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EPA Issues Final Rule Clarifying CERCLA’s “All Appropriate Inquiry” Standard

10/8/2014 Articles

The U.S. Environmental Protection Agency has at long last issued a Final Rule which provides clarification to prospective purchasers of contaminated property regarding the standards and practices that are to be used for conducting “all appropriate inquiries” (AAI) under the federal Superfund law. Effective October 6, 2015, ASTM International’s E1527-13 “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process” should be used in lieu of ASTM’s prior E1527-05 Standard in order to satisfy the AAI requirements provided in the Comprehensive Environmental Response, Compensation and Liability Act or “CERCLA.” Until the Final Rule takes effect next year, parties conducting Phase I Environmental Site Assessments may continue to utilize either ASTM Standard – E1527-05 or E1527-13 – to comply with AAI requirements.

Prospective purchasers seeking liability relief under CERCLA’s landowner liability protections (i.e., innocent landowners, bona fide prospective purchasers and contiguous property owners), as well as recipients of EPA Brownfields grants for conducting site assessments, must comply with various standards and practices for conducting AAI.  In earlier rulemakings in August 2013 and December 2013, EPA recognized both 2005 and 2013 ASTM Standards as satisfying AAI requirements, creating confusion among the regulated community and consulting industry as to which standard should be used in conducting Phase I environmental site assessments.  In its June 2014 proposed rule, EPA sought to amend its current AAI Rule to replace the reference to the E1527-05 Standard with the updated E1527-13 Standard. With this Final Rule, EPA now clarifies that, as of October 6, 2015, the E1527-13 Standard must be used to meet AAI requirements. 

Although prospective purchasers and their consultants still have the option of using the E1527-05 Standard for another year to meet their AAI obligations, as EPA observes in its Final Rule, most environmental professionals are likely already using the updated E1527-13 Standard. In addition, as we pointed out in our previous update on this issue, prospective purchasers should keep in mind that other parties involved in their transactions (e.g., investors, lenders, prospective tenants) may be expecting or even requiring a more rigorous environmental assessment to be performed based on ASTM’s updated E1527-13 Standard.

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