Final EPA Rule Provides Liability Protection To Encourage Redevelopment Of Brownfields

November 11, 2005

A new “brownfields” rule from the U.S. Environmental Protection Agency will encourage redevelopment of old, abandoned industrial facilities, according to the National Association of Home Builders (NAHB).

The final rule, promulgated Nov. 2, will provide crucial liability protection for those who seek to rehabilitate and redevelop brownfields. The rule also effectively establishes a new commercially accepted method for conducting traditional “due diligence” in all real estate transactions.

The EPA’s “all appropriate inquiry” rule spells out the necessary requirements to ensure that a property purchaser cannot be sued for environmental contamination that took place on a property prior to the purchaser’s ownership. As such, it will instill crucial legal certainty in transactions involving both tainted and untainted properties.

“Federal brownfields law says that those who purchase previously tainted properties can be protected from federal liability if they perform a property investigation called “all appropriate inquiry” before taking title to the property, but until now, it was unclear what such an investigation entailed or who was qualified to undertake it,” explained NAHB member Marty Mitchell, a land developer with Mitchell & Best Homebuilders based in Rockville, Md. “The new rule clearly explains these requirements so everyone can understand and comply with them.”

The new EPA rule seeks to encourage the cleanup and redevelopment of approximately 500,000 abandoned, idled, or under-used industrial sites where redevelopment is complicated by real or perceived environmental contamination. Brownfields redevelopment can be an important part of efforts to revitalize blighted areas near old, unused industrial facilities. Many brownfields sites are located in urban areas or inner suburbs close to residential neighborhoods, employment opportunities and retail centers.

A number of cities, including Pittsburgh, Baltimore and Minneapolis, have made brownfields redevelopment a centerpiece of neighborhood revitalization efforts. Replacing unused, decaying buildings with new commercial facilities, homes and parks means more jobs, more tax revenue and a cleaner environment.

“This will serve as a catalyst for private sector investment in brownfields cleanup,” said Mitchell, who served on the EPA advisory panel that developed the new rule to provide reasonable clarity and assurance for redevelopers. “It sends a strong signal to builders, developers, lenders and others that the government wants to make rehabilitation of these old industrial sites feasible.”

“The EPA is to be commended for its actions in this endeavor, which ensure that innocent purchasers who are interested in redeveloping brownfield properties can do so without fear of retribution under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), also known as Superfund,” said NAHB President David Wilson, a custom home builder from Ketchum, Idaho.

“Moreover, EPA Administrator Stephen L. Johnson and his staff within the EPA’s Brownfields Office deserve applause for making this happen through an innovative regulatory process known as a ‘negotiated rulemaking.’ We hope to see more of this kind of commonsense approach to environmental regulation in the future.”

Source: NAHB

Contact ALTA at 202-296-3671 or

North American Title Insurance Company (NATIC) is a seasoned title insurance underwriter, helping title agents to achieve their individual business goals for more than 50 years. Today, the company conducts real estate settlement services in 39 states and the District of Columbia through a network of experienced, independent agents.