EPA Provides New Environmental Due Diligence Option for Parties Purchasing Large Rural or Forested Tracts

January 8, 2009
by MICHAEL GROSS
Client Alert Newsletter Forecast 2009

On December 23, 2008, the U.S. Environmental Protection Agency ("EPA") announced that it will extend the liability protections afforded to parties complying with the "All Appropriate Inquiry" standard under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") to purchasers of large rural or forested tracts of land, even when such purchasers do not elect to follow the ASTM 1527-05 environmental due diligence standard. In its preamble to the new rule, EPA indicated that "there are no significant differences between the regulatory requirements" for ASTM E2247-08 and the current ASTM 1527-05 standard. Previously, only purchasers who satisfied the "All Appropriate Inquiry" requirements or who followed the ASTM 1527-05 standard were able to qualify for CERCLA defenses including the bona fide prospective purchaser defense, which allows a purchaser to knowingly purchase property contaminated with hazardous substances and still obtain statutory liability protection, provided that all additional elements of the defense were met. The new rule also applies to those using federal brownfields grants to perform environmental site assessments on a large forested or rural property. Accordingly, parties purchasing either tracts of forested land in excess of 120 acres, or large rural properties, may use the ASTM E2247-08 environmental due diligence standard ("Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process for Forestland or Rural Property") and still qualify for CERCLA liability protection.

EPA published the rule as a "direct rule" meaning that it will become effective automatically on March 23, 2009 as EPA did not receive any adverse comments during the comment period.