Prospective Real Estate Purchasers Should Demand ASTM E 1527-13 Environmental Phase I Reports

February 25, 2015

Beginning on October 6, 2015, the United States Environmental Protection Agency (EPA) will require prospective purchasers of real estate to use the new ASTM E1527-13 Phase I Environmental Assessment (Phase I) standard (2013 ASTM standard) to satisfy the bona fide prospective purchaser defense under CERCLA.  See 79 Fed. Reg. 60087 (October 6, 2014). The 2013 ASTM standard revises the definition of the crucial term “recognized environmental conditions,” which drives whether further environmental site investigation is required. It also mandates, for the first time, that consultants address vapor intrusion, and otherwise provides prospective real estate purchasers with a clearer picture of potential environmental conditions. For a summary of the 2013 ASTM standard, see EPA Approves New Assessment Standards for CERCLA Bona Fide Prospective Purchaser Defense.

EPA’s earlier rule (issued December 30, 2013) authorized purchasers to satisfy the all appropriate inquiries element of the bona fide prospective purchaser defense by conducting Phase I’s under either (a) the new 2013 ASTM standard, or (b) the former E1527-05 ASTM standard. In amending the rule to require use of the 2013 ASTM standard, EPA explained that the new standard “is a currently recognized industry consensus-based standard to conduct all appropriate inquiries as provided under CERCLA.”  EPA adds that it “is taking this action because the Agency wants to reduce any confusion associated with the regulatory reference to a historical standard [the 2005 standard] that is no longer recognized by its originating organization as meeting its standards for good customary business practice.” EPA continues that “we believe that today’s final rule will promote the use of the 2013 standard currently recognized by ASTM International as the consensus-based, good customary business standard.”

Though it wasn’t required by EPA, LP has recommended the use of the more comprehensive ASTM 2013 standard ever since its issuance. Now any ambiguity is gone. Prospective purchasers of real estate should insist that their environmental consultants employ the ASTM E 1527-13 standard in conducting all Phase I Environmental Assessments.

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