To Sample or Not to Sample?

Phase I Environmental Site Assessments (ESAs) are widely used by real estate purchasers to determine whether contamination exists on a property. There has been some debate as to whether sampling should be included as part of the ESA in order for a purchaser to obtain certain legal protections.

One protection or defense available under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) to an owner of previously contaminated property is called the Bona Fide Prospective Purchaser (BFPP) defense, which allows for the acquisition of contaminated property without liability for response costs. In order to obtain and maintain the BFPP defense, adherence to all of the terms of the defense is necessary. One major requirement to obtain BFPP status is that, prior to the actual purchase, the purchaser must conduct “all appropriate inquiries” in conformance with EPA’s All Appropriate Inquiries Rule (40 CFR Part 312). EPA has deemed compliance with ASTM Standard E1527-13, Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process, as compliance with most provisions of the rule.

Under the rule and the ASTM standard, sampling is not required to fulfill the “all appropriate inquiries” requirement and obtain the BFPP defense. The ASTM standard makes clear in Section 7.4 that the standard “does not include any testing or sampling of materials (for example, soil, water, air, building materials).” The preamble to the rule states, “The final regulation does not require that sampling and analysis be conducted to comply with the all appropriate inquiries requirements” (70 FR 66089). Additionally, it states, “With regard to the conduct of sampling and analysis, today’s final rule does not require sampling and analysis as part of the all appropriate inquiries investigation” (70 FR 66101). The rule itself merely states that “sampling and analysis may be conducted to develop information to address data gaps” (40 CFR 312.20).

As a purchaser must take steps before the purchase to obtain BFPP status, a purchaser must also take steps after the purchase to maintain that status by, among other things, taking reasonable steps to stop continuing releases, prevent future releases and prevent exposure to previously released substances. EPA mentioned that sampling could provide information regarding site-specific conditions necessary to fully understand the property. For example, sampling can provide information regarding the exact location of contamination so that post-purchase activities, such as digging or construction, do not cause additional releases or exposure to contamination. EPA also stated that a lack of sampling could be a factor in determining whether two provisions of the rule (the degree of obviousness of contamination at the property and the ability to detect the contamination by appropriate investigation) have been met. However, the rule also states that compliance with the ASTM standard is deemed compliance with these two provisions of the rule.

EPA has clearly stated that sampling could occur “pre- or post-acquisition” and “prior to or after acquiring a property” (70 FR 66101-2). As a result, even if sampling is deemed necessary, it can be accomplished at some point after the purchase.

While EPA thinks that sampling “may be valuable” in certain circumstances, EPA is equally clear that the rule “does not require that sampling and analysis be conducted as part of the all appropriate inquiries investigation” (70 FR 66101). In summary, sampling does not seem to be required prior to purchase in order to obtain the BFPP defense, but it may be helpful before or after the purchase to assist in maintaining the BFPP defense.

John B. King is a partner with Breazeale, Sachse & Wilson LLP in Baton Rouge, Louisiana. His practice relates mainly to environmental regulatory permitting, compliance and due diligence. Prior to joining the firm in 2003, he served as chief attorney for enforcement for the Louisiana Department of Environmental Quality.

Contact John B. King at jbk@bswllp.com or (225) 381-8014.

EPA Offers New Owners A New Hope

EPA is taking steps to further compliance and reduce emissions in the upstream oil and gas sector. It announced it is developing, and seeking comments on, a New Owner Clean Air Act Audit Policy (CAA Policy). Once implemented, new owners may conduct an in-depth audit of newly acquired facilities, correct identified violations or issues, and obtain a full civil penalty waiver for violations existing prior to the acquisition of the facility. Continue reading “EPA Offers New Owners A New Hope”

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EPA proposed revisions to the emission standards for the oil and natural gas sector, which has become known as the Methane Rule, on Sept. 11, 2018. The revisions, as proposed, do not substantially alter the fundamental requirements of the rule, but do relax several provisions for which the industry requested reconsideration. EPA also freely admits that the proposed revisions will increase emissions of methane and VOCs. Continue reading “Upstream Operators May Get Some Regulatory Relief”

The Trump Administration’s Impact On Oil and Gas Activities

The Trump Administration has made it clear that it seeks to unleash the potential of American-produced energy. Towards that end, it has taken actions on a variety of fronts to encourage production of oil and gas and decrease regulatory burdens on the industry.   

President Trump has issued a number of pronouncements regarding energy production. On his first day in office, January 20, 2017, the America First Energy Plan was released. Essentially, the Plan is a blueprint for future action in order to “maximize the use of American resources, freeing us from dependence on foreign oil.”  It declares that the industry has been “held back by burdensome regulations,” such as the Climate Action Plan and Waters of the United States Rule, and pledges to eliminate these and other “harmful and unnecessary policies.”  Further, the Plan recognizes the “$50 trillion in untapped shale, oil, and natural gas reserves,” and promises to “embrace the shale oil and gas revolution to bring jobs and prosperity to millions of Americans.” Continue reading “The Trump Administration’s Impact On Oil and Gas Activities”

Landowner, Operator Protections from Contamination

The ownership of land usually includes the right to use all of the property, both above and below the surface. As a general example, the owner of the surface of the property may use it as he or she sees fit and can also explore for and produce oil and gas from below the surface. But the law allows that the ownership of the land and the ownership of the mineral rights may be separate. In this situation, the interests of the separate owners may not always align. However, even though their interest may not align and their rights and obligations may differ, each can take certain precautions to protect their respective rights. Continue reading “Landowner, Operator Protections from Contamination”

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EPA’s 500th Day Victory Lap

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The nine ‘achievements’ listed by EPA include: withdrawing from the Paris Climate Agreement, ensuring clean air and water, reducing burdensome government regulations, repealing the so-called “Clean Power Plan,” repealing the Waters of the United States Rule, promoting energy dominance, promoting science transparency, ending ‘sue and settle,’ and promoting certainty to the auto industry. Continue reading “EPA’s 500th Day Victory Lap”