By Michael P. Carvalho, Esq., Managing Partner, Carvalho & Associates, P.C.

Most real estate professionals understand the practical value of completing pre-acquisition environmental due diligence in connection with the acquisition of real property. Assessing the environmental condition of properties prior to purchase or lease is now commonplace in the industry. The ASTM E-1527 Standard Practice for Environmental Site Assessments: Phase I Site Assessment Process (“ASTM Phase I”) has long been the “bible” for conducting such pre-acquisition inquires into the history, regulatory agency involvement and existing conditions at a site to assess the potential for Recognized Environmental Conditions (“RECs”). However, the legal significance of properly completing such studies is often overlooked. That is, until an Indiana federal judge in the matter of Von Duprin LLC v. Moran Electric Services (S.D. Ind., March 30, 2020). The court in Von Duprin held that the defendants were not bona fide prospective purchasers within the meaning of the statute because they failed to complete their Phase I ESAs within the 180 days of acquisition mandated by the ASTM Standard Practice.

A CERCLA Legal Primer
Superfund is one tough statute! The federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) of 1980 was passed by Congress to create a means to address the responsibility for the cleanup of the nation’s worst environmental contamination sites. Pursuant CERCLA, liability is strict, joint, several and retroactive. Potentially responsible parties (PRPs) include owners, operators, transporters and/or generators of hazardous substances that come to be located at facilities. Congress include a subsequent, limited defense to liability known as the “innocent purchaser” defense where an innocent landowner, contiguous property owner or bona fide prospective purchaser can limit CERCLA’s onerous liability scheme by conducting “all appropriate inquiries into the previous ownership and uses of the property consistent with good commercial and customary practice at the time of acquisition. Under the ASTM Standard, a person may qualify for bona fide prospective purchaser status if they complete “all appropriate inquiries” on or before the purchase date. Significantly, knowledge of contamination resulting from all appropriate inquires would not necessarily preclude CERLCA liability.

ASTM’s Continued Viability Requirement: The 180-Day Rule
Because Phase I ESAs are best thought of as a “Snapshot in Time” of a property’s environmental condition, ASTM quickly recognized that they needed to come with a shelf life. ASTM Sec. 4.6 provides that interviews with owners, operators and occupants, searches for recorded environmental cleanup liens, review of federal, triable, state and local government records, visual inspections of the property and adjoining properties, and declaration by an Environmental Professional responsible for the assessment or update must be completed within 180 days of the date of purchase or the date of the intended transaction.

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Carvalho & Associates will be a sponsor at the following events: The 7th Annual Run/Walk for the Beach 5K taking place on Sunday, June 12, 2016 at 10:00AM; and The 11th Annual Swim & Fin, open water race in Salem Harbor on Sunday, August 21, 2016 at Forest River park, Salem.

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“These changes will better protect people’s health and benefit the environment in communities across the country by improving prevention and detection of underground storage tank releases,” said Mathy Stanislaus, assistant administrator of EPA’s Office of Solid Waste and Emergency Response. “Extensive and meaningful collaboration with our underground storage tank partners and stakeholders was vital to the development of the new regulations. The revised requirements will also help ensure consistency in implementing the tanks program among states and on tribal lands.”

Secondary containment and operator training requirements of the Energy Policy Act of 2005 will apply to USTs on tribal lands. In addition, these requirements improve EPA’s original 1988 UST regulation by closing regulatory gaps, adding new technologies, and focusing on properly operating and maintaining existing UST systems.

Underground storage tanks are located at hundreds of thousands of facilities across America. Both marketers and non-retail facilities own USTs. Marketers include retail facilities such as gas stations and convenience stores that sell petroleum products. Non-retail facilities include those that do not sell petroleum products, but may rely on their own supply of gasoline or diesel for taxis, buses, limousines, trucks, vans, boats, heavy equipment, or a wide range of other vehicles.

The revised requirements include:

• adding secondary containment requirements for new and replaced tanks and piping;
• adding operator training requirements;
• adding periodic operation and maintenance requirements for UST systems;
• removing past deferrals for emergency generator tanks, airport hydrant systems, and field-constructed tanks;
• adding new release prevention and detection technologies;
• updating codes of practice; and
• updating state program approval requirements to incorporate these new changes.

States and territories primarily implement the UST program. Many states already have some of these new requirements in place. For others, these changes will set standards that are more protective.

In developing the final UST regulation, EPA reached out extensively to affected and interested UST stakeholders. EPA carefully considered the environmental benefits of the UST requirements, while balancing those with the potential future costs of compliance for UST owners and operators. For example, EPA is not requiring owners and operators to replace existing equipment, but rather is focusing on better operation and maintenance of that equipment.

The docket for the UST regulation is EPA-HQ-UST-2011-0301 and can be accessed at www.regulations.gov when the final regulation is published.

More information is available at EPA’s UST regulation website at: UST regulation

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WASHINGTON, DC – On June 1, 2015, Michael Carvalho presented the 13th Annual Ronald M. Carvalho Environmental Policy Award & Scholarship for outstanding EnvironMentors Project. The recipient of this years award is Xui Chen for her project entitled, “The Effects of Copper on the Fecundity of Caenorhabditis elegans”. Ms. Chen attends The School Without Walls in Washington, DC. and represents the Washington, DC Chapter of EnvironMentors.

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