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EPA
Clarifies Interim Due Diligence Standard for Superfund Innocent
Purchaser Protection
In January 2002, President
Bush signed the Federal Small Business Liability Relief and Brownfields
Revitalization Act (the "Act"). The Act amends the
Superfund law, and in part provides some Superfund liability limitations
for innocent landowners who acquire contaminated property after the
release of hazardous substances and who did not know, and had no reason
to know of, the existence of contamination.
The prerequisite for the
so-called "innocent purchaser defense" to Superfund liability
is that the purchaser must have conducted "all appropriate
inquiry" into environmental matters related to the property prior
to purchasing the property. The Act requires the Environmental
Protection Agency ("EPA") to develop regulations by January
2004 for how to conduct "all appropriate inquiry." In
the meantime, the Act established an interim standard for "all
appropriate inquiry" for purchases that took place after May 31,
1997. That interim standard is to follow the procedures of the
American Society for Testing and Materials ("ASTM"), including
standard E1527-97, entitled, "Standard Practice for Environmental
Site Assessment: Phase 1 Environmental Site Assessment."
Some confusion arose,
however, because by the time the Act was passed in January 2002,
standard E1527-97 had been superseded by a new ASTM version, E1527-2000.
This spring, by final rule, EPA acted to clear up this confusion.
In the recent rule (68 Fed. Reg. 3430 (2003)), EPA clarified that
prospective land purchasers may use the current ASTM standard,
E1527-2000, or the prior version, E1527-97, in conducting "all
appropriate inquiry" to qualify for the innocent landowner defense.
We continue to see some phase 1 environmental assessments conducted that
are not completed pursuant to either of these ASTM standards.
Until EPA publishes its expected regulations on how to complete
"all appropriate inquiry," prospective land purchasers need to
be sure the consultant completing a phase 1 assessment for them
completes the assessment pursuant to the current 2000 or 1997 versions
of the ASTM standard for such investigations.
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