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Some confusion arose, however, because by the time the Act was passed in January 2002, standard E1527-97 had been superseded by a new ASTM version, E1527-2000.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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