Before You Buy a Brownfield, Protect the Deal With All Appropriate Inquiries

• Under CERCLA, current owners can be liable for historic contamination, even when the pollution happened before they owned the property
• The 2002 CERCLA amendments created clearer landowner liability protections, but buyers do not receive those protections automatically; they must satisfy the statute’s requirements
• A Phase I ESA only helps when it satisfies All Appropriate Inquiries before acquisition and is followed by continuing obligations after acquisition

Redeveloping an abandoned commercial property or former industrial site can create real value for communities and local economies. It can also transfer legacy environmental risk to the buyer. Since 1980, the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly known as Superfund, has given the U.S. Environmental Protection Agency (EPA) broad authority to respond to releases or threatened releases of hazardous substances and to pursue responsible parties. EPA states that CERCLA can impose retroactive, strict and joint-and-several liability. In plain terms, ownership can create exposure even when contamination predates the deal by decades.

Congress addressed some of that barrier in the 2002 amendments to CERCLA by adding new landowner liability protections and clarifying existing ones. EPA explains that these protections are self-implementing. Buyers do not apply for them. They preserve them by meeting the law’s criteria.

All Appropriate Inquiries, or AAI, is the threshold requirement. EPA defines it as the process of evaluating a property’s environmental conditions and assessing potential liability for contamination. In most transactions, buyers satisfy that requirement through a Phase I ESA. EPA’s current AAI materials state that ASTM E1527-21 is consistent with the federal rule and may be used to comply with it.

Timing matters. The federal rule requires the overall inquiry to be completed within one year before acquisition. It also requires several core elements to be completed or updated within 180 days: interviews, cleanup lien searches, government records review, site and adjoining property inspections and the environmental professional declaration.

That is why not every Phase I ESA carries the same legal weight. EPA’s reporting guidance says the written report must state whether the inquiry identified conditions indicative of releases or threatened releases and must identify any significant data gaps. A report can exist and still leave a buyer exposed if the work is stale, incomplete or weakly documented.

AAI is the start of the defense, not the full defense. EPA says a buyer may qualify as a bona fide prospective purchaser (BFPP) even with knowledge of contamination, provided they acquired the property after January 11, 2002, meet the threshold criteria and ongoing obligations and do not impede response actions or natural resource restoration.

EPA’s landowner liability guidance adds that those ongoing obligations include no disposal after acquisition, compliance with land use restrictions and institutional controls, full cooperation and access, legally required notices and reasonable steps to stop continuing releases, prevent threatened future releases and limit exposure to earlier releases. That means liability protection depends on what the buyer does after closing, not only what they commission beforehand.

Before signing, decision-makers should focus on five checks grounded in EPA’s AAI rule and landowner liability guidance.

• Bring legal and environmental review into the deal early
• Confirm the Phase I ESA is being prepared to satisfy AAI, not only general lender diligence
• Check the acquisition calendar against the one-year and 180-day timing rules
• Resolve or clearly document significant data gaps before closing
• Build post-closing reasonable steps into the ownership and operations plan

Purchasing and redeveloping brownfield properties can create value, but environmental liability protection depends on more than a strong site plan. This series explains how buyers, municipalities, Tribal nations, lenders and redevelopment partners can manage CERCLA risk through timely due diligence, disciplined documentation and strategic planning. The takeaway for decision-makers is clear: CERCLA risk management works best when liability protection is built into the project’s full life cycle, from acquisition planning through redevelopment.

• Before You Buy a Brownfield, Keep the Bona Fide Prospective Purchaser Defense Intact
  How buyers can preserve bona fide prospective purchaser protection by meeting continuing obligations after acquisition
• Before You Buy a Brownfield: Know What CERCLA Does and Doesn’t Exempt
  How CERCLA exemptions and defenses can limit liability for certain brownfield owners and why due diligence and documentation remain essential.