On December 15, 2022, the United States Environmental Protection Agency (EPA) published a Final Rule for conducting Phase I Environmental Site Assessments. The Final Rule amends its All Appropriate Inquires (AAI) Rule referencing ASTM E1527-21 (and withdrawing reference to ASTM E1527-13) as satisfying the requirements for conducting AAI under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). The EPA’s Final Rule is effective in 60 days, on February 13, 2023, and contains a one-year phase-out period of E1521-13(the prior ASTM standard) as satisfying the AAI Rule.

CERCLA requires prospective purchasers of property to conduct AAI into the environmental conditions of a property prior ownership and use of a prospective property in order to qualify for one of CERCLA’s landowner liability protections (i.e. bona fide prospective purchasers, contiguous property owners and innocent landowners).

Typically, environmental consultant documents the environmental conditions of a property by preparing a Phase I Environmental Site Assessment Report. Developers, lenders, and purchasers involved in commercial and industrial real estate should confirm that its Phase I ESA complies with EPA’s approved AAI standards to ensure it qualifies for environmental protections under CERCLA. Based on EPA’s Final Rule, starting February 13,2023, parties having a Phase I ESA prepared may have the ESA prepared in accordance with ASTM’s International Standard E1521-21 or E1521-13. After February 13,2024, only ASTM International Standard E 1521-21 may be used.

Additionally, a purchaser of commercial or industrial property must consult environmental state law where the property is located, to ensure that the “All Appropriate Inquires” that are being conducted on their behalf, satisfies the state requirements for environmental liability protection or the so called “innocent purchasers defense”. See N.J. S. A. 58:10-23.11g(d)(2), (5). For example, in New Jersey, mere compliance with ASTM E1521 -21 or E1521-13, does not satisfy New Jersey’ s Innocent Purchasers defense to liability under New Jersey’s Spill Compensation and Control Act (Spill Act). Under the Spill Act, for real property acquisitions after September 1993, “all appropriate inquiry” means “a Preliminary Assessment (PA), and a Site Investigation (SI), if the PA indicates that a SI is necessary. The PA and SI are in accordance with NJDEP requirements and NJDEP’s specific forms must be used in order to satisfy the Innocent Purchaser’s Defense.