As we discussed in a prior Post, the Empire State Development Corporation (ESD) issued a guidance document that were exempt from Governor Cuomo’s Executive Order 202.8 banning non-essential services from operating to control the spread of the covid19 virus. In response, the New York State Department of Environmental Conservation (“NYSDEC”) issued its own Guidance describing the activities overseen its Division of Environmental Remediation (DER) that would be considered essential services.
These guidance documents called into question if environmental consultants could perform phase 1 Environmental Site Assessments (“ESAs”) that are required for property owners and tenants to qualify for certain landowner liability protections under the federal superfund program. The uncertainty was because the NYSDEC limited investigations that were considered essential services to:
“investigations, including pre-design investigations, of petroleum and hazardous waste releases as determined by NYSDEC on a case-by-case basis to be necessary to address potential human exposures and/or threat of significant contaminant migration.”
Some consultants viewed this language as precluding pre-acquisition phase 1 reports for lenders and purchasers because phase 1 reports ordinarily are not performed “to address potential human exposures and/or threat of significant contaminant migration” since the purchaser or lender would not control the site and would not have the ability to take actions to protect occupants (Arguably, reports for owners could qualify since they could be said to be doing them to assess risks to their tenants). Other consultants adopted a more nuanced view and were performing phase 1 reports for vacant sites, industrial/commercial sites where employees can vacate and conditions are safe, and other sites deemed “essential”. However, even these consultants were conducting inspections of occupied residential buildings.
Earlier today, ESD seemingly resolved this conundrum when it issued a Revised Essential Services Guidance containing a new item 14 that provides as follows:
“Real estate services shall be conducted remotely for all transactions, including but not limited to title searches, appraisals, permitting, inspections, and the recordation, legal, financial and other services necessary to complete a transfer of real property; provided, however, that any services and parts therein may be conducted in-person only to the extent legally necessary and in accordance with appropriate social distancing and cleaning/disinfecting protocols….”
Although the revised ESD guidance appears to authorize conduction phase 1 reports, there remains significant issues with complying with the requirements of the EPA All Appropriate Inquiries (“AAI”) Rule and the ASTM E1527-13 Phase 1 Standard because it consultants will likely be unable to conduct on-site investigations-which is the key task of the AAI Rule. In our next blog, we will discuss how to use the ASTM E1527-13 Standard to work around this limitation to give clients greater certainty that they have complied with the AAI rule and therefore qualify for the liability protections.