U.S. EPA Adopts ASTM 2021 Phase I Standard for Parties Seeking New Owner/Operator Liability Defenses Under CERCLA

On December 15, 2022, U.S. EPA issued its final rule adopting the ASTM E1527-21 standard for Phase I environmental site assessments as meeting the All Appropriate Inquiries (AAI) requirement to qualify for new owner and operator defenses against liability under CERCLA.[1]  The rule becomes effective February 13, 2023.  U.S. EPA is sunsetting the use of the prior ASTM E1527-13 standard one year after the new rule goes into effect.  State programs adopting innocent purchaser and/or bona fide prospective purchaser defenses may need to evaluate how the new rule affects their programs.

U.S. EPA had initially proposed adopting the 2021 Phase I standard on March 14, 2022, under a direct final rule that would have allowed compliance with either the 2021 or 2013 standard to meet the AAI requirements.  However, many adverse comments were received, including those suggesting that the dual standards would create confusion, so U.S. EPA withdrew it as a final rule on May 2, 2022.

One motivation for U.S. EPA’s adoption of the updated standard appears to be its reference to emerging contaminants.  The standard states that consideration of emerging contaminants may be included in a Phase I assessment at the user’s request,[2] particularly in states identifying those contaminants as hazardous substances under state law.  This provision is significant in the case of per- and polyfluoroalkyl substances (PFAS), where many states have progressed faster than U.S. EPA to recognize PFAS as hazardous substances.  It also enables the Phase I standard to be flexible in reacting to new contaminants identified in the future.

In addition to identifying emerging contaminants as potential business environmental risks or non-scope considerations, the 2021 standard includes more stringent requirements for the review of title work and historical information sources.  In our blog post, 2021 Revision of the ASTM Phase I Environmental Site Assessment Standard Approved, we summarized other key revisions in the 2021 Phase I standard.

Since the release of the ASTM standard and U.S. EPA’s proposed rule, many parties have been requesting, and consultants have been offering, Phase I assessments that meet the requirements of both standards.  Despite initial concerns, the new standard does not appear to have profoundly affected Phase I timing and pricing.  However, it may be premature to assess the impact prior to its exclusive application.

[1]See https://www.federalregister.gov/documents/2022/12/15/2022-27044/standards-and-practices-for-all-appropriate-inquiries

[2] The User is the party for whom the Phase I assessment is being performed, often the prospective owner or operator.