RE: New “All Appropriate Inquiries” (AAI) Standards
On November 1, the U.S. EPA published it final “Standards and Practices for All Appropriate Inquiries” in the Federal Register (70 FR 210, p66069). These standards identify how the U.S. EPA expects environmental site assessments to be conducted if the purchase of a property intends to ever assert a defense to CERCLA liability for contamination.
Property Developers, Individuals who Routinely Purchaser Property, and their Attorneys: We recommend that you carefully study both the standards (only seven pages) and the EPA’s comments (38 pages) in the federal register. The comments are particularly enlightening in helping to understand the standards. The Highlights of AAI may help you to focus on key issues we’ve identified.
Occasional Property
Purchasers: We recommend that
you review the Highlights of AAI for an expanded, but still brief discussion of
the new standards. When you
identify property you are considering purchasing, we encourage you to work with
your attorney and Fitzgerald Henne in identifying site-specific issues that
might relate to the site and how the environmental site assessment should be
conducted.
Lenders: We recommend that you review the Highlights of AAI on Fitzgerald Henne’s website for a expanded, but still brief discussion of the new standards. Although continued use of the ASTM standards may suffice in protecting a bank’s portfolio of secured properties, your borrowers would be better served if they order a full AAI site assessment.
Real Estate Brokers and Sellers: We suggest that you also review the Highlights of AAI document on Fitzgerald Henne’s website. Although the purchaser and the environmental professional will work most closely together, you should be familiar with the information that will be needed. Please also note that the AAI standards allow for a report prepared for a property seller to be transferred to a buyer provided that the data was collected within prescribed timeframes.
Fitzgerald Henne began conducting environmental site assessments following the draft AAI standards early in 2005 and is already preparing reports in conformance with these finalized standards.
Please call us if you have any general or site-specific questions.
Sincerely,
FITZGERALD HENNE & ASSOCIATES, INC.
Mark S. Henne, M.S., J.D.
Vice President
Highlights of
the AAI Standards
·
AAI uses a new
term: “conditions indicative of a
release”
·
AAI’s must be
conducted to avoid potential liability for contamination coming from other
properties
·
Fitzgerald
Henne anticipates that future ESA will need to conform to both ASTM and AAI
Standards
·
AAI is a
“performance-based” standard in contrast to ASTM’s “data-gathering”
standard
·
Data gaps must
be identified, and filled
·
Current ASTM
standards can be followed until
·
ESAs
must be conducted by “Environmental Professionals,” meeting clearly-defined
educational and experience requirements.
Three-quarters of Fitzgerald Henne’s environmental group members fully
satisfy the environmental professional requirements.
·
Reports must be
signed by the environmental professional, who must also state that they meet the
EPA’s requirements, and that the work was done in accordance with the AAI
standards
·
The report must
discuss the relationship of purchase price to the value of the
property
·
The research
must include a search for environmental cleanup liens
·
Key research
more than six month old, and all other research more than one years old must be updated before the buyer receives title to
the property.
·
Data in prior
ASTM Phase I reports may be incorporated in new AAI reports if the purchaser and
environmental professional check the information and find it to be accurate and
valid.
·
Just doing an
AAI environmental site assessment is insufficient to maintain a CERCLA defense;
the new standards include on-going obligations.
·
At least one
(and often more) current and former owners and operators must be
interviewed
·
The research
must attempt to identify the first use of the property, not merely to the first
development of the property
·
Institutional
and engineering controls, such as land-use restrictions, restrictions on well installation, or
other governmentally-created limitations intended to protect the public from
regional contamination problems, must be researched
identified
·
Purchasers and
environmental professionals must disclose any specialized knowledge they
have.
·
Commonly known
or reasonably ascertainable information must be
researched