In November 2013, the American Society for Testing and Materials (ASTM) issued its revised standard for performing Phase I environmental site assessments. The U.S. Environmental Protection Agency (EPA) recognized this revised standard as representing acceptable All Appropriate Inquiry, or AAI, for the purpose of supporting various defenses to liability under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA). However, both the revisions and the EPA’s approval of them are likely to cause confusion in determining the appropriate level of scrutiny in evaluating potentially contaminated properties in corporate and real estate transactions. Counsel involved in such transactions will need to pay special attention to Phase Is that are performed over the next few years to ensure that they provide the necessary information and conform to the new requirements.
The Phase I requirements arose from the need for a standard protocol in performing environmental site assessments to determine the potential for CERCLA liability associated with the purchase of real estate or business entities. ASTM issued its first standard in 1997, which recognized and codified existing industry practices. In response to the 2002 CERCLA amendments, which created additional defenses based on the performance of AAI, the EPA issued revised regulations in 2005 that identified the key elements of AAI based on the ASTM’s standard. In addition, the EPA specifically determined that performing Phase Is consistent with the 2005 ASTM standard would meet the AAI requirements.