[CPEO-BIF] All Appropriate Inquiry rulemaking report

[Lenny Siegel <lsiegel@cpeo.org>]

For the past few months CPEO, along with 24 other stakeholder groups,
has participated in a U.S. EPA-led Negotiated Rulemaking, or "reg-neg"
to develop an "All Appropriate Inquiry" standard for environmental site
assessments. This regulation, mandated by the 2002 federal Brownfields
statute, will influence the conduct of site assessments at commercial
and industrial sites as well as the level of public involvement required
in these assessments. Not only will the rule directly implement federal
law, but it may set a new standard for due diligence conducted under
state law or even simply to meet requirements imposed by private parties
to transactions involving potentially contaminated property. 

The Small Business Liability Relief and Revitalization Act (the
Brownfields Law) directed the EPA Administrator to promulgate a
regulation, within two years of enactment of the law, establishing
"standards and practices for the purpose of satisfying the requirement
to carry out all appropriate inquiries." The law required such inquiries
to establish liability relief, in three distinct cases, or to take
advantage of assessment grants authorized by the legislation. In April
2003, EPA convened a Negotiated Rulemaking Committee of affected
stakeholders to assist in these deliberations. Background on the
committee, as well as official meeting summaries and other information,
may be found at http://www.epa.gov/brownfields/regneg.htm.

The Brownfields law provides new liability protections for landowners
that qualify as 1) bona fide prospective purchasers, 2) contiguous
property owners, and 3) innocent landowners. To qualify for such relief,
a person must perform "all appropriate inquiry" to determine whether
hazardous substances have been released on the property. For example, a
buyer must establish that at the time he or she acquired the property,
he or she had no knowledge or reason to know that any hazardous
substance had been disposed of or released at the site. If a buyer
performs "all appropriate inquiry" and contamination is subsequently
discovered, the buyer will not be held liable for cleanup by the federal
government. These provisions apply beyond the Brownfields properties
targeted by other provisions of the law. In addition, parties receiving
grants for site characterization and assessment under the law must
follow the same standards and practices.

While there have been no federal standards for site assessments or
regulations defining "all appropriate inquiry," one professional
organization, ASTM (formerly known as the American Society for Testing
and Materials), has developed a series of standard practices, each known
as "Environmental Site Assessments: Phase I Environmental Site
Assessment Process." The most recent version is ASTM E 1527-00. The ASTM
standard, known informally as just "Phase One," is widely accepted as a
minimum requirement for environmental due diligence. The Brownfields law
recognizes the ASTM Phase I standard, for most transactions, until EPA
has issued its new standard. Many members of the committee, particularly
those who use the ASTM standard routinely, want it to serve as the basis
of the AAI document, but others see it simply as a starting point for a
negotiation process that includes a much broader range of participants
than the membership of ASTM.

The AAI Committee met in April and June to discuss the 10 criteria
specified by Congress in the Brownfields law for satisfying "all
appropriate inquiry" (AAI). In the course of its deliberations, the
members of the Committee have reviewed the ASTM standard, various state
requirements, and EPA guidance documents related to site assessment. The
discussions have been spirited and for the most part constructive. The
next meeting will take place in Washington, DC, July 8-9.

The following is CPEO's evaluation of four key issues that have arisen
thus far, including in some cases CPEO's predictions of how they will be
resolved. This is not an official summary of the Committee's work. We
are circulating this report in the hope that our constituency,
particularly participants in the National Environmental
Justice/Community Brownfields Caucus, will offer feedback and
suggestions.


1) The Brownfields law states that the assessment should be conducted by
an environmental professional, but how should an environmental
professional be defined and what formal qualifications and/or experience
should an environmental professional possess?

A Phase I environmental assessment typically relies on a number of
readily available databases for information about the past uses of site,
the site's operational history, and nearby environmental hazards that
may have impacted the property. But a site assessment also requires
considerable judgment, as well as the ability to interpret the
significance of these data. Though many of the tasks may be carried out
by inexperienced or relatively unskilled people, the environmental
professional must sign off on the results. Some Committee members prefer
a restrictive definition of "environmental professional," limiting the
practice to people with professional engineering or geologist licenses
to ensure a high level of professional competence. Others are more
concerned about the availability of practitioners, or believe that there
are many competent professionals without such licenses. They suggest a
minimum educational and/or experience threshold. It's likely that the
committee will recommend a compromise. 


2) Under the current ASTM standard, there is no requirement to interview
persons living near or adjacent to a site. Should neighbors and former
workers be interviewed or notified that an environmental assessment is
being conducted?

Members of the Committee from the environmental justice community
suggested that nearby residents are likely to have a wealth of knowledge
about a potentially contaminated site, particularly if the property was
used for unregulated activities (e.g., midnight dumping, drug
manufacture, illegal auto repair, etc.). Collecting this information,
they said, should be seen as an efficient way to identify site
conditions. 

Others argued that such a requirement would add considerably to the time
and cost of Phase I site assessments without, in most cases, adding any
new and valuable information about the site. They posed questions about
the practicality of interviewing neighbors, particularly in urban
neighborhoods: How does one even identify "adjacent" neighbors, they
asked? How many neighbors does one reasonably need to interview? 

More profoundly, some members claimed that requiring interviews with
local residents could disrupt the market for brownfields transactions.
Interviews, they contended, could publicize and thereby jeopardize
private sector efforts to assemble land parcels for brownfields
projects, as property owners on targeted sites, alerted to prospective
development interest, could demand higher prices for their properties.
Or the interviews could warn factory workers of plans for plant closure. 

This issue exposed serious ideological disagreements among the
constituencies on the reg-neg committee, but practical resolution is
likely. The committee is considering a proposal that data collection
requirements - in most cases, including interviews - be linked to
specific objectives, such as documenting the continuous ownership and
use of properties. Additional investigation may be necessary to satisfy
assessment performance goals. At vacant urban sites, interviewing
neighbors is the most likely way to fill unacceptable data gaps.


3) In a certain number of environmental site assessments, there will be
gaps in the historical record about past uses and activities on the
site. What should the process dictate at various points when there such
data gaps exist? 

Existing methodologies, such as ASTM Phase I, provide reliable
checklists for collecting information on property ownership and use, the
presence and release of hazardous substances, and past efforts to
address such releases. But they aren't as helpful if information sources
are incomplete and the goal is to show that property is indeed "clean."

As described above, the AAI standard may attempt to overcome this
obstacle with a tiered system of data collection. That is, it may
require certain steps at all sites. If the key questions can't be
answered with a simple investigation, the environmental professional
would be required to keep looking until the data gaps are closed.


4) Typically, a Phase I environmental assessment does not require
sampling. In the new standard, what findings, if any, should trigger
actual sampling of a site? 

In some cases, developers or their environmental professionals may find
it cheaper or faster to sample for contamination than to exhaust
existing data sources. No one objects to such voluntary sampling.

However, some Committee members have suggested that the Committee go
further. They believe that the benefits of the Phase I process should be
withheld if the original assessment is inconclusive. That is, to claim
relief after extensive research and interviews leave significant
uncertainties about uses and releases, the actual collection and
analysis of soil or water may be necessary, both to protect public
health and to avoid future complications and litigation.

Other Committee members, hoping to retain the relatively streamlined
existing Phase I process, are likely to object. They fear the costs and
delays of unnecessary sampling, and they believe that sampling should
remain confined to the Phase II site assessment, not in the All
Appropriate Inquiry standard.

This perhaps is the biggest challenge facing the Committee, and
discussion thus far has only scratched the surface. Most participants
agree substantially on the nuts and bolts of the Phase I process. But it
will take hard work and significant creativity to figure out how that
process should fit into continuing efforts to protect public health and
promote property revitalization.


Lenny Siegel & Bob Hersh

-- 


Lenny Siegel
Director, Center for Public Environmental Oversight
c/o PSC, 278-A Hope St., Mountain View, CA 94041
Voice: 650/961-8918 or 650/969-1545
Fax: 650/961-8918
<lsiegel@cpeo.org>
http://www.cpeo.org

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