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ALL APPROPRIATE INQUIRY: THE EVOLUTION OF THE PHASE I ENVIRONMENTAL SITE ASSESSMENT

see also: Environmental Site Assessments external resources: ASTM E 1527-00 ASTM E 1527-05 EPA - CERCLA Overview EPA - SARA Overview EPA - Brownfields Law EPA - All Appropriate Inquiries (AAI) Final Rule

The objective of environmental due diligence is to limit the potential exposure to financial liabilities and regulatory intervention related to current and historic land use. Diligent inquiry provides the basis for the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, 1980 [also known as Superfund]) "innocent landowner defense." The inquiry can be a customized and systematic process of evaluating the current and historical land use, natural and cultural resources, pollution control, and/or hazardous substance and petroleum product practices at a property.

The process of defining liability and requirements to establish defense has evolved. In 1986, CERCLA was amended with the Superfund Amendments and Reauthorization Act (SARA) to most notably include the innocent landowner defense to the strict liability cited in CERCLA and was further defined in 2002 with the Small Business Liability Relief and Brownfields Revitalization Act (“Brownfields Law”). The Brownfields Law included defense for contiguous property owners, bona fide prospective purchasers and innocent landowners. A brownfield property is a real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant.

The Brownfields Law added to CERCLA the requirement for parties to undertake “all appropriate inquiry” into prior ownership and property use at the time in which the party acquires the property. The interim standards for conducting an All Appropriate Inquiry dating back to properties purchased after 1997 can be initially met by conducting an ASTM E1527-00 Phase I Environmental Site Assessment and can systematically include investigation, economic analysis and remediation. However, the Brownfields Law requires the U.S. EPA to develop standards and practices for how to conduct All Appropriate Inquiry.

The Final Rule for All Appropriate Inquiry was published by the U.S. EPA on November 1, 2005 and will undoubtedly further evolve the due diligence process. Key aspects of the Final Rule facilitate inquiry by an environmental professional, as defined in the rule, to include interviews, historical research, identifying environmental liens, agency records review, visual inspection, specialized knowledge, property purchase price and value, commonly known information, degree of obviousness, and the ability to detect potential contamination by appropriate investigation.

Although the All Appropriate Inquiry Final Rule is similar to the ASTM E 1527-00 Standard, the U.S. EPA considers the ASTM E 1527-00 Standard to be inconsistent with applicable law because it does not meet the statutory criteria under purposes of CERCLA. The critical differences are concise objectives and performance standards, depth of inquiry, and environmental professional conductance of the inquiry. To enable the potential liability protections under CERCLA, an All Appropriate Inquiry is to be conducted to identify releases and threatened releases of hazardous substances on, at, in or to the property which cause the incurrence of response costs. However, the scope may certainly be broadened to include petroleum, petroleum products, controlled substances, and CERCLA pollutants and contaminants.

The findings of the All Appropriate Inquiry must be documented in a written report. There are no additional CERCLA reporting requirements or obligations included in the Final Rule or a specific format to the written document. In addition, the written document may be similar in nature to the type of report currently provided under generally accepted practices. Considerations such as the use of previously conducted inquiries, and their period of validity are also addressed in the Final Rule. The U.S. EPA estimates that there will be a minor increase in cost under the All Appropriate Inquiry Final Rule compared to the ASTM E 1527-00 Standard.

The ASTM E 1527-00 Standard will in the interim satisfy the statutory requirements for conducting an All Appropriate Inquiry. However, either the requirements of the All Appropriate Inquiry Final Rule or ASTM E 1527-05 Standard may be used. Beginning November 1, 2006, either the requirements of the Final Rule or ASTM E 1527-05 Standard must be used to satisfy the statutory requirements for conducting an All Appropriate Inquiry.