The Innocent Landowner Defense
The “Innocent Landowner Defense” was created as a result of 1986 amendments. The law states that an “innocent landowner defense” can be claimed if “all appropriate inquiry consistent with good commercial practice” is performed.
The purpose for performing environmental assessments prior to acquiring property is to have a report that was performed with the appropriate standard of care that could be used to help defend the property owner from environmental liability if pre-existing environmental concerns are discovered at the site after acquisition. CERCLA is very strict regarding liability, and if appropriate risk management techniques are not employed prior to site acquisition, the property owner is typically found to be the primary responsible party. The Innocent Landowner Defense (a.k.a. Innocent Purchaser Status) must be based on an environmental report that would stand up in court.
Phase I Environmental Site Assessments (ESAs) were borne by SARA (Superfund Amendments and Reauthorization Act) in 1986. In their infancy, ESAs came in all shapes and sizes. As the industry grew, the methods used to assess the environmental quality of property became fairly routine. The ESA has evolved into a generally accepted set of procedures used to obtain data about property.
Standard Operating Procedures
Environmental assessments are scientific investigations. The scientific method involves standardized processes, and there is a nationally recognized process known as the ASTM Designation E 1527-13, “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process”. This guidance has become the “Standard” for ESA’s.
Standard Operating Procedures (SOPs) provide a measure of quality assurance to the user (lenders, purchasers, attorneys) to demonstrate that all appropriate inquiry was conducted. SOPs provide a platform for providers to estimate project costs. Conducting assessments in accordance with SOPs provides liability protection to providers by demonstrating the performance of the appropriate standard of care.
Not using SOPs creates uncertainty in the findings, enables corner cutting and inappropriate pricing, and exposes both the user and the provider to liability. Not using SOPs is dangerous. If the appropriate level of inquiry is not performed, evidence of impact may be missed, and the liability protection intended from the report may have little value.
So the ASTM E-1527-13 Standard should be followed, but how carefully is it being followed? Numerous ESA reports assert that the work was performed in “general accordance” with ASTM E-1527-13. Many others claim to be conducted “in accordance with ASTM E-1527-13”, but closer examination indicates otherwise. ASTM E-1527-13 has had a significant impact on the industry, but investigative techniques and reporting formats still vary significantly.
When investigating the environmental quality of property, assessors cannot cost effectively analyze every grain of sand or gallon of groundwater. Subsurface conditions that are not visible must be assessed from the surface. The process of assessment therefore involves interpretation and subjective professional judgments based on data collected using the SOP.
Standards exist as a measure of control to limit subjectivity in an objective investigation. In the practice of environmental assessment, professional subjectivity is included in a report to supplement the objective findings obtained from standard operating procedures. The environmental profession requires both components: data collected from standard operating procedures and subjective judgments made by the professional to explain the significance of the findings.