Fundamentals of U.S. EPA’s “All Appropriate Inquiry” Rule
On November 1, 2005, the United States Environmental Protection Agency (“EPA”) announced the final “All Appropriate Inquiry” (“AAI”) Rule as required by the Small Business Liability Relief and Brownfields Revitalization Act of 2002. The final AAI Rule changes the way in which environmental due diligence and Phase I Environmental Site Assessments are to be conducted for potentially contaminated property.
For example, the final AAI Rule requires that “all appropriate inquiry” include, among other things:
- Certification that the inquiry into the property and the resulting report was prepared by a qualified “Environmental Professional” with requisite experience in accordance with the final AAI Rule;
- Visual inspections of the property and adjacent properties by the Environmental Professional;
- Interviews with past and present owners, operators, occupants and the prospective purchaser;
- Reviews of historical sources back to the first obvious use of the property;
- Review of government records;
- Commonly known or reasonably attainable information, including an evaluation of the purchase price of the property;
- An evaluation of commonly known or reasonably attainable information, including the degree of obviousness of the presence of contamination and the ability to detect the presence of such contamination;
- Data gaps, and the significance of those data gaps on the Environmental Professional’s opinion;
- An inquiry by the purchaser of the property for any environmental cleanup liens filed against the property, whether the person has any specialized knowledge or experience, the relationship of the purchase price to the fair market value of the property, if the property was not contaminated, and any commonly known or reasonably ascertainable information about the property; and
- A time limit under which all appropriate inquiries must be conducted. For all transactions, all appropriate inquiry must be conducted within one year prior to the date on which a person acquires a property. Certain components, including interviews with past and present owners, operators and occupants, searches for environmental liens, and visual inspections of the property and adjoining properties, must be updated 180 days prior to the date of acquisition of the property, if the inquiry was completed more than 180 days prior to the date of acquisition of the property.
Because completing “all appropriate inquiry” is a threshold step to qualify for one of the three exemptions from landowner liability under Comprehensive Environmental Response, Compensation and Liability Act (“Superfund”) -- the “Innocent Landowner” defense, the “Bona Fide Prospective Purchasers” defense, and the Contiguous Property Owners defense -- it is important to understand how and when all appropriate inquiry must be completed under the final AAI Rule.
- Between November 1, 2005, and November 1, 2006, prospective purchasers may demonstrate that they have conducted all appropriate inquiry into the property by performing a site investigation using one of the following methods:
o The All Appropriate Inquiry Rule, 40 CFR Part 312;
o ASTM 1527 E-00; or
o ASTM 1527 E-05.
- After November 1, 2005, prospective purchasers must demonstrate that they have conducted all appropriate inquiry into the property by performing a site investigation using one of the following methods:
o All Appropriate Rule, 40 CFR Part 312; or
o ASTM 1527 E-05.
The final AAI Rule will significantly impact property transactions and the due diligence necessary to qualify for liability relief under CERCLA. If you have any questions regarding the final AAI Rule, please contact Frost Brown Todd’s Environmental Attorneys.