e-Bulletin: EPA Issues Final Rule on Standards and Practices for All Appropriate Inquiries into Previous Ownership and Uses of Property as Required under CERCLA

The Environmental Protection Agency (EPA) has issued its final rule on federal standards and practices for conducting all appropriate inquires (AAI) as required under section 101(35)(B)(ii) and (iii) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The AAI standard clarifies the requirements necessary to establish the innocent landowner, bona fide prospective purchaser (BFPP), and contiguous property defenses. Persons claiming these liability protections must conduct AAI into prior ownership and uses of a property prior to or on the date he or she acquires the property. The purpose of AAI is to identify releases and threatened releases of hazardous substances that cause or threaten to cause the incurrence of response costs. The final rule took effect on November 1, 2006 and replaces interim standards established by Congress in 2002 under the Brownfields Amendments to CERCLA.

In addition, state, local, and tribal governments receiving federal brownfields grants awarded under CERCA section 104 (k)(2)(B) to conduct site characterizations and assessments must conduct such activities in accordance with standards and practices for AAI.

Background

Persons may be held strictly liable for cleaning up hazardous substances at properties that they either currently own or operate or owned operated at the time of disposal under CERCLA. In other words, a potentially responsible party (PRP) may be liable for environmental contamination based solely on property ownership and irrespective of his or her fault or negligence.

In 1986 the Superfund Amendments and Reauthorization Act (“SARA”) amended CERCLA by creating an “innocent landowner” defense to CERCLA liability. CERCLA section 101(35)(B) provided a defense to CERCLA liability for persons who “did not know and had no reason to know” prior to purchasing a property that a hazardous substance released or threatened to be released was disposed of on, in, or at the property. To claim the innocent landowner defense, such persons had to have conducted AAI into the previous ownership and uses of the property consistent with good commercial or customary standards and practices.

In 2002 the Small Business Liability Relief and Brownfields Revitalization Act, known as the Brownfields Amendments to CERCLA, was enacted. The Brownfields Amendments added potential liability protections for BFPPs and contiguous property owners who also must show they conducted AAI to assert the defenses. In addition, BFPPs and contiguous property owners must show that they are not potentially liable or affiliated with any other person that is potentially liable for response costs at the property. A BFPP must have acquired a property subsequent to any disposal activities involving hazardous substances at the property. A contiguous property owner must show that he did not cause, contribute, or consent to any release or threatened release of hazardous substances. The contiguous property owner defense essentially protects persons who are victims of pollution caused by their neighbors actions.

Congress established interim AAI standards as part of the Brownfields Amendments, which were effective January 11, 2002. For properties purchased after May 31, 1997, the interim standards include the procedures of the ASTM Standard E1527-97 (“Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process”). Persons who purchased properties prior to May 31, 1997 and wish to establish the innocent landowner or continuous property owner defenses must have conducted AAI into the previous ownership and uses of the property in accordance with generally accepted good commercial and customary standards and practices.

The current interim standard for AAI may not apply to property acquired by a non-governmental entity or non-commercial entity for residential or other similar uses. For those cases, the Brownfields Amendments establish that a “facility inspection and title search that reveal no basis for further investigation shall be considered to satisfy the requirements’ for AAI. These properties are not within the scope of the EPA’s final rule on AAI.

Final All Appropriate Inquiries Rule

EPA’s final AAI rule amends Title 40, Chapter I, part 312 of the Code of Federal Regulations. The primary objective of AAI is to identify conditions indicative of releases and threatened releases of hazardous substances on, at, in, or to the subject property. For recipients of Brownfields grants, the objective may also include petroleum and petroleum products, pollutants, contaminants, and controlled substances.

The final AAI standards continue certain obligations, including: complying with land use restrictions and not impeding the effectiveness or integrity of institutional controls; taking “reasonable steps” with respect to hazardous substances affecting a landowner’s property to prevent releases; providing cooperation, assistance and access to EPA, a state, or other party conducting response actions or natural resource restoration at the property; complying with CERCLA information requests and administrative subpoenas; and providing legally required notices.

Many of the AAI activities must be conducted by or under the supervision or responsible charge of, an individual who qualifies as an “environmental professional.” The final rule’s definition of an environmental professional differs from the ASTM E1527-00 standard because it only concerns the qualifications of the individual supervising the conduct of AAI; other individuals without proper qualifications may still take part in AAI as long as they are supervised by a person who satisfies the requirements.

Unlike the ASTM E1527-00 standard, the final rule for AAI requires specific certification or licensing, educational, and experience requirements for an environmental professional. In the final rule, an environmental professional is defined as someone who possesses sufficient education, training, and experience necessary to exercise professional judgment to develop opinions and conclusions regarding conditions indicative of releases or threatened releases of hazardous substances on, at, in, or to a property. An environmental professional must have a state or tribal issued certification or license and three years of relevant full-time work experience; a baccalaureate degree or higher in science or engineering and five years of relevant full-time work experience; or ten years of relevant full-time work experience.

The inquiries that must be conducted by an environmental professional under the final rule include: