The Small Business Liability Relief and Revitalization Act (the Brownfields Law), signed by President Bush on January 11, 2002, mandated that the EPA develop the first federal standard for what constitutes “all appropriate inquiry” as well as created additional landowner protections from CERCLA liability. The federally-mandated “all appropriate inquiry” standard (AAI) was promulgated on November 1, 2005 (40 CFR Part 312). The ASTM E-1527 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process will be revised to meet the final AAI rule. The ASTM E-1528 Standard Practice for Environmental Site Assessments: Transaction Screen Process will be eliminated.

The new Brownfields Law also created two new landowner liability protections. The Bona Fide Prospective Purchaser defense created liability protection for a property owner who purchases a contaminated property, provided the property owner can demonstrate the contamination occurred prior to the purchase. The Contiguous Property Owner defense created liability protection for a property owner from contamination resulting from the migration of a hazardous substance from an adjacent property, provided the property owner can demonstrate the contamination was not known to exist prior to the purchase. In order for a property owner to qualify for these new CERCLA liability protections, the property owner would be required to demonstrate the new federal AAI requirements were satisfied prior to the purchase.

The AAI rule applies to all commercial properties, as well as residential properties used for commercial purposes (i.e., apartment buildings) and residential properties under federal ownership. Once promulgated, CERCLA liability protection under the innocent landowner defense, the contiguous property owner defense, or the bona fide prospective purchaser defense will only be afforded to properties where an ESA that meets the new AAI criteria was performed prior to or the date the property is acquired. An ESA the meets the AAI criteria will also be mandatory for all property transactions funded by the EPA’s Brownfields program.

The Ottery Group continues to update its due diligence procedures to ensure that our clients can continue to rely upon the liability protections afforded by our products. The Ottery Group will continue to monitor these changes assures that our clients who rely on federal funding for real estate transactions remain in compliance with federal environmental due diligence standards.