Newsletter Spring 2006 03

Number 63
Spring 2006

EPA revisits landowner defenses to superfund liability

On November 1, 2005, the U.S. Environmental Protection Agency published its final rule on how to conduct “all appropriate inquiries” into past uses and ownership of land.

The rule provides a regulatory standard for the environmental due diligence necessary of property owners seeking landowner liability protections under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”). Although CERCLA previously used the phrase “all appropriate inquiry” in one of the defenses outlined below, the statute provided no criteria for conducting the inquiry.

“Brownfield”

Parties will now have to use the formal investigatory criteria set out in the final rule when purchasing property to qualify for certain Superfund liability protections provided by the Small Business Liability Relief and Brownfields Revitalization Act of 2002. The brownfields amendments created two new defenses to liability under CERCLA to encourage brownfields redevelopment-the bona fide prospective purchaser defense and the contiguous landowner defense-and revised the pre-existing innocent landowner defense. A brownfield is a property on which expansion, redevelopment, or reuse may be complicated by the presence (or potential presence) of a hazardous substance, pollutant, or contaminant.

All three defenses require a site owner to conduct “all appropriate inquiry” into past uses and ownership of land to qualify for Superfund protection. Landowners or prospective purchasers who do not conduct “all appropriate inquiries” prior to or on the date of obtaining ownership of the land may lose their ability to claim protection from CERCLA liability as an innocent landowner, bona fide prospective purchaser, or contiguous property owner.

Effective date

The rule will become effective on November 1, 2006. Until that time, the relevant interim due diligence standards remain in effect. However, note that the final rule allows for the use of older assessments for properties being acquired, provided those assessments are updated.

© 2006 Goldman Antonetti