On December 15, 2022, EPA issued a final rule amending the All Appropriate Inquiries Rule (AAI Rule), 40 CFR part 312, to recognize the updated ASTM International standard for conducting Phase I environmental site assessments (ESAs), ASTM E1527-21, “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process.” As part of the final rule, EPA is sunsetting its acceptance of the prior Standard Practice known as ASTM E1527-13 one year after the new standard’s effective date, or February 13, 2024. The final rule becomes effective on February 13, 2023.
The final rule comes after consideration of how to incorporate ASTM E1527-21 for most of 2022. On March 14, 2022, EPA published a direct final rule, 87 FR 14174, to establish ASTM E1527-21 as compliant with the AAI Rule. However, as many will recall, EPA received adverse comments and withdrew the direct final rule on May 2, 2022. The final rule is mostly similar to the March 14, 2022, direct final rule in that it adopts ASTM E1527-21 as the new standard for compliance with the AAI Rule, but to avoid some of the confusion commentators highlighted by sunsetting the prior standard.
The most significant takeaway from the issuance of the final rule, as noted above, is that it now allows for the use of ASTM International E1527-21 to satisfy the requirements for conducting all appropriate inquiries under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).
As has long been the case, All Appropriate Inquiries under CERCLA are investigations into the previous ownership, uses, and possible environmental concerns of a property conducted “in accordance with generally accepted good commercial and customary standards and practices,” as outlined by CERCLA. All Appropriate Inquiries are important because they are critical to certain CERCLA liability defenses for purchasers of property and others with an ownership interest such as: the bona fide prospective purchaser, innocent landowner, and contiguous property owner defenses. A landowner asserting these defenses has the burden of proof to show that it conducted AAI before acquiring the property.
In conclusion, the key takeaways from the final rule becoming effective for purchasers and lenders are:
- Effective February 13, 2023, parties may rely on ASTM E1527-21 to satisfy All Appropriate Inquiries under the CERCLA.
- Prospective purchasers of forestland or rural property may rely on either E1527-21 or the existing ASTM E2247-16 (as is current practice), to show All Appropriate Inquiries into those properties.
- EPA is phasing out its acceptance of the prior version of the standard, ASTM E1527-13, which will no longer be acceptable for All Appropriate Inquiries purposes as of February 13, 2024.
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