Posted on July 19, 2021 by Amy L. Edwards
Every eight years, ASTM standard-setting committees are required to re-evaluate existing ASTM standards. The ASTM E1527-13 Standard Practice on Phase I Environmental Site Assessments (“ESAs”) is required to be revised, re-approved as is, or abandoned this year. The ASTM E50.02 Task Group has been diligently reviewing and preparing revisions to the existing standard for more than a year. Many of the proposed changes are intended to correct perceived deficiencies in implementing the current standard. Other changes are offered to provide greater consistency in the language of the standard. Several of the proposed changes are very nuanced. Not all of the proposed changes are uniformly supported. Votes are the current draft were due on July 10, and negative ballots will likely be addressed in one more subsequent ballot. Very few environmental attorneys or their real estate clients are participating in this process, in part because it is so time consuming. Nevertheless, it behooves everyone who relies on Phase I ESAs to become actively engaged in this process. The proposed changes are likely to create a lot of confusion about “controls” on contaminated property and could adversely impact prospective purchasers’ ability to assert their Landowner Liability Protections (“LLPs”) under the 2002 Amendments to the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”).
Controversy over the CREC definition
There has been a vigorous debate about the CREC definition in the E1527 standard, and its inclusion of the phrase “property use limitation” (“PUL”).
3.2.17 controlled recognized environmental condition—a recognized environmental condition affecting the subject property that has been addressed to the satisfaction of the applicable regulatory authority or authorities with hazardous substances or petroleum products allowed to remain in place subject to implementation of controls (e.g, property use limitations or activity and use limitations). For examples of controlled recognized environmental conditions, see Appendix X220.127.116.11.1.
Those who oppose the CREC definition see no need for the phrase PUL to be included in the standard. There has been a long-accepted definition of Activity and Use Limitations (“AULs”) for more than 20 years, ASTM E2091, Standard Guide on Activity and Use Limitations, Including Institutional and Engineering Controls. AULs are described in detail in Section 6 of that Standard Guide; they include proprietary controls, state and local government controls, statutory enforcement tools, and informational devices. See, e.g., 6.6.1 of E2091. The AUL terminology is consistent with the 2002 Brownfields Amendments statutory language and EPA’s 2019 Common Elements Guide, both of which require a purchaser to be in compliance with land use restrictions (“LURs”) and not to impede the integrity or effectiveness of institutional controls (“ICs”) in order to maintain its LLPs. Neither the 2002 Brownfields Amendments nor the Common Elements Guide ever uses the term PUL. Developers need bright line tests, which the well-established term AULs provides. The ambiguous term PUL simply introduces unnecessary uncertainty and confusion. The opponents are asking for this ambiguous phrase to be deleted from the standard.
When pressed to provide a definition of PUL, the E1527 Task Group provided a tautology-simply repeating the words without offering any other meaning. PUL is not an accepted term of art in the industry. Instead, the Task Group now attempts to define the phrase through examples in Appendix X4 (examples 8, 9, and 10). But examples 9 and 10 appear to be examples of sites that have met a risk-based cleanup standard, without any clear description of what constitutes the PUL, i.e., the “control”. More than twenty years ago, ASTM rejected the concept that achieving a risk-based cleanup standard was, by itself, any type of “control.” That is why ASTM instructed one of its Task Groups to develop the E2091 standard on AULs, to supplement the E2081 standard on risk –based corrective action.
As EPA’s Common Elements Guide correctly notes, issues regarding LURs and ICs are site- and fact-specific, and involve both legal and technical judgments. EPs should not be rendering these judgments on their own in the guise of CREC determinations. The proposed inclusion of PUL in the CREC definition (and elsewhere in the Standard) should be rejected.
Other important proposed changes to the Phase I ESA Standard:
Nuanced changes to the definition of REC
Anyone who reads dozens of Phase I ESAs each year knows that you can give the same fact pattern to three different EPs and get three completely different opinions about whether there are Recognized Environmental Conditions (“RECs”) on the property, and why. In order to try to reduce the amount of variability in REC opinions, the E50.02 Committee is proposing a nuanced change to the REC definition in order to obtain more consistent interpretations. The new definition would read as follows:
The term recognized environmental condition means (1) the presence of hazardous substances or petroleum products in, on, or at the subject property due to a release to the environment; (2) the likely presence of hazardous substances or petroleum products in, on, or at the subject property due to a release or likely release to the environment; or (3) the presence of hazardous substances or petroleum products in, on, or at the subject property under conditions that pose a material threat of a future release to the environment. A de minimis conditions is not a recognized environmental condition.
This revised definition is supplemented with examples in Appendix X4 that are intended to clarify what each of these three phrases in the definition means. For example, under the first part of the definition, the presence of hazardous substances or petroleum products in, on, or at the subject property due to a release or likely release to the environment, an EP could not conclude that an off-site property was a REC. Under the second part of the definition, the likely presence of hazardous substances or petroleum products in, on, or at the subject property due to a release or likely release to the environment, an EP could conclude, based upon her experience and observations, that the subject property’s use as a gas station or dry cleaner for a significant period of time prior to regulatory controls, or the presence of a bare-steel underground petroleum storage tank installed at the subject property decades ago without any leak detection systems, may be examples of a REC due to the likely presence of a release of hazardous substances or petroleum products to the environment. Finally, Appendix X4 provides examples of what constitutes a material threat of a future release under the third part of the definition, including precariously stacked drums and bulging tanks. Appendix X4 explains that the past closure of a leaking underground storage tank, for example, may not constitute an Historical REC (“HREC”) unless the EP has evaluated the data associated with that closed tank to be sure that the sampling data meets current regulatory standards for unrestricted use and whether there is an open vapor exposure pathway. Appendix X4 also provides examples of RECs, HRECs and Controlled RECs (“CRECs”) in order to try to achieve greater consistency in the use of these terms in the future.
Recognition via a footnote that emerging contaminants are currently an issue in many states and perhaps should be addressed in the Phase I ESA (as a non-scope consideration)
If you are commissioning a Phase I ESA in a state where emerging contaminants, such as per- and poly-fluoroalkyl substances (“PFAS”), are an issue, your EP will not be identifying these contaminants under the proposed changes to E1527. This is because the Environmental Protection Agency (“EPA”) has not yet designated any of the PFAS compounds to be a hazardous substance under CERCLA. ASTM continues to consider these compounds to be “non scope.” So Users in the growing number of states that are regulating PFAS under one or more of their regulatory programs should be alert to adding PFAS as a non-scope item (18.104.22.168) to their consultant’s scope of work.
ASTM addressed this issue indirectly via a footnote in Section 1.1.4 of the standard, by reminding Users and EPs that there may be other state requirements, including those which may define emerging contaminants as hazardous substances.
Scope of historical resources to be reviewed on adjoining properties
The E1527 Task Group made significant changes in Section 8.3 regarding the scope of review of historical records. This section has been reorganized to emphasize that the standard historical information sources include aerial photographs, fire insurance maps, local street directories, topographic maps, building department records, interviews, property tax files, zoning/land use records, and other historical resources. When evaluating the uses of adjoining properties (8.3.9), the standard now emphasizes reviewing the “top four” sources of historical information (aerial photographs, fire insurance maps, local street directories, and topographic maps) for those properties as well, at least if the “top four” sources were obtained for the subject site and included the adjoining properties. Several EPs have expressed concern that the proposed changes will result in a significant expansion of the scope of review for adjoining properties, as the existing E1527 language simply states that this historical information “should” be reviewed for those properties.
Clarification that the 180 day or one year shelf life of the report begins to run from the date of the first task conducted (interviews, government records review, visual inspection, or EP Declaration), and that those dates must be listed in the report
Section 4.6.1 of the standard describes how long the Phase I report will be presumed to be viable. It will be presumed to be viable if the report was completed no more than 180 days prior to the date of acquisition, or up to one year if certain components of the report have been updated: the interviews, review of government records, visual inspection of the property, and EP Declaration. This update clock begins to run from the first of these activities, and the date each component occurred (interview; environmental lien search; review of governmental records; visual inspection; and EP Declaration) must be identified in the report. If the EP conducts the environmental lien/AUL search, the date of that report should also be listed in the Phase I ESA.
Clarification that AUL/Environmental Lien Title Reports must search land records back to 1980
The User is responsible under Section 6.2 of the Standard for providing land title records that describe any environmental liens or AULs. The revisions to the Standard explain that this is typically done in one of two ways: through a Preliminary Title Report/Title Commitment, or through a Condition of Title Report/AUL-Environmental Lien Title Report.
An important issue that came to the attention of the E1527 Task Group was that many companies running so-called AUL/Environmental Lien Title Reports were only searching the land records back to the last change in title, giving purchasers a false sense of security that there were no environmental liens or AULs. The Task Group intends to address this issue by clarifying the methods for searching title in Section 6 and explaining that companies preparing AUL/Environmental Lien Title Reports must search the land title records back to 1980 for potential restrictions on title. Users who rely on these types of searches are encouraged to talk with the companies performing these searches for them to be sure they are prepared to comply with this clarification of the current requirement.
For those who have always disliked the awkward phrasing of the conclusion in a typical Phase I report, the Task Group has now changed the phrasing (12.7) so that it reads as an affirmative statement.
12.7.1 “We have performed a Phase I Environmental Site Assessment in conformance with the scope and limitations of ASTM Practice E1527-21 of [insert address or legal description], the subject property. Any exceptions to, or deletions from, this practice are described in Section [ ] of this report. This assessment has revealed no recognized environmental conditions, controlled recognized environmental conditions, or significant data gaps in connection with the subject property,” or
12.7.2 “We have performed a Phase I Environmental Site Assessment in conformance with the scope and limitations of ASTM Practice E1527-21 of [insert address or legal description], the subject property. Any exceptions to, or deletions from, this practice are described in Section [ ] of this report. This assessment has revealed the following recognized environmental conditions, controlled recognized environmental conditions, and/or significant data gaps in connection with the subject property:” (list).
Many of these proposed changes to E1527 are quite nuanced but important and could lead to greater consistency in the findings and conclusions of Phase I ESA reports, if taken to heart by EPs. However, the proposed inclusion of “property use limitations” as a “control” within the CREC definition remains extremely troublesome, as it appears to encompass mechanisms that are neither “land use restrictions” nor “institutional controls”, and therefore mechanisms that go well beyond the requirements of the 2002 Amendments to CERCLA or the 2019 EPA Common Elements Guide. The dangerous direction in which the ASTM E50 committee is headed puts EPs at risk of having to make legal judgments without a license, and their clients at risk of losing their LLPs under CERCLA. It’s not too late to weigh in on this very important issue.