Environmental Due Diligence Standards: Present and Future

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The first half of 2013 has experienced greater economic activity than in recent years. The housing market appears to be recovering, albeit slowly. More lending and transactional activity is occurring at the commercial level. Concurrent with these general improvements in the overall economy are developments impacting environmental due diligence requirements. This commentary briefly discusses several such due diligence developments. Specifically, it reviews recent Environmental Protection Agency guidance on the bona fide prospective purchaser, or BFPP provisions as related to tenants and vapor intrusion, and the proposed changes to the American Society for Testing and Materials for Phase I Environmental Site Assessments. This commentary also discusses the impact of a recent appellate court ruling on continuing obligations required to avail of the BFPP protections.

In December 2012 the EPA issued guidance designed to help manage environmental liabilities and develop closure strategies for contaminated sites. The agency notes that Section 107(r) of the Comprehensive Environmental Response, Compensation, and Liability Act2 provides an important liability protection for parties who qualify as bona fide prospective purchasers. The guidance discusses the potential applicability of the BFPP provision to tenants who lease contaminated or formerly contaminated properties, and how the agency intends to exercise its enforcement discretion. Notably, this guidance super-sedes the EPA’s Jan. 14, 2009, guidance titled “Enforcement Discretion Guidance Regarding the Applicability of the Bona Fide Prospective Purchaser Definition in CERCLA § 101(40) to Tenants.”

Originally published in the Westlaw Journal: Environmental Expert Analysis - Volume 33, Issue 25/June 26, 2013.

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