Federal Rule Modifies Environmental Due Diligence Standard For Real Estate Transactions

A key federal rule was recently amended that will impact environmental due diligence in real estate transactions. Real estate developers, lenders, and others are working to adjust their approaches to conform to a new American Society for Testing and Materials ("ASTM") standard E1527-21 (the "New Standard"). ASTM finalized the New Standard in 2021, but U.S. EPA did not finalize its rule providing that the New Standard may be used to satisfy the All Appropriate Inquiries rule until a recent rulemaking, which became effective on February 13, 2023.

Like the "Old Standard" ASTM E1527-13, the New Standard serves two primary purposes. First, it provides a basis for satisfying the All Appropriate Inquiries rule, 40 CFR Part 112, under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"). In turn, compliance with the All Appropriate Inquiries rule satisfies a key element to many statutory defenses against potentially significant liability