EPA Updates Due Diligence Standard under Superfund for Large Tracts of Land

EPA published notice in the Federal Register on June 20, 2017, updating the “All Appropriate Inquiry Rule” for forestland and rural property. A purchaser or a tenant must demonstrate that it has performed All Appropriate Inquiry prior to taking title in order to establish an affirmative defense against strict liability under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Without a defense, owners and/or operators of contaminated property are generally liable for environmental damage, even if the contamination preceded their ownership or operation. Additionally, compliance with the All Appropriate Inquiry Rule is necessary to qualify for a brownfield grant.

Once the rule becomes effective on September 18, 2017 (unless EPA receives adverse comments), a purchaser/tenant will be able to establish that it conducted All Appropriate Inquiry if it performed its due diligence in accordance with the recent ASTM International Standard E2247-16, which standardizes the tasks and performance of a Phase I Environmental Site Assessment for large tracts of land. ASTM E2247-16 replaces ASTM E2247-8.

A potential purchaser or tenant could also follow the ASTM Standard E1527-13 to conduct due diligence, but that standard is more onerous and not well suited for multiple acre sites. Because ASTM E2247-16 is the only officially approved standard for performing the necessary due diligence other than ASTM E1527-13, it is prudent to make sure that all Phase I assessments performed on and after September 18 comply with the provisions of one of the current standards rather than one that is no longer valid.