New Modification To All Appropriate Inquiries Rule For Forested and Rural Properties

By: Erik S. Mroz, Drewry Simmons Vornehm LLP

On June 20, 2017, the United States EPA took direct final action to amend its Standards and Practices for All Appropriate Inquiries (“AAI Rule”) to reference ASTM International’s E2247-16 “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process for Forestland or Rural Property.” EPA views this action as non-controversial. EPA is making the change through direct action, which will likely be effective on September 18, 2017. EPA’s notice in the Federal Register can be accessed here.

Real estate purchasers that wish to achieve liability protection under the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601, et seq., are advised to conduct all appropriate inquiries (“AAI”) prior to purchase. For most purchasers, AAI will include a Phase I Environmental Site Assessment under ASTM International’s E1527-13, which is generally applicable to all properties. Recognizing that forested and rural properties have unique characteristics making them different from commercial and industrial properties, in 2008, ASTM International adopted E2247-08, which applies only to forested and rural properties. EPA adopted E2247-08 in the AAI Rule. The AAI Rule allows purchasers to satisfy much of their AAI obligations, and achieve liability protection, by following ASTM International’s standards.

EPA’s direct action amends the AAI Rule to replace the older E2247-08 with E2247-16 as the standard for conducting Phase I Environmental Site Assessments of forested and rural properties. One noticeable difference between the older E2247-08 standard and the new E2247-16 standard is that the new standard applies to all rural and forested properties regardless of size. The older standard only applied to properties at least 120 acres in size; and, purchasers of smaller tracts were instructed to use the more onerous E1527-13 general standard.

Once the direct final action goes into effect, purchasers of forested or rural lands should make sure their environmental consultants are not using the older E2247-08 standard.