Strasburger Real Estate Newsletter - New Standards for Assessment of Indoor Air Quality May Impact BuyersPotential Environmental Liability

New commercial standards could require real estate purchasers to conduct certain vapor intrusion assessments to protect themselves from potential environmental liability. The American Society for Testing and Materials (ASTM) recently released a new standard practice for assessing and mitigating the risk that vapors from sub-surface environmental hazards might invade buildings and affect indoor air quality. ASTM’s pronouncements are not legally binding, but past ASTM standards have been relied on by courts and the U.S. Environmental Protection Agency (EPA) as evidence of good or customary commercial practice in the United States.

The new standard may prove especially important for real estate purchasers seeking to protect against potential environmental liability. State and federal laws impose liability on owners and operators of environmentally contaminated property. Under the Federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), for example, any current owner or operator may be held jointly and severally liable for clean up costs. This is true even if the current owner did not place hazardous substances on the property. “Innocent” landowners, bona fide purchasers, and contiguous property owners may be excused from CERCLA liability if they meet certain qualifications and can prove that they performed “all appropriate inquiries” before purchasing their property.

ASTM designed the new vapor assessment standard to compliment the environmental evaluations typically conducted to satisfy the “all appropriate inquiries” standard. Assessment of vapor intrusion is not yet considered a mandatory inquiry, but the existence of a commercial standard makes it more likely that the EPA or courts will require it in the future. Even now, conducting a vapor intrusion assessment strengthens the argument that a purchaser satisfied “all appropriate inquiries.” The adoption of the ASTM standard also makes it more likely that lenders will require vapor intrusion assessments as a part of standard due diligence for certain real estate loans.

ASTM standard overview: Under ASTM’s guidelines, environmental professionals assess the risk of harmful vapor intrusion using a three-tiered system. Each tier is increasingly invasive (and expensive), but the risk of vapor intrusion can be ruled out at any point, so a purchaser need not necessarily complete all three tiers.

Tier 1- Non-Numeric Screening. Here, the environmental professional examines existing property records, past and present usage information, geological and topographical surveys, and results of any previously-conducted chemical tests or site investigations. If that evidence suggests that vapor intrusion is “unlikely” to be an issue of concern, the property may be “screened out,” and vapor assessment concluded.

Tier 2- Numeric Screening. Tier two requires review of all soil, soil gas, and groundwater test results associated with known or suspected sources of contamination on or near the property. If this information is available from regulatory agency records, no independent testing is necessary. Results are compared with state and federal standards for acceptable concentrations of soil contaminants (“risk-based concentrations”). If contaminants are within acceptable levels and it appears unlikely that any nearby soil or groundwater contaminants will reach the property, then the vapor intrusion assessment may be concluded.

Tier 3- Site-Specific Investigation. At tier three, the environmental professional tests various soil, groundwater, or indoor air samples to determine whether or not there is an existing vapor intrusion condition. If the environmental professional cannot rule out vapor intrusion after the third tier, the ASTM standard suggests a variety of options to control or manage these conditions.

Purchasers and lenders who are concerned about environmental liability related to vapor intrusion should consult a lawyer for a more detailed analysis of the new ASTM standard and should consider conducting a vapor intrusion assessment in conjunction with standard environmental site assessments.