NEWS ARTICLE:

EPA's Proposed Changes to
2004-10-13

EPA’s Proposed ‘All Appropriate Inquiry’ AAI

The EPA has recently completed a thorough review of the extant process associated with ‘All Appropriate Inquiry’ (AAI) into the ownership and uses of a property consistent with good commercial or ‘customary practice’ as defined in CERCLA 42 § 9601(35)(B) that will give a party to a commercial real estate transaction the innocent landowner defense to CERCLA liability 42 § 9601(35)(A) and (B) and § 9607(b)(3).

Currently the draft document is open to public review and comment, with the expectation that the EPA will enact new regulations by the end of calendar year 2005.

The proposed changes will have a dramatic impact on you and your clients. Some of the more salient points are noted herein:

1. Bona fide prospective Purchasers, Innocent Landowners and Continuous Property Owners, in order to qualify for under CERCLA liability protection, MUST:

a. Conduct AAI prior to purchase
b. Comply with ‘continuing obligations’ after purchase
c. Comply with land use restrictions and institutional controls
d. Take ‘reasonable steps’ with respect to hazardous substance releases
e. Cooperate with response actions
f. Comply with CERCLA information requests

2. EPA is adamant in its Preamble that: “conducting AAI alone does not provide a landowner with protection against liability;” and “failure to identify an environmental condition during AAI does not relieve the landowner from complying with the other statutory requirements for obtaining the liability protections.”

3. While not a requirement, Sampling could be necessary to maintain liability protection post-purchase as stated in the Preamble: “In certain instances, depending upon site specific circumstances…, it may be necessary to conduct sampling and analysis, either pre- or post- acquisition, to fully understand the conditions at a property and fully comply with the statutory requirements for the CERCLA liability protections.”

4. The EPA is currently conducting a ‘pre-compliance review’ of revised ASTM 1527-00 that incorporates new requirements anticipated in the finalized AAI rule.

5. The qualifications of Environmental Professionals under the proposed Rule have been significantly modified: only Professional Engineers and Geologists with relevant experience, Federal or State Licensees and B.A. or B.S. degreed individuals with relevant experience will be permitted to conduct Phase I’s.

6. Surveys conducted by the EPA suggest that increases in costs to conduct a Phase I will be insignificant to moderate.


In summary, subsequent to the adoption of AAI, a Phase I will be indistinguishable and more clearly defined from the concept of All Appropriate Inquiry as interpreted in the past.

Additional information on AAI is posted on EPA’s website at www.epa.gov/brownfields/regneg.htm

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