ASTM PFAS Standards Closer To Adoption By EPA

In June 2021, we predicted that the American Society for Testing and Material (“ASTM”) would revise its present “gold standard” for environmental due diligence – the Section I environmental web site evaluation – to replace sure definitions, really helpful processes, and for the primary time embrace a reference to PFAS. Our prediction on the time was that the ASTM PFAS requirements would doubtless acknowledge that whereas PFAS are a “non-scope issue,” they don’t rise to the extent of acknowledged environmental contaminants. On November 1, 2021, the ASTM’s environmental evaluation, threat administration, and corrective motion committee (the E50 committee) launched E 1527-21, which revises sure parts of the Section I Environmental Website Evaluation protocol. At present, the EPA will undertake the ASTM PFAS commonplace within the Federal Register in its direct final rule.

The ASTM modifications are important for a big selection of entities, together with buyers, lenders, banking, insurers, and any events considering an M&A. Notably, E 1527-21 does embrace a reference to PFAS. Whereas the ASTM PFAS modifications might not go so far as some wished, the change nonetheless indicators to anybody within the Section I Environmental Website Evaluation course of that they need to start conducting PFAS assessments voluntarily. Monetary world dealmakers should pay shut consideration to the brand new ASTM proposal to guard their investments as they transfer ahead.

ASTM PFAS Standards Below E 1527-21

The ASTM change to the Section I Environmental Website Evaluation units new necessities for complying with the All Applicable Inquiries (AAI) rule, which units sure necessities for figuring out environmental circumstances on a property and the presence of contaminants. If a possible purchaser follows the AAI rule, it might probably have the ability to avail itself of sure defenses below the Complete Environmental Response, Compensation, and Legal responsibility Act (CERCLA) or any comparable state regulation. A part of the AAI rule requires events to have carried out a Section I Environmental Website Evaluation in accordance with governing ASTM requirements. If Section I identifies environmental points or contaminants of concern, the events ought to proceed to the Section II course of, below which remediation of the problem(s) takes place. Apart from with the ability to argue sure defenses if the property at challenge turns into the topic of an environmental enforcement motion or litigation, following the AAI rule additionally serves sensible functions for events concerned within the transaction, because it permits them to raised know the total scope of the dangers of the deal that will probably be entered into.

Among the extra notable modifications below E 1527-21 embrace:

  • The location examination necessities add additional obligations on the events to bolster customary practices now in place because the prior rule was promulgated;
  • A number of modifications to the data that have to be contained within the written report;
  • The varied hazard classes had been extra clearly outlined in order to scale back confusion or misclassification of hazardous substances which can be or could also be current on the property;
  • The part detailing how you can search historic information is considerably modified to incorporate new requirements for the usage of historic sources, in addition to basic modifications to language and definitions from the prior rule; and
  • A footnote that implies together with PFAS and different rising contaminants in Section I Environmental Website Assessments if states by which the Section I is carried out outline PFAS a “hazardous substances.

ASTM PFAS Standards – Implications To Dealmakers

The discharge of E 1527-21 places entities within the deal course of on discover as to the “standard of care” that will probably be anticipated below due diligence processes with respect to PFAS.

Monetary world events (lenders, banks, fairness companies) that historically obtain Section I Environmental Website Assessments as a part of their due diligence or threat evaluation course of should start to ask whether or not the assessments voluntarily thought of PFAS points. Even higher, they need to think about demanding the assessments comprise a PFAS analysis element. Some states already classify sure PFAS as “hazardous substances.” The EPA’s PFAS Strategic Roadmap units the clear objective to designate sure PFAS as “hazardous substances” below CERCLA. In doing so, CERCLA enforcement might be utilized to air pollution points pre-dating the “hazardous substance” designation. EPA-mandated cleanups of web sites on which there are “hazardous substances” can value anyplace from lots of of hundreds to hundreds of thousands of {dollars}. Such important prices place the steadiness of lending put forth for a property deal into jeopardy, improve dangers to insurers masking the events to the transactions, and improve monetary dangers to the events to the deal. One of the best ways to guard a deal and funding in the long run is to make sure that enough PFAS concerns are going down at this time earlier than the deal is finalized.

Source link