Category: Regulatory

DOT Proposes New Guidance For Medical Examiners To Address CBD Use By Commercial Motor Vehicle Drivers

The U.S. Department of Transportation, Federal Motor Carrier Safety Administration (FMCSA) published a proposed draft Medical Examiner’s Handbook (MEH), including updates to the Medical Advisory Criteria, in the Federal Register on August 16, 2022.  The FMCSA’s regulations provide the basic driver physical qualification standards for commercial motor vehicle (CMV) drivers, in 49 CFR 391.41 through 391.49. DOT Medical Examiners currently make physical qualification determinations on a case-by-case basis and may consider guidance to assist with making those determinations.

FMCSA stated that the goal of the updated MEH and related Medical Advisory Criteria is to provide information about regulatory requirements and guidance for Medical Examiners to consider when making physical qualification determinations in conjunction with established best medical practices. The revised Medical Advisory Criteria, in addition to being included in the MEH, would also be published in Appendix A to 49 CFR part 391. The final version of the criteria would be identical in both publications. FMCSA is proposing to update both the MEH and Medical Advisory Criteria and seeks public comment on these documents until September 30, 2022.  The draft MEH may be viewed here.

Use of CBD with 0.3% THC or Less Is Not Automatically Disqualifying

Under FMCSA regulation 49 CFR 391.41(b)(12)(i), CMV drivers are not permitted to be physically qualified when using Schedule I drugs under any circumstances. The federal Controlled Substances Act lists marijuana, including marijuana extracts containing greater than 0.3% delta-9-tetrahydrocannabinol (THC), as Schedule I drugs and substances. A driver who uses marijuana cannot be physically qualified even if marijuana is legal in the State where the driver resides for recreational or medical use.

However, under current federal law cannabidiol (CBD) products containing less than 0.3% THC are not considered Schedule I substances; therefore, their use by a CMV driver is not grounds to automatically preclude physical qualification of the driver under §391.41(b)(12)(i).

FMCSA emphasized that the U.S. Food and Drug Administration (FDA) does not currently determine or certify the levels of THC in products that contain CBD, so there is no federal oversight to ensure that the labels on CBD products that claim to contain less than 0.3% of THC are accurate. Therefore, drivers who use these products are doing so at their own risk.

FMCSA now proposes that each driver should be evaluated on a case-by-case basis and encourages Medical Examiners to take a comprehensive approach to medical certification and to consider any additional relevant health information or evaluations that may objectively support the medical certification decision. Medical Examiners may request that drivers obtain and provide the results of a non-DOT drug test during the medical certification process, if it is deemed to be helpful in determining whether a driver is using a prohibited substance, such as a CBD product that contains more than 0.3% THC.

This guidance does not impact FMCSA’s drug and alcohol testing regulations.  Use of a CBD product does not excuse a positive marijuana drug test result.

Use of Suboxone and Similar Drugs Is Not Automatically Disqualifying

FMCSA received a large number of inquiries related to Suboxone (a Schedule III drug under federal law, meaning that it has a lower potential for abuse than Schedule I and II drugs).  Treatment with Suboxone and other drugs that contain buprenorphine and naloxone, as well as methadone, are not identified in the FMCSA regulations as precluding medical certification for operating a CMV. FMCSA relies on the Medical Examiner to evaluate and determine whether a driver treated with Suboxone singularly or in combination with other medications should be issued a medical certificate. The Medical Examiner should obtain the opinion of the prescribing licensed medical practitioner who is familiar with the driver’s health history as to whether treatment with Suboxone will or will not adversely affect the driver’s ability to safely operate a CMV. The final medical certification determination, however, rests with the Medical Examiner who is familiar with the duties, responsibilities, and physical and mental demands of CMV driving and non-driving tasks.

Article By Kathryn J. Russo of Jackson Lewis P.C.

For more biotech, food, and drug legal news, click here to visit the National Law Review.

Jackson Lewis P.C. © 2022

All Federal Research Agencies to Update Public Access Policies

On 25 August 2022, the Office of Science and Technology Policy (OSTP) released a guidance memorandum instructing federal agencies with research and development expenditures to update their public access policies. Notably, OSTP is retracting prior guidance that gave discretion to agencies to allow a 12-month embargo on the free and public release of peer-reviewed publications, so that federal funded research results will be timely and equitably available at no cost. The memo also directs affected agencies to develop policies that:

  1. Ensure public access to scientific data, even if not associated with peer-reviewed publications;
  2. Ensure scientific and research integrity in the agency’s public access by requiring publication of the metadata, including the unique digital persistent identifier; and
  3. Coordinate with OSTP to ensure equitable delivery of federally funded research results and data.

KEY COMPONENTS OF GUIDANCE:

Updating Public Access Policies

Federal agencies will need to develop new, or update existing, public access plans, and submit them to OSTP and the Office of Management and Budget (OMB). Deadlines for submission are within 180 days for federal agencies with more than US$100 million in annual research and development expenditures, and within 360 days for those with less than US$100 million in expenditures.

Agencies will need to ensure that any peer-reviewed scholarly publication is free and available by default in agency-designated repositories without any embargo or delay following publication. Similarly, OSTP expects the access polices to address publication of any other federally funded scientific data, even if not associated with peer-reviewed scholarly publications. As a concession, federal agencies are being asked to allow researchers to include the “reasonable publication costs and costs associated with submission, curation, management of data, and special handling instructions as allowable expenses in all research budgets.1”

Ensuring Scientific Integrity

To strengthen trust in governmentally funded research, the new or updated policies must transparently communicate information designed to promote OSTP’s research integrity goals. Accordingly, agencies are instructed to collect and make appropriate metadata available in their public access repositories, including (i) all author and co-author names, affiliations, and source of funding, referencing their digital persistent identifiers, as appropriate; (ii) date of publication; and (iii) a unique digital persistent identifier for research output. Agencies should submit to OSTP and OMB (by 31 December 2024) a second update to their policies specifying the approaches taken to implement this transparency, and publish such policy updates by 31 December 2026, with an effective date no later than one year after publication of the updated plan.

IMPLICATIONS FOR THE NATIONAL INSTITUTES OF HEALTH (NIH), OTHER FEDERAL AGENCIES, AND THEIR GRANTEES

The NIH is expected to update its Public Access Policy, potentially along with its Data Management and Sharing Policy to conform with the new OSTP guidance. Universities, academic medical centers, research institutes, and federally funded investigators should monitor agency publications of draft and revised policies in order to update their processes to ensure continued compliance.

In doing so, affected stakeholders may want to consider and comment to relevant federal agencies on the following issues in their respective public access policy development:

  • Federal agency security practices to prevent foreign misappropriation of research data;
  • Implications for research misconduct investigations and research integrity;
  • Any intellectual property considerations without a 12-month embargo, especially to the extent this captures scientific data not yet published in a peer-review journal; and
  • Costs allowable research budgets to support these data management and submission expectations.

1 Office of Science and Technology Policy, Memorandum for the Heads of Executive Departments and Agencies: Ensuring Free, Immediate, and Equitable Access to Federally Funded Research at p. 5 (25 August 2022) available at https://www.whitehouse.gov/wp-content/uploads/2022/08/08-2022-OSTP-Public-Access-Memo.pdf

Article By Cindy L. Ortega Ramos and Rebecca M. Schaefer of K&L Gates

For more administrative and regulatory legal news, click here to visit the National Law Review.

Copyright 2022 K & L Gates

FDA Publishes 2022 Retail Food Program Standards

  • On August 24, 2022, FDA announced that it had published the 2022 edition of its Voluntary National Retail Food Regulatory Program Standards (Retail Program Standards). The standards are intended to provide information on the key elements of an effective retail food regulatory program for local, tribal, state, and territorial regulatory agencies.
  • The Retail Program Standards provide recommendations for creating and managing retail food regulatory programs. Recommendations include how to provide effective inspections, reinforce proper sanitation, implement foodborne illness prevention strategies, and identify areas for improvement.
  • This year’s edition of the Retail Program Standards considers comments that were made during the Conference for Food Protection 2020 Biennial meeting, including reformatted curriculum forms and alternative sampling methods. A list of jurisdictions currently enrolled in the Retail Program Standards is available here. 

    Article By Food and Drug Law Practice Group at Keller and Heckman LLP

For more food and drug law legal news, click here to visit the National Law Review.

© 2022 Keller and Heckman LLP

Cal/OSHA COVID-19 Regulations Will Likely Continue in 2023

The current Cal/OSHA COVID-19 Emergency Temporary Standard (ETS) expires at the end of 2022. But Cal/OSHA is not done with COVID-19 regulations. There is a Non-Emergency Regulation in process. The Standards Board recently published its proposed non-emergency regulation and announced a public hearing for September 15, 2022.

Though the proposal is a non-emergency regulation, the proposed text states the requirements would only remain in effect for two years, except for certain recordkeeping requirements.

Here are other highlights of the proposed regulation:

  • Directs employers to include COVID-19 procedures in their written Injury and Illness Prevention Program (IIPP) or as a separate document.

  • As part of an employer’s COVID-19 procedures, an employer must provide training to employees regarding COVID-19

  • Employers must have effective methods and procedures for responding to COVID-19 cases in the workplace such as exclusion and quarantine requirements.

  • Employers will still have certain notice requirements regarding positive cases in the workplace.

  • Face covering requirements shall still follow California Department of Public Health requirements

One notable omission from the proposed regulation is exclusion pay, which was a very contentious requirement under the ETS.

Article By Sean Paisan of Jackson Lewis P.C.

For more coronavirus legal news, click here to visit the National Law Review.

Jackson Lewis P.C. © 2022

MLB To Allow CBD Sponsorships

Recently, Major League Baseball (MLB) informed teams that cannabidiol (CBD) sponsorships were no longer off limits and that they were free to pursue sponsorships in the CBD category under certain conditions. CBD companies will also no longer be prohibited from airing commercials during MLB game telecasts.

According to MLB’s Chief Revenue Officer Noah Garden, to be permitted, CBD sponsorships must promote products that are certified as not containing psychoactive levels of THC, the main active ingredient of cannabis. Any CBD product with concentrations of THC above 0.3% would not be permitted, as it is classified as marijuana, which is a Schedule I illicit substance. All CBD sponsorships will also require signoff by the MLB Commissioner’s Office.

MLB is the first of the four major US sports leagues to permit CBD sponsorships. Previously, only UFC and NASCAR had opened up the CBD sponsorship category for sale. And while MLB has opened the door to certain CBD sponsorships, for now, neither MLB nor any of the other major US sports leagues permit sponsorships in the broader cannabis category.

This change follows the new MLB collective bargaining agreement freeing up MLB teams to sell advertising positions on team jerseys and player batting helmets beginning with the 2023 season. MLB has confirmed that these lucrative jersey and batting helmet positions will not be off-limits to CBD companies. Garden noted specifically that “[MLB is] open-minded to doing a patch deal [in the CBD category], depending on the brand and what that brand represents. It has to [be] a brand that represents sports.”

Time will tell if MLB, its teams, and its fans embrace CBD sponsorships, but with cannabis industry valuations exceeding $13 billion in 2021, the rule change opens the door to a potentially lucrative sponsorship category.

Article By Richard L. Brand, Shahiedah Shabazz, and Zak Welsh of ArentFox Schiff LLP

For more entertainment and sports legal news, click here to visit the National Law Review.

© 2022 ArentFox Schiff LLP

Federal Reserve Doubles Down on Oversight of Crypto Activities for Banks

The Federal Reserve Board (the “FRB”) issued Supervision and Regulation Letter 22-6 (“SR 22-6”), providing guidance for FRB-supervised banking organizations (referred to collectively herein as “FRB banks”) seeking to engage in activities related to cryptocurrency and other digital assets.  The letter states that prior to engaging in crypto-asset-related activities, such FRB banks must ensure that their activities are “legally permissible” and determine whether any regulatory filings are required.  SR 22-6 further states that FRB banks should notify the FRB prior to engaging in crypto-asset-related activities.  Any FRB bank that is already engaged in crypto-asset-related activities should notify the FRB promptly regarding the engagement in such activities, if it has not already done so.  The FRB also encourages state member banks to contact state regulators before engaging in any crypto-asset-related activity.

These requirements send a clear message to FRB banks and in fact to all banks that their crypto-asset related activities are considered to be risky and not to be entered into lightly.

Indeed, the FRB noted that crypto-asset-related activities may pose risks related to safety and soundness, consumer protection, and financial stability, and thus a FRB bank should have in place adequate systems, risk management, and controls to conduct such activities in a safe and sound manner and consistent with all applicable laws.

SR 22-6 is similar to guidance previously issued by the OCC and FDIC; in all cases, the agencies require banks to notify regulators before engaging in any kind of digital asset activity, including custody activities. The three agencies also released a joint statement last November in which they pledged to provide greater guidance on the issue in 2022.  Further, in an August 17, 2022 speech, FRB Governor Bowman stated that the FRB staff is working to articulate supervisory expectations for banks on a variety of digital asset-related activities, including:

  • custody of crypto-assets
  • facilitation of customer purchases and sales of crypto-assets
  • loans collateralized by crypto-assets, and
  • issuance and distribution of stablecoins by banking organizations

Interestingly, SR 22-6 comes a few days after a group of Democratic senators sent a letter to the OCC requesting that the OCC withdraw its interpretive letters permitting national banks to engage in cryptocurrency activities and a day after Senator Toomey sent a letter to the FDIC questioning whether it is deterring banks from offering cryptocurrency services.

Although past guidance already required banks to notify regulators of crypto activity, this guidance likely could discourage additional banks from entering into crypto-related activities in the future or from adding additional crypto services. In the end, it could have the unfortunate effect of making it more difficult for cryptocurrency companies to obtain banking services.

Article By Grant F. Butler, Jeremy M. McLaughlin, Anthony R.G. Nolan, and Judith E. Rinearson of K&L Gates

For more finance and banking legal news, click here to visit the National Law Review.

Copyright 2022 K & L Gates

CERCLA PFAS Designation Major Step Forward

On January 10, 2022, the EPA submitted a plan for a PFAS Superfund designation to the White House Office of Management and Budget (OMB) when it indicated an intent to designate two legacy PFAS – PFOA and PFOS – as “hazardous substances” under the Comprehensive Environmental Response, Compensation & Liability Act (CERCLA, also known as the Superfund law). The EPA previously stated its intent to make the proposed designation by March 2022 when it introduced its PFAS Roadmap in October 2021. Under the Roadmap, the EPA planned to issue its proposed CERCLA designation in the spring of 2022. On Friday, a CERCLA PFAS designation took a significant step forward when the OMB approved the EPA’s plan for PFOA and PFOS designation. This step opens the door for the EPA to put forth its proposed designation of PFOA and PFOS under CERCLA and engage in the required public comment period.

Any PFAS designation will have enormous financial impacts on companies with any sort of legacy or current PFOA and PFOS pollution concerns. Corporations, insurers, investment firms, and private equity alike must pay attention to this change in law when considering risk issues.

Opposition to CERCLA Designation

Since the EPA’s submission of its intent to designate PFOA and PFOS as hazardous substance to the OMB, the EPA has been met with industry pushback on the proposal. Three industries met with the OMB earlier in 2022 to explain the enormity of regulatory and cleanup costs that the industries would face with a CERCLA designation of PFOA and PFOS – water utilities, waste management companies, and the International Liquid Terminals Association. These industries in particular are concerned about bearing the burden of enormous cleanup costs for pollution that third parties are responsible for. Industries are urging the OMB and EPA to consider other ways to achieve regulatory and remediation goals aside from a CERCLA designation.

During an April 5, 2022 meeting of the Environmental Council of the States (ECOS), several states also expressed concerns regarding the impact that a CERCLA designation for PFAS types would have in their states and on their constituent companies. The state environmental leaders discussed with EPA representatives how the EPA would view companies in their states that fall into categories such as waste management and water utilities, who are already facing uphill battles in disposing of waste or sludge that contains PFAS.

Realizing that the EPA is likely set on its path to designate at least two PFAS as “hazardous substances”, though, industries are asking the EPA to consider PFAS CERCLA exemptions for certain industries, which would exempt certain industry types from liability under CERCLA. Industries are also pushing the EPA, OMB and the U.S. Chamber of Commerce to conduct a robust risk analysis to fully vet the impact that the designation will have on companies financially. The EPA is statutorily required to conduct a risk analysis as part of its CERCLA designation process, so it is likely that the EPA’s delay in issuing a proposed hazardous substance designation until it feels that adequate time has passed for its designation to survive the likely legal challenges that will likely follow the designation.

CERCLA PFAS Designation: Impact On Businesses

Once a substance is classified as a “hazardous substance” under CERCLA, the EPA can force parties that it deems to be polluters to either cleanup the polluted site or reimburse the EPA for the full remediation of the contaminated site. Without a PFAS Superfund designation, the EPA can merely attribute blame to parties that it feels contributed to the pollution, but it has no authority to force the parties to remediate or pay costs. The designation also triggers considerable reporting requirements for companies. Currently, those reporting requirements with respect to PFAS do not exist, but they would apply to industries well beyond just PFAS manufacturers.

The downstream effects of a PFOA and PFOS designation would be massive. Companies that utilized PFOA and PFOS in their industrial or manufacturing processes and sent the PFOA/PFOS waste to landfills or otherwise discharged the chemicals into the environment will be at immediate risk for enforcement action by the EPA given the EPA’s stated intent to hold all PFAS polluters of any kind accountable. Waste management companies should be especially concerned given the large swaths of land that are utilized for landfills and the likely PFAS pollution that can be found in most landfills due to the chemicals’ prevalence in consumer goods. These site owners may be the first targeted when the PFOA/PFOS designation is made, which will lead to lawsuits filed against any company that sent waste to the landfills for contribution to the cost of cleanup that the waste management company or its insured will bear.

Also of concern to companies are the re-opener possibilities that a CERCLA designation would result in. Sites that are or were previously designated as Superfund sites will be subject to additional review for PFOA/PFOS concerns. Sites found to have PFOA/PFOS pollution can be re-opened by the EPA for investigation and remediation cost attribution to parties that the EPA finds to be responsible parties for the pollution. Whether through direct enforcement action, re-opener remediation actions, or lawsuits for contribution, the costs for site cleanup could amount to tens of millions of dollars, of course depending on the scope of pollution.

Conclusion

Now more than ever, the EPA is clearly on a path to regulate PFAS contamination in the country’s water, land and air. The EPA has also for the first time publicly stated when they expect such regulations to be enacted. These regulations will require states to act, as well (and some states may still enact stronger regulations than the EPA). Both the federal and the state level regulations will impact businesses and industries of many kinds, even if their contribution to drinking water contamination issues may seem on the surface to be de minimus. In states that already have PFAS drinking water standards enacted, businesses and property owners have already seen local environmental agencies scrutinize possible sources of PFAS pollution much more closely than ever before, which has resulted in unexpected costs. Beyond drinking water, though, the EPA PFAS plan shows the EPA’s desire to take regulatory action well beyond just drinking water, and companies absolutely must begin preparing now for regulatory actions that will have significant financial impacts down the road.

Article By John Gardella of CMBG3 Law

For more energy and environmental legal news, click here to visit the National Law Review.

©2022 CMBG3 Law, LLC. All rights reserved.

GAO Publishes Report on Technologies for PFAS Assessment, Detection, and Treatment

The U.S. Government Accountability Office (GAO) published a report on July 28, 2022, entitled Persistent Chemicals: Technologies for PFAS Assessment, Detection, and Treatment. GAO was asked to conduct a technology assessment on per- and polyfluoroalkyl substances (PFAS) assessment, detection, and treatment. The report examines the technologies for more efficient assessments of the adverse health effects of PFAS and alternative substances; the benefits and challenges of current and emerging technologies for PFAS detection and treatment; and policy options that could help enhance benefits and mitigate challenges associated with these technologies. GAO assessed relevant technologies; surveyed PFAS subject matter experts; interviewed stakeholder groups, including government, non-governmental organizations (NGO), industry, and academia; and reviewed key reports. GAO identified three challenges associated with PFAS assessment, detection, and treatment technologies:

  • PFAS chemical structures are diverse and difficult to analyze for health risks, and machine learning requires extensive training data that may not be available;
  • Researchers lack analytical standards for many PFAS, limiting the development of effective detection methods; and
  • The effectiveness and availability of disposal and destruction options for PFAS are uncertain because of a lack of data, monitoring, and guidance.

GAO developed the following three policy options that could help mitigate these challenges:

  • Promote research: Policymakers could support development of technologies and methods to more efficiently research PFAS health risks. This policy option could help address the challenge of limited information on the large number and diversity of PFAS, as well as a lack of standardized data sets for machine learning;
  • Expand method development: Policymakers could collaborate to improve access to standard reference samples of PFAS and increase the pace of method and reference sample development for PFAS detection. This policy option could help address the challenges of a lack of validated methods in media other than water, lack of analytical standards, and cost, which all affect researchers’ ability to develop new detection technologies; and
  • Support full-scale treatment: Policymakers could encourage the development and evaluation of full-scale technologies and methods to dispose of or destroy PFAS. This policy option could help address the challenges of cost and efficiency of disposal and destruction technologies and a lack of guidance from regulators.

GAO notes that these policy options involve possible actions by policymakers, which may include Congress, federal agencies, state and local governments, academia, and industry.

Article By Lynn L. Bergeson and Carla N. Hutton of Bergeson & Campbell, P.C.

For more environmental legal news, click here to visit the National Law Review.

©2022 Bergeson & Campbell, P.C.

USDA To Declare Salmonella An Adulterant in Some Raw Poultry

  • On August 1, the USDA’s FSIS announced that it will declare Salmonella an adulterant in breaded and stuffed raw chicken products. Breaded and stuffed raw chicken products will be considered adulterated when they exceed 1 colony forming unit (CFU) of Salmonella per gram. Products that exceed the limit would be subject to regulatory action. FSIS believes the limit of 1 CFU/gram will significantly reduce the risk of illness from consuming such products.
  • Breaded and stuffed raw chicken products have been associated with up to 14 food safety outbreaks and approximately 200 illnesses since 1998. The products at issue are those found in the freezer section and that appear to be cooked, but are only heat-treated to set the batter or breading; the products contain raw poultry. FSIS has found that continual efforts to improve product labeling have not reduced consumer illnesses.
  • FSIS is expected to publish a notice in the Federal Register in the fall and will be seeking public comments on whether a different standard for adulteration (i.e., zero tolerance or one based on specific serotypes) would be more appropriate, an implementation plan, and a verification testing program.
  • This announcement is part of FSIS’ effort to reduce Salmonella illnesses associated with poultry. In October 2021, USDA announced that it was reevaluating its Salmonella control strategy. USDA plans to present a proposed framework for a new comprehensive strategy to reduce Salmonella illnesses attributable to poultry in October and convene a public meeting to discuss in November.

Article By The Food and Drug Law Practice Group at Keller and Heckman LLP

For more biotech, food, and drug legal news, click here to visit the National Law Review.

© 2022 Keller and Heckman LLP

After EPA Rule Changes, Which ASTM Phase I ESA Standard Should You Use?

On November 1, 2021, ASTM International released its revised standard for Phase I Environmental Site Assessments. On March 14, 2022, the U.S. Environmental Protection Agency (the “EPA”) published a Direct Final Rule that confirmed the new ASTM standard, ASTM E1527-21, could be used to satisfy the EPA’s All Appropriate Inquiry (“AAI”) regulations. That, in turn, would mean that satisfying the ASTM E1527-21 standard could help a potential buyer of contaminated property satisfy some of the EPA’s requirements to qualify as a Bona Fide Prospective Purchaser, which may lead to being protected from liability under the federal Superfund statute.

However, on May 2, 2022, EPA withdrew the Final Rule it had published on March 14, 2022, and indicated it would address the comments it received concerning the previously Final Rule in a subsequent final action.

Why the change and, more importantly, which ASTM standard should a potential purchaser of contaminated property use when having a Phase I Site Assessment prepared?

EPA withdrew its Direct Final Rule in response to the negative comments it received concerning that rule. EPA had planned to allow both the November 2021 ASTM standard and its predecessor from 2013 (the ASTM E1527-13 standard) to be used to satisfy certain AAI requirements. Those commenting said that approach would lead to confusion in the marketplace, and would allow reports that did not meet the ASTM E1527-21 standard to be considered adequate, even though the 2021 ASTM standard represented what the real estate and environmental community had determined to be good commercial and customary practice. In other words, because the 2021 standard required a more rigorous approach to the relevant environmental due diligence work needed to prepare a Phase I Environmental Site Assessment, EPA’s approach would have meant that less thorough reports could have been deemed sufficient.  As noted in the comment letter submitted to the EPA by the Environmental Bankers Association, “ASTM E1527-21 includes important updates that will reduce the risk of Users [of the ESA report] failing to identify conditions indicative of hazardous substance releases, potentially jeopardizing landowner [and prospective purchaser] liability protections to [potential] CERCLA [liability].” All of that makes sense: the better the environmental due diligence, the less risk of unpleasant surprises later.

But, where does that leave potential purchasers of contaminated real estate? Should they have their consultants prepare their Phase I Site Assessment reports based on the 2021 ASTM standard, or its 2013 predecessor, or both?

Contaminated real estate buyers, and any other parties involved in the transaction, such as lenders and equity investors, should require their environmental consultants to prepare their Phase I Environmental Site Assessment in conformance with the ASTM E1527-13 standard, because that is the ASTM standard that is currently referenced in EPA’s AAI regulations. It is necessary to do so, at least for now, in order to be able to qualify for Bona Fide Prospective Purchaser protection from CERCLA liability.

Those parties should also consider having their environmental consultants prepare the same Phase I Environmental Site Assessment in conformance with the updated ATSM E1527-21 standard. While some additional cost may be involved, nonetheless it may be worthwhile in order to meet what ASTM sees as the current standard of practice regarding these reports.

Another important consideration in the preparation of these reports is whether additional issues that are not formally included in the scope of either the ASTM E1527-13 or the ASTM E1527-21 standard should be addressed. For example, as noted in an appendix to the E1527-21 standard, petroleum products are within the scope of the practice “because they are of concern with respect to commercial real estate, and current custom and usage is to include an inquiry into the [past or present] presence of petroleum products when doing an environmental site assessment of commercial real estate.” That is so even though petroleum products generally do not lead to liability under CERCLA.

The non-scope issues appendix to the ASTM E1527-21 standard also addresses “substances not defined as hazardous substances” and does a good job addressing why a user of an ASTM-compliant report should at least consider whether to include certain emerging contaminants such as per- and polyfluoroalkyl substances, also known as PFAS, within its scope. The point is to think about whether to evaluate potential environmental liability for PFAS on a case-by-case basis in light of state law considerations, even though PFAS compounds have not yet been designated “hazardous substances” under CERCLA.

EPA’s recent rule-making activities have not provided clear guidance for potential purchasers of contaminated property regarding which ASTM standard should be used in preparing environmental site assessment reports that comply with EPA’s AAI regulations. At the moment, what seems to make the most sense is to have these reports prepared so that they comply with the ASTM E1527-13 standard and to consider whether to comply with the E1527-21 standard in addition. The user should also carefully evaluate whether certain considerations, such as potential PFAS contamination, should be included within the scope of the report.

Article By Ned Abelson and Justin Rheingold of Goulston & Storrs

For more environmental legal news, click here to visit the National Law Review.

2022 Goulston & Storrs PC.