Client Alert

Phase I Environmental Site Assessments Changes are Coming

January 02, 2014


In a direct and final rule published by the United States Environmental Protection Agency (EPA) on December 30, 2013, the EPA formally adopted a new standard for conducting All Appropriate Inquiries (AAI) at potentially contaminated sites. AAI is the process that purchasing parties must take to look into the prior ownership and use of potentially contaminated sites in order to qualify for certain protections from liability under CERCLA. Although EPA will continue to authorize use of the ASTM 1527-05 standard for a short time, the EPA expressed its view that the new standard (ASTM 1527-13) provides valuable improvements and strongly encourages its use over the pre-existing standard. Further, the EPA announced its intent to publish additional amends to the AAI rule that will remove reference to the prior standard. What this means for future aquisitions is that the new standard may add to the cost and time necessary to perform Phase I reports. Prospective purchasers should take this potential delay into account when negotiating due diligence time frames with sellers. And, sellers should be aware that previously performed Phase I reports conducted using the 1527-05 standard may not be acceptable to a potential buyer who desire reports compliant with the new standard.

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