The purpose of this practice is to define good commercial and customary practice. Controlled substances are not included within the scope of this standard. An evaluation of business environmental risk associated with a parcel of commercial real estate may necessitate investigation beyond that identified in this practice.
The purpose of this practice is to define good commercial and customary practice. Controlled substances are not included within the scope of this standard. An evaluation of business environmental risk associated with a parcel of commercial real estate may necessitate investigation beyond that identified in this practice.
The purpose of this practice is to define good commercial and customary practice. Controlled substances are not included within the scope of this standard. An evaluation of business environmental risk associated with a parcel of commercial real estate may necessitate investigation beyond that identified in this practice.
Environmental Site Assessments: Phase I Environmental Site Assessment Process 1 This standard is issued under the xed designation E1527; the number immediately following the designation indicates the year of original adoption or, in the case of revision, the year of last revision. A number in parentheses indicates the year of last reapproval. A superscript epsilon () indicates an editorial change since the last revision or reapproval. 1. Scope 1.1 PurposeThe purpose of this practice is to dene good commercial and customary practice in the United States of America for conducting an environmental site assessment 2 of a parcel of commercial real estate with respect to the range of contaminants within the scope of the Comprehensive Environ- mental Response, Compensation and Liability Act (CERCLA) (42 U.S.C. 9601) and petroleum products. As such, this practice is intended to permit a user to satisfy one of the requirements to qualify for the innocent landowner, contiguous property owner, or bona de prospective purchaser limitations on CERCLA liability (hereinafter, the landowner liability protections, or LLPs): that is, the practice that constitutes all appropriate inquiries into the previous ownership and uses of the property consistent with good commercial and custom- ary practice as dened at 42 U.S.C. 9601(35)(B). (See Appendix X1 for an outline of CERCLAs liability and defense provisions.) Controlled substances are not included within the scope of this standard. Persons conducting an environmental site assessment as part of an EPA Brownelds Assessment and Characterization Grant awarded under CERCLA 42 U.S.C. 9604(k)(2)(B) must include controlled substances as dened in the Controlled Substances Act (21 U.S.C. 802) within the scope of the assessment investigations to the extent directed in the terms and conditions of the specic grant or cooperative agreement. Additionally, an evaluation of business environ- mental risk associated with a parcel of commercial real estate may necessitate investigation beyond that identied in this practice (see Sections 1.3 and 13). 1.1.1 Recognized Environmental ConditionsIn dening a standard of good commercial and customary practice for conducting an environmental site assessment of a parcel of property, the goal of the processes established by this practice is to identify recognized environmental conditions. The term recognized environmental conditions means the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property: (1) due to any release to the environment; (2) under conditions indicative of a release to the environment; or (3) under conditions that pose a material threat of a future release to the environment. De minimis conditions are not recognized environmental conditions. 1.1.2 Petroleum ProductsPetroleum products are included within the scope of this practice because they are of concern with respect to many parcels of commercial real estate and current custom and usage is to include an inquiry into the presence of petroleum products when doing an environmental site assessment of commercial real estate. Inclusion of petro- leum products within the scope of this practice is not based upon the applicability, if any, of CERCLA to petroleum products. (See X1.1.2.1 for discussion of petroleum exclusion to CERCLA liability.) 1.1.3 CERCLA Requirements Other Than Appropriate InquiriesThis practice does not address whether require- ments in addition to all appropriate inquiries have been met in order to qualify for the LLPs (for example, the duties specied in 42 U.S.C. 9607(b)(3)(a) and (b) and cited in Appendix X1, including the continuing obligation not to impede the integrity and effectiveness of activity and use limitations (AULs), or the duty to take reasonable steps to prevent releases, or the duty to comply with legally required release reporting obligations). 1.1.4 Other Federal, State, and Local Environmental LawsThis practice does not address requirements of any state or local laws or of any federal laws other than the all appropriate inquiries provisions of the LLPs. Users are cau- tioned that federal, state, and local laws may impose environ- mental assessment obligations that are beyond the scope of this practice. Users should also be aware that there are likely to be other legal obligations with regard to hazardous substances or petroleum products discovered on the property that are not addressed in this practice and that may pose risks of civil and/or criminal sanctions for non-compliance. 1 This practice is under the jurisdiction of ASTM Committee E50 on Environ- mental Assessment, Risk Management and Corrective Action and is the direct responsibility of Subcommittee E50.02 on Real Estate Assessment and Manage- ment. Current edition approved Nov. 1, 2013. Published November 2013. Originally approved in 1993. Last previous edition approved in 2005 as E1527 05. DOI: 10.1520/E1527-13. 2 All denitions, descriptions of terms, and acronyms are dened in Section 3. Whenever terms dened in 3.2 are used in this practice, they are in italics. Copyright ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959. United States 1
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. 1.1.5 DocumentationThe scope of this practice includes research and reporting requirements that support the users ability to qualify for the LLPs. As such, sufficient documenta- tion of all sources, records, and resources utilized in conduct- ing the inquiry required by this practice must be provided in the written report (refer to 8.1.9 and 12.2). 1.2 ObjectivesObjectives guiding the development of this practice are (1) to synthesize and put in writing good commer- cial and customary practice for environmental site assessments for commercial real estate, (2) to facilitate high quality, standardized environmental site assessments, (3) to provide a practical and reasonable standard practice for conducting all appropriate inquiries, and (4) to clarify an industry standard for all appropriate inquiries in an effort to guide legal interpretation of the LLPs. 1.3 Considerations Beyond ScopeThe use of this practice is strictly limited to the scope set forth in this section. Section 13 of this practice identies, for informational purposes, certain environmental conditions (not an all-inclusive list) that may exist on a property that are beyond the scope of this practice, but may warrant consideration by parties to a com- mercial real estate transaction. The need to include an inves- tigation of any such conditions in the environmental profes- sionals scope of services should be evaluated based upon, among other factors, the nature of the property and the reasons for performing the assessment (for example, a more compre- hensive evaluation of business environmental risk) and should be agreed upon between the user and environmental profes- sional as additional services beyond the scope of this practice prior to initiation of the environmental site assessment process. 1.4 Organization of This PracticeThis practice has thir- teen sections and ve appendixes. Section 1 is the Scope. Section 2 is Referenced Documents. Section 3, Terminology, has denitions of terms not unique to this practice, descriptions of terms unique to this practice, and acronyms. Section 4 is Signicance and Use of this practice. Section 5 provides discussion regarding activity and use limitations. Section 6 describes Users Responsibilities. Sections 7 12 are the main body of the Phase I Environmental Site Assessment, including evaluation and report preparation. Section 13 provides addi- tional information regarding non-scope considerations (see 1.3). The appendixes are included for information and are not part of the procedures prescribed in this practice. Appendix X1 explains the liability and defense provisions of CERCLA that will assist the user in understanding the users responsibilities under CERCLA; it also contains other important information regarding CERCLA, the Brownelds Amendments, and this practice. Appendix X2 provides the denition of the environ- mental professional responsible for the Phase I Environmental Site Assessment, as required in the All Appropriate Inquiries Final Rule (40 C.F.R. Part 312). Appendix X3 provides an optional User Questionnaire to assist the user and the environ- mental professional in gathering information from the user that may be material to identifying recognized environmental con- ditions. Appendix X4 provides a recommended table of con- tents and report format for a Phase I Environmental Site Assessment. Appendix X5 summarizes non-scope consider- ations that persons may want to assess. 1.5 This standard does not purport to address all of the safety concerns, if any, associated with its use. It is the responsibility of the user of this standard to establish appro- priate safety and health practices and determine the applica- bility of regulatory limitations prior to use. 1.6 This practice offers a set of instructions for performing one or more specic operations. This document cannot replace education or experience and should be used in conjunction with professional judgment. Not all aspects of this practice may be applicable in all circumstances. This ASTM standard is not intended to represent or replace the standard of care by which the adequacy of a given professional service must be judged, nor should this document be applied without consideration of a projects many unique aspects. The word Standard in the title means only that the document has been approved through the ASTM consensus process. 2. Referenced Documents 2.1 ASTM Standards: 3 E2091 Guide for Use of Activity and Use Limitations, Including Institutional and Engineering Controls E2600 Guide for Vapor Encroachment Screening on Prop- erty Involved in Real Estate Transactions 2.2 Federal Statutes: Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA or Super- fund), as amended by Superfund Amendments and Re- authorization Act of 1986 (SARA) and Small Business Liability Relief and Brownelds Revitalization Act of 2002 (Brownelds Amendments), 42 U.S.C. 9601 et seq. Emergency Planning and Community Right-To-KnowAct of 1986 (EPCRA), 42 U.S.C. 11001 et seq. Freedom of Information Act, 5 U.S.C. 552, as amended by Public Law No. 104-231, 110 Stat. 3048 Resource Conservation and Recovery Act (also referred to as the Solid Waste Disposal Act), as amended (RCRA), 42 U.S.C 6901 et seq. 2.3 USEPA Documents: All Appropriate Inquiries Final Rule, 40 C.F.R. Part 312 Chapter 1 EPA, Subchapter J-Superfund, Emergency Planning, and Community Right-To-Know Programs, 40 C.F.R Parts 300-399 National Oil and Hazardous Substances Pollution Contin- gency Plan, 40 C.F.R. Part 300 2.4 Other Federal Agency Document: OSHA Hazard Communication Regulation, 29 C.F.R. 1910.1200 3. Terminology 3.1 This section provides denitions, descriptions of terms, and a list of acronyms for many of the words used in this practice. The terms are an integral part of this practice and are critical to an understanding of the practice and its use. 3 For referenced ASTM standards, visit the ASTM website, www.astm.org, or contact ASTM Customer Service at [email protected]. For Annual Book of ASTM Standards volume information, refer to the standards Document Summary page on the ASTM website. E1527 13 2
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No further reproductions authorized. 3.2 Denitions: 3.2.1 abandoned propertyproperty that can be presumed to be deserted, or an intent to relinquish possession or control can be inferred from the general disrepair or lack of activity thereon such that a reasonable person could believe that there was an intent on the part of the current owner to surrender rights to the property. 3.2.2 activity and use limitationslegal or physical restric- tions or limitations on the use of, or access to, a site or facility: (1) to reduce or eliminate potential exposure to hazardous substances or petroleum products in the soil, soil vapor, groundwater, and/or surface water on the property, or (2) to prevent activities that could interfere with the effectiveness of a response action, in order to ensure maintenance of a condition of no signicant risk to public health or the environ- ment. These legal or physical restrictions, which may include institutional and/or engineering controls, are intended to pre- vent adverse impacts to individuals or populations that may be exposed to hazardous substances and petroleum products in the soil, soil vapor, groundwater, and/or surface water on the property. See Note 1. NOTE 1The term AUL is taken from Guide E2091 to include both legal (that is, institutional) and physical (that is, engineering) controls within its scope. Other agencies, organizations, and jurisdictions may dene or utilize these terms differently (for example, EPA and California do not include physical controls within their denitions of institutional controls. Department of Defense and International County/City Manage- ment Association use Land Use Controls. The term land use restric- tions is used but not dened in the Brownelds Amendments). 3.2.3 actual knowledgethe knowledge actually possessed by an individual who is a real person, rather than an entity. Actual knowledge is to be distinguished from constructive knowledge that is knowledge imputed to an individual or entity. 3.2.4 adjoining propertiesany real property or properties the border of which is contiguous or partially contiguous with that of the property, or that would be contiguous or partially contiguous with that of the property but for a street, road, or other public thoroughfare separating them. 3.2.5 aerial photographsphotographs taken from an aerial platform with sufficient resolution to allow identication of development and activities of areas encompassing the property. Aerial photographs are often available from government agen- cies or private collections unique to a local area. See 8.3.4.1 of this practice. 3.2.6 all appropriate inquiriesthat inquiry constituting all appropriate inquiries into the previous ownership and uses of the property consistent with good commercial and customary practice as dened in CERCLA, 42 U.S.C 9601(35)(B), that will qualify a party to a commercial real estate transaction for one of the threshold criteria for satisfying the LLPs to CERCLA liability (42 U.S.C 9601(35)(A) & (B), 9607(b)(3), 9607(q); and 9607(r)), assuming compliance with other elements of the defense. See Appendix X1. 3.2.7 approximate minimum search distancethe area for which records must be obtained and reviewed pursuant to Section 8 subject to the limitations provided in that section. This may include areas outside the property and shall be measured from the nearest property boundary. This term is used in lieu of radius to include irregularly shaped properties. 3.2.8 bona de prospective purchaser liability protection (42 U.S.C. 9607(r))a person may qualify as a bona de prospective purchaser if, among other requirements, such person made all appropriate inquiries into the previous ownership and uses of the facility in accordance with generally accepted good commercial and customary standards and prac- tices. Knowledge of contamination resulting from all appro- priate inquiries would not generally preclude this liability protection. A person must make all appropriate inquiries on or before the date of purchase. The facility must have been purchased after January 11, 2002. See Appendix X1 for the other necessary requirements that are beyond the scope of this practice. 3.2.9 Brownelds Amendmentsamendments to CERCLA pursuant to the Small Business Liability Relief and Brown- elds Revitalization Act, Pub. L. No. 107-118 (2002), 42 U.S.C. 9601 et seq. 3.2.10 building department recordsthose records of the local government in which the property is located indicating permission of the local government to construct, alter, or demolish improvements on the property. Often building de- partment records are located in the building department of a municipality or county. See 8.3.4.7. 3.2.11 business environmental riska risk which can have a material environmental or environmentally-driven impact on the business associated with the current or planned use of a parcel of commercial real estate, not necessarily limited to those environmental issues required to be investigated in this practice. Consideration of business environmental risk issues may involve addressing one or more non-scope considerations, some of which are identied in Section 13. 3.2.12 commercial real estateany real property except a dwelling or property with no more than four dwelling units exclusively for residential use (except that a dwelling or property with no more than four dwelling units exclusively for residential use is included in this term when it has a commer- cial function, as in the building of such dwellings for prot). This term includes but is not limited to undeveloped real property and real property used for industrial, retail, office, agricultural, other commercial, medical, or educational pur- poses; property used for residential purposes that has more than four residential dwelling units; and property with no more than four dwelling units for residential use when it has a commercial function, as in the building of such dwellings for prot. 3.2.13 commercial real estate transactiona transfer of title to or possession of real property or receipt of a security interest in real property, except that it does not include transfer of title to or possession of real property or the receipt of a security interest in real property with respect to an individual dwelling or building containing fewer than ve dwelling units, nor does it include the purchase of a lot or lots to construct a dwelling for occupancy by a purchaser, but a commercial real estate E1527 13 3
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No further reproductions authorized. transaction does include real property purchased or leased by persons or entities in the business of building or developing dwelling units. 3.2.14 Comprehensive Environmental Response, Compensation, and Liability Information System (CERCLIS) the list of sites compiled by EPA that EPA has investigated or is currently investigating for potential hazardous substance contamination for possible inclusion on the National Priorities List. 3.2.15 construction debrisconcrete, brick, asphalt, and other such building materials discarded in the construction of a building or other improvement to property. 3.2.16 contaminated public wellspublic wells used for drinking water that have been designated by a government entity as contaminated by hazardous substances (for example, chlorinated solvents), or as having water unsafe to drink without treatment. 3.2.17 contiguous property owner liability protection(42 U.S.C. 9607(q))a person may qualify for the contiguous property owner liability protection if, among other requirements, such person owns real property that is contigu- ous to, and that is or may be contaminated by hazardous substances from other real property that is not owned by that person. Furthermore, such person conducted all appropriate inquiries at the time of acquisition of the property and did not know or have reason to know that the property was or could be contaminated by a release or threatened release from the contiguous property. The all appropriate inquiries must not result in knowledge of contamination. If it does, then such person did know or had reason to know of contamination and would not be eligible for the contiguous property owner liability protection. See Appendix X1 for the other necessary requirements that are beyond the scope of this practice. 3.2.18 controlled recognized environmental conditiona recognized environmental condition resulting from a past release of hazardous substances or petroleum products that has been addressed to the satisfaction of the applicable regulatory authority (for example, as evidenced by the issuance of a no further action letter or equivalent, or meeting risk-based criteria established by regulatory authority), with hazardous substances or petroleum products allowed to remain in place subject to the implementation of required controls (for example, property use restrictions, activity and use limitations, institutional controls, or engineering controls). (See Note 2.) A condition considered by the environmental professional to be a controlled recognized environmental condition shall be listed in the ndings section of the Phase I Environmental Site Assessment report, and as a recognized environmental condi- tion in the conclusions section of the Phase I Environmental Site Assessment report. (See Note 3.) NOTE 2For example, if a leaking underground storage tank has been cleaned up to a commercial use standard, but does not meet unrestricted residential cleanup criteria, this would be considered a controlled recog- nized environmental condition. The control is represented by the restriction that the property use remain commercial. NOTE 3A condition identied as a controlled recognized environmen- tal condition does not imply that the environmental professional has evaluated or conrmed the adequacy, implementation, or continued effectiveness of the required control that has been, or is intended to be, implemented. 3.2.19 CORRACTS lista list maintained by EPA of haz- ardous waste treatment, storage, or disposal facilities and other RCRA-regulated facilities (due to past interim status or storage of hazardous waste beyond 90 days) that have been notied by the U.S. Environmental Protection Agency to undertake cor- rective action under RCRA. The CORRACTS list is a subset of the EPA database that manages RCRA data. 3.2.20 data failurea failure to achieve the historical re- search objectives in 8.3.1 through 8.3.2.2 even after reviewing the standard historical sources in 8.3.4.1 through 8.3.4.8 that are reasonably ascertainable and likely to be useful. Data failure is one type of data gap. See 8.3.2.3. 3.2.21 data gapa lack of or inability to obtain information required by this practice despite good faith efforts by the environmental professional to gather such information. Data gaps may result from incompleteness in any of the activities required by this practice, including, but not limited to site reconnaissance (for example, an inability to conduct the site visit), and interviews (for example, an inability to interview the key site manager, regulatory officials, etc.). See 12.7. 3.2.22 de minimis conditiona condition that generally does not present a threat to human health or the environment and that generally would not be the subject of an enforcement action if brought to the attention of appropriate governmental agencies. Conditions determined to be de minimis conditions are not recognized environmental conditions nor controlled recognized environmental conditions. 3.2.23 demolition debrisconcrete, brick, asphalt, and other such building materials discarded in the demolition of a building or other improvement to property. 3.2.24 druma container (typically, but not necessarily, holding 55 gal (208 L) of liquid) that may be used to store hazardous substances or petroleum products. 3.2.25 dry wellsunderground areas where soil has been removed and replaced with pea gravel, coarse sand, or large rocks. Dry wells are used for drainage, to control storm runoff, for the collection of spilled liquids (intentional and non- intentional) and wastewater disposal (often illegal). 3.2.26 due diligencethe process of inquiring into the environmental characteristics of a parcel of commercial real estate or other conditions, usually in connection with a commercial real estate transaction. The degree and kind of due diligence vary for different properties and differing purposes. See Appendix X1. 3.2.27 dwellingstructure or portion thereof used for resi- dential habitation. 3.2.28 engineering controls (EC)physical modications to a site or facility (for example, capping, slurry walls, or point of use water treatment) to reduce or eliminate the potential for exposure to hazardous substances or petroleum products in the soil or groundwater on the property. Engineering controls are a type of activity and use limitation (AUL). 3.2.29 environmentenvironment shall have the same meaning as the denition of environment in CERCLA 42 E1527 13 4
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. U.S.C. 9601(8)). For additional background information, see Legal Appendix (Appendix X1) to section XI. 1.1 Releases and Threatened Release. 3.2.30 environmental compliance auditthe investigative process to determine if the operations of an existing facility are in compliance with applicable environmental laws and regula- tions. This term should not be used to describe this practice, although an environmental compliance audit may include an environmental site assessment or, if prior audits are available, may be part of an environmental site assessment. 3.2.31 environmental liena charge, security, or encum- brance upon title to a property to secure the payment of a cost, damage, debt, obligation, or duty arising out of response actions, cleanup, or other remediation of hazardous substances or petroleum products upon a property, including (but not limited to) liens imposed pursuant to CERCLA 42 U.S.C. 9607(1) & 9607(r) and similar state or local laws. 3.2.32 environmental professionala person meeting the education, training, and experience requirements as set forth in 40 CFR 312.10(b). For the convenience of the reader, this section is reprinted in Appendix X2. The person may be an independent contractor or an employee of the user. 3.2.33 environmental site assessment (ESA)the process by which a person or entity seeks to determine if a particular parcel of real property (including improvements) is subject to recognized environmental conditions. At the option of the user, an environmental site assessment may include more inquiry than that constituting all appropriate inquiries or, if the user is not concerned about qualifying for the LLPs, less inquiry than that constituting all appropriate inquiries. An environmental site assessment is both different from and often less rigorous than an environmental compliance audit. 3.2.34 ERNS listEPAs emergency response notication system list of reported CERCLA hazardous substancereleases or spills in quantities greater than the reportable quantity, as maintained at the National Response Center. Notication requirements for such releases or spills are codied in 40 CFR Parts 302 and 355. 3.2.35 Federal Register, (FR)publication of the United States government published daily (except for federal holidays and weekends) containing all proposed and nal regulations and some other activities of the federal government. When regulations become nal, they are included in the Code of Federal Regulations (CFR), as well as published in the Federal Register. 3.2.36 ll dirtdirt, soil, sand, or other earth, that is obtained off-site, that is used to ll holes or depressions, create mounds, or otherwise articially change the grade or elevation of real property. It does not include material that is used in limited quantities for normal landscaping activities. 3.2.37 re insurance mapsmaps produced for private re insurance map companies that indicate uses of properties at specied dates and that encompass the property. These maps are often available at local libraries, historical societies, private resellers, or from the map companies who produced them. 3.2.38 good faiththe absence of any intention to seek an unfair advantage or to defraud another party; an honest and sincere intention to fulll ones obligations in the conduct or transaction concerned. 3.2.39 hazardous substancea substance dened as a haz- ardous substance pursuant to CERCLA 42 U.S.C.9601(14), as interpreted by EPA regulations and the courts: (A) any substance designated pursuant to section 1321(b)(2)(A) of Title 33, (B) any element, compound, mixture, solution, or sub- stance designated pursuant to section 9602 of this title, (C) any hazardous waste having the characteristics identied under or listed pursuant to section 3001 of the Resource Conservation and Recovery Act of 1976 (RCRA), as amended, (42 U.S.C. 6921) (but not including any waste the regulation of which under RCRA(42 U.S.C.6901 et seq.) has been suspended by Act of Congress), (D) any toxic pollutant listed under section 1317(a) of Title 33, (E) any hazardous air pollutant listed under section 112 of the Clean Air Act (42 U.S.C. 7412), and (F) any imminently hazardous chemical substance or mixture with respect to which the Administrator (of EPA) has taken action pursuant to section 2606 of Title 15. The term does not include petroleum, including crude oil or any fraction thereof which is not otherwise specically listed or designated as a hazardous substance under subparagraphs (A) through (F) of this paragraph, and the term does not include natural gas, natural gas liquids, liqueed natural gas, or synthetic gas usable for fuel (or mixtures of natural gas and such synthetic gas). (See Appendix X1.) 3.2.40 hazardous wasteany hazardous waste having the characteristics identied under or listed pursuant to section 3001 of RCRA, as amended, (42 U.S.C. 6921) (but not including any waste the regulation of which under RCRA (42 U.S.C. 6901-6992k) has been suspended by Act of Con- gress). RCRA is sometimes also identied as the Solid Waste Disposal Act. RCRA denes a hazardous waste, at 42 U.S.C. 6903, as: a solid waste, or combination of solid wastes, which because of its quantity, concentration, or physical, chemical, or infectious characteristics may(A) cause, or signicantly contribute to an increase in mortality or an increase in serious irreversible, or incapacitating reversible, illness; or (B) pose a substantial present or potential hazard to human health or the environment when improperly treated, stored, transported, or disposed of, or otherwise managed. 3.2.41 hazardous waste/contaminated sitessites on which a release has occurred, or is suspected to have occurred, of any hazardous substance, hazardous waste, or petroleum products, and that release or suspected release has been reported to a government entity. 3.2.42 historical recognized environmental conditiona past release of any hazardous substances or petroleum prod- ucts that has occurred in connection with the property and has been addressed to the satisfaction of the applicable regulatory authority or meeting unrestricted use criteria established by a regulatory authority, without subjecting the property to any required controls (for example, property use restrictions, ac- tivity and use limitations, institutional controls, or engineering controls). Before calling the past release a historical recog- nized environmental condition, the environmental professional must determine whether the past release is a recognized environmental condition at the time the Phase I Environmental E1527 13 5
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. Site Assessment is conducted (for example, if there has been a change in the regulatory criteria). If the EP considers the past release to be a recognized environmental condition at the time the Phase I ESA is conducted, the condition shall be included in the conclusions section of the report as a recognized environmental condition. 3.2.43 IC/EC registriesdatabases of institutional controls or engineering controls that may be maintained by a federal, state or local environmental agency for purposes of tracking sites that may contain residual contamination and AULs. The names for these may vary from program to program and state to state, and include terms such as Declaration of Environmen- tal Use Restriction database (Arizona), list of deed restric- tions (California), environmental real covenants list (Colorado), brownelds site list (Indiana, Missouri) and the Pennsylvania Activity and Use Limitation (PAAUL) Registry. 3.2.44 innocent landowner defense(42 U.S.C. 9601(35) & 9607(b)(3))a person may qualify as one of three types of innocent landowners: (i) a person who did not know and had no reason to know that contamination existed on the property at the time the purchaser acquired the property; (ii) a govern- ment entity which acquired the property by escheat, or through any other involuntary transfer or acquisition, or through the exercise of eminent domain authority by purchase or condem- nation; and (iii) a person who acquired the facility by inheritance or bequest. To qualify for the innocent landowner defense, such person must have made all appropriate inquiries on or before the date of purchase. Furthermore, the all appropriate inquiries must not have resulted in knowledge of the contamination. If it does, then such person did know or had reason to know of contamination and would not be eligible for the innocent landowner defense. See Appendix X1 for the other necessary requirements that are beyond the scope of this practice. 3.2.45 institutional controls (IC)a legal or administrative restriction (for example, deed restrictions, restrictive covenants, easements, or zoning) on the use of, or access to, a site or facility to (1) reduce or eliminate potential exposure to hazardous substances or petroleum products in the soil or groundwater on the property, or (2) to prevent activities that could interfere with the effectiveness of a response action, in order to ensure maintenance of a condition of no signicant risk to public health or the environment. An institutional control is a type of Activity and Use Limitation (AUL). 3.2.46 interviewsthose portions of this practice that are contained in Section 10 and 11 thereof and address questions to be asked of past and present owners, operators, and occupants of the property and questions to be asked of local government officials. 3.2.47 key site managerthe person identied by the owner or operator of a property as having good knowledge of the uses and physical characteristics of the property. See 10.5.1. 3.2.48 landlla place, location, tract of land, area, or premises used for the disposal of solid wastes as dened by state solid waste regulations. The term is synonymous with the term solid waste disposal site and is also known as a garbage dump, trash dump, or similar term. 3.2.49 Landowner Liability Protections (LLPs)landowner liability protections under CERCLA; these protections include the bona de prospective purchaser liability protection, con- tiguous property owner liability protection, and innocent land- owner defense from CERCLA liability. See 42 U.S.C. 9601(35)(A), 9601(40), 9607(b), 9607(q), 9607(r). 3.2.50 local government agenciesthose agencies of mu- nicipal or county government having jurisdiction over the property. Municipal and county government agencies include but are not limited to cities, parishes, townships, and similar entities. 3.2.51 local street directoriesdirectories published by pri- vate (or sometimes government) sources that show ownership, occupancy, and/or use of sites by reference to street addresses. Often local street directories are available at libraries, or historical societies, and/or local municipal offices. See 8.3.4.6 of this practice. 3.2.52 LUST sitesstate lists of leaking underground stor- age tank sites. RCRA gives EPA and states, under cooperative agreements with EPA, authority to clean up releases from UST systems or require owners and operators to do so. (42 U.S.C. 6991b). 3.2.53 major occupantsthose tenants, subtenants, or other persons or entities each of which uses at least 40 % of the leasable area of the property or any anchor tenant when the property is a shopping center. 3.2.54 material safety data sheet (MSDS)written or printed material concerning a hazardous substance which is prepared by chemical manufacturers, importers, and employers for hazardous chemicals pursuant to OSHAs Hazard Commu- nication Standard, 29 C.F.R. 1910.1200. 3.2.55 material threata physically observable or obvious threat which is reasonably likely to lead to a release that, in the opinion of the environmental professional, is threatening and might result in impact to public health or the environment. An example might include an aboveground storage tank system that contains a hazardous substance and which shows evidence of damage. The damage would represent a material threat if it is deemed serious enough that it may cause or contribute to tank integrity failure with a release of contents to the environ- ment. 3.2.56 migrate/migrationfor the purposes of this practice, migrate and migration refers to the movement of hazard- ous substances or petroleum products in any form, including, for example, solid and liquid at the surface or subsurface, and vapor in the subsurface. See Note 4. NOTE 4Vapor migration in the subsurface is described in Guide E2600; however, nothing in this practice should be construed to require application of the Guide E2600 standard to achieve compliance with all appropriate inquiries. 3.2.57 National Contingency Plan (NCP)the National Oil and Hazardous Substances Pollution Contingency Plan, found at 40 C.F.R. Part 300, that is the EPAs blueprint on how hazardous substances are to be cleaned up pursuant to CER- CLA. E1527 13 6
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. 3.2.58 National Priorities List (NPL)list compiled by EPA pursuant to CERCLA 42 U.S.C. 9605(a)(8)(B) of prop- erties with the highest priority for cleanup pursuant to EPAs Hazard Ranking System. See 40 C.F.R. Part 300. 3.2.59 obviousthat which is plain or evident; a condition or fact that could not be ignored or overlooked by a reasonable observer while visually or physically observing the property. 3.2.60 occupantsthose tenants, subtenants, or other per- sons or entities using the property or a portion of the property. 3.2.61 operatorthe person responsible for the overall operation of a facility. 3.2.62 other historical sourcesany source or sources other than those designated in 8.3.4.1 through 8.3.4.8 that are credible to a reasonable person and that identify past uses of the property. The term includes, but is not limited to: miscel- laneous maps, newspaper archives, internet sites, community organizations, local libraries, historical societies, current own- ers or occupants of neighboring properties, and records in the les and/or personal knowledge of the property owner and/or occupants. See 8.3.4.9. 3.2.63 ownergenerally the fee owner of record of the property. 3.2.64 petroleum exclusionthe exclusion from CERCLA liability provided in 42 U.S.C. 9601(14), as interpreted by the courts and EPA: The term (hazardous substance) does not include petroleum, including crude oil or any fraction thereof which is not otherwise specically listed or designated as a hazardous substance under subparagraphs (A) through (F) of this paragraph, and the term does not include natural gas, natural gas liquids, liqueed natural gas, or synthetic gas usable for fuel (or mixtures of natural gas and such synthetic gas). 3.2.65 petroleum productsthose substances included within the meaning of the petroleum exclusion to CERCLA, 42 U.S.C. 9601(14), as interpreted by the courts and EPA, that is: petroleum, including crude oil or any fraction thereof which is not otherwise specically listed or designated as a hazardous substance under Subparagraphs (A) through (F) of 42 U.S.C. 9601(14), natural gas, natural gas liquids, liqueed natural gas, and synthetic gas usable for fuel (or mixtures of natural gas and such synthetic gas). (The word fraction refers to certain distillates of crude oil, including gasoline, kerosine, diesel oil, jet fuels, and fuel oil, pursuant to Standard Denitions of Petroleum Statistics. 4 ) 3.2.66 Phase I Environmental Site Assessmentthe process described in this practice. 3.2.67 physical setting sourcessources that provide infor- mation about the geologic, hydrogeologic, hydrologic, or topographic characteristics of a property. See 8.2.4. 3.2.68 pits, ponds, or lagoonsman-made or natural de- pressions in a ground surface that are likely to hold liquids or sludge containing hazardous substances or petroleum products. The likelihood of such liquids or sludge being present is determined by evidence of factors associated with the pit, pond, or lagoon, including, but not limited to, discolored water, distressed vegetation, or the presence of an obvious wastewater discharge. 3.2.69 practically reviewableinformation that is practi- cally reviewable means that the information is provided by the source in a manner and in a form that, upon examination, yields information relevant to the property without the need for extraordinary analysis of irrelevant data. The form of the information shall be such that the user can review the records for a limited geographic area. Records that cannot be feasibly retrieved by reference to the location of the property or a geographic area in which the property is located are not generally practically reviewable. Most databases of public records are practically reviewable if they can be obtained from the source agency by the county, city, zip code, or other geographic area of the facilities listed in the record system. Records that are sorted, led, organized, or maintained by the source agency only chronologically are not generally practi- cally reviewable. Listings in publicly available records which do not have adequate address information to be located geographically are not generally considered practically review- able. For large databases with numerous records (such as RCRAhazardous waste generators and registered underground storage tanks), the records are not practically reviewable unless they can be obtained from the source agency in the smaller geographic area of zip codes. Even when information is provided by zip code for some large databases, it is common for an unmanageable number of sites to be identied within a given zip code. In these cases, it is not necessary to review the impact of all of the sites that are likely to be listed in any given zip code because that information would not be practically reviewable. In other words, when so much data is generated that it cannot be feasibly reviewed for its impact on the property, it is not practically reviewable. 3.2.70 propertythe real property that is the subject of the environmental site assessment described in this practice. Real property includes buildings and other xtures and improve- ments located on the property and affixed to the land. 3.2.71 property tax lesthe les kept for property tax purposes by the local jurisdiction where the property is located and may include records of past ownership, appraisals, maps, sketches, photos, or other information that is reasonably ascertainable and pertaining to the property. See 8.3.4.3. 3.2.72 publicly availableinformation that is publicly available means that the source of the information allows access to the information by anyone upon request. 3.2.73 RCRA generatorsthose persons or entities that generate hazardous wastes, as dened and regulated by RCRA. 3.2.74 RCRA generators listlist kept by EPA of those persons or entities that generate hazardous wastes as dened and regulated by RCRA. 3.2.75 RCRA TSD facilitiesthose facilities on which treatment, storage, and/or disposal of hazardous wastes takes place, as dened and regulated by RCRA. 4 Standard Denitions of Petroleum Statistics, American Petroleum Institute, Fifth Edition, 1995. E1527 13 7
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. 3.2.76 RCRA TSD facilities listlist kept by EPA of those facilities on which treatment, storage, and/or disposal of hazardous wastes takes place, as dened and regulated by RCRA. 3.2.77 reasonably ascertainableinformation that is (1)publicly available, (2) obtainable from its source within reasonable time and cost constraints, and (3) practically reviewable. 3.2.78 recognized environmental conditionsthe presence or likely presence of any hazardous substances or petroleum products in, on, or at a property: (1) due to release to the environment; (2) under conditions indicative of a release to the environment; or (3) under conditions that pose a material threat of a future release to the environment. De minimis conditions are not recognized environmental conditions. 3.2.79 recorded land title recordsrecords of historical fee ownership, which may include leases, land contracts, and AULs on or of the property recorded in the place where land title records are, by law or custom, recorded for the local jurisdiction in which the property is located. (Often such records are kept by a municipal or county recorder or clerk.) Such records may be obtained from title companies or directly from the local government agency. Information about the title to the property that is recorded in a U.S. district court or any place other than where land title records are, by law or custom, recorded for the local jurisdiction in which the property is located, are not considered part of recorded land title records. See 8.3.4.4. 3.2.80 records of emergency release notications EPCRA (42 U.S.C. 11004)requires operators of facilities to notify their local emergency planning committee (as dened in EPCRA) and state emergency response commission (as dened in EPCRA) of any release beyond the facilitys boundary of any reportable quantity of any extremely hazardous substance. Often the local re department is the local emergency planning committee. Records of such notications are Records of Emergency Release Notications (42 U.S.C. 11004). 3.2.81 records reviewthat part that is contained in Section 8 of this practice that addresses which records shall or may be reviewed. 3.2.82 releasea release of any hazardous substance or petroleum product shall have the same meaning as the deni- tion of release in CERCLA 42 U.S.C. 9601(22)). For additional background information, see Legal Appendix (Ap- pendix X1) to X1.1.1 Releases and Threatened Release. 3.2.83 reportthe written report prepared by the environ- mental professional and constituting part of a Phase I Envi- ronmental Site Assessment, as required by this practice. 3.2.84 site reconnaissancethat part that is contained in Section 9 of this practice and addresses what should be done in connection with the site visit. The site reconnaissance includes, but is not limited to, the site visit done in connection with such a Phase I Environmental Site Assessment. 3.2.85 site visitthe visit to the property during which observations are made constituting the site reconnaissance section of this practice. 3.2.86 solid waste disposal sitea place, location, tract of land, area, or premises used for the disposal of solid wastes as dened by state solid waste regulations. The term is synony- mous with the term landll and is also known as a garbage dump, trash dump, or similar term. 3.2.87 solventa chemical compound that is capable of dissolving another substance and may itself be a hazardous substance, used in a number of manufacturing/industrial pro- cesses including but not limited to the manufacture of paints and coatings for industrial and household purposes, equipment clean-up, and surface degreasing in metal fabricating indus- tries. 3.2.88 standard environmental record sourcesthose re- cords specied in 8.2.1. 3.2.89 standard historical sourcesthose sources of infor- mation about the history of uses of property specied in 8.3.4. 3.2.90 standard physical setting sourcea current USGS 7.5 Minute Topographic Map (if any) showing the area on which the property is located. See 8.2.4. 3.2.91 standard practicethe activities set forth in this practice. 3.2.92 standard sourcessources of environmental, physi- cal setting, or historical records specied in Section 8 of this practice. 3.2.93 state registered USTsstate lists of underground storage tanks required to be registered under Subtitle I, Section 9002 of RCRA. 3.2.94 sumpa pit, cistern, cesspool, or similar receptacle where liquids drain, collect, or are stored. 3.2.95 TSD facilitytreatment, storage, or disposal facility (see RCRA TSD facilities). 3.2.96 underground injectionthe emplacement or dis- charge of uids into the subsurface by means of a well, improved sinkhole, sewage drain hole, subsurface uid distri- bution system or other system, or groundwater point source. 3.2.97 underground storage tank (UST)any tank, includ- ing underground piping connected to the tank, that is or has been used to contain hazardous substances or petroleum products and the volume of which is 10 % or more beneath the surface of the ground. 3.2.98 userthe party seeking to use Practice E1527 to complete an environmental site assessment of the property. A user may include, without limitation, a potential purchaser of property, a potential tenant of property, an owner of property, a lender, or a property manager. The user has specic obliga- tions for completing a successful application of this practice outlined in Section 6. 3.2.99 USGS 7.5 Minute Topographic Mapthe map (if any) available from or produced by the United States Geologi- cal Survey, entitled USGS 7.5 Minute Topographic Map, and showing the property. 3.2.100 visually and/or physically observedduring a site visit pursuant to this practice, this term means observations made by vision while walking through a property and the structures located on it and observations made by the sense of E1527 13 8
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. smell, particularly observations of noxious or foul odors. The term walking through is not meant to imply that disabled persons who cannot physically walk may not conduct a site visit; they may do so by the means at their disposal for moving through the property and the structures located on it. 3.2.101 wastewaterwater that (1) is or has been used in an industrial or manufacturing process, (2) conveys or has con- veyed sewage, or (3) is directly related to manufacturing, processing, or raw materials storage areas at an industrial plant. Wastewater does not include water originating on or passing through or adjacent to a site, such as stormwater ows, that has not been used in industrial or manufacturing processes, has not been combined with sewage, or is not directly related to manufacturing, processing, or raw materials storage areas at an industrial plant. 3.2.102 zoning/land use recordsthose records of the local government in which the property is located indicating the uses permitted by the local government in particular zones within its jurisdiction. The records may consist of maps and/or written records. They are often located in the planning department of a municipality or county. See 8.3.4.8. 3.3 Acronyms: 3.3.1 AULsActivity and Use Limitations. 3.3.2 CERCLAComprehensive Environmental Response, Compensation and Liability Act of 1980 (as amended, 42 U.S.C. 9601 et seq.). 3.3.3 CERCLISComprehensive Environmental Response, Compensation and Liability Information System (maintained by EPA). 3.3.4 CFRCode of Federal Regulations. 3.3.5 CORRACTSfacilities subject to Corrective Action under RCRA. 3.3.6 EPAUnited States Environmental Protection Agency. 3.3.7 EPCRAEmergency Planning and Community Right to Know Act ((also known as SARA Title III), 42 U.S.C. 11001-11050 et seq.). 3.3.8 ERNSemergency response notication system. 3.3.9 ESAEnvironmental Site Assessment (different than an environmental compliance audit, 3.2.30). 3.3.10 FOIAU.S. Freedom of Information Act (5 U.S.C. 552 as amended by Public Law No. 104-231, 110 Stat.). 3.3.11 FRFederal Register. 3.3.12 ICsInstitutional Controls. 3.3.13 LLPLandowner Liability Protections under the Brownelds Amendments 3.3.14 LUSTLeaking Underground Storage Tank. 3.3.15 MSDSMaterial Safety Data Sheet. 3.3.16 NCPNational Contingency Plan. 3.3.17 NFRAPformer CERCLIS sites where no further remedial action is planned under CERCLA. 3.3.18 NPDESNational Pollutant Discharge Elimination System. 3.3.19 NPLNational Priorities List. 3.3.20 PCBspolychlorinated biphenyls. 3.3.21 PRPPotentially Responsible Party (pursuant to CERCLA 42 U.S.C. 9607(a)). 3.3.22 RCRAResource Conservation and Recovery Act (as amended, 42 U.S.C.6901 et seq.). 3.3.23 SARASuperfund Amendments and Reauthorization Act of 1986 (amendment to CERCLA). 3.3.24 TSDFhazardous waste treatment, storage or dis- posal facility. 3.3.25 USCUnited States Code. 3.3.26 USGSUnited States Geological Survey. 3.3.27 USTUnderground Storage Tank. 4. Signicance and Use 4.1 UsesThis practice is intended for use on a voluntary basis by parties who wish to assess the environmental condi- tion of commercial real estate taking into account commonly known and reasonably ascertainable information. While use of this practice is intended to constitute all appropriate inquiries for purposes of the LLPs, it is not intended that its use be limited to that purpose. This practice is intended primarily as an approach to conducting an inquiry designed to identify recognized environmental conditions in connection with a property. No implication is intended that a person must use this practice in order to be deemed to have conducted inquiry in a commercially prudent or reasonable manner in any particular transaction. Nevertheless, this practice is intended to reect a commercially prudent and reasonable inquiry. (See Section 1.6.) 4.2 Clarications on Use: 4.2.1 Use Not Limited to CERCLAThis practice is de- signed to assist the user in developing information about the environmental condition of a property and as such has utility for a wide range of persons, including those who may have no actual or potential CERCLA liability and/or may not be seeking the LLPs. 4.2.2 Residential Tenants/Purchasers and OthersNo im- plication is intended that it is currently customary practice for residential tenants of multifamily residential buildings, tenants of single-family homes or other residential real estate, or purchasers of dwellings for ones own residential use, to conduct an environmental site assessment in connection with these transactions. Thus, these transactions are not included in the term commercial real estate transactions, and it is not intended to imply that such persons are obligated to conduct an environmental site assessment in connection with these trans- actions for purposes of all appropriate inquiries or for any other purpose. In addition, no implication is intended that it is currently customary practice for environmental site assess- ments to be conducted in other unenumerated instances (in- cluding but not limited to many commercial leasing transactions, many acquisitions of easements, and many loan transactions in which the lender has multiple remedies). On the other hand, anyone who elects to do an environmental site E1527 13 9
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. assessment of any property or portion of a property may, in such persons judgment, use this practice. 4.2.3 Site-SpecicThis practice is site-specic in that it relates to assessment of environmental conditions on a specic parcel of commercial real estate. Consequently, this practice does not address many additional issues raised in transactions such as purchases of business entities, or interests therein, or of their assets, that may well involve environmental liabilities pertaining to properties previously owned or operated or other off-site environmental liabilities. 4.3 Who May ConductA Phase I Environmental Site Assessment must be performed by an environmental profes- sional as specied in Section 7.5.1. No practical standard can be designed to eliminate the role of judgment and the value and need for experience in the party performing the inquiry. The professional judgment of an environmental professional is, consequently, vital to the performance of all appropriate inquiries. 4.4 Additional ServicesAs set forth in 12.9, additional services may be contracted for between the user and the environmental professional. Such additional services may in- clude business environmental risk issues not included within the scope of this practice, examples of which are identied in Section 13 under Non-Scope Considerations. 4.5 PrinciplesThe following principles are an integral part of this practice and are intended to be referred to in resolving any ambiguity or exercising such discretion as is accorded the user or environmental professional in performing an environ- mental site assessment or in judging whether a user or environmental professional has conducted appropriate inquiry or has otherwise conducted an adequate environmental site assessment. 4.5.1 Uncertainty Not EliminatedNo environmental site assessment can wholly eliminate uncertainty regarding the potential for recognized environmental conditions in connec- tion with a property. Performance of this practice is intended to reduce, but not eliminate, uncertainty regarding the potential for recognized environmental conditions in connection with a property, and this practice recognizes reasonable limits of time and cost. 4.5.2 Not ExhaustiveAll appropriate inquiries does not mean an exhaustive assessment of a property. There is a point at which the cost of information obtained or the time required to gather it outweighs the usefulness of the information and, in fact, may be a material detriment to the orderly completion of transactions. One of the purposes of this practice is to identify a balance between the competing goals of limiting the costs and time demands inherent in performing an environmental site assessment and the reduction of uncertainty about unknown conditions resulting from additional information. 4.5.3 Level of Inquiry is VariableNot every property will warrant the same level of assessment. Consistent with good commercial and customary practice, the appropriate level of environmental site assessment will be guided by the type of property subject to assessment, the expertise and risk tolerance of the user, and the information developed in the course of the inquiry. 4.5.4 Comparison with Subsequent InquiryIt should not be concluded or assumed that an inquiry was not all appropri- ate inquiries merely because the inquiry did not identify recognized environmental conditions in connection with a property. Environmental site assessments must be evaluated based on the reasonableness of judgments made at the time and under the circumstances in which they were made. Subsequent environmental site assessments should not be considered valid standards to judge the appropriateness of any prior assessment based on hindsight, new information, use of developing tech- nology or analytical techniques, or other factors. 4.6 Continued Viability of Environmental Site Assessment Subject to Section 4.8, an environmental site assessment meeting or exceeding this practice and completed less than 180 days prior to the date of acquisition 5 of the property or (for transactions not involving an acquisition) the date of the intended transaction is presumed to be valid. 6 If within this period the assessment will be used by a user different than the user for whom the assessment was originally prepared, the subsequent user must also satisfy the Users Responsibilities in Section 6. Subject to Section 4.8 and the Users Responsibili- ties set forth in Section 6, an environmental site assessment meeting or exceeding this practice and for which the informa- tion was collected or updated within one year prior to the date of acquisition of the property or (for transactions not involving an acquisition) the date of the intended transaction may be used provided that the following components of the inquiries were conducted or updated within 180 days of the date of purchase or the date of the intended transaction: (i) interviews with owners, operators, and occupants; (ii) searches for recorded environmental cleanup liens; (iii) reviews of federal, tribal, state, and local government records; (iv) visual inspections of the property and of adjoining properties; and (v) the declaration by the environmental professional respon- sible for the assessment or update. 4.7 Prior Assessment UsageThis practice recognizes that environmental site assessments performed in accordance with this practice will include information that subsequent users may want to use to avoid undertaking duplicative assessment procedures. Therefore, this practice describes procedures to be followed to assist users in determining the appropriateness of using information in environmental site assessments performed more than one year prior to the date of acquisition of the property or (for transactions not involving an acquisition) the date of the intended transaction. The system of prior assess- ment usage is based on the following principles that should be adhered to in addition to the specic procedures set forth elsewhere in this practice: 5 Under All Appropriate Inquiries 40 C.F.R. Part 312, EPA denes date of acquisition as the date on which a person acquires title to the property. 6 Subject to meeting the other requirements set forth in this section, for purpose of the LLPs, information collected in an assessment conducted prior to the effective date of the federal regulations for All Appropriate Inquiries or this practice can be used if the information was generated as a result of procedures that meet or exceed the requirements of the E1527-97 or -00 standards. E1527 13 10
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. 4.7.1 Use of Prior InformationSubject to the requirements set forth in Section 4.6, users and environmental professionals may use information in prior environmental site assessments provided such information was generated as a result of procedures that meet or exceed the requirements of this practice. However, such information shall not be used without current investigation of conditions likely to affect recognized environmental conditions in connection with the property. Additional tasks may be necessary to document conditions that may have changed materially since the prior environmental site assessment was conducted. 4.7.2 Contractual Issues Regarding Prior Assessment UsageThe contractual and legal obligations between prior and subsequent users of environmental site assessments or between environmental professionals who conducted prior environmental site assessments and those who would like to use such prior environmental site assessments are beyond the scope of this practice. 4.8 Actual Knowledge ExceptionIf the user or environ- mental professional(s) conducting an environmental site as- sessment has actual knowledge that the information being used from a prior environmental site assessment is not accurate or if it is obvious, based on other information obtained by means of the environmental site assessment or known to the person conducting the environmental site assessment, that the infor- mation being used is not accurate, such information from a prior environmental site assessment may not be used. 4.9 Rules of EngagementThe contractual and legal obli- gations between an environmental professional and a user (and other parties, if any) are outside the scope of this practice. No specic legal relationship between the environmental profes- sional and the user is necessary for the user to meet the requirements of this practice. 5. Signicance of Activity and Use Limitations 5.1 Activity and Use Limitations (AULs)AULs are one indication of a past or present release of a hazardous substance or petroleum products. AULs are an explicit recognition by a federal, tribal, state, or local regulatory agency that residual levels of hazardous substances or petroleum products may be present on a property, and that unrestricted use of the property may not be acceptable. AULs are important to both the user and the environmental professional. Specically, the environ- mental professional can review agency records and IC/EC registries for the presence of AULs on the property to determine if a recognized environmental condition is present on the subject property (see Section 8.2.1, 8.2.3, and 11.5.1.4). The user must comply with AULs to maintain the LLP (see Appendix X1). 5.2 Different Terms for AULsThe term AUL is taken from Guide E2091 to include both legal (that is, institutional) and physical (that is, engineering) controls within its scope. Agencies, organizations, and jurisdictions may dene or utilize these terms differently (for example, Department of Defense and International City/County Management Association use Land Use Controls and the term land use restrictions is used but not dened in the Brownelds Amendments). 5.3 Information Provided by the AULThe AUL should provide information on the chemical(s) of concern, the poten- tial exposure pathway(s) that the AUL is intended to control, the environmental medium that is being controlled, and the expected performance objective(s) of the AUL. AULs may be used to provide access to monitoring wells, sampling locations, or remediation equipment. 5.4 Where AULs Can Be FoundAULs are often recorded at the land title office, that is, County Recorder/Registry of Deeds. Notice of an AUL is given to the public by recording the AUL instrumental at the appropriate land title agency. Preliminary Title Reports, Title Commitments, Condition of Title, or Title Abstracts are the types of title reports that will commonly disclose AULs. However, these reports will only disclose AULs led in the land title office. AUL information is not typically contained in a chain of title report. In some cases, an AUL may not have been led at the land title office but may be found in a separate environmental agency database. While some states maintain reasonably ascertainable IC/EC registries, other states do not. The environmental professional should determine whether AULs are considered readily avail- able records in the state in which the property is located. Some AULs may only exist in project documentation, which may not be readily available to the environmental professional. This may be the case in states where project les are archived after a period of years and access to the archives is restricted. AULs imposed upon some properties by local agencies with limited environmental oversight may not be recorded in the land title records, particularly where a local agency has been delegated regulatory authority over environmental programs. 6. Users Responsibilities 6.1 ScopeThe purpose of this section is to describe tasks to be performed by the user. The All Appropriate Inquiries Final Rule (40 CFR Part 312) requires that these tasks be performed by or on behalf of a party seeking to qualify for an LLP to CERCLA liability. These tasks must also be completed by or on behalf of EPA Browneld Assessment and Charac- terization grantees. While such information is not required to be provided to the environmental professional, the environmen- tal professional shall request that the user provide the results of these tasks as such information can assist the environmental professional in identifying recognized environmental condi- tions. Appendix X3 provides an optional User Questionnaire to assist the user and the environmental professional in gathering information from the user that may be material to identifying recognized environmental conditions. If the user does not communicate the information to the environmental profes- sional in connection with 6.1 through 6.6, the environmental professional should consider the signicance of the absence of such information pursuant to 12.7. NOTE 5Nothing in this section relieves the environmental profes- sional of satisfying the environmental professional responsibilities set forth in the All Appropriate Inquiries Final Rule (40 CFR Part 312). 6.2 Review Title and Judicial Records for Environmental Liens and Activity and Use Limitations (AULs)To meet the requirements of 40 CFR 312.20 and 312.25, a search for the existence of environmental liens and AULs that are led or E1527 13 11
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. recorded against the property must be conducted. Environmen- tal liens and AULs are legally distinct instruments and have very different purposes and both can commonly be found within recorded land title records (e.g., County Recorder/ Registry of Deeds). The types of title reports that may disclose environmental liens and AULs include Preliminary Title Reports, Title Commitments, Condition of Title, and Title Abstracts. Chain of title reports will not normally disclose environmental liens or AULs. Environmental liens and AULs that are imposed by judicial authorities may be recorded or led in judicial records only. In jurisdictions where environ- mental liens or AULs are only recorded or led in judicial records, the judicial records must be searched for environmen- tal liens and AULs. Any environmental liens and AULs known to the user should be reported to the environmental profes- sional conducting a Phase I Environmental Site Assessment. Unless added by a change in the scope of work to be performed by the environmental professional, this practice does not impose on the environmental professional the responsibility to undertake a review of recorded land title records and judicial records for environmental liens and AULs. The user should either (1) engage a title company, real estate attorney, or title professional to undertake a review of reasonably ascertainable recorded land title records and lien records for environmental liens and AULs currently recorded against or relating to the property, or (2) negotiate such an engagement of a title company, real estate attorney, or title professional as an addition to the scope of work of the environmental profes- sional. The search for environmental liens and AULs in this section is in addition to the environmental professionals search of institutional control and engineering control registries in 8.2. 6.2.1 Reasonably Ascertainable Title and Judicial Records for Environmental Liens and Activity and Use LimitationsFor this Section 6 (but not 8.2), environmental liens and AULs that are recorded or led in any place other than recorded land title records are not considered to be reasonably ascertainable unless applicable federal, tribal, state, or local statutes, or regulations specify a place other than recorded land title records for recording or ling of environmental liens and AULs. 6.3 Specialized Knowledge or Experience of the User Users must take into account their specialized knowledge to identify conditions indicative of releases or threatened re- leases. If the user has any specialized knowledge or experience that is material to recognized environmental conditions in connection with the property, the user should communicate any information based on such specialized knowledge or experience to the environmental professional. The user should do so before the environmental professional conducts the site reconnaissance. 6.4 Actual Knowledge of the UserIf the user has actual knowledge of any environmental lien or AULs encumbering the property or in connection with the property, the user should communicate such information to the environmental profes- sional. The user should do so before the environmental professional conducts the site reconnaissance. 6.5 Reason for Signicantly Lower Purchase PriceIn a transaction involving the purchase of a parcel of commercial real estate, the user shall consider the relationship of the purchase price of the property to the fair market value of the property if the property was not affected by hazardous sub- stances or petroleum products. The user should try to identify an explanation for a lower price which does not reasonably reect fair market value if the property was not contaminated, and make a written record of such explanation. Among the factors to consider will be the information that becomes known to the user pursuant to the Phase I Environmental Site Assessment. This practice does not require that a real estate appraisal be obtained in order to ascertain fair market value of the property. The user should inform the environmental pro- fessional if the user believes that the purchase price of the property is lower than the fair market value due to contami- nation. The user is not required to disclose the purchase price to the environmental professional. 6.6 Commonly Known or Reasonably Ascertainable InformationCommonly known or reasonably ascertainable information within the local community about the property must be taken into account by the user. If the user is aware of any commonly known or reasonably ascertainable information within the local community about the property that is material to recognized environmental conditions in connection with the property, the user should communicate such information to the environmental professional. The user should do so before the environmental professional conducts the site reconnaissance. The user must gather such information to the extent necessary to identify conditions indicative of releases or threatened releases of hazardous substances or petroleum products. 6.7 Degree of ObviousnessThe user must consider the degree of obviousness of the presence or likely presence of releases or threatened releases at the property and the ability to detect releases or threatened releases by appropriate investi- gation including the information collected under 6.2, 6.3, 6.5, 6.6, 8.2, 8.3, Section 9, and Section 10. 6.8 OtherEither the user shall make known to the envi- ronmental professional the reason why the user wants to have the Phase I Environmental Site Assessment performed or, if the user does not identify the purpose of the Phase I Environmen- tal Site Assessment, the environmental professional shall as- sume the purpose is to qualify for an LLP to CERCLAliability and state this in the report. 7. Phase I Environmental Site Assessment 7.1 ObjectiveThe purpose of this Phase I Environmental Site Assessment is to identify, to the extent feasible pursuant to the processes prescribed herein, recognized environmental conditions in connection with the property. (See 1.1.1.) 7.2 Four ComponentsA Phase I Environmental Site As- sessment shall have four components, as described as follows: 7.2.1 Records ReviewReview of records; see Section 8, 7.2.2 Site ReconnaissanceA visit to the property; see Section 9, 7.2.3 Interviews: E1527 13 12
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. 7.2.3.1 Interviews with present and past owners, operators, and occupants of the property; see Section 10, and 7.2.3.2 Interviews with local government officials; see Sec- tion 11, and 7.2.4 ReportEvaluation and report; see Section 12. 7.3 Coordination of Parts: 7.3.1 Parts Used in ConcertThe records review, site reconnaissance, and interviews are intended to be used in concert with each other. If information from one source indicates the need for more information, other sources may be available to provide information. For example, if a previous use of the property as a gasoline station is identied through the records review, but the present owner and occupants interviewed report no knowledge of an underground storage tank, the person conducting the site reconnaissance should be alert for signs of the presence of an underground storage tank. The environmental professional shall, based on professional judgment, evaluate the relevant lines of evidence obtained as a part of the Phase I process to identify recognized environmen- tal conditions in connection with the property. 7.3.2 Users ObligationsThe environmental professional shall note in the report whether or not the user has reported to the environmental professional information pursuant to Section 6. 7.4 No SamplingThis practice does not include any testing or sampling of materials (for example, soil, water, air, building materials). 7.5 Who May Conduct a Phase I: 7.5.1 Environmental Professionals DutiesThe environ- mental site assessment must be performed by the environmen- tal professional or conducted under the supervision or respon- sible charge of the environmental professional. The interviews and site reconnaissance shall be performed by a person possessing sufficient training and experience necessary to conduct the site reconnaissance and interviews in accordance with this practice, and having the ability to identify issues relevant to recognized environmental conditions in connection with the property. At a minimum, the environmental profes- sional must be involved in planning the site reconnaissance and interviews. Review and interpretation of information upon which the report is based shall be performed by the environ- mental professional. 7.5.2 Information Obtained From OthersInformation for the records review needed for completion of a Phase I Environmental Site Assessment may be provided by a number of parties including government agencies, third-party vendors, the user, and present and past owners and occupants of the property, provided that the information is obtained by or under the supervision of an environmental professional or is obtained by a third-party vendor specializing in retrieval of the infor- mation specied in Section 8. Prior assessments may also contain information that will be appropriate for usage in a current environmental site assessment provided the prior usage procedures set forth in Sections 8, 9, and 10 are followed. The environmental professional(s) responsible for the report shall review all of the information provided. 7.5.2.1 RelianceAn environmental professional is not re- quired to verify independently the information provided but may rely on information provided unless he or she has actual knowledge that certain information is incorrect or unless it is obvious that certain information is incorrect based on other information obtained in the Phase I Environmental Site Assess- ment or otherwise actually known to the environmental pro- fessional. 8. Records Review 8.1 Introduction: 8.1.1 ObjectiveThe purpose of the records review is to obtain and review records that will help identify recognized environmental conditions in connection with the property. 8.1.2 Approximate Minimum Search DistanceSome re- cords to be reviewed pertain not just to the property but also pertain to properties within an additional approximate mini- mum search distance in order to help assess the likelihood of an impact to the property from migrating hazardous substances or petroleum products. When the term approximate minimum search distance includes areas outside the property, it shall be measured from the nearest property boundary. The term approximate minimum search distance is used in lieu of radius in order to include irregularly shaped properties. 8.1.2.1 Adjustment to Approximate Minimum Search DistanceWhen allowed by 8.2.1, the approximate minimum search distance for a particular record may be adjusted in the discretion of the environmental professional. Factors to con- sider in adjusting the approximate minimum search distance include: (1) the density (for example, urban, rural, or suburban) of the setting in which the property is located; (2) the distance that the hazardous substances or petroleum products are likely to migrate based on local geologic or hydrogeologic condi- tions; (3) the property type, (4) existing or past uses of surrounding properties, and (5) other reasonable factors. The justication for each adjustment and the approximate minimum search distance actually used for any particular record shall be explained in the report. If the approximate minimum search distance is specied as property only, then the search shall be limited to the property and may not be reduced unless the particular record is not reasonably ascertainable. 8.1.3 Accuracy and CompletenessAccuracy and com- pleteness of record information varies among information sources, including governmental sources. Record information is often inaccurate or incomplete. The user or environmental professional is not obligated to identify mistakes or insuffi- ciencies in information provided. However, the environmental professional reviewing records shall make a reasonable effort to compensate for mistakes or insufficiencies in the information reviewed that are obvious in light of other information of which the environmental professional has actual knowledge. 8.1.4 Reasonably Ascertainable/Standard Sources Availability of record information varies from information source to information source, including governmental jurisdic- tions. The user or environmental professional is not obligated to identify, obtain, or review every possible record that might exist with respect to a property. Instead, this practice identies record information that shall be reviewed from standard sources, and the user or environmental professional is required to review only record information that is reasonably ascertain- able from those standard sources. Record information that is E1527 13 13
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. reasonably ascertainable means (1) information that is pub- licly available, (2) information that is obtainable from its source within reasonable time and cost constraints, and (3) information that is practically reviewable. 8.1.5 Reasonable Time and CostInformation that is ob- tainable within reasonable time and cost constraints means that the information will be provided by the source within 20 calendar days of receiving a written, telephone, or in-person request at no more than a nominal cost intended to cover the sources cost of retrieving and duplicating the information. Information that can only be reviewed by a visit to the source is reasonably ascertainable if the visit is permitted by the source within 20 days of request. 8.1.6 Alternatives to Standard SourcesAlternative sources may be used instead of standard sources if they are of similar or better reliability and detail, or if a standard source is not reasonably ascertainable. 8.1.7 CoordinationIf records are not reasonably ascer- tainable from standard sources or alternative sources, the environmental professional shall attempt to obtain the re- quested information by other means specied in this practice, such as questions posed to the current owner or occupant(s) of the property or appropriate persons available at the source at the time of the request. 8.1.8 Sources of Standard Source InformationStandard source information or other record information from govern- ment agencies may be obtained directly from appropriate government agencies or from commercial services. Govern- ment information obtained from nongovernmental sources may be considered current if the source updates the information at least every 90 days or, for information that is updated less frequently than quarterly by the government agency, within 90 days of the date the government agency makes the information available to the public. 8.1.9 Documentation of Sources CheckedThe report shall document each source that was used, even if a source revealed no ndings. Sources shall be sufficiently documented, includ- ing name, date request for information was lled, date infor- mation provided was last updated by source, date information was last updated by original source (if provided other than by original source; see 8.1.8). Supporting documentation shall be included in the report or adequately referenced to facilitate reconstruction of the assessment by an environmental profes- sional other than the environmental professional who con- ducted it. 8.1.10 SignicanceIf a standard environmental record source (or other sources in the course of conducting the Phase I Environmental Site Assessment) identies the property or another site within the approximate minimum search distance, the report shall include the environmental professionals judg- ment about the signicance of the listing to the analysis of recognized environmental conditions in connection with the property (based on the data retrieved pursuant to 8.2, additional information from the government source, or other sources of information). In doing so, the environmental professional may make statements applicable to multiple sites (for example, a statement to the effect that none of the sites listed is likely to have current or former releases of hazardous substances and/or petroleum products with the potential to migrate to the prop- erty except ...). 8.2 Environmental Information: 8.2.1 Standard Federal, State, and Tribal Environmental Record SourcesThe following standard environmental re- cord sources shall be reviewed, subject to the conditions of 8.1.1 through 8.1.8. The approximate minimum search distance may be reduced, pursuant to 8.1.2.1, for any of these standard environmental record sources except the Federal NPL site list and Federal RCRA TSD list. Standard Environmental Record Sources (where available) Approximate Minimum Search Distance miles (kilometres) Federal NPL site list 1.0 (1.6) Federal Delisted NPL site list 0.5 (0.8) Federal CERCLIS list 0.5 (0.8) Federal CERCLIS NFRAP site list 0.5 (0.8) Federal RCRA CORRACTS facilities list 1.0 (1.6) Federal RCRA non-CORRACTS TSD facilities list 0.5 (0.8) Federal RCRA generators list property and adjoining properties Federal institutional control/engineering control registries property only Federal ERNS list property only State and tribal lists of hazardous waste sites identied for investigation or remediation: State- and tribal-equivalent NPL 1.0 (1.6) State- and tribal-equivalent CERCLIS 0.5 (0.8) State and tribal landll and/or solid waste disposal site lists 0.5 (0.8) State and tribal leaking storage tank lists 0.5 (0.8) State and tribal registered storage tank lists property and adjoining properties State and tribal institutional control/ engineering control registries property only State and tribal voluntary cleanup sites 0.5 (0.8) State and tribal Browneld sites 0.5 (0.8) 8.2.2 Regulatory Agency File and Records Review: 8.2.2.1 If the property or any of the adjoining properties is identied on one or more of the standard environmental record sources in 8.2.1, pertinent regulatory les and/or records associated with the listing should be reviewed in accordance with 8.1.1 through 8.1.8. The purpose of the regulatory le review is to obtain sufficient information to assist the environ- mental professional in determining if a recognized environmen- tal condition, historical recognized environmental condition, controlled recognized environmental condition, or a de minimis condition exists at the property in connection with the listing. If, in the environmental professionals opinion, such a review is not warranted, the environmental professional must explain within the report the justication for not conducting the regulatory le review. 8.2.2.2 As an alternative, the environmental professional may review les/records from an alternative source(s) (for example, on-site records, user provided records, records from local government agencies, interviews with regulatory officials or other individuals knowledgeable about the environmental conditions that resulted in the standard environmental record source listing, etc.). A summary of the information obtained from the le/record review shall be included in the report and E1527 13 14
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. the environmental professional must include in the report his/her opinion on the sufficiency of the information obtained from the les/records review to evaluate the existence of a recognized environmental condition, historical recognized en- vironmental condition, controlled recognized environmental condition, or a de minimis condition. 8.2.3 Additional Federal, State, Tribal, and Local Environ- mental Record SourcesTo enhance and supplement the stan- dard environmental record sources in 8.2.1, local records and/or additional federal, state, or tribal records shall be checked when, in the judgment of the environmental professional, such additional records (1) are reasonably ascertainable, (2) are sufficiently useful, accurate, and com- plete in light of the objective of the records review (see 8.1.1), and (3) are generally obtained, pursuant to local good com- mercial and customary practice, in initial environmental site assessments in the type of commercial real estate transaction involved. To the extent additional sources are used to supple- ment the same record types listed in 8.2.1, approximate minimum search distances should not be less than those specied above (adjusted as provided in 8.2.1 and 8.1.2.1). Examples of types of records and sources that may be useful include: Types of Records Local Browneld Lists Local Lists of Landll/Solid Waste Disposal Sites Local Lists of Hazardous Waste/Contaminated Sites Local Lists of Registered Storage Tanks Local Land Records (for activity and use limitations) Records of Emergency Release Reports (42 U.S.C. 11004) Records of Contaminated Public Wells Sources Department of Health/Environmental Division Fire Department Planning Department Building Permit/Inspection Department Local/Regional Pollution Control Agency Local/Regional Water Quality Agency Local Electric Utility Companies (for records relating to PCBs) 8.2.4 Physical Setting SourcesAcurrent USGS 7.5 Minute Topographic Map (or equivalent) showing the area on which the property is located shall be reviewed. It is the only standard physical setting source and the only physical setting source that is required to be obtained (and only if it is reasonably ascertainable). One or more additional physical setting sources may be obtained in the discretion of the environmental profes- sional. Because such sources provide information about the geologic, hydrogeologic, hydrologic, or topographic character- istics of a site, discretionary physical setting sources shall be sought when (1) conditions have been identied in which hazardous substances or petroleum products are likely to migrate to the property or from or within the property into the groundwater or soil and (2) more information than is provided in the current USGS 7.5 Minute Topographic Map (or equiva- lent) is generally obtained, pursuant to local good commercial and customary practice in initial environmental site assess- ments in the type of commercial real estate transaction involved, in order to assess the impact of such migration on recognized environmental conditions in connection with the property. Mandatory Standard Physical Setting Source USGSCurrent 7.5 Minute Topographic Map (or equivalent) Discretionary and Non-Standard Physical Setting Sources USGS and/or State Geological SurveyGroundwater Maps USGS and/or State Geological SurveyBedrock Geology Maps USGS and/or State Geological SurveySurcial Geology Maps Soil Conservation ServiceSoil Maps Other Physical Setting Sources that are reasonably credible (as well as reasonably ascertainable ) 8.3 Historical Use Information: 8.3.1 ObjectiveThe objective of consulting historical sources is to develop a history of the previous uses of the property and surrounding area, in order to help identify the likelihood of past uses having led to recognized environmental conditions in connection with the property. The environmental professional shall exercise professional judgment and consider the possible releases that might have occurred at a property in light of the historical uses and, in concert with other relevant information gathered as part of the Phase I process, use this information to assist in identifying recognized environmental conditions. 8.3.2 Uses of the PropertyAll obvious uses of the property shall be identied from the present, back to the propertys rst developed use, or back to 1940, whichever is earlier. This task requires reviewing only as many of the standard historical sources in 8.3.4.1 through 8.3.4.8 as are necessary and both reasonably ascertainable and likely to be useful (as described under Data Failure in 8.3.2.3). For example, if the property was developed in the 1700s, it might be feasible to identify uses back to the early 1900s, using sources such as re insurance maps or USGS topographic maps (or equivalent). Although other sources such as recorded land title records might go back to the 1700s, it would not be required to review them unless they were both reasonably ascertainable and likely to be useful. As another example, if the property was reportedly not developed until 1960, it would still be necessary to attempt to conrm that it was undeveloped back to 1940. Such conrmation may come from one or more of the standard historical sources specied in 8.3.4.1 through 8.3.4.8, or it may come from other historical sources (such as someone with personal knowledge of the property; see 8.3.4.9). However, checking other historical sources (see 8.3.4.9) is not required. For purposes of 8.3.2, the term developed use includes agricultural uses and placement of ll dirt. The report shall describe all identied uses, justify the earliest date identied (for example, records showed no development of the property prior to the specic date), and explain the reason for any gaps in the history of use (for example, data failure). 8.3.2.1 IntervalsReview of standard historical sources at less than approximately ve year intervals is not required by this practice (for example, if the property had one use in 1950 and another use in 1955, it is not required to check for a third use in the intervening period). If the specic use of the property appears unchanged over a period longer than ve years, then it is not required by this practice to research the use during that period (for example, if re insurance maps show the same apartment building in 1940 and 1960, then the period in between need not be researched). E1527 13 15
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. 8.3.2.2 General Type of UseIn identifying previous uses, more specic information about uses is more helpful than less specic information, but it is sufficient, for purposes of 8.3.2, to identify the general type of use (for example: office, retail, and residential) unless it is obvious from the source(s) con- sulted that the use may be more specically identied. However, if the general type of use is industrial or manufac- turing (for example, zoning/land use records show industrial zoning), then additional standard historical sources shall be reviewed if they are likely to identify a more specic use and are reasonably ascertainable, subject to the constraints of data failure (see 8.3.2.3). 8.3.2.3 Data FailureThe historical research is complete when either: (1) the objectives in 8.3.1 through 8.3.2.2 are achieved; or (2) data failure is encountered. Data failure occurs when all of the standard historical sources that are reasonably ascertainable and likely to be useful have been reviewed and yet the objectives have not been met. Data failure is not uncommon in trying to identify the use of the property at ve year intervals back to rst use or 1940 (whichever is earlier). Notwithstanding a data failure, standard historical sources may be excluded if: (1) the sources are not reasonably ascertainable, or (2) if past experience indicates that the sources are not likely to be sufficiently useful, accurate, or complete in terms of satisfying the objectives. Other historical sources specied in 8.3.4.9 may be used to satisfy the objectives, but are not required to comply with this practice. If data failure is encountered, the report shall docu- ment the failure and, if any of the standard historical sources were excluded, give the reasons for their exclusion. If the data failure represents a signicant data gap, the report shall comment on the impact of the data gap on the ability of the environmental professional to identify recognized environmen- tal conditions (see 12.7). 8.3.3 Uses of Properties in Surrounding AreaUses in the area surrounding the property shall be identied in the report, but this task is required only to the extent that this information is revealed in the course of researching the property itself (for example, an aerial photograph or re insurance map of the property will usually show the surrounding area). If the environmental professional uses sources that include the sur- rounding area, surrounding uses should be identied to a distance determined at the discretion of the environmental professional (for example, if an aerial photo shows the area surrounding the property, then the environmental professional shall determine how far out from the property the photo should be analyzed). Factors to consider in making this determination include, but are not limited to: the extent to which information is reasonably ascertainable; the time and cost involved in reviewing surrounding uses (for example, analyzing aerial photographs is relatively quick, but reviewing property tax les for adjacent properties or reviewing local street directories for more than the few streets that surround the site is typically too time-consuming); the extent to which information is useful, accurate, and complete in light of the purpose of the records review (see 8.1.1); the likelihood of the information being signicant to recognized environmental conditions in connec- tion with the property; the extent to which potential concerns are obvious; known hydrogeologic/geologic conditions that may indicate a high probability of hazardous substances or petroleum products migration to the property; how recently local development has taken place; information obtained from interviews and other sources; and local good commercial and customary practice. 8.3.4 Standard Historical Sources: 8.3.4.1 Aerial PhotographsThe term aerial photo- graphs means photographs taken from an aerial platform with sufficient resolution to allow identication of development and activities of areas encompassing the property. Aerial photo- graphs are often available from government agencies or private collections unique to a local area. 8.3.4.2 Fire Insurance MapsThe term re insurance maps means maps produced for private re insurance map compa- nies that indicate uses of properties at specied dates and that encompass the property. These maps are often available at local libraries, historical societies, private resellers, or from the map companies who produced them. 8.3.4.3 Property Tax FilesThe term property tax les means the les kept for property tax purposes by the local jurisdiction where the property is located and includes records of past ownership, appraisals, maps, sketches, photos, or other information that is reasonably ascertainable and pertaining to the property. 8.3.4.4 Recorded Land Title RecordsThe term recorded land title records means records of historical fee ownership, which may include leases, land contracts and AULs on or of the property recorded in the place where land title records are, by law or custom, recorded for the local jurisdiction in which the property is located (often such records are kept by a municipal or county recorder or clerk). Such records may be obtained from title companies or directly from the local government agency. Information about the title to the property that is recorded in a U.S. district court or any place other than where land title records are, by law or custom, recorded for the local jurisdiction in which the property is located, are not considered part of recorded land title records, because often this source will provide only names of previous owners, lessees, easement holders, etc., and little or no information about uses or occupancies of the property, but when employed in combination with another source recorded land title records may provide helpful information about uses of the property. This source cannot be the sole historical source consulted. If this source is consulted, at least one additional standard historical source must also be consulted. 8.3.4.5 USGS Topographic MapsThe term USGS Topo- graphic Maps means maps available from or produced by the United States Geological Survey (7.5 minute topographic maps are preferred). 8.3.4.6 Local Street DirectoriesThe term local street di- rectories means directories published by private (or sometimes government) sources and showing ownership and/or use of sites by reference to street addresses. Often local street directories are available at libraries of local governments, colleges or universities, or historical societies. E1527 13 16
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. 8.3.4.7 Building Department RecordsThe term building department records means those records of the local govern- ment in which the property is located indicating permission of the local government to construct, alter, or demolish improve- ments on the property. Often building department records are located in the building department of a municipality or county. 8.3.4.8 Zoning/Land Use RecordsThe term zoning/land use records means those records of the local government in which the property is located indicating the uses permitted by the local government in particular zones within its jurisdiction. The records may consist of maps and/or written records. They are often located in the planning department of a municipality or county. 8.3.4.9 Other Historical SourcesThe term other historical sources means any source or sources other than those desig- nated in 8.3.4.1 through 8.3.4.8 that are credible to a reasonable person and that identify past uses of the property. This category includes, but is not limited to: miscellaneous maps, newspaper archives, internet sites, community organizations, local libraries, historical societies, current owners or occupants of neighboring properties, or records in the les and/or personal knowledge of the property owner and/or occupants. 8.4 Prior Assessment UsageStandard historical sources reviewed as part of a prior environmental site assessment do not need to be searched for or reviewed again, but uses of the property since the prior environmental site assessment should be identied either through standard historical sources (as specied in 8.3) or by alternatives to standard historical sources, to the extent such information is reasonably ascer- tainable. (See 4.7.) 9. Site Reconnaissance 9.1 ObjectiveThe objective of the site reconnaissance is to obtain information indicating the likelihood of identifying recognized environmental conditions in connection with the property. 9.2 ObservationOn a visit to the property (the site visit), the property shall be visually and/or physically observed and any structure(s) located on the property to the extent not obstructed by bodies of water, adjacent buildings, or other obstacles shall be observed. 9.2.1 ExteriorThe periphery of the property shall be visually and/or physically observed, as well as the periphery of all structures on the property, and the property shall be viewed from all adjacent public thoroughfares. If roads or paths with no apparent outlet are observed on the property, the use of the road or path shall be identied to determine whether it was likely to have been used as an avenue for disposal of hazardous substances or petroleum products. 9.2.2 InteriorOn the interior of structures on the property, accessible common areas expected to be used by occupants or the public (such as lobbies, hallways, utility rooms, recreation areas, etc.), maintenance and repair areas, including boiler rooms, and a representative sample of occupant spaces, shall be visually and/or physically observed. It is not necessary to look under oors, above ceilings, or behind walls. 9.2.3 MethodologyThe environmental professional shall document, in the report, the method used (for example, grid patterns or other systematic approaches used for large properties, which spaces for owner or occupants were observed, etc.) to observe the property. 9.2.4 Limiting ConditionsThe environmental professional shall document, in the report, general limitations and basis of review, including limitations imposed by physical obstructions such as adjacent buildings, bodies of water, asphalt, or other paved areas, and other physical constraints (for example, snow, rain). 9.2.5 FrequencyIt is not expected that more than one visit to the property shall be made in connection with a Phase I Environmental Site Assessment. The one visit constituting part of the Phase I Environmental Site Assessment may be referred to as the site visit. 9.3 Prior Assessment UsageThe information supplied in connection with the site reconnaissance portion of a prior environmental site assessment may be used for guidance but shall not be relied upon without determining through a new site reconnaissance whether any conditions that are material to recognized environmental conditions in connection with the property have changed since the prior environmental site assessment. 9.4 Uses and ConditionsThe uses and conditions specied in 9.4.1 through 9.4.4.7 should be noted to the extent visually and/or physically observed during the site visit. The uses and conditions specied in 9.4.4 through 9.4.4.7 should also be the subject of questions asked as part of interviews of owners, operators, and occupants (see Section 10). Uses and conditions shall be described in the report to the extent specied in 9.4.1 through 9.4.4.7. The environmental professional(s) performing the Phase I Environmental Site Assessment are obligated to identify uses and conditions only to the extent that they may be visually and/or physically observed on a site visit, as described in this practice, or to the extent that they are identied by the interviews (see Sections 10 and 11) or record review (see Section 8) processes described in this practice. 9.4.1 General Site Setting: 9.4.1.1 Current Use(s) of the PropertyThe current use(s) of the property shall be identied in the report. Any current uses likely to involve the use, treatment, storage, disposal, or generation of hazardous substances or petroleum products shall be identied in the report. Unoccupied occupant spaces should be noted. In identifying current uses of the property, more specic information is more helpful than less specic information. (For example, it is more useful to identify uses such as a hardware store, a grocery store, or a bakery rather than simply retail use.) 9.4.1.2 Past Use(s) of the PropertyTo the extent that indications of past uses of the property are visually and/or physically observed on the site visit, or are identied in the interviews or record review, they shall be identied in the report, and past uses so identied shall be described in the report if they are likely to have involved the use, treatment, storage, disposal, or generation of hazardous substances or petroleum products. (For example, there may be signs indicat- ing a past use or a structure indicating a past use.) 9.4.1.3 Current Uses of Adjoining PropertiesTo the extent that current uses of adjoining properties are visually and/or E1527 13 17
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No further reproductions authorized. physically observable on the site visit, or are identied in the interviews or records review, they shall be identied in the report, and current uses so identied shall be described in the report if they are likely to indicate recognized environmental conditions in connection with the adjoining properties or the property. 9.4.1.4 Past Uses of Adjoining PropertiesTo the extent that indications of past uses of adjoining properties are visually and/or physically observed on the site visit, or are identied in the interviews or record review, they shall be noted and past uses so identied shall be described in the report if they are likely to indicate recognized environmental conditions in connection with the adjoining properties or the property. 9.4.1.5 Current or Past Uses in the Surrounding AreaTo the extent that the general type of current or past uses (for example, residential, commercial, industrial) of properties surrounding the property are visually and/or physically ob- served on the site visit or going to or from the property for the site visit, or are identied in the interviews or record review, they shall be noted and uses so identied shall be described in the report if they are likely to indicate recognized environmen- tal conditions in connection with the property. 9.4.1.6 Geologic, Hydrogeologic, Hydrologic, and Topo- graphic ConditionsThe topographic conditions of the prop- erty shall be noted to the extent visually and/or physically observed or determined from interviews, as well as the general topography of the area surrounding the property that is visually and/or physically observed from the periphery of the property. If any information obtained shows there are likely to be hazardous substances or petroleum products on the property or on nearby properties and those hazardous substances or petroleum products are of a type that may migrate, topographic observations shall be analyzed in connection with geologic, hydrogeologic, hydrologic, and topographic information ob- tained pursuant to records review (see 8.2.4) and interviews to evaluate whether hazardous substances or petroleum products are likely to migrate to the property, or within or from the property, into groundwater or soil. 9.4.1.7 General Description of StructuresThe report shall generally describe the structures or other improvements on the property, for example: number of buildings, number of stories each, approximate age of buildings, ancillary structures (if any), etc. 9.4.1.8 RoadsPublic thoroughfares adjoining the property shall be identied in the report and any roads, streets, and parking facilities on the property shall be described in the report. 9.4.1.9 Potable Water SupplyThe source of potable water for the property shall be identied in the report. 9.4.1.10 Sewage Disposal SystemThe sewage disposal system for the property shall be identied in the report. Inquiry shall be made as to the age of the system as part of the process under Sections 8, 10, or 11. 9.4.2 Interior and Exterior Observations: 9.4.2.1 Current Use(s) of the PropertyThe current use(s) of the property shall be identied in the report. Any current uses likely to involve the use, treatment, storage, disposal, or generation of hazardous substances or petroleum products shall be identied in the report. Unoccupied occupant spaces should be noted. In identifying current uses of the property, more specic information is more helpful than less specic information. (For example, it is more useful to identify uses such as a hardware store, a grocery store, or a bakery rather than simply retail use.) 9.4.2.2 Past Use(s) of the PropertyTo the extent that indications of past uses of the property are visually and/or physically observed on the site visit, or are identied in the interviews or records review, they shall be identied in the report, and past uses so identied shall be described in the report if they are likely to have involved the use, treatment, storage, disposal, or generation of hazardous substances or petroleum products. (For example, there may be signs indicat- ing a past use or a structure indicating a past use.) 9.4.2.3 Hazardous Substances and Petroleum Products in Connection with Identied UsesTo the extent that present uses are identied that use, treat, store, dispose of, or generate hazardous substances and petroleum products on the property: (1) the hazardous substances and petroleum products shall be identied or indicated as unidentied in the report, and (2) the approximate quantities involved, types of containers (if any) and storage conditions shall be described in the report. To the extent that past uses are identied that used, treated, stored, disposed of, or generated hazardous substances and petroleum products on the property, the information shall be identied to the extent it is visually and/or physically observed during the site visit or identied from the interviews or the records review. 9.4.2.4 Storage TanksAbove ground storage tanks, or underground storage tanks or vent pipes, ll pipes or access ways indicating underground storage tanks shall be identied (for example, content, capacity, and age) to the extent visually and/or physically observed during the site visit or identied from the interviews or records review. 9.4.2.5 OdorsStrong, pungent, or noxious odors shall be described in the report and their sources shall be identied in the report to the extent visually and/or physically observed or identied from the interviews or records review. 9.4.2.6 Pools of LiquidStanding surface water shall be noted. Pools or sumps containing liquids likely to be hazardous substances or petroleum products shall be described in the report to the extent visually and/or physically observed or identied from the interviews or records review. 9.4.2.7 DrumsTo the extent visually and/or physically observed or identied from the interviews or records review, drums shall be described in the report, whether or not they are leaking, unless it is known that their contents are not hazardous substances or petroleum products (in that case the contents should be described in the report). Drums often hold 55 gal (208 L) of liquid, but containers as small as 5 gal (19 L) should also be described. 9.4.2.8 Hazardous Substance and Petroleum Products Con- tainers (Not Necessarily in Connection With Identied Uses) When containers identied as containing hazardous substances or petroleum products are visually and/or physically observed on the property and are or might be a recognized environmental condition (for example, due to damage that represents a material threat or abandonment (see the denition of release in E1527 13 18
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. X1.1.1)); the hazardous substances or petroleum products shall be identied or indicated as unidentied in the report, and the approximate quantities involved, types of containers, and storage conditions shall be described in the report. 9.4.2.9 Unidentied Substance ContainersWhen open or damaged containers containing unidentied substances sus- pected of being hazardous substances or petroleum products are visually and/or physically observed on the property, the approximate quantities involved, types of containers, and storage conditions shall be described in the report. 9.4.2.10 PCBsElectrical or hydraulic equipment known to contain PCBs or likely to contain PCBs shall be described in the report to the extent visually and/or physically observed or identied from the interviews or records review. Fluorescent light ballasts likely to contain PCBs do not need to be noted. 9.4.3 Interior ObservationsInterior observations shall be made with the intent to identify releases or material threat of future releases of hazardous substances or petroleum products to the environment: 9.4.3.1 Heating/CoolingThe means of heating and cool- ing the buildings on the property, including the fuel source for heating and cooling, shall be identied in the report (for example, heating oil, gas, electric, radiators from steam boiler fueled by gas). 9.4.3.2 Stains or CorrosionTo the extent visually and/or physically observed or identied from the interviews, stains or corrosion on oors, walls, or ceilings shall be described in the report, except for staining from water. 9.4.3.3 Drains and SumpsTo the extent visually and/or physically observed or identied from the interviews, oor drains and sumps shall be described in the report. 9.4.4 Exterior Observations: 9.4.4.1 Pits, Ponds, or LagoonsTo the extent visually and/or physically observed or identied from the interviews or records review, pits, ponds, or lagoons on the property shall be described in the report, particularly if they have been used in connection with waste disposal or waste treatment. Pits, ponds, or lagoons on properties adjoining the property shall be described in the report to the extent they are visually and/or physically observed from the property or identied in the interviews or records review. 9.4.4.2 Stained Soil or PavementTo the extent visually and/or physically observed or identied from the interviews, areas of stained soil or pavement shall be described in the report. 9.4.4.3 Stressed VegetationTo the extent visually and/or physically observed or identied from the interviews, areas of stressed vegetation (from something other than insufficient water) shall be described in the report. 9.4.4.4 Solid WasteTo the extent visually and/or physi- cally observed or identied from the interviews or records review, areas that are apparently lled or graded by non-natural causes (or lled by ll of unknown origin) suggesting trash construction debris, demolition debris, or other solid waste disposal, or mounds or depressions suggesting trash or other solid waste disposal, shall be described in the report. 9.4.4.5 WastewaterTo the extent visually and/or physi- cally observed or identied from the interviews or records review, wastewater or other liquid (including storm water) or any discharge into a drain, ditch, underground injection system, or stream on or adjacent to the property shall be described in the report. 9.4.4.6 WellsTo the extent visually and/or physically ob- served or identied from the interviews or records review, all wells (including dry wells, irrigation wells, injection wells, abandoned wells, or other wells) shall be described in the report. 9.4.4.7 Septic SystemsTo the extent visually and/or physi- cally observed or identied from the interviews or records review, indications of on-site septic systems or cesspools shall be described in the report. 10. Interviews With Past and Present Owners and Occupants 10.1 ObjectiveThe objective of interviews is to obtain information indicating recognized environmental conditions in connection with the property. 10.2 ContentInterviews with past and present owners, operators, and occupants of the property, consist of questions to be asked in the manner and of persons as described in this section. The content of questions to be asked shall attempt to obtain information about uses and conditions as described in Section 9, as well as information described in 10.8 and 10.9. 10.3 MediumQuestions to be asked pursuant to this sec- tion may be asked in person, by telephone, or in writing, in the discretion of the environmental professional. 10.4 TimingExcept as specied in 10.8 and 10.9, it is in the discretion of the environmental professional whether to ask questions before, during, or after the site visit described in Section 9, or in some combination thereof. 10.5 Interviews: 10.5.1 Key Site ManagerPrior to the site visit, the owner shall be asked to identify a person with good knowledge of the uses and physical characteristics of the property (the key site manager). Often the key site manager will be the property manager, the chief physical plant supervisor, or head mainte- nance person. (If the user is the current property owner, the user has an obligation to identify a key site manager, even if it is the user himself or herself.) If a key site manager is identied, the person conducting the site visit shall make at least one reasonable attempt (in writing or by telephone) to arrange a mutually convenient appointment for the site visit when the key site manager agrees to be there. If the attempt is successful, the key site manager shall be interviewed in conjunction with the site visit. If such an attempt is unsuccessful, when conducting the site visit, the environmental professional shall inquire whether an identied key site man- ager (if any) or if a person with good knowledge of the uses and physical characteristics of the property is available to be interviewed at that time; if so, that person shall be interviewed. In any case, it is within the discretion of the environmental professional to decide which questions to ask before, during, or after the site visit or in some combination thereof. 10.5.2 OccupantsA reasonable attempt shall be made to interview a reasonable number of occupants of the property. E1527 13 19
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. 10.5.2.1 Multi-Family PropertiesFor multi-family resi- dential properties, residential occupants do not need to be interviewed, but if the property has nonresidential uses, inter- views should be held with the nonresidential occupants based on criteria specied in 10.5.2.2. 10.5.2.2 Major OccupantsExcept as specied in 10.5.2.1, if the property has ve or fewer current occupants, a reason- able attempt shall be made to interview a representative of each one of them. If there are more than ve current occupants, a reasonable attempt shall be made to interview the major occupant(s) and those other occupants whose operations are likely to indicate recognized environmental conditions in connection with the property. 10.5.2.3 Reasonable Attempts to InterviewExamples of reasonable attempts to interview those occupants specied in 10.5.2.2 include (but are not limited to) an attempt to interview such occupants when making the site visit or calling such occupants by telephone. In any case, when there are several occupants to interview, it is not expected that the site visit must be scheduled at a time when they will all be available to be interviewed. 10.5.2.4 Occupant IdenticationThe report shall identify the occupants interviewed and the duration of their occupancy. 10.5.3 Prior Assessment UsagePersons interviewed as part of a prior Phase I Environmental Site Assessment consis- tent with this practice do not need to be questioned again about the content of answers they provided at that time. However, they should be questioned about any new information learned since that time, or others should be questioned about conditions since the prior Phase I Environmental Site Assessment consis- tent with this practice. 10.5.4 Past Owners, Operators, and OccupantsInterviews with past owners, operators, and occupants of the property who are likely to have material information regarding the potential for contamination at the property shall be conducted to the extent that they have been identied and that the information likely to be obtained is not duplicative of infor- mation already obtained from other sources. 10.5.5 Interview Requirements for Abandoned PropertiesIn the case of inquiries conducted at abandoned properties where there is evidence of potential unauthorized uses of the abandoned property or evidence of uncontrolled access to the abandoned property, interviews with one or more owners or occupants of neighboring or nearby properties shall be conducted. 10.6 Quality of AnswersThe person(s) interviewed should be asked to be as specic as reasonably feasible in answering questions. The person(s) interviewed should be asked to answer in good faith and to the extent of their knowledge. 10.7 Incomplete AnswersWhile the person conducting the interview(s) has an obligation to ask questions, in many instances the persons to whom the questions are addressed will have no obligation to answer them. 10.7.1 UserIf the person to be interviewed is the user (the person on whose behalf the Phase I Environmental Site Assessment is being conducted), the user has an obligation to answer all questions posed by the person conducting the interview, in good faith, to the extent of his or her actual knowledge or to designate a key site manager to do so. If answers to questions are unknown or partially unknown to the user or such key site manager, this interview section of the Phase I Environmental Site Assessment shall not thereby be deemed incomplete. 10.7.2 Non-userIf the person conducting the interview(s) asks questions of a person other than a user but does not receive answers or receives partial answers, this section of the Phase I Environmental Site Assessment shall not thereby be deemed incomplete, provided that (1) the questions have been asked (or attempted to be asked) in person, by electronic mail, or by telephone and written records have been kept of the person to whom the questions were addressed and the responses, or (2) the questions have been asked in writing sent by rst class mail or by private, commercial carrier and no answer or incomplete answers have been obtained and at least one reasonable follow up (telephone call or written request) was made again asking for responses. 10.8 Questions About Helpful DocumentsPrior to the site visit, the property owner, key site manager (if any is identied), and user (if different from the property owner) shall be asked if they know whether any of the documents listed in 10.8.1 exist and, if so, whether copies can and will be provided to the environmental professional within reasonable time and cost constraints. Even partial information provided may be useful. If so, the environmental professional conducting the site visit shall review the available documents prior to or at the beginning of the site visit. 10.8.1 Helpful Documents: 10.8.1.1 Environmental site assessment reports, 10.8.1.2 Environmental compliance audit reports, 10.8.1.3 Environmental permits (for example, solid waste disposal permits, hazardous waste disposal permits, wastewa- ter permits, NPDES permits, underground injection permits), 10.8.1.4 Registrations for underground and above-ground storage tanks, 10.8.1.5 Registrations for underground injection systems, 10.8.1.6 Material safety data sheets, 10.8.1.7 Community right-to-know plan, 10.8.1.8 Safety plans; preparedness and prevention plans; spill prevention, countermeasure, and control plans; facility response plans, etc., 10.8.1.9 Reports regarding hydrogeologic conditions on the property or surrounding area, 10.8.1.10 Notices or other correspondence from any gov- ernment agency relating to past or current violations of environmental laws with respect to the property or relating to environmental liens encumbering the property, 10.8.1.11 Hazardous waste generator notices or reports, 10.8.1.12 Geotechnical studies, 10.8.1.13 Risk assessments, and 10.8.1.14 Recorded AULs. 10.9 Proceedings Involving the PropertyPrior to the site visit, the property owner, key site manager (if any is identied), and user (if different from the property owner) shall be asked whether they know of: (1) any pending, threatened, or past litigation relevant to hazardous substances or petroleum prod- ucts in, on, or from the property ; (2) any pending, threatened, E1527 13 20
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. or past administrative proceedings relevant to hazardous sub- stances or petroleum products in, on or from the property; and (3) any notices from any governmental entity regarding any possible violation of environmental laws or possible liability relating to hazardous substances or petroleum products. 11. Interviews With State and/or Local Government Officials 11.1 ObjectiveThe objective of interviews with state and/or local government officials is to obtain information indicating recognized environmental conditions in connection with the property. 11.2 ContentInterviews with state and/or local govern- ment officials consist of questions to be asked in the manner and of persons as described in this section. The content of questions to be asked shall be decided in the discretion of the environmental professional(s) conducting the Phase I Environ- mental Site Assessment, provided that the questions shall generally be directed towards identifying recognized environ- mental conditions in connection with the property. 11.3 MediumQuestions to be asked may be asked in person, by telephone, or in writing, in the discretion of the environmental professional. 11.4 TimingIt is in the discretion of the environmental professional whether to ask questions before or after the site visit described in Section 9, or in some combination thereof. 11.5 Who Should Be Interviewed: 11.5.1 State and/or Local Agency OffcialsA reasonable attempt shall be made to interview at least one staff member of any one of the following types of state and/or local government agencies: 11.5.1.1 Local re department that serves the property, 11.5.1.2 State and/or local health agency or local/regional office of state health agency serving the area in which the property is located, 11.5.1.3 State and/or local agency or local/regional office of state agency having jurisdiction over hazardous waste disposal or other environmental matters in the area in which the property is located, or 11.5.1.4 Local agencies responsible for the issuance of building permits or groundwater use permits that document the presence of AULs which may identify a recognized environ- mental condition in the area in which the property is located. 11.6 Prior Assessment UsagePersons interviewed as part of a prior Phase I Environmental Site Assessment consistent with this practice do not need to be questioned again about the content of answers they provided at that time. However, they should be questioned about any new information learned since that time, or others should be questioned about conditions since the prior Phase I Environmental Site Assessment consistent with this practice. 11.7 Quality of AnswersThe person(s) interviewed should be asked to be as specic as reasonably feasible in answering questions. The person(s) interviewed should be asked to answer in good faith and to the extent of their knowledge. 11.8 Incomplete AnswersWhile the person conducting the interview(s) has an obligation to ask questions, in many instances the persons to whom the questions are addressed will have no obligation to answer them. If the person conducting the interview(s) asks questions but does not receive answers or receives partial answers, this section shall not thereby be deemed incomplete, provided that questions have been asked (or attempted to be asked) in person or by telephone and written records have been kept of the person to whom the questions were addressed and their responses. 12. Evaluation and Report Preparation 12.1 Report FormatThe report for the Phase I Environ- mental Site Assessment should generally follow the recom- mended report format attached as Appendix X4 unless other- wise required by the user. 12.2 DocumentationThe ndings, opinions and conclu- sions in the Phase I Environmental Site Assessmentreport shall be supported by documentation. If the environmental profes- sional has chosen to exclude certain documentation from the report, the environmental professional shall identify in the report the reasons for doing so (for example, a condentiality agreement). Relevant supporting documentation shall be in- cluded in the report or adequately referenced to facilitate reconstruction of the assessment by an environmental profes- sional other than the environmental professional who con- ducted it. Sources that revealed no ndings also shall be documented. 12.3 Contents of ReportThe report shall include those matters required to be included in the report pursuant to various provisions of this practice. The report shall also identify the environmental professional and the person(s) who conducted the site reconnaissance and interviews. In addition, the report shall state whether the user reported to the environ- mental professional any information pursuant to the users responsibilities described in Section 6 of this practice (for example, an environmental lien or AUL encumbering the property or any relevant specialized knowledge or experience of the user). 12.4 Scope of ServicesThe report shall describe all ser- vices performed in sufficient detail to permit another party to reconstruct the work performed. 12.5 FindingsThe report shall have a ndings section which identies known or suspect recognized environmental conditions, controlled recognized environmental conditions, historical recognized environmental conditions, and de mini- mis conditions. 12.6 OpinionThe report shall include the environmental professionals opinion(s) of the impact on the property of conditions identied in the ndings section. The logic and reasoning used by the environmental professional in evaluating information collected during the course of the investigation related to such conditions shall be discussed. Frequently, items initially suspected to be a recognized environmental condition are subsequently determined, upon further evaluation, to not be considered a recognized environmental condition. The opinion E1527 13 21
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. shall specically include the environmental professionals ra- tionale for concluding that a condition is or is not currently a recognized environmental condition. Conditions identied by the environmental professional as recognized environmental conditions currently shall be listed in the conclusions section of the report. 12.6.1 Additional InvestigationThe environmental profes- sional should provide an opinion regarding additional appro- priate investigation, if any, to detect the presence of hazardous substances or petroleum products. This opinion should be provided in the unusual circumstance when greater certainty is required regarding the identied recognized environmental conditions. A Phase I Environmental Site Assessment which includes such an opinion by the environmental professional does not render the assessment incomplete. This opinion is not intended to constitute a requirement that the environmental professional include any recommendations for Phase II or other assessment activities. 12.7 Data GapsThe report shall identify and comment on signicant data gaps that affect the ability of the EP to identify recognized environmental conditions and identify the sources of information that were consulted to address the data gaps. A data gap by itself is not inherently signicant. For example, if a propertys historical use is not identied back to 1940 because of data failure (see 8.3.2.3), but the earliest source shows that the property was undeveloped, this data gap by itself would not be signicant. A data gap is only signicant if other information and/or professional experience raises reason- able concerns involving the data gap. For example, if a building on the property is inaccessible during the site visit, and the environmental professionals experience indicates that such a building often involves activity that leads to a recog- nized environmental condition, the inability to inspect the building would be a signicant data gap warranting comment. 12.8 ConclusionsThe report shall include a conclusions section that summarizes all recognized environmental condi- tions (including controlled recognized environmental condi- tions) connected with the property. The report shall include a statement substantially similar to one of the following state- ments: 12.8.1 We have performed a Phase I Environmental Site Assessment in conformance with the scope and limitations of ASTM Practice E1527 of [insert address or legal description], the property. Any exceptions to, or deletions from, this practice are described in Section [ ] of this report. This assessment has revealed no evidence of recognized environmental condi- tions in connection with the property, or 12.8.2 We have performed a Phase I Environmental Site Assessment in conformance with the scope and limitations of ASTM Practice E1527 of [insert address or legal description], the property. Any exceptions to, or deletions from, this practice are described in Section [ ] of this report. This assessment has revealed no evidence of recognized environmental condi- tions in connection with the property except for the following: (list). 12.9 Additional ServicesAny additional services con- tracted for between the user and the environmental professional(s), including a broader scope of assessment, more detailed conclusions, liability/risk evaluations, recommenda- tion for Phase II testing or other assessment activities, reme- diation techniques, etc., are beyond the scope of this practice, and should only be included in the report if so specied in the terms of engagement between the user and the environmental professional. 12.10 Limiting Conditions/DeviationsAll limiting conditions, deletions, and deviations from this practice (if any) shall be listed individually and in detail, including client- imposed constraints, and all additions shall be listed. 12.11 ReferencesThe report shall include a references section to identify published referenced sources relied upon in preparing the Phase I Environmental Site Assessment. Each referenced source shall be adequately annotated to facilitate retrieval by another party. 12.12 SignatureThe environmental professional(s) re- sponsible for the Phase I Environmental Site Assessment shall sign the report. 12.13 Environmental Professional StatementAs required by 40 CFR 312.21(d), the report shall include the following statements of the environmental professional(s) responsible for conducting the Phase I Environmental Site Assessment and preparation of the report. 12.13.1 [I, We] declare that, to the best of [my, our] professional knowledge and belief, [I, we] meet the denition of Environmental professional as dened in 312.10 of 40 CFR 312 and 12.13.2 [I, We] have the specic qualications based on education, training, and experience to assess a property of the nature, history, and setting of the subject property. [I, We] have developed and performed the all appropriate inquiries in conformance with the standards and practices set forth in 40 CFR Part 312. 12.14 AppendicesThe report shall include an appendix section containing supporting documentation and the quali- cations of the environmental professional and the qualications of the personnel conducting the site reconnaissance and interviews if conducted by someone other than an environmen- tal professional. 12.15 RecommendationsRecommendations are not re- quired by this standard. A user should consider whether recommendations for additional inquiries or other services are desired. Recommendations are an additional service that may be useful in the users analysis of LLPs or business environ- mental risk. 13. Non-Scope Considerations 13.1 General: 13.1.1 Additional IssuesThere may be environmental is- sues or conditions at a property that parties may wish to assess in connection with commercial real estate that are outside the scope of this practice (the non-scope considerations). As noted by the legal analysis in Appendix X1 of this practice, some substances may be present on a property in quantities and under conditions that may lead to contamination of the E1527 13 22
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. property or of nearby properties but are not included in CERCLAs denition of hazardous substances (42 U.S.C. 9601(14)) or do not otherwise present potential CERCLA liability. In any case, they are beyond the scope of this practice. 13.1.2 Outside Standard PracticesWhether or not a user elects to inquire into non-scope considerations in connection with this practice or any other environmental site assessment, no assessment of such non-scope considerations is required for appropriate inquiry as dened by this practice. 13.1.3 Other StandardsThere may be standards or proto- cols for assessment of potential hazards and conditions asso- ciated with non-scope conditions developed by governmental entities, professional organizations, or other private entities. 13.1.4 Compliance With AULsParties who wish to qualify for one of the LLPs will need to know whether they are in compliance with AULs, including land use restrictions that were relied upon in connection with a response action. A determination of compliance with AULs is beyond the scope of this practice. 13.1.5 List of Additional IssuesFollowing are several non-scope considerations that persons may want to assess in connection with commercial real estate. Some common non- scope considerations are discussed further in Appendix X1 and Appendix X5. No implication is intended as to the relative importance of inquiry into such non-scope considerations, and this list of non-scope considerations is not intended to be all-inclusive: 13.1.5.1 Asbestos-Containing Building Materials, 13.1.5.2 Biological agents, 13.1.5.3 Cultural and historic resources, 13.1.5.4 Ecological resources, 13.1.5.5 Endangered species, 13.1.5.6 Health and safety, 13.1.5.7 Indoor air quality unrelated to releases of hazard- ous substances or petroleum products into the environment, 13.1.5.8 Industrial hygiene, 13.1.5.9 Lead-Based Paint, 13.1.5.10 Lead in Drinking Water, 13.1.5.11 Mold, 13.1.5.12 Radon, 13.1.5.13 Regulatory compliance, and 13.1.5.14 Wetlands. E1527 13 23
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. APPENDIXES (Nonmandatory Information) X1. LEGAL BACKGROUND ON CERCLA AND THE APPLICATION OF ALL APPROPRIATE INQUIRIES TO THE PRACTICE ON ENVIRONMENTAL ASSESSMENTS IN COMMERCIAL REAL ESTATE TRANSACTIONS INTRODUCTION (Note that EPA was not a party to the development of the appendix and the information and conclusions provided in the appendix do not in any way reect the opinions, guidance, or approval of EPA. This appendix was completed on January 31, 2013. Users of this appendix are cautioned that statutes, regulations, guidance, case law, and/or other authorities analyzed and/or referenced in the appendix may have changed since that date. Thus, before relying on any of the analyses, conclusions and/or guidance provided by this appendix, users should ensure that those analyses, conclusions and/or guidance are current and correct at the time use is made of this appendix. In addition, this appendix is provided for background information purposes only and does not alter, amend, or change the meaning of E1527. If any inconsistency between this appendix and E1527 arises, E1527 applies, not this appendix or any interpretation based on this appendix.) The specter of strict, joint and several liability under the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601 et seq. (CERCLA) and analogous state laws, has been a primary driver for Environmental Assessments in Commercial Real Estate Transactions. While the E1527 practice can be used in many contexts, a familiarity with CERCLA, and especially its potential landowner liability protections (LLPs), is crucial to understanding and applying Practice E1527. CERCLA authorizes the federal government to respond to releases of hazardous substances, 7 to seek reimbursement from potentially responsible parties (PRPs) 8 or to order PRPs to abate releases or threatened releases of hazardous substances that may present an imminent and substantial endangerment to the public health or welfare or the environment. 9 In addition, CERCLA requires anyone who is in charge of a facility or vessel to immediately report releases of hazardous substances that they become aware of which exceed the reportable quantity threshold established by EPA. 10 In addition, PRPs and other persons may seek cost recovery or contribution for response costs from other PRPs, provided they comply with certain requirements. 11 EPA promulgated an all appropriate inquiries (AAI) rule 12 that became effective in November 2006. EPA has indicated that this Practice E1527 is consistent with the requirements of AAI and may be used to comply with the provisions of the AAI rule. 13 This Legal Appendix provides background on CERCLA liability, the scope of the potential liability protections that may be available to owners and operators of commercial real estate and the AAI rule. It should be noted that with the adoption of AAI, the Environmental Transaction Screen Practice (E1528) no longer meets the requirement for establishing the CERCLA LLPs. However, Practice E1528 may still be a useful transactional environmental screening tool. This Legal Appendix is intended for informational purposes only and is not intended to be nor interpreted as legal advice. 7 Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9604(a)(1). 8 42 U.S.C. 9607(a)(4)(A). 9 42 U.S.C. 9606. 10 42 U.S.C. 9603. 11 42 U.S.C. 9607(a)(4)(B)(authorizing innocent parties and PRPs to obtain cost recovery from other liable parties); 42 U.S.C. 9613(f) (specifying the circumstances under which PRPs may seek contribution). See also United States v. Atlantic Research Corp., 551 U.S. 128, 134-41 (2007); Cooper Indus. Inc. v. Aviall Services., Inc., 543 U.S. 157, 165-68 (2004). 12 70 Fed. Reg. 66081 (Nov. 1, 2005). Codied at 40 C.F.R. 312. 13 70 Fed. Reg. 66081 (Nov. 1, 2005). E1527 13 24
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. X1.1 Elements of CERCLA LiabilityA plaintiff (federal government, state or local government, or private party) must establish the following elements before a defendant may be found liable under CERCLA for response costs: 14 X1.1.1 Release or Threatened ReleaseThe rst element for establishing CERCLA liability is that there must be a release or threatened release of hazardous substances from a facility or a vessel. A release or threatened release of a hazardous substance includes any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing into the environment (includ- ing the abandonment or discarding of barrels, containers and other closed receptacles containing any hazardous substance, or pollutant or contaminant). 15 X1.1.1.1 Courts have generally broadly interpreted the term release. There is no minimum quantity requirement in order to qualify as a CERCLA release. 16 Likewise, courts have liberally construed the meaning of threatened release so that corroding or deteriorating drums have been interpreted to be a threatened release. 17 The release must also be into the environment. 18 X1.1.1.2 Exclusions From Denition of Release: (1) Section 101(22) contains a number of exclusions from the denition of release. For example, section 101(22)(A) excludes any release that results in exposures solely within the workplace for claims that may be asserted against an em- ployer. 19 In a 1983 notice of proposed rulemaking to adjust the reportable quantities for the CERCLA release notication requirements, EPA discussed this so-called workplace exclu- sion. EPA said the provision was a relic of an earlier House bill that had contemplated that CERCLA would provide a remedy for personal injury. The bill would have provided compensation to persons injured in the workplace from re- leases of hazardous substances unless they could le a workers compensation claim to avoid duplicate claims. 20 Citing to the legislative history, EPA said the workplace exposure exclu- sion was apparently intended to limit the potential scope of third-party actions for personal injuries under the Act. 21 EPA then went on to say that when the personal injury remedy for exposure to releases of hazardous substances was deleted Congress apparently failed to remove the workplace exclu- sion. 22 When EPA nalized the rule in 1985, the agency said that the workplace exclusion only applied to claims compens- able through workers compensation. 23 EPA then went on to say that the legislative history clearly indicates that Congress did not intend to exclude all workplace releases of hazardous substances from CERCLA reporting requirements and re- sponse authorities. 24 As a result, EPA said that if a release of a hazardous substance does not remain wholly contained within a building or structure, then it is a release into the environ- ment for CERCLA purposes, whether or not it occurs within a workplace. 25 (2) In 1993, EPA issued guidance on the use of authority under section 104(a) of CERCLA to conduct response actions to address releases of hazardous substances, pollutants, or contaminants that are found within buildings. EPAclaried that the phrase release into the environment refers to the location of the release itself and does not address the location of the hazard that the release poses. The guidance document then provided examples where EPA could exercise its authority. These included: [c]ontamination that is the direct result of a release into the environment from a non-natural source that migrates into a building or structure. For example, contamination in a 14 See United States v. Aceto Agriculture Chemical Corp., 872 F. 2d 1373 (8th Cir. 1989). Private plaintiffs, as well as the government, may seek response costs under CERCLA from defendants. While many users of these ASTM practices or other private parties may think in terms of how to defend against CERCLAliability, they should be aware of the alternative option of conducting a cleanup and then seeking response costs from other responsible parties. 15 42 U.S.C. 9601(22). The complete denition of a release is any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment (including the abandonment or discarding of barrels, containers, and other closed receptacles containing any hazardous substance or pollutant or contaminant), but excludes (A) any release which results in exposure to persons solely within a workplace, with respect to a claim which such persons may assert against the employer of such persons, (B) emissions from the engine exhaust of a motor vehicle, rolling stock, aircraft, vessel, or pipeline pumping station engine, (C) release of source, byproduct, or special nuclear material from a nuclear incident, as those terms are dened in the Atomic Energy Act of 1954 [42 USCS 2011 et seq.], if such release is subject to requirements with respect to nancial protection established by the Nuclear Regulatory Commission under section 170 of such Act [42 USCS 2210], or, for the purposes of section 104 of this title [42 USCS 9604] or any other response action, any release of source byproduct, or special nuclear material from any processing site designated under section 102(a)(1) or 302(a) of the Uranium Mill Tailings Radiation Control Act of 1978 [42 USCS 7912(a) or 7942(a)], and (D) the normal application of fertilizer. 16 Amcast Industry Corp. v. Detrex Corp., 779 F. Supp. 1519 (N.D. Ind. 1991). Note that 40 C.F.R. 312.20(h) provides that the environmental professional need not specically identify extremely small quantities or amounts of contaminants, so long as the contaminants generally would not pose a threat to human health or the environment. 17 New York v. Shore Realty Corp., 759 F.2d 1032 (2d Cir. 1985). 18 The term environment means (A) the navigable waters, the waters of the contiguous zone, and the ocean waters of which the natural resources are under the exclusive management authority of the United States under the Magnuson-Stevens Fishery Conservation and Management Act [16 U.S.C. 1801 et seq.], and (B) any other surface water, groundwater, drinking water supply, land surface or subsurface strata, or ambient air within the United States or under the jurisdiction of the United States. 42 U.S.C. 9601(8). EPA has interpreted into the environment to apply to releases that remain on plant or installation grounds such as spills from tanks or valves onto concrete pads or into lined ditches open to the outside air, releases from pipes into open lagoons or ponds, or any other discharges that are not wholly contained within buildings or structures. 50 Fed. Reg. 13456 (April 4, 1985). 19 42 U.S.C. 9601(22)(A). See also United States v Saporito, 2011 U.S. Dist. LEXIS 66456 (N.D.Ill. June 22, 2011). 20 Notice of Proposed Rulemaking: Notication Requirements; Reportable Quan- tity Adjustments, 48 Fed. Reg. 23552, 23555 (May 25, 1983) (NPRM). 21 Id. at 23555. EPA said in the preamble to the NRPM that The legislative history of the Act indicates that the workplace exposure exclusion was apparently intended to limit the potential scope of third-party actions for personal injuries under the Act and cited to S. Rep. No. 96-848, 96th Cong., 2d. Sess. 94 (1980). 22 48 Fed. Reg. 23555 (May 25, 1983). 23 50 Fed. Reg. 13456, 13462 (April 4, 1985). 24 Id. EPA included the following quote from the legislative history to support this statement For example, if a release occurring solely within a workplace created a hazard of damage to human life or to the environment, it is contemplated that the Fund would have the authority to respond with all of its authorities except for compensating workers whose employers are liable for their injuries under workers compensation law. Id., (citing to S. Rep. No. 96-848, 96th Cong., 2d Sess. 94 (1980)). 25 48 Fed. Reg. at 13463. See also Cyker v. Four Seasons Hotels Ltd., 1991 U.S. Dist. LEXIS 1310 (D. Mass. Jan. 3, 1991) (no release into the environment when chemicals from an indoor pool migrated into adjoining apartment building). See also Response Actions at Sites With Contamination Inside Buildings, Memorandum from Henry L. Longest, II, OSWER Directive 9360.3-12 (Aug. 12, 1993). E1527 13 25
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. yard may be tracked into a building on the feet of the residents or workers, or may migrate into the building through an open window or basement walls. In this situation, a release into the environment is occurring and has caused a building to become contaminated with the hazardous substance, pollutant, or contaminant. (3) Another example EPA provided was when radium wastes that have been disposed in subsoil that may cause indoor hazards from migration and accumulation of radon gas in nearby homes can result in CERCLA liability. 26 (4) Thus, the presence within a building of hazardous substances such as vapors that have migrated into a building from a release into the environment (i.e., from a release outside of the building) can result in CERCLA liability. 27 (5) Another exclusion to the denition of release that may be relevant to commercial real estate transaction is the exclu- sion for the normal application of fertilizer contained section 101(22)(D). While CERCLA does not dene the phrase nor- mal application of fertilizer, the legislative history stated that phrase was meant to apply to the act of putting fertilizer on crops or cropland, and did not mean any dumping, spilling, or emitting, whether accidental or intentional, in any other place or of signicantly greater concentrations or amounts than are benecial to crops. 28 The exception may not apply to spillage or improper storage of fertilizer. 29 X1.1.1.3 Section 40 CFR 312.1(c) provides that the objec- tive of the investigation is to identify conditions indicative of releases or threatened releases. While the rule refers to CERCLA section 101(22) that includes the exclusions to the denition of release, the rule does not specically discuss if those excluded releases have to be identied to comply with the AAI rule. X1.1.2 Hazardous SubstanceThe second element that must be satised is that there must be a release of a hazardous substance. Section 101(14) 30 provides that the term hazard- ous substance includes hazardous substances designated un- der section 311 of the Clean Water Act (CWA) 31 or section 102 of CERCLA 32 any toxic pollutant listed under section 307(a) of the CWA, 33 any waste that has been listed as a RCRA hazardous waste or possesses a RCRA hazardous waste characteristic, 34 any substance that is identied as a hazardous pollutant under section 112 of the Clean Air Act (CAA), 35 any imminently hazardous chemical that EPA has taken action pursuant to section 7 of the Toxic Substances Control Act (TSCA). 36 X1.1.2.1 Petroleum Exclusion: (1) The denition of a CERCLA hazardous substance specically excludes petroleum products and crude oil. 37 EPA has determined that the petroleum exclusion applies to petroleum products such as gasoline and other fuels containing lead, benzene or other hazardous substances that are normally added during the rening process. 38 (2) If waste oil becomes contaminated during use from new hazardous substances that are added to oil during use or because the level of the hazardous substances that are normally found in the oil is increased beyond the concentrations nor- mally found in petroleum, the EPA has said the petroleum exclusion should not apply. 39 Courts have generally upheld EPAs view that the petroleum exclusion does not apply to petroleum that has been contaminated through use. Thus, waste oil has been held to fall outside the petroleum exclusion. 40 Courts have been less certain on whether sludges found at the bottom of a petroleum storage tank that become contaminated with rust from the steel tank fall within the petroleum exclu- sion. 41 Likewise, the petroleum exclusion was held not appli- cable where petroleum had commingled with hazardous sub- stances in the subsurface beneath a renery. 42 X1.1.2.2 Notwithstanding the existence of the petroleum exclusion, petroleum products are included within the scope of this practice and the Legal Appendix for several reasons. First, petroleum products have historically been widely used at commercial properties. Second, other federal and state laws may impose liability for releases or spills of petroleum prod- ucts. For example, petroleum products may become hazardous wastes such as when petroleum has spilled and cannot be reclaimed from soil. In addition, petroleum products released from underground storage tanks may be subject to corrective action under RCRA Subtitle I 43 or comparable state laws. Spills to surface waters could also result in cleanup liability 26 Id. 27 See Response Actions at Sites With Contamination Inside Buildings, Memorandum from Henry L. Longest, II, OSWER Directive 9360.3-12 (Aug. 12, 1993). 28 S. Rep. No. 96-848, at 46 (1980). 29 City of Waco v. Schouten, 385 F. Supp. 2d 595 (W.D. Tex. 2005)(use and storage of phosphorus in cow manure was beyond normal application of fertilizer). 30 42 U.S.C. 9601(14)(A)-(F). 31 33 U.S.C. 1321(b)(2)(A). 32 42 U.S.C. 9602. EPA has promulgated a list of CERCLA Hazardous Substances at 40 C.F.R. 302. 33 33 U.S.C. 1317(a). 34 EPA has identied over 400 substances as listed hazardous wastes (see 40 C.F.R. 261.11). EPA has also identied four hazardous waste characteristics for determining if a non-listed solid waste should be regulated as a hazardous waste (See 40 C.F.R. 260.21-.24). 35 42 U.S.C. 7412. 36 15 U.S.C. 2606(f). 37 42 U.S.C. 9601(14) provides that the term hazardous substances does not include petroleum, including crude oil or any fraction thereof which is not otherwise specically listed or designated as a hazardous substance under subparagraphs (A) through (F) of this paragraph, and the term does not include natural gas, natural gas liquids, liqueed natural gas, or synthetic gas usable for fuel (or mixtures of natural gas and such synthetic gas). 38 50 Fed. Reg. 13 460 (April 4, 1985); Scope of the CERCLA Petroleum Exclusion, Memorandum from Francis Blake, General Counsel, Environmental Protection Agency, to J. Winston Porter, Assistant Administrator for Solid Waste and Emergency Response (July 31, 1987); Wilshire Westwood Associates v. Atlantic Richeld Corp., 881 F.2d 801 (9th Cir. 1989). 39 50 Fed. Reg. 13460 (April 4, 1985); Scope of the CERCLA Petroleum Exclusion, Memorandum from Francis Blake, General Counsel, Environmental Protection Agency, to J. Winston Porter, Assistant Administrator for Solid Waste and Emergency Response (July 31, 1987). 40 United States v. Alcan Aluminum, 964 F.2d 252 (3d. Cir. 1992); United States v. Alcan Aluminum Corp., 755 F. Supp. 531 (N.D.N.Y. 1991); City of New York v. Exxon Corp., 766 F. Supp. 177 (S.D.N.Y. 1991). 41 Compare United States v. Western Processing Co., 761 F. Supp. 713 (W.D. Wa. 1991) with Cose v. Getty Oil Co., 4 F.3d 700 (9th Cir. 1993) (reversing and remanding summary judgment in favor of appellee oil company). 42 Tosco Corp. v. Koch Industries, Inc. 216 F.3d. 886 (10th Cir. 2000). 43 42 U.S.C. 6991 et seq. E1527 13 26
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. pursuant to the Oil Pollution Act of 1990 44 and the CWA. 45 Finally, persons seeking to qualify for federal, state or local browneld funding may be required to investigate potential petroleum releases as part of implementing this practice. X1.1.3 FacilityThe third element of CERCLA liability is that the release must occur on or from a facility. 46 The term facility is meant to encompass the area of contamination so that a facility may extend beyond property boundaries such as when a groundwater plume has migrated offsite. EPA has said it has broad discretion to treat non-contiguous sites as one CERCLA facility. 47 X1.1.4 Response CostsAnother element necessary to es- tablish CERCLA liability is that response costs must be incurred as a result of a release or threatened release of a hazardous substance. There are two different types of response actions for which costs may be recovered: Removal actions 48 (typically short-term or temporary actions) and remedial ac- tions 49 (typically long-term or permanent cleanups). X1.1.4.1 To recover response costs, a plaintiff must demon- strate that its response costs were incurred consistent with the National Oil and Hazardous Substances Pollution Contingency Plan (NCP). 50 However, the burden of establishing NCP consistency differs depending if the plaintiff is the federal government or a private party. A private party or local government seeking to recover response costs has the burden of proving its response costs were consistent with the NCP. 51 Private plaintiffs only have to demonstrate substantial com- pliance with the NCP rather than strict technical compliance as long as a CERCLA-quality cleanup is achieved. 52 Some cases have held that cleanup costs incurred pursuant to a consent decree will be presumed to be in compliance with the NCP. 53 X1.1.4.2 The federal government may recover response costs that are not inconsistent with the NCP. 54 Courts have interpreted the not inconsistent language to mean that the government has a rebuttable presumption that its response costs are consistent with the NCP. Thus, defendants have to introduce evidence to overcome this presumption of NCP consistency. 55 Some courts have held that the defendants must not simply prove variance from the NCP but that there were demonstrable excess costs. 56 Other courts have rejected defen- dant claims that a remedy was inconsistent with the NCP because it was not cost effective on the grounds that this factor is only relevant in choosing a remedy and not a criterion for challenging the implementation of the remedy. 57 While state agencies also enjoy the presumption of consistency, munici- palities are not entitled to the presumption because they are not considered part of state government. 58 Another limitation on cost recovery by private plaintiffs is that they may recover only necessary response costs. 59 X1.1.4.3 No Cost Recovery for Certain Types of Releases Sections 104(a)(3) and 107 identify certain categories of releases for which cost recovery is prohibited. While the cost prohibition of sections 107(i) and (j) broadly apply to all persons including the federal government, states and Tribes, the limitation of section 104(a)(3) is expressly directed at the federal government. 60 However, courts have generally inter- preted this provision not only to limit the federal governments ability to recover response costs for such releases under section 107 but also to apply to private cost recovery or contribution actions. 61 The section 104(a)(3) limitations on response actions by the federal government do not apply to any release or threatened release that EPA determines constitutes a public health or environmental emergency and no other person with 44 33 U.S.C. 1321 et seq. Indeed, an all appropriate inquiries requirement was added to OPA in 2004 as part of a new OPA innocent landowner defense and the United States Coast Guard issued an OPAAAI rule in 2008 that is substantially similar to the CERCLA AAI rule. See 73 Fed. Reg. 2146 (Jan. 14, 2008). 45 33 U.S.C. 1321 et seq. 46 42 U.S.C. 9601(9) denes the term facility to mean (A) any building, structure, installation, equipment, pipe or pipeline (including any pipe into a sewer or publicly owned treatment works), well, pit, pond, lagoon, impoundment, ditch, landll, storage container, motor vehicle, rolling stock, or aircraft, or (B) any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located; but does not include any consumer product in consumer use or any vessel. 47 55 Fed. Reg. 868991 (Mar. 8, 1990). 48 42 U.S.C. 9601(23). 49 42 U.S.C. 9601(24). 50 42 U.S.C 9607(a)(4)(B). The National Contingency Plan is the federal governments blueprint on how hazardous substances are to be cleaned up pursuant to CERCLA. See 42 U.S.C. 9605; 40 C.F.R. Part 300. 51 Amland Properties Corp. v. Aluminum Co. of America, 711 F. Supp. 784, 794 (D.N.J. 1989); Artesian Water Co. v. New Castle Cty., 659 F. Supp. 1269, 1291 (D. Del. 1987); United States v. Northeastern Pharmaceutical & Chemical Co., 579 F. Supp. 823 (W.D. Mo. 1984), affd in part, revd on other grounds, 810 F.2d 726 (8th Cir. 1986), cert. denied, 484 U.S. 848 (1987). 52 The NCP requirements for a private party response-action are set forth at 40 C.F.R. 300.700. 53 United States v. Western Processing Co., 1991 U.S. Dist. LEXIS 16021 (W.D. Wa. July 31, 1991). 54 42 U.S.C. 9607(a)(4)(A). See Dedham Water Co. v. Cumberland Farms Dairy, Inc., 889 F.2d 1146 (1st Cir. 1989). 55 United States v. Gurley Rening Co., 788 F. Supp. 1473 (E.D. Ak. 1992); United States v. American Cyanamid, 786 F. Supp. 152 (D.R.I. 1992); Ambrogi v. Gould, 750 F. Supp. 1233 (M.D. Pa. 1990); Northeastern Pharmaceutical & Chemical Co., 579 F. Supp. 823 (W.D. Mo. 1984). 56 United States v. American Cyanamid, 786 F. Supp. 152 (D.R.I. 1992). 57 Id. 58 Town of Bedford v. Raytheon Co., 755 F. Supp. 469 (D. Mass. 1991); Philadelphia v. Stephan Chemical Co., 713 F. Supp. 1484 (E.D. Pa. 1989). 59 42 U.S.C. 9607(a)(4)(B). 60 42 U.S.C. 9604(a)(3). 61 3550 Stevens Creek Assocs. v. Barclays Bank, 915 F.2d 1355 (9th Cir. 1990)(affirming district court ruling that it was unlikely that Congress would have intended to preclude the President from taking a specic action, while allowing private parties to respond by that precise action); First United Methodist Church v. United States Gypsum Co., 882 F.2d 862 (4th Cir. 1989)( 9604(a)(3)(B) represents much more than a procedural limitation on the Presidents authority; instead, it is a substantive limitation of the breadth of CERCLA itself); Retirement Community Developers, Inc. v. Merine, 713 F. Supp. 153 (D. Minn.1989)(legislative history supports view that 9604(a)(3) was intended to be a limit on the substantive scope of CERCLAand not solely a limit on the Presidents authority under the statute). But see Prudential Ins. Co. of America, v. United States Gypsum, 711 F. Supp. 1244 (D.N.J. 1989) (holding that the plaintiffs did not state a CERCLA claim because the sale of asbestos building materials was not a disposal of a hazardous substance as dened by CERCLA but suggesting, in dicta, that it believed that the limits of 9604(a)(3) did not apply to private asbestos removal actions). E1527 13 27
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. the authority and capability to respond to the emergency will do so in a timely manner. 62 (1) Naturally-Occurring Substances ExclusionThis ex- clusion applies to releases from a substance that is in an unaltered form or altered by natural processes and where the releases occur from a location where the substance is naturally found. 63 Thus, the migration of radon gas into a building would not normally be considered a CERCLA release. 64 However, when the source material for the radon gas is radioactive waste material that has been disposed or spilled, the presence of radon gas in a structure or property can be a release of a hazardous substance for which cost recovery could be avail- able. 65 (2) Building Materials ExclusionThis exclusion applies to releases from products that are part of a building that result in exposure within that structure. 66 This exclusion has been invoked frequently to challenge claims for abatement of asbestos-containing building materials (ACM) 67 but can also apply to lead-based paint (LBP). 68 To fall within this exclusion, the release must be from a product that is part of the structure AND result in exposure within the structure. 69 (a) For example, some building owners who have in- curred ACM abatement costs have tried to circumvent the structural materials issue by arguing that the seller arranged for the disposal of hazardous substances by selling a building with ACM. For example, in Sycamore Industrial Park Associates v. Ericsson, Inc. 70 the plaintiff purchased an industrial park with an old heating system that was incorporated into the building. Plaintiff sued defendant under CERCLA, RCRA and common law, and requested an injunction ordering the defendant to remove the ACM or pay plaintiff for its abatement costs. In its CERCLA claim, plaintiff tried to distinguish the long line of CERCLA caselaw holding that sellers of buildings with ACM in the building structures could not be liable for arranging for disposal of a hazardous substance. Plaintiff argued that since the ACM in the building was associated with an abandoned and obsolete heating system, it was no longer a useful product. Ruling for the defendant on its motion to dismiss, the court said that since installing ACM in a building was not disposal under CERCLA, then simply leaving the same material where it was originally installed could not qualify as disposal. Moreover, the court noted that the plaintiff did not allege that asbestos bers were being released into the environment. If the defendant had dismantled the equipment with ACM or detached and aban- doned the ACM, the court said it would not hesitate to impose liability on the seller. Since no such facts were alleged in the complaint, the court granted the defendants motion to dismiss. (b) In California v. Blech, 71 a re caused asbestos dust to be released in office space leased by the California Department of General Services (DGS). When the building owner/ defendant declined to abate the dust, DGS performed a cleanup and sought cost recovery. DGS argued that the re-damaged ACM was no longer part of the building structure and had become asbestos waste. However, the court ruled that because the source of the asbestos dust was ACM that had been part of the building structure, the asbestos abatement costs were not recoverable under CERCLA. (c) In CP Holdings, Inc. v. Goldberg-Zoino & Associates, Inc. 72 the purchaser of a building with ACM was allowed to recover its ACM disposal costs under CERCLA after the purchaser demolished the building because the asbestos release was not conned to the interior of the building. Courts have allowed plaintiffs to recover response costs for soil contami- nated with asbestos that was released from buried asbestos- contaminated materials. 73 (d) While the building materials exclusion of CERCLA 104(a)(3) has been applied to LBP, EPA has used its CERCLA authority to conduct response actions for soils contaminated by a release of lead-contaminated paint chips from the exterior of homes that pose a lead hazard and to prevent recontamination of soils that have been remediated. 74 (3) Exclusion for release into public or private drinking water supplies due to deterioration of the system through ordinary use 75 Lead in drinking water (LIW) can be evalu- ated in terms of this exclusion. The statutory language seems clear that LIW would not fall within the CERCLAs AAI responsibilities. Indeed, there is no reported case law involving LIW and CERCLA. (4) Application of PesticidesSection 107(i) 76 provides that no person (including the United States and state govern- ments) may recover response costs resulting from the applica- tion of pesticides registered pursuant to Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). The purpose of CERCLAs pesticide exemption is to prevent the typical pesticide user from incurring CERCLA liability when he has done nothing more than to have purchased and applied a 62 42 U.S.C. 9604(a)(4). See also CERCLA Removal Actions at Methane Release Sites; Memorandum from Henry L. Longest, II to Basil G. Constantelos, OSWER Directive 9360.0-8 (Jan. 23, 1986). 63 42 U.S.C. 9604(a)(3)(A). 64 EPA has designated radionuclides as a CERCLA hazardous substance. Radon and its daughter products are considered radionuclides, and qualify as CERCLA hazardous substances. See 40 C.F.R. 302.4. 65 Amoco Oil Co. v. Borden, Inc., 889 F.2d 664 (5th Cir. 1990). 66 42 U.S.C. 9604(a)(3)(B). 67 3550 Stevens Creek Assoc. v. Barclays Bank, 915 F.2d 1355 (9th Cir. 1990), cert. denied, 500 U.S. 917 (1991); Dayton Independent School Dist. v. United States Mineral Products, 906 F.2d 1059 (5th Cir. 1990); First United Methodist Church v. United States Gypsum Co., 882 F.2d 862 (4th Cir. 1989); Black v. Carey Canada, Inc., 791 F. Supp. 1120 (S.D. Miss. 1990); Retirement Community Developers v. Merine, 713 F. Supp. 153 (D. Md. 1989). 68 California v. Blech, 976 F.2d 525, 527 (9th Cir. 1992); First United Methodist Church v. United States Gypsum Co., 882 F.2d 862, 868 (4th Cir. 1989); ABD Assocs. v. American Tobacco Co., 1995 U.S. Dist. LEXIS 11094 (M.D.N.C. June 26, 1995). 69 ABD Assocs. v. American Tobacco Co., 1995 U.S. Dist. LEXIS 11094 (the legislative history of 9604(a)(3) shows no intention by Congress to distinguish between asbestos and other products such as lead-based paint). 70 2007 U.S. Dist. LEXIS 23881 (N.D. Ill. Mar. 30, 2007). 71 California v. Blech, 760 F. Supp. 832 (C.D. Cal. 1991), affd , 976 F.2d 525 (9th Cir. 1992). 72 769 F. Supp. 432 (D.N.H. 1991). 73 Hidden Lakes Development, LP v. Allina Health System and Park Construction Co., 2004 U.S. Dist. LEXIS 19360 (D. Minn. Sept. 27, 2004); Richmond American Homes of Colorado, Inc., v. United States, 75 Fed. Cl. 376 (2007). 74 See generally Superfund Lead-Contaminated Residential Sites Handbook, OSWER 9285.7-50 (August 2003); See also OSWER Directive Clarication to the 1994 Revised Interim Soil Lead (Pb) Guidance for CERCLA Sites and RCRA Corrective Action Facilities, OSWER Directive 9200.4-27P (August 1998). 75 42 U.S.C. 9604 (a)(3)(C). 76 42 U.S.C. 9607(i). E1527 13 28
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. pesticide in the customary manner. 77 FIFRAregistration is not a complete defense to a CERCLA claim, though, and a defendant will have the burden of establishing its entitlement to the exemption. 78 To qualify for this cost recovery prohibition, the pesticide must have been applied in accordance with the labeling requirements established for that pesticide product at the place where the pesticide product was to be applied. Courts have held that the pesticide exemption should be construed narrowly and the exemption has been held not to apply to pesticide disposal, storage, spills, transport. 79 The misapplica- tion of pesticides that causes contamination on adjacent prop- erties has been held not to fall within the pesticide exemp- tion. 80 The pesticide exemption also contains a savings clause that provides that the cost recovery prohibition does not alter or modify any obligations or liability under any other federal or state law for damages, injury or loss resulting from a release of hazardous substances, or for the costs of removal or remedial actions of such hazardous substances. (5) Federally Permitted ReleasesLikewise, section 107(j) 81 prohibits cost recovery by any persons (including the United States and state governments) for response costs or damages resulting from federally-permitted releases. 82 There is also a savings clause that provides that this section does not alter or modify any obligations or liability under any other federal or state law for damages, injury or loss resulting from a release of hazardous substances, or for the costs of removal or remedial actions of such hazardous substances. X1.1.5 Responsible PartyThe nal element of CERCLA liability is that the plaintiff must establish that defendant falls within at least one of the four categories of potentially responsible parties (PRP) identied in section 107(a). The categories of PRPs include current owners and operators of a facility; 83 past owners or operators of a facility at the time of disposal; 84 any person who arranges for disposal, treatment or transport of hazardous substances (arrangers or genera- tors); 85 and any person who accepts or accepted any hazard- ous substances for transport to a disposal or treatment facility selected by such person (transporter). 86 Because this practice is focused on commercial real estate transactions, the discus- sion in this Legal Appendix focuses on the owner and operator PRP categories. X1.1.5.1 CERCLA Owner: 87 (1) Courts have broadly construed the term and some courts have ruled that persons holding equitable title, 88 ease- ment holders 89 and holders of mineral estates 90 could be liable as CERCLAowners. Apurchaser of tax liens who has obtained tax deeds has been found to be a CERCLA owner 91 as well as an owner of equipment that is an important component of the production process at a facility. 92 Other courts have ruled that mere possessory interests without some incidents of ownership cannot support CERCLAowner liability. 93 Some courts appear to be reluctant to extend ownership liability to persons who simply serve as conduits and hold title for only a very short period of time to facilitate a multi-step transaction. 94 (2) Current owners may be liable for any contamination existing on the site even if the current owner did not place the hazardous substances on the site or cause the release. 95 One federal appeals court held that current ownership is measured at the time of cleanup and not necessarily when a cost recovery lawsuit is led. 96 Passive landlords or sublessors who do not participate in the management of the property have been held to be liable for cleanup costs. 97 77 Jordan v. Southern Wood Piedmont Co., 805 F. Supp. 1575, 1581-82 (S.D. Ga. 1992). 78 Cameron v. Navarre Farmers Union Coop. Assn, 76 F. Supp. 2d 1178 (D. Kan. 1999); Beers v.Williams Pipe Line Co., 1994 U.S. Dist. LEXIS 12303 (D. Kan. Aug. 23, 1994). 79 See Redwing Carriers, Inc. v. Saraland Apartments, 94 F.3d 1489, 1511 (11th Cir. 1996) (affirming the district courts nding that the defendant could not be held liable for the alleged disposal of FIFRA-registered pesticides because plaintiff failed to produce any evidence refuting the defendants proof that the pesticides were properly applied.); South Fla. Water Management Dist. v. Montalvo, 84 F.3d 402 (11th Cir. 1996) (exemption inapplicable to spills while loading planes and the drainage of contaminated rinse water following spraying runs.); In re Sundance Corp., 149 B.R. 641, 663 (Bankr. E.D. Wash. 1993) (allowing excess Dip to drain off the stakes was release and not application of pesticides); Jordan v. Southern Wood Piedmont Co., 805 F. Supp. 1575 (S.D. Ga. 1992) (exemption did not apply to wood treatment facility but defendant not liable on other grounds); United States v. Hardage, 1989 U.S. Dist. LEXIS 17877 (W.D. Okla. 1989) (rejecting a stock yard companys argument that exemption afforded a defense to liability for the disposal of FIFRA registered dipping vat pesticide waste). 80 United States v. Tropical Fruit, S.E., 96 F. Supp. 2d 71 (D.P.R. 2000). 81 42 U.S.C. 9607(j). 82 Federally-Permitted Releases are dened in 42 U.S.C. 9601(10). Some of the categories of releases that may be relevant to commercial real estate transactions include discharges in compliance with NPDES and pre-treatment permits issued under the Clean Water Act; releases in compliance with a legally enforceable nal permit issued pursuant to RCRA where the permit specically identies the hazardous substances and establishes treatment practice for that discharge; emis- sions of air pollutants pursuant to permits issued under the CAA; injection of uids authorized under the federal underground injection control programs or approved state programs pursuant to the Safe Drinking Water Act, and any release of source, special nuclear, or byproduct material in compliance with a legally enforceable license, permit, regulation, or order issued pursuant to the Atomic Energy Act of 1954. 83 42 U.S.C. 9607(a)(1). 84 42 U.S.C. 9607(a)(2). 85 42 U.S.C. 9607(a)(3). 86 42 U.S.C. 9607(a)(4). 87 42 U.S.C. 9601(20). 88 K.C. 1986 Ltd. Pshp. v. Reade Mfg., 33 F. Supp.2d 820 (W.D. Mo. 1998); United States v. Wedzeb Enters., Inc., 809 F. Supp. 646, 652 (S.D. Ind. 1992); United States v. Union Corp., 259 F. Supp.2d 356, 395 (E.D. Pa. 2003). 89 United States v. Union Gas Co., 1992 U.S. Dist. LEXIS 14834 (E.D. Pa. Sept. 30, 1992). But see Long Beach Unied Sch. Dist. v. Dorothy B. Godwin Cal. Living Trust, 32 F.3d 1364, 1369 (9th Cir. 1994) and Grand Trunk Western Railroad Co. v. Acme Belt Recoating, Inc., 859 F. Supp. 1125 (W.D. Mich. 1994). 90 City of Grass Valley v. Newmont Mining Corp., 2007 U.S. Dist. LEXIS 97340 (E.D. Cal. Dec. 3, 2007) (holding that ownership of the mineral estate was sufficient to impose liability as an owner under CERCLA). 91 United States v. Capital Tax Corp., 2007 U.S. Dist. LEXIS 1184 (N.D. Ill. Jan. 4, 2007). 92 United States v. Saporito, 684 F. Supp. 2d 1043 (N.D. Ill. 2010); Elf Atochem North American, Inc. v. United States, 868 F. Supp. 707, 709 (E.D. Pa. 1994). 93 City of L.A. v. San Pedro Boat Works, 635 F.3d 440 (9th Cir. 2011); Long Beach Unied Sch. Dist. v. Dorothy B. Godwin Cal. Living Trust, 32 F.3d 1364, 1368 (9th Cir. 1994). 94 Ameripride Servs. v. Valley Indus. Serv., 2007 U.S. Dist. LEXIS 18806 (E.D. Cal. Jul. 7, 2007); Robertshaw Controls v. Watts Regulator, 807 F. Supp. 144 (D. Me. 1992); In re Diamond Reo Trucks, Inc. v. Lansing, 115 B.R. 559 (Bankrcy. W.D. Mich. 1990). 95 Nurad, Inc. v. Hooper & Sons Co., 966 F.2d 837 (4th Cir. 1992), cert. denied, 506 U.S. 940 (1992); United States v. Monsanto, 858 F.2d 160 (4th Cir. 1989). 96 Cal. Dept of Toxic Substances Control v. Hearthside Residential Corp., 613 F.3d 910 (9th Cir. 2010). 97 United States v. A & N Cleaners & Launderers, Inc., 788 F. Supp. 1317 (S.D.N.Y. 1992). E1527 13 29
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. (3) In contrast to the scope of liability for a current owner, a person may only be liable as a former owner if the person held title at the time of disposal. Some courts have held that even the mere migration of previously-deposited or released hazardous substances constitutes disposal so that a former owner that simply held title while contaminants migrated (passive disposal) could be liable as a CERCLA past owner. 98 However, the majority of jurisdictions now appear to require that a party must be engaged in active conduct to be liable as a former owner at the time of disposal. 99 In many jurisdictions, development activities such as grading and soil relocation may be the kind of active conduct that can be considered disposal for purposes of CERCLA liability. 100 X1.1.5.2 CERCLA Operator Liability: 101 (1) A person may be liable as a CERCLA operator when they exercise control over a facility. To be considered a CERCLA operator, the United States Supreme Court held in United States v. Bestfoods that a person must manage, direct, or conduct operations specically related to pollution, that is, operations having to do with the leakage or disposal of hazardous waste, or decisions about compliance with environ- mental regulations. 102 Following Bestfoods, parent corpora- tions and individual shareholders may be directly liable as CERCLA operators for subsidiary facilities only if they exer- cise actual control over the operations at the facility that caused the contamination. 103 Aparent corporation may be held deriva- tively or indirectly liable for the environmental liabilities of its subsidiary only on a traditional corporate veil piercing analy- sis. 104 Municipalities have been found liable as operators of sewer systems that allowed contaminants to escape into the environment. 105 (2) Some courts have held that a person may be liable as a current CERCLA operator where the person did not exercise control over historic operations that caused the contamination but dispersed or moved around contaminated soil during grading and excavation activities. 106 A managing agent of a shopping center that had been contaminated by releases from a dry cleaner may also be potentially liable as a CERCLA operator. 107 (3) Like a past CERCLA owner, a past operator must have exercised control over the site at the time of disposal to be liable as a CERCLA operator. Many courts have held that disposal is not limited to the original release but can encompass subsequent dispersal or movement of hazardous substances. Thus, CERCLAoperator liability has been imposed on persons as a result of grading or excavation activities that moved contaminated soil. 108 X1.1.5.3 Arrangers/Generators and Transporters CERCLA arrangers/generators and transporters are not usually found liable for releases at property that they do not own or operate. Therefore, this practice is typically not impacted by CERCLA arranger/generator and transporter liability. X1.1.6 Exclusions from Denition of Owner or Operator There are several important statutory exemptions from the denition of owner or operator. A party that does not qualify for one of the statutory exemptions may still be able to assert one of the LLPs. X1.1.6.1 Secured Creditor ExemptionThe secured credi- tor exemption exempts from the denition of owner or operator persons holding an indicia of ownership primarily 98 Nurad, Inc. v. Hooper & Sons Co., 966 F.2d 837 (4th Cir.), cert. denied, 506 U.S. 940 (1992). 99 Carson Harbor Vill., Ltd. v. Unocal Corp., 270 F.3d 863 (9th Cir. 2001); United States v. 150 Acres of Land, 204 F.3d 698, 706 (6th Cir. 2000); ABB Indus. Sys., Inc. v. Prime Tech., Inc., 120 F.3d 351 (2d Cir. 1997); United States v. CDMG Realty Co., 96 F.3d 706 (3d Cir. 1996). 100 Bonnieview Homeowners v. Woodmont Builders, 2009 U.S. Dist. LEXIS 86737 (D.N.J. Sept. 22, 2009); United States v. Honeywell Intl., Inc., 542 F. Supp.2d 1188 (E.D. Cal. 2008). 101 42 U.S.C. 9601(20). 102 United States v. Bestfoods, 524 U.S. 51 (1998). 103 Atlanta Gas Light Co. v. UGI Utilities, Inc., 463 F.3d 1201 (11th Cir, 2006). See also Consolidated Edison of New York, Inc. v. UGI Utilities, 310 F. Supp.2d 592 (S.D.N.Y.), affd in part, 423 F.3d 90 (2d Cir. 2005); cert. denied 551 U.S. 1130 (2007); Yankee Gas Services Company v. UGI Utilities, 616 F. Supp.2d 228 (D. Conn. 2009), affd, 428 Fed. Appx. 18. But see United States v. Newmont USA Ltd., 2008 U.S. Dist. LEXIS 82922 (E.D. Wa. Oct. 11, 2008). 104 524 U.S. at 63-64. 105 Westfarm Assocs. Ltd. Partnership v. Washington Suburban Sanitary Commn, 66 F.3d 669 (4th Cir. 1995); City of Bangor v. Citizens Communications Co., 2004 U.S. Dist. LEXIS 3845 (D. Me. Mar. 11, 2004); United States v. Union Corp., 277 F. Supp.2d 478 (E.D. Pa. 2003). But see Lincoln Properties, Ltd. v. Higgins, 823 F. Supp. 1528 (E.D. Cal. 1992). 106 Trinity Amer. Corp. v. EPA, 150 F.3d 389 (4th Cir. 1998); PCS Nitrogen, Inc. v. Ashley II of Charleston LLC, 714 F.3d 161, 177 (4th Cir. 2013), cert. denied, 571 U.S. ___ (Nov. 4, 2013); United States v. Honeywell Intl, Inc., 542 F. Supp.2d 1188 (E.D. Cal. 2008). 107 Scarlett & Associates, Inc. v Briarcliff Center Partners, LLC, 2009 U.S. Dist. LEXIS 90483 (N.D. Ga. 2009). There, the managing agent did not maintain an office or have personnel at the site, nor did it have keys to any leased space or have the power to evict tenants. The managing agent said its principal responsibilities were to attempt to rent space to tenants that were approved by the owner, collect rent, maintain the common areas of the shopping center, pay bills in a timely manner, and send any excess revenues to the owner. The owner pointed to language in the management services agreement that the managing agent was to obtain all necessary government approvals and perform such acts necessary to ensure that owner was in compliance with all laws. The court noted that the managing agent sent the dry cleaner a certied letter advising the dry cleaner of certain environmental reporting requirements, requested copies of the documentation that the dry cleaner was required to provide to the EPA or an explanation as to why the dry cleaner was exempt from providing such documentation. The court said that this correspondence combined with the other evidence of record indicating that the managing agent generally was responsible for managing and maintaining the shopping center and performing all acts necessary to effect compliance with all laws, rules, ordinances, statutes, and regulations of any governmental authority applicable to the operation of the shopping center was sufficient to create a genuine issue as to whether the managing agent managed the operations of the dry cleaner specically related to pollution and it therefore met the denition of a former operator. 108 Tanglewood Homeowners v. Charles-Thomas, Inc., 849 F.2d 1568 (5th Cir. 1988); Redwing Carriers, Inc. v. Saraland Apartments, 94 F.3d 1489 (11th Cir. 1996); Kaiser Aluminum & Chem. Corp. v. Catellus Dev. Corp., 976 F.2d 1338 (9th Cir. 1992); Bonnieview Homeowners Assn, LLC v. Woodmont Builders, L.L.C., 655 F. Supp.2d 473 (D.N.J. 2009). E1527 13 30
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. to protect a security interest in a vessel or facility so long as the person did not participate in the management of the facility. 109 The CERCLA secured creditor exemption can insulate a secured creditor from liability during the administration of a loan, including workouts, so long as the lenders actions during the life of a loan do not constitute exercising managerial control over the operations of its borrower. 110 The secured creditor exemption contains some key denitions. X1.1.6.2 Security InterestThis term includes a right under a mortgage, deeds of trust, assignment, judgment lien, pledge, security agreement, factoring agreements, or lease and any other right accruing to a person to secure the repayment of money, performance of a duty, or any other obligations by a non-affiliated person. 111 X1.1.6.3 Lender Permissible Actions: (1) A lender holding indicia of ownership primarily to protect a security interest in a facility or vessel will not be liable as a CERCLA owner or operator during the term of a loan if it does not participate in the management of that facility. The term participate in management means actually partici- pating in the management or operational affairs of a vessel or facility, and does not include merely having the capacity to inuence or the unexercised right to control vessel or facility operations. Thus, the mere presence of clauses in a nancing agreement giving a lender the right to take certain actions, such as responding to violations of law or releases of hazardous substances, will not expose the lender to liability. 112 (2) The secured creditor exemption includes a list of nine permissible activities commonly taken by lenders that are considered consistent with the exemption and therefore do not constituent participation in management. A lender may take the following nine actions and not be deemed to have partici- pated in management: (a) holding, releasing, or abandoning a security interest, including environmental compliance covenants, warranties, or other environmental conditions in a security agreement or extension of credit; 113 (b) monitoring or enforcing any terms or conditions of a security agreement or extension of credit; (c) monitoring or undertaking any inspections of the collateral; (d) requiring the borrower to take response actions to address releases of hazardous substances; (e) providing nancial or other advice or counseling to mitigate, prevent, or cure default or diminution of the value of the collateral; (f) restructuring, renegotiating, or otherwise agreeing to alter terms and conditions of a security agreement or extension of credit; (g) exercising forbearance of any rights; (h) exercising any remedies that may be available under applicable law for breaches of security agreements or exten- sions of credit; and (i) conducting a response action under CERCLA in ac- cordance with the National Contingency Plan or under the direction of an on-scene coordinator. 114 (3) A lender may be considered to be participating in management of a facility if it does the following while the borrower is in possession of the property encumbered by the security interest: (a) exercises decision-making control over the borrowers environmental compliance, such that the holder (i.e. lender) has undertaken responsibility for the borrowers hazardous substance handling or disposal practices; (b) exercises control at a level comparable to that of a manager of the facility or vessel so that the lender has assumed or manifested responsibility for the overall management of the day-to-day decision making at the facility with respect to environmental compliance or overall or substantially all of the operational aspects or functions of the facility or vessel. 115 X1.1.6.4 Workouts and ForeclosureThe secured creditor exemption also provides limited protection to lenders during workouts and foreclosures. A lender will not be considered a CERCLA owner or operator if it did not participate in the management of a facility prior to foreclosure, forecloses on the facility or vessel, and then follows certain requirements. After foreclosure, the lender may maintain business activities, wind up operations, undertake a response action in accordance with the NCP or under the direction of an on-scene coordinator, or otherwise take any other actions to preserve, protect, or prepare the vessel or facility prior to sale or disposition provided the lender tries to sell, release or otherwise divest itself of the 109 42 U.S.C. 9601(20)(E)(i). In 1992, EPA sought to further clarify the scope of the secured creditor exemption when it issued its Lender Liability under CERCLA as an amendment to the NCP (Lender Liability Rule). 57 Fed. Reg. 18344 (April 29, 1992). However, the Lender Liability Rule was subsequently invalidated. Kelley v. EPA, 15 F.3d 1100 (D.C. Cir. 1994), rehg denied, 25 F.3d 1088 (D.C. Cir. 1994). In response, EPA announced it would use the Lender Liability Rule as a guidance document in exercising its enforcement discretion. See Policy on CERCLA Enforcement Against Lenders and Government Entities that Acquire Property Involuntarily (Sept. 22, 1995). Congress subsequently enacted the Asset Conservation, Lender Liability, and Deposit Insurance Protection Act (1996 Lender Liability Amendments) which substantially amended the secured creditor exemptions of CERCLAand RCRA. Omnibus Consolidated Appropriations Act of 1997, Pub. L. No 104-208 2501-2505, 110 Stat. 3009 (Sept. 30, 1996). The 1996 Lender Liability Amendments added new dened terms and identied the kinds of actions lenders could take without being considered to be participating in the management of a facility, as well as the steps that lenders had to follow to foreclose on property and still be considered simply protecting their security interest. 110 Monarch Tile, Inc. v. City of Florence, 212 F.3d 1219, 1222 (11th Cir. 2000); United States v. Marvin Pesses, 1998 U.S. Dist. LEXIS 7902 (W.D. Pa. May 6, 1998). 111 42 U.S.C. 9601(20)(G)(vi). 112 57 Fed. Reg. at 18357 (Apr. 29, 1992). 113 An extension of credit includes a lease nance transaction where the lessor does not initially select the leased vessel or facility, during the term of the lease does not control the daily operation or maintenance of the vessel or facility, or the transaction conforms with regulations issued by a federal banking agency, an appropriate state bank supervisor, or with regulations promulgated by the National Credit Union Administration Board. 42 U.S.C. 9601(20)(G)(i). 114 42 U.S.C. 9601(20)(F)(iv). 115 42 U.S.C. 9601(20)(F)(ii). E1527 13 31
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. facility or vessel at the earliest practicable, commercially reasonable time, and on commercially reasonable terms after taking into account market conditions and legal or regulatory requirements. 116 X1.1.7 TrusteesThe secured creditor exemption also in- cludes liability protections for persons and nancial institutions acting in a duciary capacity. 117 X1.1.7.1 Denition of Fiduciary: (1) The liability protection applies to anyone holding title, having control, or otherwise having an interest in a facility or vessel pursuant to the exercise of its responsibilities as a duciary. Covered persons include trustees, receivers, executors, administrators, custodians, guardians of estates or a guardian ad litem, conservators, committees of estates of incapacitated persons, personal representatives, trustees under a various forms of indebtedness where the trustee is not the lender (indenture agreement, trust agreement, lease, or similar nancing agreement for debt securities, certicates of partici- pation in debt securities, or other) or a representative that EPA determines is acting in one of the foregoing capacities. 118 (2) The term does not include a person acting as a duciary for an estate organized for the primary purpose of, engaged in, or actively carrying on a trade or business for prot, or a person who acquires ownership or control of a vessel or facility with the objective of avoiding liability. In addition, it does not apply to the assets of the estate or trust, or to a non-employee agent or independent contractor of the duciary. (3) A trustee is not a duciary for the purpose of the safe harbor provision where they are the trustee of a trust that engages in a business for prot, or is organized to engage in a business for prot, unless the reason for the trust was the facilitation of an estate plan due to the incapacity of the estate owner. 119 Also excluded are duciaries of trusts that would be considered fraudulent in that they were created specically and intentionally to avoid liability. 120 X1.1.7.2 Fiduciary Permissible ActionsA duciary will also not forfeit its immunity from liability by taking the following actions: (1) Terminating the duciary relationship; (2) Including covenants or other conditions requiring com- pliance with environ mental laws in the duciary agreement; (3) Monitoring or conducting inspections of a facility or vessel; (4) Providing nancial advice or other advice to other parties in the duciary relationship, including the settlor or beneciary; (5) Restructuring or renegotiating the terms of the duciary relationship; (6) Administering a vessel or facility that was contami- nated prior to the commencement of the duciary relationship; or (7) Declining to take any of the foregoing actions. X1.1.7.3 Limitation of Liability: (1) Aduciary will only be liable for releases of hazardous substances from a facility or vessel held in a duciary capacity up to the value of the assets held in the trust or estate so long as the release was not caused by the negligence of the duciary. In addition, a duciary will not be exposed to personal liability by undertaking or directing another person to take response actions to address releases of hazardous substances. (2) Importantly, the limitation on the liability of a duciary will not apply if the duciary negligently caused or contributed to the release or threatened release of a hazardous substance. An example of the negligence exception is Canadyne-Georgia Corp. v. NationsBank, N.A. 121 where a former site owner was allowed to proceed with a contribution action against a bank that served as trustee for a trust that held a general partnership interest in a limited partnership owning the site. 122 X1.2 Defenses to CERCLA LiabilityAssuming all the elements of liability exist (and no specic liability exclusions apply), a party may still avoid CERCLA liability by qualifying 116 The CERCLA Lender Liability Rule had required lenders to take actions consistent with the NCP, such as removing abandoned drums at a facility they have foreclosed on, in order to preserve their immunity. Abandonment of drums or equipment would not be consistent with the requirements of the NCP and could cause a lender to lose its immunity even where it has complied with all of the aspects of the CERCLA Lender Liability Rule. However, the Lender Liability Amendments did not expressly address this issue of post-foreclosure NCP compliance. The Lender Liability rule contained a bright-line test requiring a lender to publish certain notices of sale and retain brokers to sell the property. If the lender complied with these requirements, there would be a presumption that the lender had complied with the rule which a plaintiff would have to rebut to proceed against a secured creditor under CERCLA. Unfortunately, the 1996 Lender Liability Amend- ments did not incorporate the bright-line test. As a result, the CERCLA secured creditor exemption provides little guidance to lenders on the specic steps that they may take and still preserve their safe harbor. Accordingly, it is imperative that holders of security interests carefully review site conditions before foreclosing. Note that EPA promulgated a nal rule in 1995 that claried the regulatory obligations of lending institutions and other persons who hold a security interest in a petroleum underground storage tank (UST) subject to the RCRA Subtitle I UST program or in real estate containing a petroleum underground storage tank, or that acquired title or deed to property with petroleum USTs subject to the RCRASubtitle I UST program. See Underground Storage TanksLender Liability; Final Rule, 60 Fed. Reg. 46691 (Sept. 7, 1995) (RCRA Lender Liability Rule). The RCRA Lender Liability Rule contains a bright-line test for persons holding security interests that foreclose on property containing USTs subject to the RCRA Subtitle I program. See 40 C.F.R. 280.210(c)(1)(ii). In the RCRA Lender Liability Rule, EPA stated that it believed the Kelly decision did not apply to the RCRA Subtitle I UST program. 60 Fed. Reg. at 46695 n.3. Thus, the RCRA bright-line test for foreclosing lenders remains in effect. 117 42 U.S.C. 9607(n). 118 Generally powers of a trustee are greater and broader than those of an executor or conservator. Actions of a trustee require court approval in fewer instances. The trustee obtains written title by the very trust instrument itself. CERCLA owner liability can extend to conservators and executors so long as they hold adequate indicia of ownership over and above bare legal title. Bare legal title is not enough to impose CERCLA owner liability on a duciary. Other factors must be considered in determining this issue. As a result, one court held that conservators and executors must not only hold bare legal title, but must possess other indicia of ownership. Castlerock Estates v. Estate of Markham, 871 F. Supp. 360 (N.D. Cal. 1994). 119 42 U.S.C. 9607(n)(5)(A)(ii)(I). 120 42 U.S.C. 9607(n)(5)(A)(ii)(II). Trustees of an Illinois land trust are not owners under CERCLA, even though they hold legal title. United States v. Petersen Sand and Gravel, Inc., 806 F. Supp. 1346, 1359 (N.D. Ill. 1992). 121 183 F.3d 1269 (11th Cir. 1999). 122 It is unclear if a duciary who fails to respond to a release of hazardous substances can still take advantage of the duciary safe harbor. Thus, a duciary with knowledge of a release may want to consider authorizing response actions to address any such release or threatened release since such actions will not expose the duciary to liability, and the failure to take such action might amount to negligence that could expose the duciary to personal liability. E1527 13 32
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. for one of the so-called affirmative defenses. 123 These listed affirmative defenses are exclusive of other common law defenses that a defendant might be able to assert. 124 X1.2.1 Third Party DefenseThe most commonly asserted defense is that the release is attributable to the acts or omissions of a third party. 125 To successfully assert this defense, a party must establish the following four elements: X1.2.1.1 The release of the hazardous substance was caused solely by a third party, X1.2.1.2 The third party is not an employee or agent of the defendant, or the acts or omissions of the third party did not occur in connection with a direct or indirect contractual relationship with the defendant; X1.2.1.3 The defendant exercised due care with respect to the hazardous substances (Due Care Element), 126 and X1.2.1.4 The defendant took precautions against foresee- able acts or omissions of the third party (Precaution Ele- ment). 127 X1.2.1.5 The Third Party Defense does not require that the landowner perform pre-acquisition all appropriate inquiries. 128 Of course, if the defendant has a direct or indirect contractual relationship with the person solely responsible for the release, it would have to comply with the all appropriate inquiries rule to assert the innocent landowner defense (see below). X1.2.2 Innocent Landowner Defense (ILO)The second element of the third party defense prohibits the defendant from having a direct or indirect contractual relationship with the person solely responsible for the release. A contractual rela- tionship encompasses land contracts, deeds or other instru- ments transferring title or possession. 129 (1) In the early days of CERCLA, a number of courts broadly construed the meaning of this phrase so that it encompassed nearly every contractual arrangement transfer- ring title or possession of land such as a purchase agreement or lease. 130 For example, a deed was held to serve as an indirect contractual relationship that could prevent a property owner from asserting the third party defense. 131 As a result, it was difficult for purchasers or landowners to assert this defense in jurisdictions adopting this view since a landowner could only effectively invoke the defense if the release was a result of acts of trespassers, or adjacent landowners, and then only if the landowner exercised due care. 132 (2) Because of this harsh impact on owners who did not cause the contamination, Congress enacted the ILO defense in 1986 to exclude from the phrase in connection with a 123 Section 9607(b) provides that a party shall not be liable if it can establish by a preponderance of the evidence [meaning more probable than not] that the release or threat of release of a hazardous substance and the damages resulting therefrom were caused by (1) an act of God; (2) an act of war; (3) the third party defense(discussed below). 42 U.S.C. 9607(b). The Contiguous Property Owner (CPO) liability protection of 42 U.S.C. 9607(q) and the Bona Fide Prospective Purchaser (BFPP) liability protection of 42 U.S.C. 9607(r) are not contained within the affirmative defenses of 107(b) so they are discussed separately. 124 United States v. Aceto Agricultural Chemicals Corp., 872 F.2d 1373 (8th Cir. 1989). But see United States v. Marisol, Inc., 725 F. Supp. 833 (M.D. Pa. 1989) (equitable defenses under Superfund may be available after the development of a factual record). The equitable defenses may be considered by the court when resolving or apportioning contribution claims under 42 U.S.C. 9613(f). AT&T Global Info. Solutions Co. v. Union Tank Car Co., 1997 U.S. Dist. LEXIS 6090 (S.D. Ohio Mar. 31, 1997). 125 42 U.S.C. 9607(b)(3). 126 CERCLA does not indicate what types of actions would constitute the exercise of due care that would satisfy the third party defense. The legislative history indicates that a person must demonstrate that their actions were consistent with those that a reasonable and prudent person would have taken in light of all relevant facts and circumstances. H.R. Rep. No. 253, 99th Cong., 2d Sess. 187 (1986). The due care requirement has been interpreted to include those steps necessary to protect the public from a health or environmental threat. State of New York v. Lashins Arcade, 91 F.3d 353 (2d Cir. 1996). Because a persons actions will be evaluated based on the relevant facts and circumstances, the due care analysis is a fact-intensive inquiry and will be evaluated on a case-by-case basis. Foster v. United States, 922 F. Supp. 642 (D.D.C. 1996). In one case, the owner of a shopping center was able to demonstrate that it exercised due care because it took steps such as maintaining water lters, sampling drinking water, instructing tenants to avoid discharging into the septic system, inserting institutional and land use controls into leases and conducting periodic inspections. Lashins, 91 F.3d 353. At the other extreme are the cases that hold that a person who does not take any affirmative measures will not be able to satisfy its due care obligations. See United States v. DiBiase, 45 F.3d 541 (1st Cir. 1995); Kerr-McGee Chem. Corp. v. Lefton Iron & Metal Co., 14 F.3d 321 (7th Cir. 1994). 127 United States v. A & N Cleaners & Launderers, Inc., 854 F. Supp. 229, 239 (S.D.N.Y. 1994). Like the Due Care Element, the Precaution Element will be evaluated on a case-by-case basis. In one case, a municipal sewer authority was found to have failed to take adequate precautions when it knew that a dry cleaner discharged PCE into the sewer system and that there were cracks in its sewer pipes, had the power to abate foreseeable release of PCE and failed to exercise that power. Westfarm Associates Ltd. Pshp. v. Washington Suburban Sanitary Commn, 66 F.3d. 669 (4th Cir. 1995) (despite this knowledge, the county did not repair its pipes or prohibit the discharge of PCE into its system). 128 Town of New Windsor v. Tesa Tuck, Inc., 935 F. Supp. 310 (S.D.N.Y. 1996) (landowner established the Third Party Defense despite having not taken steps to discover the contamination at its property from the encroachment of a neighboring landll).Of course, it might be difficult to satisfy the Due Care and Precaution Elements of the third party defense in the absence of any due diligence. Indeed, some courts have held in the context of what constitutes due care that the failure to inquire about past environmental practices may constitute a lack of due care on the grounds that Congress intended CERCLA to provide incentives for private parties to investigate potential sources of contamination and initiate remediation efforts. United States v. A & N Cleaners & Launderers, 842 F. Supp. 1543 (failure to inquire about past use of oor drain, not communicating with local environmental authorities or inquiring about environmental compliance of commercial tenants). Other courts have held that CERCLA does not sanction willful or negligent blindness. Westfarm Associates Ltd. Pshp. v. Washington Suburban Sanitary Commn, 66 F.3d. 669 (4th Cir. 1995); United States v. Monsanto, 858 F.2d. 160; United States v. Shore Realty, 759 F.2d 1032. 129 42 U.S.C. 9601(35)(A). 130 See State of New York v. Shore Realty Corp., 759 F.2d 1032 (2d Cir. 1985); United States v. Pacic Hide & Fur Depot, Inc., 716 F. Supp. 1341 (D. Idaho 1989); United States v. Northernaire Plating Co., 670 F. Supp. 742 (W.D. Mich. 1987); United States v South Carolina Recycling and Disposal, Inc., 653 F. Supp. 984 (D.S.C. 1984). 131 United States v. Occidental Chemical Corp., 965 F. Supp. 408 (W.D.N.Y. 1997). 132 An exception to this trend was State of New York v. Lashins Arcade, 91 F.3d 353 (2d Cir. 1996) where the Second Circuit allowed the current owner/purchaser of a shopping center to invoke the third-party defense even though it knew of contamination because the current owner had no contractual relationship with a former dry cleaner tenant who had discharged hazardous substances into the ground 15 years prior to the current owners acquisition. In addition, the property owner took proactive steps to minimize exposure to the contamination. Compare Lashins conduct to the purchaser/owner in Idylwoods Associates v. Mader Capital Inc., 956 F. Supp. 410 (W.D.N.Y. 1997). E1527 13 33
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. contractual relationship purchasers who conducted an appro- priate inquiry into the past use and ownership of the property, and did not know or have reason to know of any releases as a result of that investigation. 133 (3) Following the enactment of the ILO defense, some courts began holding that the mere existence of a contractual relationship was not sufficient to defeat the third party defense and began looking into the purpose of the contractual relation- ship to see if it related to the hazardous substances that had impacted the property or if the contract allowed the landowner to assert some level of control over the third partys activities at the site. 134 X1.2.2.1 Pre-Acquisition Obligations of ILOThe ILO de- fense is actually a component of the third party defense. It provides that a purchaser will not be considered to have a contractual relationship if at the time the defendant acquired the facility the defendant did not know and had no reason to know that any hazardous substance which is the subject of the release was disposed of on, in, or at the facility. 135 To establish that the defendant did not know and had no reason to know of the hazardous substance with respect to the property, the defendant must show that it undertook all appropriate inqui- ries into the past ownership and uses of the property in accordance with generally accepted good commercial and customary standards and practices. 136,137 X1.2.2.2 Post-Acquisition Obligations of the ILOBecause the ILO defense is part of the Third Party Defense, a defendant would still have to comply with the Due Care and Precaution- ary Elements of the Third Party Defense after learning of the release of the hazardous substance. 138 (1) In addition, following the 2002 CERCLAAmendments, a person seeking to assert the ILO defense must after acquiring the property: (a) cooperate, assist, and provide access to persons that are authorized to conduct response actions or natural resource restoration at the property; (b) comply with any land use restrictions established or relied on in connection with the response action at a vessel or facility; and (c) must not impede the effectiveness or integrity of any institutional control employed at the vessel or facility in connection with a response action. 139 (2) Finally, the defendant must take reasonable steps to: (a) stop any continuing release; (b) prevent any threatened future release; and (c) prevent or limit any human, environmental, or natural resources exposure to any previously released hazardous substance. 140 X1.2.3 BeneciariesPersons who acquire title by inheri- tance or bequest will not be considered to be in a contractual relationship and will be able to assert the Third Party Defense if they comply with the Due Care and Precaution Elements of the Third Party Defense and the same post-acquisition obliga- tions as those required by the ILO defense. 141 X1.2.4 State and Local GovernmentsCERCLA contains two exemptions for state or local governmental units that acquire ownership or control involuntarily by virtue of their function as sovereigns. The rst exemption is from the deni- tion of owner or operator and applies to involuntary acquisi- tions or control of property through the bankruptcy, tax delinquency, abandonment, or other circumstances in which the government involuntarily acquires title by virtue of its function as sovereign. However, this exclusion does not apply 133 42 U.S.C. 9601(35)(A). 134 State of New York v. Lashins Arcade, 91 F.3d 353 (2d Cir. 1996); Westwood Pharmaceuticals, Inc. v. National Fuel Gas Distribution, 964 F.2d 85 (2d Cir. 1992) (requiring some relationship between the contractual relationship and the disposal or release). See also, CERCLA Enforcement Discretion Guidance Regarding the Affliation Language of CERCLAs Bona Fide Prospective Purchaser and Contigu- ous Property Owner Liability Protections Memorandum from Elliot Gilberg, Director of Office of Site Remediation Enforcement, Environmental Protection Agency to Regional Counsel of EPA (Sept. 21, 2011). 135 42 U.S.C. 9601(35)(A)(i). 136 42 U.S.C. 9601(35)(B)(i)(I). The 2002 CERCLAAmendments required EPA to promulgate a regulation establishing the requirements for conducting all appropriate inquiries (AAI). 42 U.S.C. 9601(35)(B)(ii). The 2002 CERCLA Amendments also provided that property owners who acquired commercial property before May 31, 1997 would have to establish that they complied with the statutory criteria for the ILO defense that had been in effect prior to the 2002 CERCLA Amendments. These criteria were: any specialized knowledge or experience on the part of the defendant; the relationship of the purchase price to the value of the property, if the property was not contaminated; commonly known or reasonably ascertainable information about the property; the obviousness of the presence or likely presence of contamination at the property; and the ability of the defendant to detect the contamination by appropriate inspection (1986 AAI). 42 U.S.C. 9601(35)(B)(iv)(I). Persons who acquired commercial property after May 31, 1997 would have to demonstrate compliance with the interim federal AAI standard until EPA promulgated its AAI Rule. 42 U.S.C. 9601(35)(B)(iv)(II). While a draft AAI Rule was under development, EPAclaried that persons who purchased or occupied property on or after May 31, 1997 would have to demonstrate compliance with the Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process ASTM E1527-00 or the earlier 1997 version (ASTM E1527- 97). 68 Fed. Reg. 24888 (May 9, 2003). EPA promulgated its AAI Rule on November 1, 2005. Standards and Practices for All Appropriate Inquiries, 70 Fed. Reg. 66069 (Nov. 1, 2005). Beginning November 1, 2006, a party seeking to establish the ILO defense must show that it has complied with the requirements of EPAs AAI Rule. 40 C.F.R. 312. EPA has also announced that environmental site assessments consistent with ASTM E1527-05 and E2247-08 would be considered to be in compliance with the nal AAI Rule. See 40 C.F.R. 312.11. EPAhas proposed the same determination with respect to E1527-13. 78 Fed. Reg. 49714 (Aug. 15, 2013). 137 This practice is limited to commercial real estate transactions. However, CERCLAdoes provide all appropriate inquiries requirements for residential or other similar use at the time of purchase by a nongovernmental or noncommercial entity. A facility inspection and title search that reveal no basis for further investigation shall be considered to satisfy the all appropriate inquiries requirements. 42 U.S.C. 9601(35)(B)(v). 138 42 U.S.C. 9601(35)(A). 139 42 U.S.C. 9601(35)(A). 140 42 U.S.C. 9601(35)(B)(i)(II). 141 42 U.S.C. 9601(35)(A)(iii). E1527 13 34
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. if the government entity contributed or caused the release of hazardous substances. 142 X1.2.4.1 The second state or local government liability exemption is contained within the exclusion for contractual relationships for the third party defense. This exemption contains slightly different language than the owner or opera- tor exemption as it applies to a government entity which acquired a facility by escheat, or through any other involuntary transfer or acquisition, or through the exercise of eminent domain authority by purchase or condemnation. 143 A govern- ment unit seeking to rely on this exemption would have to comply with the Due Care and Precautionary Elements of the Third Party Defense to maintain their liability protection. X1.3 Landowner Liability ProtectionsThe 2002 CER- CLA Amendments added two new landowner liability protec- tions (LLPs) to CERCLA liability. X1.3.1 Bona Fide Prospective Purchaser (BFPP) 144 The BFPP is a signicant LLP because it allows a purchaser to acquire property with knowledge that it is contaminated. The BFPP liability protection applies to purchasers (and their tenants) that acquire ownership of a facility after January 11, 2002. 145 Unlike the ILO defense, a party that qualies as a BFPP is by denition not a responsible party. 146 X1.3.1.1 Pre-Acquisition RequirementsTo qualify as a BFPP, a person must satisfy the following pre-acquisition criteria prior to acquiring title: (i) all disposal of hazardous substances at the facility occurred before the person acquired the facility; 147 (ii) the person conducted all appropriate inquiries 148 and (iii) the person is not a PRP or affiliated with any other PRP for the property through any direct or indirect familial relationship, any contractual, corporate or nancial relationship, 149 or as a result of a reorganization of a business entity that was a PRP. 150 X1.3.1.2 Post-Acquisition ObligationsA BFPP must also comply with the following continuing obligations after taking title to the property: (1) provide all legally required notices with respect to the discovery or release of any hazardous substances at the facility; 151 (2) exercise appropriate care with respect to hazardous substances by taking reasonable steps to stop any continuing release; prevent any threatened future releases; and prevent or limit human, environmental, or natural resource exposure to any previously released hazardous substance; 152 (3) provide full cooperation, assistance, and access to persons who are authorized to conduct response actions or natural resource restoration (including the cooperation and access necessary for the installation, integrity, and maintenance of any complete or partial response actions or natural resource restoration; 153 (4) comply with any land use restrictions established or relied on in connection with the response action, and not impede the effectiveness or integrity of any institutional control employed at the vessel or facility in connection with a response action; 154 and (5) comply with any request for information or administra- tive subpoena issued under CERCLA. 155 ASTM has issued a guide to assist users in satisfying post-acquisition continuing obligations. 156 X1.3.2 The Contiguous Property Owner (CPO) Liability Protection 157 This LLP excludes from the denition of a 142 42 U.S.C. 9601(20)(D). Courts have not consistently interpreted the reference to taking title to a facility by the exercise of eminent domain. Some courts have held that the exemption applies to municipalities that assert their eminent domain authority but reach an agreement to purchase the property without having to resort to judicial proceedings. City of Emeryville v. Elements Pigments, Inc., 2001 U.S. Dist. LEXIS 4712 (N.D. Ca. Mar. 7, 2001). Other courts have ruled that a local government will not be entitled to the liability protection unless the land is purchased pursuant to a judicial proceeding. See City of Toledo v. Beazer Materials and Services, Inc., 923 F. Supp. 1013 (N.D. Ohio. 1996). Some have also examined if the purchase was voluntary. See United States v. Occidental Chem. Corp., 965 F. Supp. 408 (N.D.N.Y. 1997) (City of Niagara Falls was held to have voluntarily acquired title to Love Canal area.); City of Petoskey v. Oxy USA, Inc., 1996 U.S. Dist. LEXIS 22640 (W.D. Mich. Feb. 6, 1996) (city that purchased site for use as a municipal park as part of a waterfront redevelopment project was performing a governmental function but purchase was not involuntary transfer); Transportation Leasing Co. v. California, 861 F. Supp. 931 (C.D. Cal. 1993) (exclusion did not apply to state government that voluntarily acquired land by eminent domain to build a freeway). In re Sundance Corp., 149 B.R. 641 (E.D. Wash.1993), a court- appointed receiver was held to fall within the protection afforded by this section under derivative judicial immunity theory as an officer of court performing judicial functions. 143 42 U.S.C. 9601(35)(A)(ii). 144 42 U.S.C. 9601(40). 145 The BFPP LLP could result in the owner becoming subject to a windfall lien for unrecovered response costs against an increase in value of the property due to cleanup. 42 U.S.C. 9607(r). 146 42 U.S.C. 9607(r)(1). 147 42 U.S.C. 9601(40)(A). 148 42 U.S.C. 9601(40)(B). 149 42 U.S.C. 9601(40(H)(i)(II) narrows the potential scope of the phrase contractual, corporate or nancial relationship. It excludes any such relationship that is created by an instrument by which title to a facility is conveyed or nanced, or by a contract for the sale of goods or services. 150 42 U.S.C. 9601(40)(H). Note that the ILO defense does not include the no affiliation language. Also note that in Ashley II of Charleston LLC v. PCS Nitrogen, Inc., 791 F. Supp 2d 431 (D.S.C. 2011), affd on other grounds, 714 F.3d 161 (4th Cir. 2013), cert. denied, 571 U.S. ___ (Nov. 4, 2013), a federal district ruled that a plaintiff had an inappropriate affiliation when it indemnied the seller of contami- nated property and then sought to discourage EPA from bringing an enforcement action against the seller/indemnitee. 151 42 U.S.C. 9601(40)(C). 152 42 U.S.C. 9601(40)(D). 153 42 U.S.C. 9601(40)(E). 154 42 U.S.C. 9601(40)(F). 155 42 U.S.C. 9601(40)(G). 156 ASTM E2790-11. 157 42 U.S.C. 9607(q). E1527 13 35
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. CERCLA owner or operator, a landowner whose property has been impacted solely by a release from a source located at real property that is not owned or operated by the person and that is contiguous to or otherwise similarly situated to the impacted property. 158 X1.3.2.1 No Knowledge of ContaminationUnlike a BFPP, a CPO must not know or have reason to know following performance of all appropriate inquires that their property was or could be contaminated by the adjacent or contiguous real property. 159 X1.3.2.2 Pre-Acquisition RequirementsTo satisfy this LLP, the property owner must show that (i) it did not cause, contribute, or consent to the release; (ii) the person is not a PRP or affiliated with any other PRP; 160 and (iii) the person conducted all appropriate inquiries. 161 X1.3.2.3 Post-Acquisition ObligationsA CPO must com- ply with the so-called Continuing Obligations after taking title to maintain the CPO LLP. These Continuing Obligations are: (1) taking reasonable steps to stop any continuing release; prevent any threatened future release; and prevent or limit human, environmental, or natural resource exposure to any hazardous substance released on or from property owned by that person; 162 (2) provide full cooperation, assistance, and access to persons that are authorized to conduct response actions or natural resource restoration at the facility from which there has been a release or threatened release (including the cooperation and access necessary for the installation, integrity, operation, and maintenance of any complete or partial response action or natural resource restoration at the facility); 163 (3) comply with any land use restrictions established or relied on in connection with the response action at the facility; 164 (4) not impede the effectiveness or integrity of any institu- tional control employed in connection with a response ac- tion; 165 (5) comply with any request for information or administra- tive subpoena issued by EPA; 166 and (6) provide all legally required notices with respect to the discovery or release of any hazardous substances at the facility. 167 X1.4 EPA Common Elements Guidance: X1.4.1 In 2003, EPA issued interim guidance (Common Elements Guidance) interpreting the obligations that parties must satisfy to qualify for the CERCLALLPs. 168 The guidance identies two initial threshold criteria that a party must satisfy at the time it takes title to or possession of the property. 169 The guidance then discussed ve Continuing Obligations that landowners or building occupants must 158 EPA has issued guidance explaining its views on the CPO. See Interim Enforcement Discretion Guidance Regarding Contiguous Property Owners, Memo- randum from the USEPA Office of Enforcement and Compliance Assurance (Jan. 2004). In addition, EPA issued policies that preceded the CPO but may still reect how the agency will exercise its enforcement discretion since the CPO was based on these policies. See Final Policy Towards Owners of Property Containing Contami- nated Aquifers, Memorandum from Bruce Diamond, Director of Office of Site Remediation Enforcement Environmental Protection Agency (May 24, 1995); and Policy Towards Owners of Residential Property at Superfund Sites, Memorandum from U.S. Environmental Protection Agency Office of Solid Waste and Emergency Response to Regional Administrators (July 3, 1991). 159 42 U.S.C. 9607(q)(1)(A)(viii)(II). A person that does not qualify for the CPO because it knew or should have known that its property was impacted by an off-site source may still qualify for the BFPP LLP. 42 U.S.C. 9607(q)(1)(C). 160 42 U.S.C. 9607(q)(1)(A)(ii)(I)-(II). The improper affiliation includes any direct or indirect familial relationship or any contractual, corporate, or nancial relationship (other than a contractual, corporate, or nancial relationship that is created by a contract for the sale of goods or services), or the result of a reorganization of a business entity that was potentially liable. Note that in Ashley II of Charleston v PCS Nitrogen, Inc., 791 F. Supp. 2d 431 (D.S.C. 2011), affd on other grounds, 714 F.3d 161 (4th Cir. 2013), cert. denied, 571 U.S. ___ (Nov. 4, 2013), a federal district court ruled that a plaintiff had an inappropriate affiliation when it indemnied the seller of contaminated property and then sought to discourage EPA from bring an enforcement action against the seller/indemnitee. 161 42 U.S.C. 9607(q)(1)(A)(viii)(I). 162 42 U.S.C. 9607(q)(1)(A)(iii). 163 42 U.S.C. 9607(q)(1)(A)(iv). 164 42 U.S.C. 9607(q)(1)(A)(v)(I). 165 42 U.S.C. 9607(q)(1)(A)(v)(II). 166 42 U.S.C. 9607(q)(1)(A)(vi). 167 42 U.S.C. 9607(q)(1)(A)(vii). 168 Interim Guidance Regarding Criteria Landowners Must Meet In Order to Qualify for the Bona Fide Prospective Purchaser, Contiguous Property Owner or Innocent Landowner Limitations on CERCLA Liability (Common Elements Guidance), Memorandum from Susan E. Bromm, Director of Site Remediation Enforcement, Environmental Protection Agency (March 6, 2003). Note that this document like other informal documents issued by EPA without formal rulemaking is not a regulation and does not have the force of law. Thus, it does not impose legal duties or obligations on landowners. Instead, it is EPAs interpretation of some of the Continuing Obligations and a court can choose to adopt or ignore EPAs interpre- tation. E1527 13 36
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. continue to satisfy following acquisition or possession to maintain a defense to liability. 170,171 X1.4.2 In its Common Elements Guidance, EPA indicated that the due care case law of the CERCLA Third Party Defense provides a reference point for evaluating the reason- able steps requirement. The guidance goes on to state that when courts have examined the due care requirement in the context of the pre-existing innocent landowner defense, they have generally concluded that a landowner should take some positive or affirmative step(s) when confronted with hazardous substances on its property. Based on the similarity in concepts, it would appear that the kinds of actions that owners and operators of properties must take to satisfy the reasonable steps obligations of the ILO, BFPP and CPO liability protec- tions will probably be similar to those required under the due care obligation of the Third Party Defense. X1.5 All Appropriate Inquiries: X1.5.1 As noted above, a prerequisite for each of the LLPs is that the owner conduct all appropriate inquiries into the previous ownership and uses of the target property in accor- dance with generally accepted good commercial and customary standards and practices as established by EPA before acquir- ing title to property. The purpose of the pre-acquisition AAI is to determine if there has been a release of hazardous substances of on, in, or at the property. 172 X1.5.2 Prior to the 2002 CERCLA Amendments, persons seeking to qualify for the ILO had to demonstrate compliance with the ve statutory criteria added to CERCLA in 1986 (1986 AAI). In the 2002 CERCLA Amendments, Congress 169 The rst threshold criterion is that the landowner conducts all appropriate inquiries. The second threshold criterion is that a party must not be potentially liable or affiliated with a potentially responsible party, or any other person who is potentially liable for response costs. The Common Elements Guidance acknowl- edged that the 2002 CERCLA Amendments did not dene the phrase affiliated with and that the term affiliation could be broadly interpreted, EPAsuggested that Congress intended to prevent a party from contracting away its liability through a transaction with a family member or related corporate entity. In Ashley II of Charleston v PCS Nitrogen, Inc., 791 F. Supp. 2d 431 (D.S.C. 2011), affd on other grounds, 714 F.3d 161 (4th Cir. 2013), cert. denied, 571 U.S. ___ (Nov. 4, 2013), a federal district court ruled that a plaintiff had an inappropriate affiliation when it indemnied the seller of contaminated property and then sought to discourage EPA from bringing an enforcement action against the seller/indemnitee. It is unclear if a tenant who takes possession of property after the January 11, 2002 effective date of the 2002 CERCLA Amendments can qualify for the BFPP defense if the owner of the property is a PRP who held title prior to that date. In 2012, EPA issued guidance on the applicability of the BFPP protection to tenants who lease contaminated or formerly contaminated properties, and how EPA intends to exercise its enforcement discretion to treat certain tenants as BFPPs under CERCLA. See Revised Enforcement Guidance Regarding the Treatment of Tenants Under the CERCLA Bona Fide Prospective Purchaser Provision Memorandum from Cynthia Giles and Mathy Stanislaus to Regional Administrators (Dec. 5, 2012) (available at: http://www.epa.gov/enforcement/cleanup/documents/policies/ superfund/tenants-bfpp-2012.pdf). 170 The Common Elements Guidance only addresses ve of the continuing obligations that a landowner must satisfy. The rst Continuing Obligation addressed by the Common Elements Guidance was complying with land use restrictions and institutional controls (Land Use Restrictions and Institutional Controls). EPA, Common Elements Guidance at 6-8. Note that the Common Elements Guidance uses the statutory language Land Use Restrictions and Institutional Controls in whole or in part. ASTM uses the phrase Activity and Use Limitations or AULs. The EPA language is used in the summary below. The Common Elements Guidance indicated that the landowners seeking to qualify for the CERCLA liability protection must comply with Land Use Restric- tions and Institutional Controls relied on in connection with the response action even if the Land Use Restrictions and Institutional Controls were not in place at the time the person purchased the property or have not been properly implemented. According to the Common Elements Guidance, a land use restriction may be considered relied on when the restriction is identied as a component of the remedy. EPA noted that an institutional control may not serve the purpose of implementing a land use restriction if it was not implemented, the party responsible for enforcement of the institutional controls neglects to take sufficient measures to bring those persons into compliance or a court nds the controls to be unenforceable. For example, a remedy might rely on an ordinance that prevents groundwater from being used as drinking water but the local government may fail to enact the ordinance, change the ordinance to allow a use prohibited by the remedy (e.g., drinking water use), or fail to enforce the ordinance. In such circumstances, the guidance indicates that a landowner or person using the property will still be required to comply with the groundwater use restriction to maintain its liability protection. If the owner/operator fails to comply with a land use restriction relied on in connection with a response action, the EPA indicated that it might use its CERCLA authority to order the owner to remedy the violation or may remedy the violation itself and seek cost recovery from the owner/operator. The guidance suggested that a party could be deemed to be impeding the effectiveness or integrity of an institutional control without actually physically disturbing the land. Examples cited by EPA included removing a notice that was recorded in the land records, failing to provide a required notice of the existence of institutional controls to a future purchaser of the property, and applying for a zoning change or variance when the current designated use of the property was intended to act as an institutional control. However, EPA acknowledged that some Land Use Restrictions and Institutional Controls may not need to remain in place in perpetuity, and that an owner may seek to change any restrictions or controls provided it follows procedures required by the applicable regulatory agency. 171 The second Continuing Obligation addressed by the guidance was the appropriate care requirement. The guidance document states that a reasonable steps determination will be a site-specic, fact-based inquiry that will have to take into account the different elements of the landowner liability protections. The guidance also indicated the obligations may differ for landowners depending on the defense they are relying on because of the differences among the three statutory provisions. For example, while each defense requires the owner/operator to conduct an appropriate inquiries, only a BFPP may purchase with knowledge. Thus, the reasonable steps required of a BFPP may differ from those of the other protected landowner categories who did not have knowledge prior to purchase. Thus, a BFPP arguably has greater responsibility than an ILO because the BFPP knows about the contamination. The due care caselaw seems to suggest that while a protected party discovering contamination may not be required to undertake a full environmental investigation, doing nothing in the face of a known or suspected environmental hazard would likely be insufficient. It would appear, then, that there may be some circumstances where the reasonable steps required of a party seeking to maintain one of the LLPs may be akin to those of a PRP at least where the only remaining response action is implementation and maintenance of institutional or engineering controls. For the complying with requests requirement of the Continuing Obligation, the guidance indicates that EPA expects timely, accurate, and complete responses from all recipients of section 104(e) information requests. As an exercise of its enforcement discretion, EPA may consider a person who has made an inconsequen- tial error in responding (e.g., the person sent the response to the wrong EPA address and missed the response deadline by a day) a BFPP as long as the landowner also meets the other conditions of the applicable landowner liability protection. For the Continuing Obligation to provide all the legally required notices involving the discovery or release of any hazardous substances at the facility, the agency indicated that legally required notices might include those required under federal, state, and local laws. Thus, a landowner would not only have to make individual federal notications for each response program having jurisdiction over the release but also comply with all individual state and local reporting require- ments. The BFPP will have the burden of ascertaining what notices are legally required in a given instance and of complying with those notice requirements. However, to try to ease the reporting burden obligation, the guidance indicated that regional offices may allow a BFPP to provide all legally required notices within a certain number of days of purchasing the property. The self-certications may be in the form of a letter signed by the landowner as long as the letter is sufficient to satisfy EPA that applicable notice requirements have been met. Readers may also consult ASTM E2790-11 Standard Guide for Identifying and Complying with Continuing Obligations. 172 42 U.S.C. 9601(35)(A)(i). E1527 13 37
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. added to the statutory criteria. The ten criteria are listed below with 1986 placed in parenthesis next to the original 1986 statutory criteria: X1.5.2.1 the results of an inquiry by an environmental professional; X1.5.2.2 interviews with past and present owners, operators, and occupants of the facility for the purpose of gathering information regarding the potential for contamina- tion at the facility; X1.5.2.3 reviews of historical sources, such as chain-of-title documents, aerial photographs, building department records, and land use records, to determine previous uses and occupan- cies of the real property since the property was rst developed; X1.5.2.4 searches for recorded environmental cleanup liens against the facility that are led under Federal, State, or local law; X1.5.2.5 reviews of Federal, State and local governmental records, waste disposal records, underground storage tank records, and hazardous waste handling, treatment, disposal and spill records, concerning contamination at or near the facility; X1.5.2.6 visual inspections of the facility and of adjoining properties (1986); X1.5.2.7 specialized knowledge or experience on the part of the defendant (1986); X1.5.2.8 the relationship of the purchase price to the value of the property, if the property was not contaminated (1986); X1.5.2.9 commonly known or reasonably ascertainable information about the property (1986); and X1.5.2.10 the degree of obviousness of the presence or likely presence of contamination at the property, and the ability to detect contamination by appropriate investigation (1986). 173 X1.5.3 To further clarify the scope of all appropriate inquiries, Congress instructed EPA to promulgate regulatory standards and practices for carrying out all appropriate inqui- ries. 174 The 2002 CERCLA Amendments also provided that property owners who acquired commercial property before May 31, 1997 would have to establish that they complied with the 1986 AAI. 175 X1.5.4 The purpose of E1527 is to set forth a practice that constitutes all appropriate inquiries into the previous owner- ship and uses of the property consistent with good commercial and customary practice as dened at 42 U.S.C. 9601(35)(B). 176 The goal of E1527 is to identify the presence or likely presence of any hazardous substances or petroleum products on a property under conditions that indicate an existing release, a past release, or a material threat of a release of any hazardous substances or petroleum products into structures on the property or into the ground, groundwater, or surface water of the property. 177 E1527 labels the presence or likely presence of a hazardous substance (or petroleum prod- ucts) as a Recognized Environmental Condition (REC). 178 In other words, the environmental professionals determination pursuant to an AAI procedure that a hazardous substance (or petroleum) from a release is or is likely to be present at the property in a non-de minimis condition results in the identi- cation of a REC under E1527. Although many of the specic steps set forth in AAI are prescriptive, 179 the rule clearly requires the exercise of professional judgment by the Environ- mental Professional who conducts the inquiry as guided by the objectives and performance standards of the AAI rule. 180 X1.6 Case Law Interpretation of All Appropriate Inqui- ries in Commercial Real Estate Transactions: X1.6.1 The vast body of case law interpreting the param- eters of all appropriate inquiries pre-date the 2002 CERCLA Amendments. 181 EPA indicated in its Common Elements 173 42 U.S.C. 9601(35)(B)(iii). 174 42 U.S.C. 9601(35)(B)(ii). In the preamble to its AAI rule, USEPA said that AAI was legally distinct from the more general concepts or processes of environmental site assessment and environmental due diligence. 70 Fed. Reg. 66069, 66072 (Nov. 1, 2005). 175 42 U.S.C. 9601(35)(B)(iv)(I). Persons who acquired commercial property after May 31, 1997 and who sought LLPs were required to have complied with the interim federal AAI standard until EPApromulgated its AAI Rule. See footnote 122, infra. 176 E1527-13, Section 1.1. 177 E1527-13, Section 1.1.1. Note that E1527-13 includes petroleum and is not limited to CERCLA hazardous substances. See Section 1.1.2 of E1527-13 that explains that E1527-13 includes petroleum products because they are a concern in assessing real estate, but not because of any applicability of CERCLA to petroleum products. 178 E1527-13, Section 1.1.1. Because CERCLA does not contain any exclusion for minor spills, the REC denition is not necessarily congruent with the denition of a CERCLArelease. For example, there could be a spill or discharge of hazardous substance that would satisfy the CERCLA liability element of a release but would not qualify as a REC if the contamination does not exceed applicable cleanup levels. Under such a circumstance, the contamination could be considered a de minimis condition since it would not likely result in an enforcement action if brought to the attention of regulators. Likewise, the REC denition also refers to conditions indicating the existence of a material threat of a release. Again, CERCLA liability does not have a materiality requirement to satisfy the release element for CERCLA. Of course, a release that does not result in contamination that exceeds applicable cleanup standards will not likely result in signicant response costs though some investiga- tion might be required to make that determination. Under a strict reading of CERCLA, the absence of a REC might not necessarily mean that the owner or operator of the property under evaluation would be immune from CERCLAliability albeit not likely to be signicant. However, EPAdetermined that this practice is the equivalent of AAI. Thus, a landowner who conducts an investigation consistent with this practice that does not identify any RECs and otherwise complies with the other requirements of AAI might be able to satisfy the ILO or CPO notwithstanding the lack of congruence between the denition of a CERCLA release and a REC. 179 For example, see 312.21 (an inquiry by an environmental professional), 312.22 (collection of certain required information), and 312.25 (searches for recorded environmental cleanup liens). 180 40 C.F.R. 312.20(e) and (f). EPAdiscussed the importance of the objectives and performance standards in the Preamble to the AAI Final Rule, 70 Fed. Reg. 66070, 66101 (Nov. 1, 2005): After collecting and considering all the information required to comply with the rules objectives and performance standards, all the information should be considered in total to determine whether or not there are indications of releases or threatened releases of hazardous substances on, at, in, or to the property. 181 As of mid-2012, only one case has directly addressed AAI. Unfortunately, the court opinion in Ashley II of Charleston v PCS Nitrogen, Inc., 791 F. Supp. 2d 431 (D.S.C. 2011), affd on other grounds, 714 F.3d 161 (4th Cir. 2013), cert. denied, 571 U.S. ___ (Nov. 4, 2013), did not provide a detailed analysis. In this case, the plaintiff performed a phase 1 that was certied to have met the AAI. The defendant claimed there were some inconsistencies between phase I reports commissioned by Ashley and ASTM E1527. The court simply held that any such inconsistencies lacked signicance without explaining the alleged inconsistencies between the phase 1 reports and E1527. What was important, the court continued, was that Ashley acted reasonably; it hired an expert to conduct an AAI and relied on that expert to perform its job properly. As a result, the court ruled that Ashley had properly conducted AAI. Id. at 500-01. E1527 13 38
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. Guidance that this older due care case law will inform what constitutes appropriate care or reasonable steps. 182 The older case law involving the Third Party Defense and LLPs is fact-intensive and is inuenced by the particular circumstance of the case. X1.6.2 The courts have said that deciding what constitutes an appropriate inquiry presents a mixed question of law and fact 183 that is to be guided by the statutory language, legislative history and common sense. 184 The duty to make inquiry is judged as of the time of acquisition. Defendants shall be held to a higher standard as public awareness of the hazards associated with releases of hazardous substances has grown, as reected by CERCLA and other federal and state statutes. For pre-2002 acquisitions, good commercial and customary prac- tice has been viewed through a prism of what a reasonable inquiry must have included in all circumstances, in light of best business and land transfer principles. Those engaged in com- mercial transactions should, however, be held to a higher standard than those who are engaged in private residential transactions. 185 X1.6.3 AAI represents the minimum level of inquiry nec- essary to support the LLPs. However, it is important to understand that additional inquiry ultimately may be necessary or desirable for legal as well as business reasons depending upon the outcome of this inquiry and the particular risk tolerances of a user. For example, such additional inquiry may assist the user in determining whether he would have continu- ing obligations in the event he acquires the property and may also assist the user in dening the scope of future steps to be taken to satisfy the obligation to take reasonable steps. In addition, a user may be concerned about Business Environ- mental Risks that do not fall within the denition of a REC. If an investigation performed to the requirements of this practice identies the presence of RECs, the user may desire to conduct additional subsurface investigation (commonly referred to as a Phase II environmental investigation). X1.6.4 The burden of proof for establishing an LLP or Third Party Defense lies with the person seeking to qualify for the liability protection. 186 The person seeking to assert a defense to CERCLA liability must show only that the evidence offered to support the level of inquiry that was taken at the time of acquisition is of greater weight or more convincing than the evidence offered in opposition to it. In other words, the evidence on the inquiry issue taken as a whole shows that the fact sought to be proved is more probable than not. X1.6.5 Finally, it should be noted that as a result of the 2002 CERCLAAmendments and the promulgation of AAI, Practice E1528 (Transaction Screen) does not meet the threshold for all appropriate inquiries. 182 EPA, Common Elements Guidance at 11. 183 Advance Technology Corp. v. Eliskim, Inc. 87 F. Supp.2d 780, 785 (N.D. Ohio 2000). 184 See United States v. Serani, 706 F. Supp. 346 (M.D. Pa. 1988), 791 F. Supp. 107 (M.D. Pa. 1990) (By entertaining disputed facts as to the custom and practice of viewing land prior to purchase, the court implied that appropriate inquiry necessarily varies on a site-by-site basis); United States v. Pacic Hide and Fur Depot, Inc., 716 F. Supp. 1341 (D. Idaho 1989) (No inquiry was required by those who received an ownership interest in property via corporate stock transfer and warranty deed under the facts of this case); International Clinical Laboratories, Inc. v. Stevens, 1990 U.S. Dist. LEXIS 3685 (E.D.N.Y. Jan. 12,1990) (Despite a long history of toxic wastewater disposal and presence of the site on the states hazardous waste disposal site list, the purchaser was able to establish the innocent landowner defense since there were no visible environmental problems at the site, the defendant had no knowledge of environmental problems at the site and the purchase price did not reect a reduction on account of the problem). 185 H.R. Rep. No. 962, 99th Cong., 2d Sess. 187 (1986), reprinted at 1986 U.S.C.C.A.N. 3276, 3280. 186 United States v. Domenic Lombardi Realty, Inc., 290 F. Supp.2d 198 (D.R.I. 2003). E1527 13 39
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. X2. DEFINITION OF ENVIRONMENTAL PROFESSIONAL AND RELEVANT EXPERIENCE THERETO, PURSUANT TO 40 CFR 312.10 X2.1 Environmental Professional X2.1.1 Environmental Professional means: (1) a person who possesses sufficient specic education, training, and experience necessary to exercise professional judgment to develop opinions and conclusions regarding con- ditions indicative of releases or threatened releases (see 312.1(c)) on, at, in, or to a property, sufficient to meet the objectives and performance factors in 312.20(e) and (f). (2) Such a person must: (i) hold a current Professional Engineers or Professional Geologists license or registration from a state, tribe, or U.S. territory (or the Commonwealth of Puerto Rico) and have the equivalent of three (3) years of full-time relevant experience; or (ii) be licensed or certied by the federal government, a state, tribe, or U.S. territory (or the Commonwealth of Puerto Rico) to perform environmental inquiries as dened in 312.21 and have the equivalent of three (3) years of full-time relevant experience; or (iii) have a Baccalaureate or higher degree from an accredited institution of higher education in a discipline of engineering or science and the equivalent of ve (5) years of full-time relevant experience; or (iv) have the equivalent of ten (10) years of full-time relevant experience. (3) An environmental professional should remain current in his or her eld through participation in continuing education or other activities. (4) The denition of environmental professional provided above does not preempt state professional licensing or regis- tration requirements such as those for a professional geologist, engineer, or site remediation professional. Before commencing work, a person should determine the applicability of state professional licensing or registration laws to the activities to be undertaken as part of the inquiry identied in 312.21(b). (5) A person who does not qualify as an environmental professional under the foregoing denition may assist in the conduct of all appropriate inquiries in accordance with this part if such person is under the supervision or responsible charge of a person meeting the denition of an environmental profes- sional provided above when conducting such activities. X2.2 Relevant Experience X2.2.1 Relevant experience, as used in the denition of environmental professional in this section, means: participation in the performance of all appropriate inquiries investigations, environmental site assessments, or other site investigations that may include environmental analyses, investigations, and reme- diation which involve the understanding of surface and sub- surface environmental conditions and the processes used to evaluate these conditions and for which professional judgment was used to develop opinions regarding conditions indicative of releases or threatened releases (see 312.1(c)) to the subject property. E1527 13 40
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. X3. USER QUESTIONNAIRE INTRODUCTION In order to qualify for one of the Landowner Liability Protections (LLPs) 187 offered by the Small Business Liability Relief and Brownelds Revitalization Act of 2001 (the Brownelds Amendments), 188 the user must conduct the following inquiries required by 40 CFR 312.25, 312.28, 312.29, 312.30, and 312.31. These inquiries must also be conducted by EPA Browneld Assessment and Characterization grantees. The user should provide the following information to the environmen- tal professional. Failure to conduct these inquiries could result in a determination that all appropriate inquiries is not complete. X3.1 In addition, certain information should be collected, if available, and provided to the environmental professional conducting the Phase I Environmental Site Assessment. This information is intended to assist the environmental professional, but is not necessarily required to qualify for one of the LLPs. The information includes: (a) the reason why the Phase I is being performed, (b) the type of property and type of property transaction, for example, sale, purchase, exchange, etc., (c) the complete and correct address for the property (a map or other documentation showing property location and boundaries is helpful), 187 Landowner Liability Protections, or LLPs, is the term used to describe the three types of potential defenses to Superfund liability in EPAs Interim Guidance Regarding Criteria Landowners Must Meet in Order to Qualify for Bona Fide Prospective Purchaser, Contiguous Property Owner, or Innocent Landowner Limitations on CERCLA Liability (Common Elements Guide) issued on March 6, 2003. 188 P.L. 107-118. (1.) Environmental liens that are led or recorded against the property (40 CFR 312.25). Did a search ofrecorded land title records (or judicial records where appropriate, seeNote 1 below) identify any environmental liens led or recorded against thepro- perty under federal, tribal, state or local law? NOTE 1In certain jurisdictions, federal, tribal, state, or local statutes, or regulations specify that environmental liens and AULs be led in judicial records rather than in land title records. In such cases judicial records must be searched for environmental liens and AULs. (2.) Activity and use limitations that are in place on the property or that have been led or recorded against the property (40 CFR 312.26(a)(1)(v) and vi)). Did a search ofrecorded land title records (or judicial records where appropriate, seeNote 1 above) identify any AULs, such asengineering controls, land use re- strictions orinstitutional controls that are in place at theproperty and/or have been led or recorded against theproperty under federal, tribal, state or local law? (3.) Specialized knowledge or experience of the person seeking to qualify for the LLP (40 CFR 312.28). Do you have any specialized knowledge or experience related to the property or nearby properties? For example, are you involved in the same line of business as the current or former occupants of the property or an adjoining property so that you would have specialized knowledge of the chemicals and processes used by this type of business? (4.) Relationship of the purchase price to the fair market value of the property if it were not contaminated (40 CFR 312.29). Does the purchase price being paid for thisproperty reasonably reect the fair market value of the property? If you conclude that there is a difference, have you considered whether the lower purchase price is because contamination is known or believed to be present at the property? (5.) Commonly known or reasonably ascertainable information about the property (40 CFR 312.30). Are you aware of commonly known orreasonably ascertainable information about the property that would help the environmental professional to identify conditions indicative of releases or threatened releases? For example, (a.) Do you know the past uses of the property? (b.) Do you know of specic chemicals that are present or once were present at the property? (c.) Do you know of spills or other chemical releases that have taken place at the property? (d.) Do you know of any environmental cleanups that have taken place at the property? (6.) The degree of obviousness of the presence or likely presence of contamination at the property, and the ability to detect the contamination by ap- propriate investigation (40 CFR 312.31). Based on your knowledge and experience related to the property are there any obvious indicators that point to the presence or likely presence of releases at the property? E1527 13 41
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. (d) the scope of services desired for the Phase I (including whether any parties to the property transaction may have a required standard scope of services or whether any consider- ations beyond the requirements of Practice E1527 are to be considered), (e) identication of all parties who will rely on the Phase I report, (f) identication of the site contact and how the contact can be reached, (g) any special terms and conditions which must be agreed upon by the environmental professional, and (h) any other knowledge or experience with the property that may be pertinent to the environmental professional (for example, copies of any available prior environmental site assessment reports, documents, correspondence, etc., concern- ing the property and its environmental condition). X4. RECOMMENDED TABLE OF CONTENTS AND REPORT FORMAT X4.1 SummaryThis section provides a summary of the Phase I Environmental Site Assessment process and may include ndings, opinions and conclusions. X4.2 IntroductionThis section identies the property (lo- cation and legal description) and the purpose of the Phase I Environmental Site Assessment. This section also provides a place to discuss contractual details (including scope of work) as well as limiting conditions, deviations, exceptions, signi- cant assumptions, and special terms and conditions. X4.3 User Provided InformationThis section presents information under Section 6. Users Responsibilities and may include information from the User Questionnaire (see Appen- dix X3), if completed. X4.4 Records ReviewThis section presents a review of physical setting sources, standard and additional environmental records sources, and historical use information on the property and surrounding area as detailed in Section 8, Records Review. X4.5 Site ReconnaissanceThis section includes site re- connaissance observations as discussed in Section 9, Site Reconnaissance, including general site setting, interior and exterior observations, and uses and conditions of the property and adjoining properties. X4.6 InterviewsThis section provides a summary of in- terviews conducted as detailed in Section 10, Interviews with Past and Present Owners and Occupants, and Section 11, Interviews with State and Local Government Officials. X4.7 EvaluationThis section documents the ndings, opinions and conclusions of the Phase I Environmental Site Assessment as stated in Section 12. This section also includes additional investigations, data gaps, deletions. This section is also where environmental professionals as described in 3.2.32 and Appendix X2 provide their statement, references and signature(s). X4.8 Non-Scope Services This section provides a place for recommendations (see 12.15) and summarizes additional services discussed in Section 13, which are not a part of this practice. X4.9 AppendicesThis section contains supporting docu- mentation and the qualications of the environmental profes- sional and other personnel who may have conducted the site reconnaissance and interviews. E1527 13 42
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. X5. SUMMARY OF COMMON NON-SCOPE ISSUES (COMMON NON-SCOPE CONSIDERATIONS) INTRODUCTION (Note that the EPA was not a party to the development of Appendix X5 and the information and conclusions provided in the appendix do not in any way reect the opinions, guidance, or approval of EPA. Users of this appendix are cautioned that statutes, regulations, guidance, case law, and/or other authorities analyzed and/or referenced in the appendix may have changed since the publication of this appendix. Thus, before relying on any of the analyses, conclusions and/or guidance provided by this appendix, users should ensure that those analyses, conclusions and/or guidance are current and correct at the time use is made of this appendix. In addition, this appendix is provided for background information purposes only and does not alter, amend, or change the meaning of E1527. If any inconsistency between this appendix and E1527 arises, E1527 applies, not this appendix or any interpretation based on this appendix. The objective of Practice E1527 is to help users qualify for one of the CERCLA Landowner Liability Protections (LLPs). Users should be aware that there are other federal, state, and local environmental laws and regulations that can impose liabilities and obligations on owners and operators of real property that are outside the scope of this practice. This appendix explains by illustration that this practice does not address all possible environmental liabilities that a user may need to consider in the context of a commercial real estate transaction. Therefore, users may desire to expand the scope of prepurchase due diligence to assess other business environmental risks that exist beyond CERCLA liability associated with the target property. Subsection 3.2.11 denes a Business Environmental Risk (BER) as a risk which can have a material environmental or environmentally-driven impact on the business associated with the current or planned use of commercial real estate, and is not an issue required to be investigated under this practice. A BER may include one or more of the non-scope issues contained in subsection 13.1.5 (Non-Scope Considerations). Evaluation of non-scope items, including those addressed in this appendix is not required nor relevant for compliance with the AAI Rule or E1527. Inclusion of any non-scope item in a Phase I report is entirely within the discretion of the user based on its own risk tolerance, the particular requirements of a specic transaction and the factors discussed in 3.2.11. As a result, this appendix should not be construed as requiring the inclusion of any non-scope issues in a Phase I report. The items in this appendix are some of the more common non-scope items that may be encountered in commercial real estate transactions. Those non-scope items discussed in this appendix should not be construed as being more important than any non-scope items that are not addressed by this appendix. Furthermore, it is noteworthy that in some circumstances, a non-scope consideration in an old Phase I analysis may present a REC for a subsequent Phase I analysis based on the rise of potential CERCLA liability. For example, asbestos-containing building materials within an existing structure are excluded from CERCLA. However, following the demolition of the building, asbestos containing materials buried in soil may no longer fall within the exclusion from the denition of a CERCLA release. To more fully understand the circumstances under which a particular non-scope consideration could result in potential CERCLAliability, readers should consult the Legal Appendix (Appendix X1). This appendix discusses nine of the non-scope considerations listed in 13.1.5 in more detail: X5.1 Asbestos-Containing Building MaterialsAsbestos is a naturally occurring mineral ber that was once widely used in building materials and products for its thermal insulating properties and re resistance. EPA denes asbestos-containing material (ACM) as material that contains more than 1 % asbestos. Building products containing ACM are often referred to as asbestos containing building materials (ACBM). Undis- turbed ACBM generally does not pose a health risk. However, ACBM may pose an increased risk if damaged, disturbed in certain manners, or if it deteriorates so that asbestos bers can be released into building air. X5.1.1 Asbestos has been specically designated as a haz- ardous substance pursuant to CERCLA section 102 (42 U.S.C. 9602) but ACBM abatement costs generally are not recov- erable under CERCLA. For more information, please consult E1527 13 43
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. the Legal Appendix (Appendix X1). There are other federal and state environmental statutes that impose obligations with respect to ACM. Although CERCLA does not provide a remedy for asbestos abatement, property owners may still be subject to liability for exposure to asbestos bers under other federal or state environmental statutes and common laws. For example, under the Clean Air Act (CAA), EPA adopted a National Emission Standard for Hazardous Air Pollutants (NESHAP) for asbestos that regulates or restricts certain uses of asbestos and imposes certain work practices for demolition and renovation projects that disturb certain thresholds of regulated ACM (See 40 CFR Part 61 for more information). Local rules may be more stringent than the federal asbestos NESHAP. X5.1.2 Many building materials such as structural steel reproong, acoustic nishes, ceiling texture, ceiling tile, suspended ceiling panels, textured and elastomeric paints, window putty, exible duct connectors, rubbery pipe insulation tape, building wiring insulation, pipe, boiler, and vessel insulation, interior plaster, and duct insulation commonly contained asbestos until the late 1970s. Other types of ACM were commonly used until the middle to late 1980s such as drywall joint, compound, exterior stucco, sheet vinyl ooring, vinyl ooring products, ooring and other mastics (adhesives), roof tiles and coatings, asbestos-cement products and ues. Under the Toxic Substance Control Act (TSCA), EPA banned the use of asbestos in many products in 1993. However, several categories of building products were not subject to the ban. Thus, existing and even new buildings may lawfully contain ACBM. The following types of building materials may still contain asbestos. X5.1.2.1 Vinyl-asbestos tile, X5.1.2.2 Roong felt, X5.1.2.3 Roong coatings, X5.1.2.4 Plastic roof cement, X5.1.2.5 Caulking putties, X5.1.2.6 Construction mastics, X5.1.2.7 Textured coatings, X5.1.2.8 Asbestos-cement items (shingles, corrugated sheets, at sheets, pipes, ues), X5.1.2.9 Pipeline wrap, and X5.1.2.10 Millboard. X5.1.3 EPA recommends that owners and managers of office buildings, shopping centers, apartment buildings, hospitals, and similar facilities that may contain ACM imple- ment an Asbestos Operations and Maintenance (O&M) pro- gram to minimize risk posed by ACBM. EPA suggests that ACBM O&M plans should include work practices so that ACM is maintained in good condition, to ensure proper cleanup of asbestos bers previously released, prevent further releases of asbestos bers, and monitor the condition of ACBM. OSHA also regulates worker exposure to asbestos. [For more information on ACM Assessment and Abatement, readers may refer to Guide E2308 and Practice E2356.] X5.1.4 Some areas of the country have naturally-occurring asbestos (NOA). Although NOA is not commonly an issue for real estate transactions, some jurisdictions with NOA have adopted local ordinance or regulations that require construction activities that would disturb NOA to observe certain work practices to minimize release of bers. X5.2 RadonRadon is a radioactive gas that is produced from the natural decay of uranium, radium, and thorium in soil, rock, and groundwater beneath homes and buildings. As uranium naturally breaks down, it releases radon gas which is a colorless, odorless, radioactive gas. Radon gas enters homes through dirt oors, cracks in concrete walls and oors, oor drains, and sumps. When radon becomes trapped in buildings and concentrations accumulate and increase indoors, exposure to radon can become a concern. Sometimes radon enters the home through well water. X5.2.1 CERCLA generally prohibits recovery for radon mitigation costs where the presence of radon gas in a building is a result from naturally-occurring materials. For more information, readers should consult the Legal Appendix (Ap- pendix X1). X5.2.2 EPA has divided the country into three radon zones based on the potential for indoor radon levels. Counties in Radon Zone 1 have a predicted average indoor radon screening level greater than the 4.0 pico curies per liter (pCi/L), Radon Zone 2 counties have a predicted average indoor radon screening level between 2 and 4 pCi/L, and Radon Zone 3 counties have a predicted average indoor radon screening level less than 2 pCi/L. EPA recommends homeowners take steps to reduce radon levels when homes have radon levels of 4 pCi/L or more. For new construction in Radon Zone 1 areas, EPAalso recommends use of radon-resistant construction design. Be- cause there is no known safe level of exposure to radon, EPA also recommends radon mitigation measures for homes with radon levels above 2 pCi/L (See http://www.epa.gov/radon/ aboutus.html). X5.2.3 Because the danger posed by radon rises when radon gas accumulates in an interior space, energy efficient struc- tures with reduced airow can contribute to radon problems. If the geographic area typically experiences high radon levels and workers regularly occupy the buildings substructures, radon testing may be warranted. However, actual radon exposures can be affected by diverse factors such as building construction, HVAC systems, and occupancy patterns. [For more information about radon assessment, readers may refer to Practices D7297, E2121, and E1465.] X5.2.4 Costs to investigate and mitigate radon may be material in certain transactions. In addition, failing to account for these risks or inadequately responding to such risks may give rise to possible exposure to personal injury law suits and/or judgments. X5.3 Lead-Based Paint (LBP)Lead is a soft, bluish me- tallic element that has been used in a wide variety of products. According to EPA, paint manufacturers frequently used lead as a primary ingredient in many oil-based interior and exterior house paints through the 1940s and gradually decreased its use in the 1950s and 1960s as latex paints became more wide- spread. The federal Department of Housing and Urban Devel- opment (HUD) estimated that 75 % of the houses built in the E1527 13 44
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. United States before 1978 contain some lead-based paint. Lead from paint, chips, and dust can pose health hazards if not properly managed. The Consumer Product Safety Commission (CPSC) prohibited use of lead in paint for residential use in 1978 in concentrations greater than 0.06 percent lead by weight. It should be noted that the use of LBP in commercial and industrial buildings has not been prohibited. X5.3.1 Because CERCLA authorizes EPA to address re- leases of hazardous substances into the environment, the agency has limited authority to use the federal Superfund program to address exposure from interior LBP. In limited circumstances, EPA may use its CERCLA authority to conduct response actions for soils contaminated by a release of lead- contaminated paint from building exteriors that pose a lead hazard and to prevent recontamination of soils that have been remediated. In general, EPA has determined that lead contami- nation in soils at or exceeding 400 ppm in play areas and 1200 ppm in other residential areas where children below 7 are present may pose serious health risks that can justify time- critical removal actions. CERCLA generally does not provide cost recovery for LBP abatement. However, response costs for remediation of lead in soil may be recoverable even where the source of the presence of lead may be from damaged exterior LBP. Please refer to the Legal Appendix (Appendix X1) for more information. X5.3.2 LBP debris from renovation or demolition projects can be regulated as a RCRA hazardous waste. EPA has also adopted certain work practices for renovation, repair and painting projects that will disturb certain thresholds of LBP. OSHA also regulates worker exposure to lead. X5.4 Lead-in-Drinking-Water (LIW)The major source of LIW is leaching of lead from household plumbing materials or water service lines used to bring water from the main to the home. Lead can leach into drinking water through contact with the plumbing, solder, xtures and faucets (brass), and ttings. The amount of lead in drinking water will be inuenced by the type and amount of minerals in the water, how long the water stays in the pipes, the amount of wear in the pipes, the waters acidity and its temperature. X5.4.1 Since 1986, the Safe Drinking Water Act (SDWA) has required that only lead free pipe, solder, or ux can be used in plumbing in residential or non-residential facilities providing water for human consumption. The SDWA also required businesses selling plumbing supplies to sell solder or ux that is lead free after August 6, 1996. Moreover, after that date the SDWA prohibited any person from introducing into commerce any solder or ux containing lead unless a label was attached to the solder or ux stating that it is illegal to use the solder or ux to install or repair plumbing providing water for human consumption. However, lead free does not mean no lead. Products such as solders and ux may be considered lead free if they contain less than 0.2 % lead. Similarly, pipes and pipe ttings will be considered lead free if they contain less than 8 % lead. Thus, lead may still be introduced in new homes with brass or chrome-plated brass faucets and xtures. X5.4.2 The SDWA requires EPA to establish enforceable maximum contaminant levels (MCLs) for a variety of contami- nants in drinking water. Because lead contamination of drink- ing water often results from corrosion of the plumbing mate- rials belonging to water system customers, EPA established a treatment technique rather than an MCL for lead. A treatment technique is an enforceable procedure or level of technological performance which water systems must follow to ensure control of a contaminant. The treatment technique regulation for lead (referred to as the Lead and Copper rule) requires water systems to control the corrosivity of the water. The regulation also requires systems to collect tap samples from sites served by the system that are more likely to have plumbing materials containing lead. If more than 10 % of tap water samples exceed the lead action level of 15 parts per billion, then water systems are required to take additional actions. X5.5 Wetlands: X5.5.1 Wetlands provide a number of economically and environmentally important functions such as ood control, water quality protection, groundwater recharge, spawning ar- eas for commercially important sh, and wildlife habitat. Wetlands are evaluated using three indicators: hydrology, hydrophytic vegetation, and hydric soils. Section 404 of the Clean Water Act requires a permit before dredged or ll material may be discharged into regulated wetlands (know as Jurisdictional Wetlands). The Army Corps of Engineers has primary responsibility for making wetlands jurisdictional de- terminations and issuing wetlands permits. A number of activities are authorized through the use of nationwide permits. X5.5.2 The presence of wetlands may impede or eliminate the potential for planned activities at a target property, includ- ing proposed construction or expansion. In addition, it is possible that the existence of wetlands will increase the costs associated with any planned development. Furthermore, in some instances, structures may have been constructed on illegally lled wetlands. While owners are rarely required to demolish completed buildings on illegally lled wetlands, they could become subject to civil or criminal nes, and also be required to perform mitigation projects or make payments to a conservation bank to offset the loss of the wetlands. X5.6 Regulatory Compliance (Includes Health and Safety)Properties used for industrial, commercial and even residential purposes are frequently subject to a panoply of environmental laws and regulations that relate to many aspects of operations conducted at the property. In the context of a property transaction, noncompliance with environ- mental laws and regulations may create a material risk of nancial loss for both building operators and owners of the properties. X5.6.1 Common Sources of Federal Compliance ObligationsMany federal regulations apply to industrial, commercial and residential properties. Owners or operators of facilities that generate, store, treat or dispose of hazardous wastes may be subject to regulation under the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. 6901 et. seq. For example, properties with petroleum storage tanks, dry cleaners that use chlorinated solvents and photo developing E1527 13 45
Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized. operations may be required to comply with RCRA. Facilities that manufacture and use many hazardous or toxic substances may be subject to the Toxic Substances Control Act (TSCA), 15 U.S.C. 2601 et. seq. Manufacturing operations that emit air pollutants and commercial or residential properties that burn fossil fuels may be required to obtain permits and install emissions control equipment under the Clean Air Act (CAA), 42 U.S.C. 7401, et. seq. Facilities that discharge pollutants into waters of the United States and public sewer systems may be required to comply with the Clean Water Act (CWA), 33 U.S.C. 1251, et. seq. Many commercial properties will also be required to comply with stormwater permitting requirements under the CWA. Facilities that store or use certain volumes of hazardous chemicals and extremely hazardous substances, which can include warehouses and distribution centers, may be required to comply with the reporting requirements of the Emergency Planning and Community Right-To-Know Act (EPCRA), 42 U.S.C. 11001, et. seq. In addition, the Occupa- tional Safety & Health Administration (OSHA) has promul- gated regulations pursuant to the Occupational Safety and Health Act, 29 U.S.C. 651, et. seq. that establish operating standards and work practices for employees in certain indus- trial and commercial facilities. X5.6.2 Common Sources of State and Local Compliance ObligationsMany state agencies have been delegated author- ity to implement state versions of these federal laws in lieu of EPA. For example, state agencies may be designated to issue permits and bring enforcement actions under the CAA, CWA, or RCRA. Even where a state agency has been delegated authority to implement the federal environmental programs, EPA often retains the ability to veto a permit or take enforce- ment action where EPA disagrees with a state agencys enforcement decision or where the state has declined enforce- ment. In some cases, state regulations may be broader in scope or stricter than the federal rules. In addition, state laws also implement state-specic regulatory regimes. For example, several states retain permitting and enforcement authority for ood control or construction in oodways. Furthermore, local government bodies can impose an entirely distinct set of operating restrictions or compliance obligations as well, for example in building code requirements, green building mandates, zoning requirements, and local licensing require- ments. X5.6.3 Potential Effects of NoncomplianceDepending on the circumstances, noncompliance with various regulatory requirements could result in material costs to owners and operators of industrial, commercial or residential properties, including nes or other monetary penalties, injunctions or other equitable relief that slows or eliminates productivity, and could result in increased transaction costs associated with defending claims of noncompliance. Furthermore, even in the absence of administrative or legal enforcement proceedings, the costs to bring facilities into compliance with applicable regulatory requirements could be material in some circum- stances. X5.7 Endangered Species ActUnder the Endangered Spe- cies Act (ESA), the government protects endangered and threatened plants and animals (listed species) and their habi- tats. The presence of listed species can restrict use of property to ensure that the proposed activities do not adversely affect endangered or threatened species as well as their critical habitats. X5.8 Indoor Air Quality(excluding impacts to indoor air from releases of hazardous substances into the environment) There are many sources of indoor air pollution. These include combustion sources such as oil, gas, kerosene, coal, wood, tobacco products, asbestos-containing materials, wet or damp carpet, formaldehyde, certain pressed wood products, cleaning and maintenance chemicals, and pesticides. EPA estimates that indoor levels of air pollutants can be two to ve times higher, and occasionally 100 times higher, than outdoor levels. In general, EPA does not regulate indoor air quality except to the extent that indoor air impacts are caused by releases of hazardous substances into subsurface soil or groundwater (vapor intrusion). For more information, please refer to the Legal Appendix (Appendix X1). [For more information about assessing indoor air quality, refer to Practice D7297.] X5.9 MoldMolds are organisms that belong to the Fungi Kingdom. Molds are present virtually everywhere in the outdoor and indoor environments. Molds lack chlorophyll and must survive by digesting organic materials for food such as some types of building materials. To grow, molds require a food source and moisture. Molds can produce toxic substances called mycotoxins that may result in human health effects. Some compounds produced by molds are volatile and are released directly into the air. These are known as microbial volatile organic compounds (mVOCs). In addition, spores may contain allergens that can remain allergenic for years even if the mold is dead. X5.9.1 Currently, there are no federal regulations or stan- dards for airborne mold contaminants. However, EPA and some states or local jurisdictions have issued publications discussing mold issues. In addition, under the OSHA General Duty Clause (29 U.S.C. 654), an employer has an obligation to protect workers from serious and recognized workplace haz- ards even where there is no standard. Thus, it is possible that the OSHA general duty clause may impose a duty on employ- ers to disclose hazards relating to mold to employees although the disagreement on the degree of hazard, if any, makes this uncertain. Signicant mold contamination may fall under the general disclosure requirements for real estate transactions in various jurisdictions. For more information on investigating and assessing mold, readers may refer to Guide E2418. X5.9.2 Mold in a building(s) on a property could result in a variety of business risks such as litigation for exposures by tenants and occupants, abatement costs, loss of tenants, adverse publicity and loss in property value. E1527 13 46
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Copyright by ASTM Int'l (all rights reserved); Tue Apr 15 12:02:13 EDT 2014 Downloaded/printed by Ray Allton (Rosenberg Associates) pursuant to License Agreement. No further reproductions authorized.