Change is in the Air

Today, adherence to the environmental due diligence practice outlined in ASTM E 1527-00 is sufficient to qualify a landowner for CERCLA’s innocent landowner defense. Soon, however, the rules will change. On January 11, 2002, President Bush signed the Federal Brownfields Law; on that date, two new CERCLA liability defenses—the bona fide prospective purchaser defense and the contiguous property owner defense—joined the innocent landowner defense. To qualify for any of the three, owners are required to perform “all appropriate inquiries,” the process by which a property’s potential for environmental contamination is investigated prior to purchase. However, because the federal government never defined AAI, Congress
included provisions in the Federal Brownfields Law ordering EPA to establish a federal AAI rule.

In April 2003, the agency tasked a 25-member committee with developing an environmental site assessment standard, and on November 14, 2003, the committee reached consensus on a draft rule. In the fall of 2004, EPA opened up the draft rule for public comment, and subsequently reviewed the more than 400 responses received before releasing the rule. November 1, 2005 was a historic day for the Phase I environmental site assessment industry.
On this date, U.S. EPA Administrator Stephen L. Johnson released the much-anticipated final “All Appropriate Inquiries” rule, marking the first time that property environmental due diligence has been codified in a federal regulation. Parties wishing to claim any of the three CERCLA liability defenses will need to follow AAI beginning on November 1, 2006; lenders now have less than a year to prepare for the new requirements on transactions where CERCLA liability protection is a concern to them.


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