ENVIRONMENTAL DUE DILIGENCE:
Defense to Superfund Liability Requires Compliance with EPA-Proposed "All Appropriate Inquiry" Regulations

Purchasers of property and existing property owners should be aware of the recent amendments to the Comprehensive Environmental Response Compensation and Liability Act (CERCLA). On January 11, 2002, President Bush signed the Small Business Liability Relief and Revitalization Act (the 2002 Brownfield Amendments). The 2002 Brownfield Amendments address liability for three categories of property owners: innocent landowners, contiguous property owners and bona fide prospective purchasers. These parties must now make "all appropriate inquiry" into the prior use and ownership of a property at the time that the property is acquired as a necessary step to establish the defenses under CERCLA and Superfund. The 2002 Brownfield Amendments direct EPA to promulgate regulations defining the appropriate inquiry to be made by prospective purchasers. The EPA regulations must address several criteria when establishing the standards for all appropriate inquiry:

• The results of an inquiry by an environmental professional;
• Interviews with past and present owners, operators, and occupants regarding the potential for contamination;
• Reviews of historical sources;
• Searches for recorded environmental clean-up liens;
• Reviews of federal, state, and local government records;
• Visual inspections of the facility and adjoining properties;
• Specialized knowledge or experience on the part of the purchaser;
• Relationship of the purchase price to the value of the property if the property was not contaminated;
• Commonly known or reasonably ascertainable information about the property; and
• The degree of obviousness of the presence or likely presence of contamination at the property and the ability to detect the contamination by appropriate investigation.

Prior to promulgation of the all appropriate inquiry regulations, buyers remain subject to different interim appropriate inquiry standards that are triggered based on the date of purchase of the property.

The EPA proposed its all appropriate inquiry regulations on August 26, 2004. On September 17, 2004, EPA published notice that it is extending the comment period until November 30, 2004. Since these regulations will apply to closings occurring after the promulgation date, purchasers should carefully review the regulation and guidance published by the EPA. Strasburger would be pleased to assist its clients in drafting comments on the proposed rules or, once implemented, in complying with the new regulations.

     
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