EPA Adopts Revised Standards for Phase I Environmental Assessments
On December 30, 2013, the United States Environmental Protection Agency (“EPA”) issued a final rule adopting the ASTM International E1527-13 standard for Phase I Environmental Site Assessments (“ESA”) as an approved method for complying with the “all appropriate inquiry” requirements of the landowner liability protection provisions of the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). Many aspects of the 2013 standard mirror the previously adopted ASTM E1527-05, but it is important to note several differences, discussed below, which may require changes in the way Phase I ESAs are performed as part of environmental due diligence efforts to allow landowners to take advantage of the landowner ESAs defenses to CERCLA liability. These revisions may result in increased costs associated with Phase I ESA as well as additional time for completion.
ASTM Phase I ESA standards were developed by ASTM International for use by parties seeking to assess the environmental condition of real estate while taking into consideration commonly known and reasonably available information. The new ASTM E1527-13, titled “Standard Practice for Environmental Assessments: Phase I Environmental Site Assessment Process” was published by ASTM International on November 6 and technically supercedes the 2005 version, ASTM E1527-05. However, for the time being, EPA has approved use of either the 2005 or 2013 version for purposes of the “all appropriate inquiry” requirements, while stating that it will at some point revise the rule to rescind its approval of the 2005 standard. Purchasers may also continue to follow the All Appropriate Inquiries Rule codified at 40 C.F.R. Part 312.
One key difference in the 2013 standard is the addition and clarification of certain defined terms. The term “controlled recognized environmental condition” (“CREC”) was added as a defined term to include past releases that have been addressed but allow some level of contamination to remain in place subject to the implementation of required controls, such as deed restrictions. The definitions of “Recognized Environmental Condition” (“REC”), “Historical Recognized Environmental Condition” (“HREC”), and “de minimis condition” were also revised.
ASTM E15207-13 also contains a revised definition of “migrate/migration” that specifically requires consideration of vapor contaminants. Although vapor intrusion was not excluded from the previous version of the standard and, therefore, was often addressed as part of the Phase I process, the explicit reference in the revised standard may result in additional investigations regarding potential vapor intrusion pathways at an increased cost to the purchaser. Engineering controls to monitor or mitigate vapor impacts, where they are identified, will also result in increased cost.
Finally, ASTM E15207-13 provides a standardized framework for review of the files of regulatory agencies as part of the due diligence process. Under the new standard, the environmental professional should review and document the information found in searches of agency databases. Many environmental professionals already perform such an analysis as part of the Phase I; however, the lengthy agency response times to file review requests has the potential to delay the Phase I ESA processes, particularly for professionals who do not routinely perform comprehensive reviews of agency files.
Any prospective purchaser of commercial property should be advised to become familiar with the ASTM E15207-13 requirements prior to conducting a Phase I ESA and should be aware of the potential for increased costs and time that may result from these new requirements. In light of EPA’s stated intent to rescind its approval of the 2005 standard in due course, a purchaser should make a reasoned decision regarding the appropriate standard to use in light of the particular property at issue and the potential contaminants that may be present.
Additional Items of Interest
As part of W.R. Grace & Co.’s bankruptcy plan of reorganization, the company paid $63 million in early February to EPA and other federal agencies for environmental remediation at 39 Superfund sites in 21 states. The settlement was the result of claims made by EPA beginning in 2003 for recovery of past and future cleanup costs at these sites. W.R. Grace remains separately responsible for remediation at other sites it continues to own or operate. For a complete listing of the Superfund sites affected by this settlement, go tohttp://www2.epa.gov/enforcement/case-summary-epa-receives-over-54-million-wr-grace-bankruptcy.
In February, EPA announced enforcement actions against 35 contractors and training providers to require compliance with EPA’s Lead Renovation, Repair, and Painting (RRP) Standards. These enforcement actions resulted from failure to comply with certification requirements, failure to follow lead-safe work practices, and failure to ensure that subcontractors followed RRP standards. The RRP standards are designed to owners of houses built before 1978 receive information on lead-based paint hazards before starting renovations, that only qualified individuals perform such renovations, and that procedures for lowering the risk of lead-based paint exposure are followed. For a listing of the contractors involved in the settlement, go to http://www2.epa.gov/enforcement/lead-renovation-repair-and-painting-rule-february-2014.
In February, EPA issued a Notice of Violation to Utilities, Inc. for sanitary sewer overflows (SSOs) in violation of the Clean Water Act at the Tega Cay Water Services Wastewater Collection and Treatment System. According to EPA, during 2013 Tega Cay allowed 27 SSOs to occur, which resulted in 446,350 gallons of untreated sewage to be discharged. An estimated 18 of the SSOs resulted in discharges to navigable waters of the United States.
Alpha Natural Resources, Inc., Alpha Appalachian Holdings, and 66 subsidiaries have agreed to pay a $27.5 million civil penalty and spend approximately $200 million on upgrades to wastewater treatment systems to reduce discharges from 79 active coal mines and 25 processing plants in Kentucky, Pennsylvania, Tennessee, Virginia, and West Virginia. The settlement, announced by the Department of Justice and EPA on March 5, addresses routine violations of state-issued Clean Water Act discharge permits that resulted in excess discharges of pollutants such as iron, total suspended solids, aluminum, manganese, selenium, and salinity. The $27.5 million penalty is the largest ever civil penalty under Section 402 of the Clean Water Act.
In March, LSB Industries, Inc. agreed to improve its nitric oxide manufacturing processes in Alabama, Arkansas, Texas, and Oklahoma resulting in a reduction of nitric oxide emissions by more than 800 tons per year. The company, which is the largest merchant manufacturer of concentrated nitric acid in North America, also agreed to pay a $725,000 civil penalty and spend $150,000 to remediate ten acres of land with acidified soils. Over $150,000 of the civil penalty will be paid to the Alabama Department of Environmental Management, who was a co-plaintiff with EPA and the State of Oklahoma. Two of the plants at issue, Cherokee Nitrogen Co., are located in Cherokee, Alabama.
On March 20, the federal government announced that a settlement with Flint Hills Resources of Port Arthur to reduce air pollution from industrial flares and leaking equipment at its chemical manufacturing plant in Port Arthur, Texas. Pursuant to the settlement, the company will spend approximately $28 million to utilize innovative technology to recover and recycle waste gases and ensure that gases to sent to flares are burned with 98% efficiency. The company will also pay a $350,000 civil penalty to resolve its Clean Air Act violations.
In January, Logsdon Valley Oil Co. Inc. and operators Charles L. Stinson and Ralph Dowell were sentenced in the Western District of Kentucky to pay $45,000 for conspiracy to inject fluids into sinkholes and wells without a permit in violation of the Safe Drinking Water Act. The defendants were also required to ensure that the wells used for the illegal injection were properly plugged and abandoned to protected underground drinking water supply.
In January, EPA announced the selection of Heather McTeer Toney as Regional Administrator for EPA Region 4. As Regional Administrator she will be responsible for managing EPA activities in Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee. Prior to joining EPA, Ms. Toney served as the Mayor of Greenville, Mississippi and served as the Executive Director of the Center for Excellence in Student Learning and TRIO programs at Mississippi Valley State University.
In January, EPA issued a final rule authorizing the use of e-Manifests for Resource Conservation and Recovery Act (“RCRA”) reporting. The rule, which was issued pursuant to the Hazardous Waste Electronic Manifest Establishment Act, to allow the current waste tracking process to be converted from paper forms to electronic manifests. For more information, go to http://www.epa.gov/waste/hazard/transportation/manifest/e-man.htm.
In early February, EPA released the 2012 Toxics Release Inventory National Analysis, which is EPA’s annual analysis of Toxics Release Inventory (TRI) data. The data for the year 2012 represents management of certain toxic chemicals for over 21,000 facilities and shows that since 2003, disposal or other releases of toxic chemicals has decreased 19%. The complete 2012 TRI analysis is available at:http://www2.epa.gov/toxics-release-inventory-tri-program/2012-tri-national-analysis.
On February 7, EPA announced its approval of two uses of coal combustion residuals (CCRs or coal ash) – use in concrete as a substitute for portland cement and use as a substitute for mined gypsum in wallboard. EPA evaluated these two uses using its Methodology for Evaluating Encapsulated Beneficial Uses of Coal Combustion Residuals, a newly developed methodology for use by states and interested parties to make informed determinations regarding beneficial uses of coal ash. Additional information about the new methodology is available at: http://www.epa.gov/epawaste/conserve/imr/ccps/benfuse.htm.
On February 20, EPA announced proposed revisions to the Worker Protection Standard for Agricultural Pesticides which include improved training programs for workers regarding pesticide exposure and restrictions on handling of pesticides for workers under age16. For more information, go to http://www.epa.gov/oppfead1/safety/workers/proposed/index.html.
Oral argument before the U.S. Supreme Court in CTS Corp. v. Waldburger (Docket No. 13-339), a case involving application of CERCLA’s federal limitations period in certain state law causes of action, is scheduled for April 23, 2014. The issue on appeal is whether the federal commencement date prescribed in Section 9658 preempts state statutes of repose. Courts have held that Section 9658 preempts state law statutes of limitations, but the Fourth Circuit in Waldburger held that it preempts state statutes of repose as well.
In February, legislation regarding the regulation of storm water was introduced in the Alabama House of Representatives (HB475) by Representative JimCarns (R-Birmingham) and the Alabama Senate (SB355) by Senator Cam Ward (R-Alabaster). The bill authorizes counties and municipalities in Alabama to implement the separate storm water sewer system programs and provide the option to establish inter-cooperative public corporations for compliance with regulations regarding discharges. In March, SB355 passed the Senate and the bill received final passage in the House in early April.