On December 15, 2022, the United States Environmental Protection Agency (US EPA) issued the final rule that amended the All Appropriate Inquiries (AAI) Rule to reference ASTM E1527-21 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process, with an effective date of February 13, 2023. This change allows for the current ASTM Phase I Standard (ASTM E1527-21) to be used in demonstrating compliance with the AAI Rule.
What is the AAI Rule?
All Appropriate Inquiries (AAI) are the steps taken to evaluate the environmental condition of a property. The AAI Rule explains the procedures and steps needed to fulfill the requirements of Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) Section 101 (35)(B) to acquire CERCLA landowner liability protections as well as to complete assessments and site characterizations under Brownfields grants. The US EPA, in the final rule, also noted that the use of the ASTM standard is not required to comply with the AAI Rule, but the ASTM standard can be used to satisfy the AAI requirements.
But I Thought the US EPA Already Issued a Final Rule?
On March 14, 2022, the US EPA issued a final rule to allow for the use of ASTM E1527-21; however, as a result of adverse comments, it was withdrawn on May 2, 2022 for further review. On December 15, 2022, the EPA issued the final rule that amended the All Appropriate Inquiries (AAI) Rule to reference ASTM E1527-21 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process, effective February 13, 2023.
What Does This Change Mean for the Bank?
Bank policy and procedures should be consulted to determine the current requirements for commercial loans. Some policy and procedures documents may specifically reference the accepted ASTM standard as ASTM E1527-13 or ASTM E1527-21 or may refer to “the current ASTM standard.” Some banks may establish a grace period similar to the US EPA where a Phase I completed to either the ASTM E1527-13 or E1527-21 standard may be acceptable, while other banks may immediately require Phase I reports that reference the ASTM E1527-21 standard once the final rule is made effective on February 13, 2023.
How Long is the Old Phase I Standard Effective?
The US EPA also stated that reference to the previous standard (ASTM E1527-13) would be removed from the AAI Rule one year from the publication of the final rule. Therefore, ASTM E 1527-13 can be used until February 13, 2024 to satisfy AAI.
We Can Help!
For over twenty years, ERI has been dedicated to providing commercial lenders with effective and efficient due diligence services and guidance. ERI works with numerous lenders to develop individualized environmental policies that fit within the client banks’ existing procedures and organizational structure. ERI’s diverse experience with numerous financial institutions enables ERI to address the specific environmental risk management needs of its client banks. For some community and regional banks, ERI serves as a complete outsourced environmental risk management department. For larger institutions, ERI provides capacity and support to internal environmental staff. Whether it is environmental policy development, implementation, or capacity building, ERI’s extensive experience can ensure “best in class” environmental risk management for its client banks.