EPA Proposes to Approve E1527-13 As AAI

August 15th, 2013

EPA has published a notice in the federal register proposing that the E1527-13 will satisfy the All Appropriate Inquiries. EPA believes (mistakenly in our opinion) the proposed action is non-controversial. However, just in case the agency published a final direct rule and a proposed  rule .

If EPA does not receive adverse comments by September 16th, the amendment to AAI that parties using E1527-13 shall be in conformance with AAI will become effective on november 13th. If EPA receives adverse comments, it will withdraw the proposed amendment and respond to the comments.

Unfortunately, EPA is also proposing that E1527-05 shall also satisfy AAI. This would seem to undercut the purpose of the revisions to E1527. Link to notice is here. Specifically, EPA states ”

The Agency notes that today’s action does not require any party to use the ASTM E1527-13 standard. Any party conducting all appropriate inquiries to comply with the CERCLA’s bona fide prospective purchaser, contiguous property owner, and innocent landowner liability protections may continue to follow the provisions of the All Appropriate Inquiries Final Rule at 40 CFR part 312, use the ASTM E1527-05 Standard or use the ASTM E2247-08 standard.”

EPA has prepared a document summarizing the difference between ASTM E1527-05 and E1527-13. This analysis has been placed in the docket for this rule.

By all estimates, the proposed E1527-13 will likely cost more because of the presumption that agency file reviews should be performed. Many property owners and lenders will likely opt for the cheaper and quicker E1527-05 since the AAI rule will still state that this standard satisfies AAI. We suspect the fact that ASTM considers the 05 version as outdated or replaced will be trumped by the regulatory language until and unless a court decides otherwise.  Moreover, the high-volume phase 1 shops were concerned about how they could bid on projects when they might not know the size or complexity of agency files. We can see these shops strongly urging their clients to use the E1527-05 standard.

Finally, agency file reviews will be critical to learning about historic issues associated with brownfield sites. However, the proposal will allow applicants for brownfield funds to use the less rigorous E1527-05 standard. Should EPA really be in the business of encouraging recipients of federal funds to use a less rigorous investigation?

In our view, the EPA proposal is a terrible idea that will continue to allow the market forces that caused substandard phase 1 reports to be issued under the old E1527-05 standard to continue. The ASTM E50 task force worked long and hard to reach an agreement with numerous stakeholders on ways to improve E1527-05 standard. EPA’s proposed amendment will do nothing but undermine this effort.

There is no way to say this nicely. EPA  has fumbled or bungled this rulemaking effort. The agency had a representative attend meetings and conference calls for the two year period that we argued , drafted and compromised on the standard. Apparently at no time during that process did anyone at EPA think to consider the question as to whether the agency would remove the reference to “05″ or simply add “13″ as an additional way of satisfying AAI. Had someone at EPA taken the time to think this through and communicate those thoughts (however poorly reasoned that they were), the task force would have been able to address these concerns. It isnt like ASTM suddenly asked EPA in July 2013 to recognize E1527-13. Somebody seriously dropped the ball at EPA and this lack of attention or plain incompetence is going to cause some real disruption in the market unless they fix the mess they’ve created. This botched rulemaking isnt as bad as the HealthCare.Gov website fiasco but it sure is up there in the hall of absurd government decisions.

the best way to correct this problem will be to remove the reference to “05″ when AAI is finalized. It is unfathomable to me that a lawyer at EPA could really believe that removing a reference to an expired and obsolete standard for transactions occurring after the effective date of the rule is going to potentially jeopardize the LLP status of all those parties who complied with “05″ from 11/1/06 through the effective date of the new rule. That person may have gone to law school and learned something about the law but they sure exhibited a lack of common sense and professional judgment.

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