Note: This post is important for purchasers of contaminated property who want to limit their liability under the federal Superfund, known as CERCLA and Washington’s cleanup statute – the Model Toxics Control Act (MTCA).
The All Appropriate Inquiry (AAI) Rule is fundamental to a person availing itself of three defenses to limit its liability under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). The three defenses are: innocent landowner, contiguous property owner, and bona fide prospective purchaser. To use any of the defenses, a person must show that it performed a Phase I Environmental Site Assessment (ESA), which follows a specific American Society for Testing Materials (ASTM) standard, codified at 40 CFR )Part 312, before purchasing the property.
EPA issued an amendment to its AAI rule, effective December 30, 2013, that allows a person to use a new ASTM standard, known as E1527-13. The AAI Rule amendment gives a person the option of using the existing rule or this new one. EPA encourages persons to use the new standard because it improves upon the existing standard and reflects best practices in performing a Phase I site assessment.
This AAI Rule amendment provides rigor and clarity in three primary areas to help a prospective purchaser make a more informed decision before buying or leasing contaminated property. First, the standard underscores the requirement to consider the migration of vapors into the property, an issue that is a growing focus of regulatory agencies around the country. Second, the environmental professional can use the new term “historic recognized environmental condition” to describe past contamination that has been cleaned up to unrestricted use, and the term “controlled recognized environmental condition” to denote past contamination that is subject to engineering or institutional controls, such as deed restrictions. Finally, the standard provides a framework to help verify the accuracy of agency records that may be relevant to the property.
This new ASTM E 1527-13 standard will provide more useful information to help prospective purchasers know the environmental risks of the property and limit their liability under the CERCLA and MTCA. I recommend that environmental consultants embrace it, and buyers demand it when doing their environmental due diligence. It is simply an essential best practice in today’s regulatory climate.