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USEPA Final Rule Published for Phase I Standard

Posted on December 19, 2022

On December 15, the USEPA published the amended Final Rule recognizing ASTM International’s updated Phase I Environmental Site Assessment Standard (E1527-21) as compliant with the All Appropriate Inquiries (AAI) requirements of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). More specifically, this Final Rule amends the AAI to allow for the use of ASTM International standard ASTM E1527-21 effective on February 13, 2023, to satisfy the AAI requirements under CERCLA for establishing the bona fide prospective purchaser, contiguous property owner, and innocent landowner liability protections. Further, following one year of the effective date, this rule will remove recognition of the previous version of that standard, ASTM E1527-13, as compliant with the AAI rule, to provide a grace period for any ongoing Phase I Environmental Site Assessments intended to comply with the AAI rule.

The new E1527-21 Standard is an update to E1527-13, and is based on lessons learned, as shared by practicing environmental professionals and users of the standard, as well as a review of recent litigation and claims arising from Phase I ESA disputes. While the update encompasses many improvements, some of the changes include:

  • Definitional clarifications to improve consistent identification by environmental professionals of Recognized Environmental Conditions (RECs), Controlled Recognized Environmental Condition (CREC), and Historical Recognized Environmental Condition (HREC);
  • Significantly expanded procedures for researching historical uses of the subject property and adjoining properties;
  • Changes to information that must be included in a Phase I ESA report;
  • A new definition for a “significant data gap” that affects the environmental professional’s ability to identify RECs, and guidance on how to address the gap; and
  • Clarification that various components of the Phase I ESA must be completed within 180 days prior to the transaction date, not the report date.

To help environmental professionals perform consistent assessments, the Standard adds an appendix with examples of conditions that represent RECs, CRECs, and HRECs, and a flow chart to aid in identifying the type of REC at issue. The clarifications may lead to identification of RECs or Business Environmental Risks that would not have been identified previously, and in some instances, may lead to elimination of RECs previously identified out of an abundance of caution or misapplication of the Standard.

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