Section 9 Threshold Requirement to CERCLA Defenses: “All Appropriate Inquiry” Rule

• Library: Environmental Issues and Federal Regulations Affecting Real Estate 2011

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The threshold requirement for all three landowner defenses to CERCLA liability discussed in §§1.5–1.7 above is that the purchaser must perform AAI (“all appropriate inquiry”) into the previous ownership and uses of a property before purchasing it to determine whether the property is, or potentially is, contaminated. See:

· CERCLA § 101(35), 42 U.S.C. § 9601(35) (innocent landowner/purchaser defense)

· CERCLA § 101(40)(B) (bona fide prospective purchaser defense)

· CERCLA § 107(q)(1)(A)(viii), 42 U.S.C. § 9607(q)(1)(A)(viii) (contiguous property owner defense)

In addition, as discussed in the EPA’s guidance documents on the bona fide prospective purchaser defense (see §1.6, supra),
the prepurchase AAI will, most likely, inform a bona fide prospective purchaser as to the nature and extent of contamination on the property and what might be considered “reasonable steps” to take regarding the contamination. Knowledge of contamination and the opportunity to plan before purchase should be factors in evaluating what are reasonable steps, and this could result in greater reasonable steps obligations for a bona fide prospective purchaser.

Before SBLRBRA, the 2002 Brownfields Amendments, CERCLA did not specify the level of inquiry required to meet the AAI requirement, which at that time applied only to
the innocent landowner/purchaser defense. Over time, the commercial real estate industry viewed the procedures of
the ASTM (ASTM International) (formerly known as the American Society for Testing and Materials)—specifically,
the document known as ASTM E1527 Phase I Process (Standard E1527—Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process)—as the customary and appropriate standard for pre-purchase inquiry into environmental conditions. This document was issued in 1995 and revised in 1997 and 2000. See 70 Fed. Reg. 66,069...