All Appropriate Inquiry
The New Rules
SARA BETH WATSON
Steptoe & Johnson LLP
Washington, D.C.
American Bar Association Teleconference
Wednesday, November 16, 2005
12:00 pm -1:30 pm EST
swatson@steptoe.com
(202) 429-6460
Brownfield Amendments
The Small Business Liability Relief and the
Brownfields Revitalization Act of 2002 (Brownfield
Amendments)
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Potential for federal CERCLA liability relief
Hurdles to qualify for the relief before the
acquisition of the property
Long-term commitments to maintain the relief
State law liability issues must be considered
separately
How Does One Meet the
Qualifying Criteria?


Evaluation of compliance preformed on a
“careful, fact-specific analysis”
Statutory Criteria for compliance:
A. “All Appropriate Inquiry” Criteria
B.
Full Cooperation
C.
Compliance with Land Use Restrictions and Institutional
Controls
D.
Did Not Cause, Contribute or Consent to a Release/Disposal
Occurred Prior to Acquisition
E.
Compliance with All Requests for Information
F.
All Legally Required Notices
G.
No Affiliation with a Potential Liable Party
H.
Reasonable Steps
42 U.S.C. § 9601(35)(B)(iii)
To whom is AAI applicable?
All Appropriate Inquiry is applicable to 3 categories of
property owners:
1.
Innocent purchasers
2.
Contiguous property owners
3.
Bona fide prospective purchasers
*
provided that the property owner meets the
statutory criteria, which will be analyzed
on a fact-specific basis
4. Certain Brownfield grant recipients
To whom is AAI applicable?

All Appropriate Inquiry is applicable to relief from CERCLA
liability for the 3 categories of property owners i.e. limited to
CERCLA hazardous substances definition

Need to consider other liability schemes for non-CERCLA
substances such as petroleum

Grant recipients have a broader range of substances under AAI
Statutory Criteria For Compliance –
All Appropriate Inquiry
Statute requires EPA to promulgate regulations and consider
several factors in developing the regulations
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Results of the inquiry of an environmental professional
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Interview with past and present owners, operators and
occupant regarding the potential for contamination
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Review of historical sources
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Searches for recorded environmental clean-up liens
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Reviews of federal, state and local records
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Visual inspections for the facility and adjoining properties
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Relationship of the purchase price to the value of the property
if not contaminated
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Commonly known or reasonably ascertainable information
about the property
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The degree of obviousness of the presence or likely presence
of contamination and the ability to detect contamination by
appropriate investigation
All Appropriate Inquiry Regulations
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EPA instituted a negotiated rulemaking to develop All
Appropriate Inquiry regulations.
The Federal Advisory Committee represented a variety of
interests
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The negotiating committee included representatives from
commercial real estate, mortgage bankers, engineers and
geologists, Tribes, state and local government, environmental
groups, conservation groups and environmental justice groups
SEER served as a resource
Insurance interests served as a resource
Consensus draft in November 2003
Proposed Regulations published August 26, 2004 69 Fed.
Reg. 52,542
Final Rule published November 1, 2005 70 Fed. Reg. 66,070
Effective date of regulations is November 1, 2006.
All Appropriate Inquiry Regulations

The inquiry is time sensitive

AAI must be conducted prior to the acquisition of
the property (date on which person acquires title
to the subject property)

AAI must be conducted within one year before
the acquisition (earlier information can be used in
the report)

Certain elements must be current within 180 days
prior to acquisition

Time components may impact other aspects of
the deal

Performance based; not a checklist
All Appropriate Inquiry Regulations
Results of the inquiry of an
environmental professional (EP)

What is an environmental professional?

EP must identify data gaps, identify sources used to
address gaps and comment on significance of the
data gaps on the ability to identify conditions

Results must be documented in a written report
which must include an opinion as to whether
conditions are indicative of a release and signed by
EP
All Appropriate Inquiry Regulations
The inquiry of the EP must include

Interviews with past and present owners, operators, and
occupants regarding the potential for contamination
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Must interview current owner and occupant, if multiple
occupants must include major occupants and those likely
to use, store or handle hazardous material

To extent necessary to achieve objectives include current
and past managers, past owners, and current and former
employees

Special rules for “abandoned properties”
All Appropriate Inquiry Regulations
 Review of historical sources
 As far back in history as the subject
property had structures or was first used for
residential, agricultural, commercial,
industrial or government purposes
 EP can use judgment as to how far back in
time EP needs to go to meet objectives
All Appropriate Inquiry Regulations
 Reviews of federal, state and local records
 Specific search distances provided in
regulations.
 EP may modify if written justification in the
report
 Includes tribal records in some circumstances
All Appropriate Inquiry Regulations
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Visual inspections for the facility and adjoining
properties
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Physical limitations on the inspection such as weather must be
documented
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Must have on-site inspection of subject property except in
unusual circumstances

Visual inspection of adjoining property from subject property line
or other vantage point
The degree of obviousness of the presence or likely
presence of contamination and the ability to detect
contamination by appropriate investigation
All Appropriate Inquiry Regulations
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Information that can developed by others

Specialized knowledge or experience on the part of the
defendant
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Relationship of the Purchase Price to the value of the property if
not contaminated (need not share with EP)

Searched for recorded environmental clean up liens

Commonly known or reasonably ascertainable information about
the property
Documentation of information developed by
others is critical to liability relief defense
Important Points to Remember
Regarding All Appropriate Inquiry
1.
2.
Is AAI relevant to my site?
Specified time frames
 i.e. the All Appropriate Inquiry must be
completed before ownership is acquired
 Inquiries have a shelf life
 Ongoing obligations after acquisition required
by the amendments
swatson@steptoe.com
(202) 429-6460
Important Points to Remember
Regarding All Appropriate Inquiry
3.
4.
5.
State law programs may be relevant and have
different criteria
Site specific issues
Constraints of the deal
swatson@steptoe.com
(202) 429-6460