EPA backpeddles on due diligence – now what?

31 Oct 2013

Tuesday, the EPA announced that it was withdrawing its August proposal to add the soon to be adopted ASTM 2013 due diligence standard to the possible acceptable approaches to meet the All Appropriate Inquiry due diligence standard.

Despite the fact that ASTM has not released the 2013 standard, EPA proposed to include this new “secret” standard as an alternative to the ASTM 2005 standard which it adopted almost exactly 8 years ago today.   One of the primary concerns expressed by the regulated community was, given that EPA was approving both standards, and given the differences between the standards, what should lenders and purchasers do when the standards differed?    Assuming that ASTM still promulgates this standard (which I expect it will), what does this mean?  EPA can certainly revisit this and perhaps dump the 2005 standard for the 2013.  EPA specifically said that it “will address the comments received in any subsequent final action.” Or EPA may let the 2005 standard stand.

Certainly, the introduction of a new standard may raise uncertainty in the field.  While we suspect that EPA’s failure to adopt the 2013 standard gives one “cover” to stick with the 2005 standard, one never knows what the Courts could do.  Certainly, it is worth considering further clarification of what a report means in discussing “Recognized Environmental Conditions (REC)” and “Historical Recognized Environmental Conditions (HREC).”

Further clarity is also advisable regarding past releases where some contamination remains in place but no cleanup is presently required and about what is and is not a  “de minimis” condition.

Certainly, one should consider seeking inclusion in Phase I ESAs information regarding vapor migration including the possiblity of vapor migration from off-site.  One point of contention and expense is likely to be whether one can rely on information obtained from database searches without reviewing agency files.  This practice would increase both the price of a Phase I and the confidence that users, or prospective buyers may place on site assessment results.  Merely relying on a database service has always been something of a tricky proposition in some cases.

Ultimately, if the new standard is viewed as more effective, the lending community will compel its use regardless of what  EPA says will satisfy CERCLA’s all appropriate inquiry standard.

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