Patrick J. Paul & Christopher P. Colyer
As activity on the real estate transactional front continues to gain momentum, real estate practitioners need to increasingly be aware of due diligence requirements necessary to minimize or avoid liability under federal law—namely, the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA” or “Superfund”). Performing the required due diligence prior to property acquisition is an essential prerequisite for three significant defenses to CERCLA liability—the Innocent Landowner, Bona Fide Prospective Purchaser (“BFPP”), and Contiguous Property Owner defenses—as well as to qualify for CERCLA Brownfield grants. The common thread to each of these CERCLA defenses and grants is the requirement that a purchaser or operator perform “All Appropriate Inquiry” (“AAI”) prior to acquisition.
Performing AAI is not an idle exercise, as the United States Environmental Protection Agency’s (“EPA”) AAI rule, established at 40 C.F.R. part 312, sets forth specific inquiry requirements that must be met for purposes of CERCLA. These inquiry requirements generally are satisfied by performing a Phase I Environmental Site Assessment in accordance with standards adopted by the American Society for Testing and Materials (“ASTM”)—namely, the E1527-05 standard and its more recent update, the E1527-13 standard.