To supplement our prior blog posts [here and here] with respect to this issue, on December 30, 2013, the USEPA published a final rule (“Final Rule”) adopting the ASTM E1527-13 Standard Practice for Environmental Site Assessments, Phase I Environmental Site Assessment Process, as a standard that satisfies the “All Appropriate Inquiry” (“AAI”) requirement for a landowner liability defense under Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”).
In August of 2013, USEPA published a direct Final Rule, which USEPA subsequently withdrew in response to criticism for including a dual standard regime that would have allowed purchasers to satisfy AAI by completing the Phase I complying with either the ASTM E1527-13 or the prior standard, the ASTM E1527-05. In the current rule, USEPA now affirmatively recommends that Phase I Environmental Site Assessments follow the standards set forth in the ASTM E1527-13 and has announced its intention to publish a proposed rule to replace the regulatory reference to ASTM E1527-05 with ASTM E1527-13, in lieu of simply referencing both acceptable standards.
Interestingly, USEPA adopted the ASTM E1527-13 Standard to satisfy the procedures provided in AAI, but specifically states that this is not mandatory. However, USEPA believes that the new ASTM standard will result in a clearer presentation of information of interest to prospective landowners, particularly regarding prior contamination or potential obligations or restrictions on future use. As such, prospective landowners whose goal is to qualify for the CERCLA landowner liability defenses should arguably use the updated ASTM E1527-13 standard to avoid future questions regarding compliance with the AAI component of the defense.
It should be noted that simply because one has performed an AAI compliant Phase I ESA, does not automatically qualify the owner to use the defense. In certain circumstances, parties must comply with continuing obligations, such as land use restrictions (deed notices and activity and use limitations). Thus, the inquiry as to whether a party is eligible to assert the landowner defenses is fact specific and depends on the environmental condition of the property and the steps taken by the party attempting to assert the defense. Regardless, environmental assessments based on the ASTM Standards are frequently used in the commercial acquisition and financing markets, which should anticipate that the new standard will become the appropriate standard with this final rule.