There it sits on your bookshelf—the Phase I Environmental Site Assessment (ESA) report for the property you just purchased. It looks impressive. It conforms to the ASTM Standard for Phase I ESAs (you hope), and an Environmental Professional signed off on it. At the least, it was good enough to allow your deal to go through. So you’re done with your environmental issues, aren’t you?
Not yet. Although the deal has been consummated, you have additional obligations, if you wish to qualify for one of the liability protections offered by the federal government. These obligations, known as continuing obligations, can result in loss of your liability protections if not performed.
The intent of the 2002 Brownfields Amendments to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, a.k.a. “Superfund”) was to encourage redevelopment of abandoned or underutilized brownfields sites. To do so, it established two new liability defenses to the existing Innocent Landowner defense. The Contiguous Property Owner defense, as its name implies, protects the owner of a property that abuts a contaminated property. The Bona Fide Prospective Purchaser defense protects the purchaser of a property known to be contaminated.
The Brownfields Act also listed six obligations that must be followed post-purchase to allow the new property owner to continue to qualify for one of these three liability defenses. Three of these obligations are intuitive and easily understood: 1) cooperate with persons conducting hazardous waste response actions; 2) comply with information requests and administrative subpoenas; and 3) provide legally required notices regarding the presence of hazardous waste on the property. The other three continuing obligations are: 1) comply with land use restrictions; 2) do not impede the effectiveness or integrity of institutional controls established in connection with a response action; and 3) take reasonable steps regarding releases of hazardous substances. The ways to implement these three obligations are less obvious.
The new E2790-11 standard, also known as the “Standard Guide for Identifying and Complying with Continuing Obligations,” is designed to establish methodologies by which the purchaser can implement these three continuing obligations, thereby maintaining the applicable liability protections.
Before describing the standard practice, it is necessary to define some terms. “Land Use Restrictions” include both “institutional controls” and “engineering controls.” Institutional controls are legal limitations on the usage of the property (called “Activity and Use Limitations” in the ASTM Phase I ESA standard). They include deed notices, restrictive covenants, and the like. Engineering controls are physical barriers, such as impermeable caps, fencing, etc., that limit the spread of contamination as well as the usage of the property.
Although the Brownfields Act specifically excludes engineering controls from the continuing obligations requirement, they were included in the ASTM standard because, in practicality, engineering controls are unlikely to be effective without the active cooperation of the property owner.
What's the plan?
At the heart of the standard is the development of a Continuing Obligations Plan. This plan, developed after performing the preliminary steps of identifying what continuing obligations apply to the property, need not be a written plan, although a written document would certainly help the user in maintaining compliance and consistency of practice. The plan specifies the “reasonable steps” to be performed on the particular property.
These site-specific “reasonable steps” should be designed to stop continuing releases of hazardous substances, prevent threatened future releases of hazardous substances, and prevent human, environmental, or natural resource exposure to prior releases of hazardous substances. Since environmental site conditions vary widely, from the simple to the highly complex, the standard is non-prescriptive, providing a significant amount of flexibility in the development and implementation of the Continuing Obligations Plan.
As with the standard for Phase I ESAs, the Continuing Obligations standard does not require an exhaustive review or comprehensive steps to be taken. The Continuing Obligations standard intentionally incorporates phrases familiar to persons experienced in the Phase I ESA standard, such as reviewing “reasonably ascertainable” sources of information and the possibility of “data failure.”
The standard is entirely voluntary. As such, this standard will not be of interest to users of Phase I ESA reports who are only interested in quantifying business risk. However, persons who are concerned with CERCLA liability should seriously consider implementing this standard.
Unlike the Phase I ESA standard, an environmental professional does not need to be involved in implementing the Continuing Obligations standard. However, at the end of the day, the property owner will need to justify that the “reasonable steps” had been performed by somebody qualified to perform them.
Therefore, the expertise of an environmental professional may be desired for the more complicated cases. That individual should be knowledgeable of the Continuing Obligations standard and experienced in the investigation and remediation of contaminated properties.
Benjamin Alter, PG, LSRP, is a Senior Vice President of GZA GeoEnvironmental, Inc.
