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 firstname.lastname@example.org or (225) 381-8014.