By Matthew C. Wood, Babst Calland, in the National Law Review

On December 15, 2022, the U.S. Environmental Protection Agency (EPA) published a final rule amending its All Appropriate Inquiries (AAI) Rule to incorporate ASTM International’s E1527-21 “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process” (Final Rule).¹ The Final Rule – effective February 13, 2023 – allows parties conducting due diligence to utilize the E1527-21 standard to satisfy the AAI requirements under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), for the purpose of obtaining liability protections when acquiring potentially contaminated properties.

Specifically, “bona fide prospective purchasers,” “contiguous property owners,” and “innocent landowners” can potentially obtain CERCLA liability protection by complying with the AAI Rule. More broadly, however, other regulating bodies, such as states, often require or recommend using the E1527 standard for evaluating potentially contaminated properties prior to purchase.

The Final Rule’s publication ends months of speculation and confusion about when and how the EPA would address E1527-21 and its prior version, E1527-13. After ASTM issued E1527-21 in November 2021, EPA published an applicable direct final rule (and accompanying proposed rule, requesting comments on the direct final rule) in March 2022 incorporating E1527-21 into the AAI Rule, but also allowing parties to continue to use E1527-13 to satisfy AAI requirements.

Many commenters opposed this approach, predicting confusion about which standard to use and pointing out that ASTM would eventually do away with E1527-13. In response to these comments, EPA withdrew the direct final rule in May 2022. The Final Rule addresses these concerns by removing the AAI Rule’s reference to the E1527-13 standard one year from the Final Rule’s publication in the Federal Register, i.e., December 15, 2023. Until then, any Phase I Environmental Site Assessment (ESA) conducted using E1527-13 will be considered compliant under the AAI Rule.

Among its many updates, E1527-21 adds definitions for certain terms (e.g., “significant data gap”) and updates other definitions for clarity and consistency (e.g., “recognized environmental condition”); it explains how long a Phase I ESA remains viable (no more than 180 days prior to property acquisition, or up to one year if certain components are updated); and expands the scope of the subject property’s historical review to include adjoining properties.

One of the most notable and potentially significant updates is E1527-21’s discussion of “emerging contaminants,” or “substances not defined as hazardous substances under CERCLA,” which includes a discussion of how and whether to address per- and polyfluoroalkyl substances (PFAS).

Read the full story here

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