ASTM International publishes the accepted standard for performance of Phase I environmental assessments to evaluate a property’s environmental condition and assess potential liability for any contamination. U.S. EPA’s “All Appropriate Inquiries” Rule (AAI) recognizes the current ASTM Phase I standard, ASTM 1527-13, is consistent with the requirements of AAI and can be used to satisfy the statutory requirements for conducting AAI. This includes establishment of the Bona Fide Purchaser Defense (BFPD) to CERCLA liability.
The ASTM Phase I standards have been revised six times since 1993, most recently in 2013. ASTM standards are supposed to be reviewed every eight years. The current standard is to sunset in 2021. A new standard is expected by the end of 2021.
Revisions to ASTM Phase I standards are noteworthy because they determine the scope of review necessary for due diligence prior to acquisition of commercial and industrial property. Almost no one purchases commercial and industrial properties without performing a Phase I prior to acquisition. Most lenders also require a Phase I to finance acquisition of commercial or industrial property.
ASTM is currently reviewing the standards once again. Here are some of the noteworthy issues being discussed in the current review:
Site Visits and Interviews
Whether to require site visits and interviews to be conducted, at a minimum, by someone under the guidance of an “Environmental Professional” or EP (a person who meets certain qualifications as defined under the ASTM standards). As discussed in a recent LightBox blog post, some are pushing for the Environmental Professional to perform the site visit or interview because they believe only someone with the proper training and qualification can perform these tasks.
Greater focus on historical research to identify the subject property’s prior uses which could have resulted in contamination. Under the current standard (ASTM 1527-13) a Phase I assessment should review the following sources of information: aerial photographs, fire insurance maps, city directories, and topographic maps. It is possible the new standards will encourage researching additional sources of historical information regarding property usage. There is also push to require historical research for adjacent properties. The current standard requires review of historical usage only for the subject property.
Under the current ASTM Phase I standard, the EP is required to identify “data gaps” or information that is required to be reviewed as part of the Phase I but was unavailable. Under the current standards an EP is only required to identify data gaps. One change being considered is to require the EP to explain how a data gap may impact the ability of the EP to evaluate whether the subject property may be impacted by release(s) of hazardous substances.
Treatment of PFAS Compounds
The most important issue being addressed under the revised standards is how to treat per- and poly-fluoroalkyl substances (PFAS) or so called “forever chemicals.” PFAS compounds are currently not regulated as “hazardous substances” under CERCLA and, therefore, would be considered out-of-scope under the current standards. However, federal regulation of PFAS compounds is progressing and many states have already adopted drinking water standards for PFAS compounds. Several options appear to be debated by the Task Group for how to treat PFAS compounds under the new Phase I standard:
- As discussed in the LightBox blog post, one possible option is to add language to clarify that because PFAS are not designated as “hazardous substances” under CERCLA and, therefore, PFAS compounds are not within the scope of the standard;
- Another option discussed is whether evaluation of PFAS could be considered “in scope” (i.e. should be reviewed as part of the Phase I) if the subject property is in a state that regulates PFAS; and
- Another option is to create a separate section, still considered non-scope, but the EP has the option of identifying possible chemicals of concerns, including PFAS compounds.
Due the ever increasing regulatory focus on PFAS, including numerous states establishing drinking water standards, prospective purchasers clearly face a liability risk associated with acquiring property with PFAS contamination. Any Client interested in understanding the liability risk associated with purchasing a particular property should care whether there are indications PFAS contamination may be present. Regardless of how the revised ASTM Phase I standard addresses PFAS compounds, this will be the most significant issue addressed under the revised standard.