On Jan. 11, 2002, President Bush signed the Small Business Liability Relief and Brownfields Revitalization Act, Public Law 107-118 (“the Brownfields Amendments”). Among other things, the Brownfields Amendments limited CERCLA1 liability for certain purchasers of contaminated property, including bona fide prospective purchasers and contiguous land owners, while clarifying requirements necessary to establish the innocent landowner defense under CERCLA. The amendments state that parties purchasing potentially contaminated property must undertake “all appropriate inquiries” (often referred to as “AAI”). AAI is the assessment or evaluation of a property to identify potential environmental contamination and assess potential liability for any contamination at the property.2 AAI encompasses the “process of conducting due diligence, or a Phase I ESA [environmental site assessment], to determine prior uses and ownership of a property and assess conditions at the property that may be indicative of releases or threatened releases of hazardous substances at, on, in, or to the property.”3 Since the enactment of the Brownfields Amendments, the EPA and the regulated community have been in a consistent process of refining good commercial and customary practices for conducting AAI. This refinement has led to current standards that are more onerous than the predecessors.
The Brownfields Amendments required the EPA to develop regulations establishing standards and practices for conducting AAI. On Nov. 1, 2005, the EPA created those regulations, which referenced E1527-05 and authorized its use to comply with the rule.4 However, E1527-05 was revised in 2013, and this new standard, E1527-13, now defines good commercial and customary practice in the United States for conducting environmental site assessments of commercial real estate.5 As a result, on Dec. 30, 2013, the EPA published a final rule providing that E1527-13 may be used to comply with CERCLA’s AAI requirement.6 In its final rule, the EPA explained that it would publish a proposed rule to amend the rule again to remove the reference to the older E1527-05 standard.
On June 17, 2014, the EPA followed through on its promise and published a proposed rule that removes the reference to E1527-05 standard, leaving in place only the more recent E1527-13.7 With this removal, the EPA seeks to reduce confusion with the regulatory reference that is no longer recognized by the ASTM. Parties potentially affected by the change are those who perform all appropriate inquiries, both public and those intending to claim protection from CERCLA liability as bona fide prospective purchasers, contiguous landowners or innocent landowners.
Most parties have been using the most recent standard; however, the EPA anticipates some are still using the old standard from 2005. With this in mind, the EPA stated that it “anticipates providing for a delayed effective date,” which will be one year after the EPA publishes the final rule.8 This will allow parties to complete investigations that may be ongoing and to become familiar with the updated industry standard.
To learn more about the amendments, please contact Brad Sugarman, Julian Harrell or any other member of Taft’s Environmental practice group.
Author's note: Andrew Holt, Taft Summer Associate, assisted with this article.
1CERCLA is the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601 to 9675. CERCLA is also referred to as Superfund because it created a tax on the chemical and petroleum industries that went into a trust fund for cleaning up abandoned or uncontrolled hazardous waste sites. CERCLA created broad liability for virtually anyone involved in the ownership or operation of a contaminated site and for those who transported hazardous substances to the site or arranged for such transport. CERCLA liability is famously joint and several and retroactive. CERCLA originally contained limited exceptions to this liability and one of the purposes of the Brownfields Amdendments was to provide protection to innocent landowners.
2U.S. EPA, General Guidelines on All Appropriate Inquiries, available at http://www.epa.gov/brownfields/aai/aaigg.htm (last accessed July 10, 2014).
3U.S. EPA, EPA Grants, CERCLA Liability, and All Appropriate Inquiries (Apr. 2009), available at http://www.epa.gov/brownfields/aai/aaicerclafs.pdf.
478 Fed. Reg. 49690 (Nov. 1, 2005).
5Taft attorneys Dave Guevara and Frank Deveau have published a book which extensively addresses AAI. See D. Guevara & F. Deveau, The Bona Fide Prospective Purchaser Defense: A Guide for Lawyers (ABA Publishing 2013).
678 Fed. Reg. 79319 (Dec. 30, 2013).
779 Fed. Reg. 34480 (June 17, 2014).
879 Fed. Reg. at 34482.