – to cover sites where cleanup has been achieved with conditions, such as activity and land use restrictions.
The re-definition of an REC is certainly an all-encompassing description and is one that will impart a big change to the new Phase I ESA process. Using the CERCLA definition of a release, the consensus is that vapor intrusion shall be considered a release; therefore, a vapor intrusion screening must be included in the scope of work of a Phase I ESA to be consistent with E1527-13. This process involves assessing properties within a defined radius to determine whether vapors associated with contamination from those properties are likely to impact the subject site.
In addition to new and refined definitions, the E1527-13 includes a new section regarding Regulatory Agency File and Records Reviewed. Previously, the Environmental Professional could recommend file review for facilities with regulatory issues as a next step in the Due Diligence process; however, the new section in E1527-13 makes regulatory file review a component of the Phase I ESA, unless the Environmental Professional can provide justification that the file review is not warranted, such as that the files are not reasonably ascertainable. Per E1527-13, this means that the information is not “(1) publicly available, (2) obtainable from its source within reasonable time and cost constraints, and (3) practically reviewable.” There are also several other changes, such as revisions to the User Responsibilities section, particularly as it pertains to environmental lien search requirements.
So, as a commercial real estate professional, investor or lender, what does this really mean to you? The bottom line is that the typical cost and standard turnaround time of a Phase I ESA will increase with the new standard, but with that comes more information and a report that is more consistent with the EPA’s All Appropriate Inquiry rule.