On February 13, 2023, the Environmental Protection Agency’s (EPA) final rule amending the All Appropriate Inquiries (AAI) rule took effect. Under the new rule, prospective purchasers of contaminated property can use ASTM E1527-21 “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process” (ATSM E1527-21) in assessing the environmental condition of property they are considering purchasing to satisfy the AAI requirement for receiving the bona fide prospective purchaser, contiguous property owner, and innocent landowner liability protections under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). In other words, if an entity, whether public or private, complies with the procedures detailed in ASTM E1527-21, that entity will also comply with the AAI requirement and will receive protection from CERCLA liability. The same protection will be afforded to those recipients of brownfield grants using ASTM E1527-21 to conduct site assessments under CERCLA § 104(k).
ASTM E1527-21 revises several key sections of the older ASTM E1527-13 “Standard Practice for Phase I Environmental Site Assessments” (ASTM E1527-13). For example, ASTM E1527-21 revises the definitions of Recognized Environmental Conditions, Historical Recognized Environmental Condition, and Controlled Recognized Environmental Condition, as well as the historical research requirements. Notably, ASTM E1527-21 places a greater emphasis on emerging contaminants.. Although such substances, which are not CERCLA Hazardous Substances, are not included in the scope of a Phase I report, emerging contaminants should generally be included in the assessment of commercial real estate, especially where state laws define the contaminant as hazardous substances or EPA appears likely to take regulatory action.
Per- and polyfluoroalkyl substances (PFAS) are an example of emerging contaminants that should be included during the AAI process and in the Phase I report. Although such substances are not currently regulated as CERCLA Hazardous Substances, several states, including Washington, regulate these substances as hazardous substances under state environmental laws and EPA plans to finalize a rule designating PFOS and PFOA, two ubiquitous PFAS, as CERCLA Hazardous Substances later this year. EPA also has additional plans to consider designating other PFAS as either CERCLA Hazardous Substances or Resource Conservation and Recovery Act Hazardous Waste.
The new AAI Rule allows, but does not require, the use of ASTM E1527-21. A party may still use ASTM E1527-13 to satisfy the AAI requirements until February 13, 2024. It is recommended, however, that parties insist on using ASTM E1527-21 in their due diligence process now to show compliance with the latest standards for AAI.
This article is provided for informational purposes only—it does not constitute legal advice and does not create an attorney-client relationship between the firm and the reader. Readers should consult legal counsel before taking action relating to the subject matter of this article.