May 15, 2005
 
EPA Proposes AAI Rule
 
On August 26, 2004, the US Environmental Protection Agency published the proposed "all appropriate inquiries" rule in the Federal Register. If promulgated, EPA's rule will mark the first time that environmental due diligence is codified in a federal regulation - Part 312 - Standards and Practices for All Appropriate Inquiries.
 
With Phase I procedures designed for application to a Brownfields Development, the proposed rule will establish specific regulatory requirements for conducting AAI into the previous ownership, uses and environmental conditions of a property for the purposes of qualifying for certain landowner liability protections under CERCLA. Within the proposed rule is text that will not only dictate who can perform Phase I environmental site assessments in the future, but also calls for significant changes in how ESAs can be performed - from historical research documentation to reviews of local and tribal government records to documentation of data gaps.
 
The rub for the marketplace is that the new rule imposes in depth research procedures and requirements that assume that every loan transaction or acquisition by a developer is a Brownfields site. To appreciate the impacts of the rule on the marketplace, one must first understand the definition of a Brownfields site and in turn apply that definition to a typical loan transaction in the private sector marketplace.
 
What are Brownfields?
 
Brownfields are "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". Brownfields vary in size, location, age, and past use. Such properties can range from a small, abandoned corner gas station to a large, multi-acre former manufacturing plant that has been closed for years.
 
Brownfields are, and have been, problems for economic, social, and environmental reasons. They can cause harm to human health and the environment, reduce surrounding property value and contribute to neighborhood blight, and limit economic growth. Conversely, the redevelopment of a Brownfields property can restore the site to productive use, increase property values, boost tax rolls, improve public health, and enhance a community's image. Brownfields re-developments are typically public sector driven projects.
 
What's Been Said?
 
We at EARC are continuing to monitor this rule as it develops and will keep our clients informed as best as possible in this section of our web site. We are reliably informed that the rule is at least a year away from implementation as of the date of this article. What can be done now to prepare for its implementation? That is a matter of conjecture, as no one knows at this time in what final form the rule will emerge.
 
As can be expected in the private sector marketplace, the proposed rule has come under intense fire. Unfortunately, much of the public comment, both pro and con, has been generated by various companies and entities from the seemingly exclusive perspective of self interest in hopes of gaining advantage over competitors, rather than the best interest of their private sector clientele.
 
Many other Phase I professionals with their clients best interest in mind, have already aired concerns about the effect the AAI rule will have on the time and costs associated with completing Phase Is. After the rule was proposed, EPA held a 90-day public comment period.

 
 
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