Julie Kilgore Wasatch Environmental, Inc.

1. Julie KilgoreWasatch Environmental, Inc. • Principal, Wasatch Environmental, Inc. • Chair of the ASTM E1527 Task Group • Member of the EPA Federal Advisory Committee established to develop the “All Appropriate Inquiry” (AAI) regulation Salt Lake City, Utah 801-972-8400 jk@wasatch-environmental.com

2. TIME LINE OVERVIEW

3. Legislative Framework of All Appropriate Inquiry CERCLA – 1980 Comprehensive Environmental Response, Compensation and Liability Act • Created fund to clean up abandoned sites • Recover cleanup costs from PRPs • Part of the 1980 “Test” for an “innocent landowner” defense: • The property was acquired after disposal of the hazardous substance and, at the time, the Defendant did not know, and had no reason to know that any hazardous substance was released.

4. Legislative Framework of All Appropriate Inquiry Superfund Amendments (SARA) 1986 • Further clarified the concept of “acquisition without knowledge.” • “The Defendant must have undertaken, at the time of acquisition, all appropriate inquiry into the previous ownership and uses of the property consistent with good commercial or customary practice.”

5. Legislative Framework of All Appropriate Inquiry Factors Outlined by SARA for Courts to Consider: • Specialized knowledge or experience • If purchase price is below market value • Commonly known or reasonably ascertainable information • Obviousness of contamination • Ability to detect by inspection

6. ASTM Subcommittee E-50.02 Two Industry Standards Published in 1993 • To define “customary practice” for conducting “appropriate inquiry” • ASTM E1527 (Phase I Environmental Site Assessment) • Conducted by an Environmental Professional • Revised ’94, ’97, ’00, and ’05 • ASTM E1528 (Transaction Screen) • Checklist that can be conducted by anyone • Revised ’96, ’00, and ’06

7. 1996 Lender Liability Law • Safe harbor for many customary lending practices • Can not be ‘Participating in management’ defined as an exercise of decisionmaking control over: • Environmental compliance issues • Hazwaste management • Or all operational functions • Foreclosure OK, including: • Maintaining business activities • Winding up operations • Cleaning up contamination

8. Legislative Framework of All Appropriate Inquiry Small Business Liability Relief and Brownfields Revitalization Act – 2001 • Provided Clarifications to Innocent Landowner Defense • Removed from CERCLA’s liability scheme under certain circumstances: • Bona Fide Prospective Purchasers (BFPPs) • Contiguous Landowner (CPOs) • Established Brownfields Site Characterization and Assessment Grant Programs

9. Contiguous Property Owner Must purchase without knowledge of H.S. Cannot own property that contains the “source” Not subject to a Windfall lien Bona Fide Prospective Purchaser May purchase the property with knowledge of H.S Owning a “source” property is O.K. May be subject to a windfall lien Must acquire the property after January 11, 2002 CPO vs. BFPP

10. Legislative Framework of All Appropriate Inquiry Key Provisions Affecting ESAs: • Sets out 10 Criteria for “All Appropriate Inquiries” • Requires EPA to develop final rules for conducting AAI • Establishes the ASTM E 1527-97 as the interim standard practice for property purchased on or after May 31, 1997 (EPA later issued a rule to include E1527-00)

11. Outlined Ten Criteria for All Appropriate Inquiry • Criterion I: The results of an inquiry by an environmental professional. • Criterion II: Interviews with past and present owners, operators, and occupants . . . • Criterion III:Reviews of historical sources . . . to determine previous uses and occupancies . . . since the property was first developed.

12. Ten Criteria for AAI • Criterion IV:Searches for recorded environmental cleanup liens . . . • Criterion V:Reviews of Federal, State, and local government records . . . • Criterion VI:Visual inspections of the facility and of adjoining properties.

13. Ten Criteria for AAI(Innocent Landowner Artifacts) • Criterion VII: Specialized knowledge or experience on the part of the defendant • Criterion VIII: The relationship of the purchase price to the value of the property, if the property was not contaminated • Criterion IX: Commonly known or reasonably ascertainable information about the property • Criterion X: The degree of obviousness of the presence or likely presence of contamination at the property, and the ability to detect the contamination by appropriate investigation

14. Where are We Now?E1527 Phase I ESAs • ASTM E1527 Phase I ESA Revised in ’05 • EPA References ASTM E1527-05 as being in full compliance with the AAI Regulation • Since November 1, 2006, only the ASTM E1527-05 or the EPA AAI Regulation will be recognized for CERCLA landowner liability protections or brownfield grant recipients

15. ASTM E1527 andthe AAI Rule ASTM E1527-00 Already More Stringent Than AAI in some areas Examples: • Historic research at least to 1940 or first developed use, whichever is earlier • Historic uses of adjoining properties • Does not specifically provide an exception to the site visit • ASTM E1527 has always required the Environmental Professional to conduct the site visit and interviews • ASTM E1527 has always included petroleum products

16. Key Phrase Comparisons

17. EPA AAI Objective: Identify conditions indicative of releases and threatened releases of hazardous substances on, at, in, or to the subject property ASTM E1527-05 Objective: Identify RECS - presence or likely presence of a hazardous substance or petroleum product . . . under conditions indicating a present, past or material threat of a future release . . . into structures, ground, or groundwater

18. EPA AAI – Gather information that is publicly available, obtainable within reasonable time and cost constraints, and can be practicably reviewed ASTM E1527-05 - Reasonably ascertainable: publicly available, obtainable within reasonable time and cost constraints, and practically reviewable

19. EPA AAI - not intended to require the identification of quantities or amounts, either individually or in the aggregate, of hazardous substances that because of said quantities and amounts, generally would not pose a threat to human health or the environment ASTM E1527-05 - de minimis:conditions that generally do not present a threat to human health or the environment and that generally would not be the subject of an enforcement action if brought to the attention of appropriate governmental agencies

20. EPA AAI - Review and evaluate the thoroughness and reliability of the information gathered, taking into account information gathered in the course of complying with the other standards and practices of the rule ASTM E1527-05 – The EP shall make a reasonable effort to compensate for mistakes or insufficiencies in the information reviewed that are obvious in light of other information

21. EPA AAI – Inspect adjoining properties from the subject property line, public rights-of-way, or other vantage point, including a visual inspection of areas where hazardous substances may be or may have been stored, treated, handled or disposed ASTM E1527-05 – Identify uses of adjoining properties to the extent observable

22. EPA AAI - Interviews with past owners, occupants, or operators should be conducted to the extent necessary to achieve the objectives and performance factors – see EPA AAI “Summary of Regulatory Costs” ASTM E1527-05 - Interviews with past owners, operations, and occupants likely to have material information regarding the potential for contamination at the property shall be conducted to the extent that they have been identified and that the information likely to be obtained is not duplicative of information already obtained from other sources.

23. ASTM E1527-05Phase I ESA Process Unchanged • Must be conducted by an Environmental Professional (EP) • Records Review • Historical Research necessary to develop site history • Government Records Review, provide opinion regarding the “significance of the listing • Physical Setting (geologic setting) • Site Reconnaissance • Interviews as necessary to develop site history • Report must include EP opinions and conclusions regarding hazardous substances and petroleum products

24. Role of the Environmental Professional • AAI-Compliant must be conducted by an EP or conducted under the supervision or responsible charge of an EP • ASTM E1527-00 requires site visit and interviews conducted by EP . . . as defined in E1527-00 • ASTM E1527-05 requires site visit to be performed by “a person possessing sufficient training and experience necessary to conduct the site reconnaissance and interviews . . . having the ability to identify issues relevant to RECs” (E1527-00 EP definition)

25. EPA Definition for EP inResponsible Charge • PE or PG and 3yrs Relevant Experience OR • Other Government issued License or Certification to Perform ESAs and 3yrs Relevant Experience OR • Baccalaureate or Higher in Engineering or Science and 5yrs Relevant Experience OR • 10yrs Relevant Experience

26. Relevant Experience • Performance of ESAs including Environmental Analysis, Investigation, and Remediation • Understanding of Surface and Subsurface Environmental Conditions • Knowledge of Processes Used in Evaluations of Environmental Conditions • Ability to Develop Opinions Regarding Conditions Indicative of a Release or Threatened Release of Hazardous Substances

27. Interviews Neighbors • AAI-Compliant requires interviews with one or more neighbors, as necessary, for 1) abandoned properties with 2) potential for unauthorized uses or 3) evidence of uncontrolled access • E1527-00 did not address interviews with neighbors, though EPs have interviewed neighbors in the past to achieve the objective • E1527-05 mirrors AAI language

28. User Provided Information • AAI: Information regarding ELs, specialized knowledge, relationship of purchase price, and commonly known info may be provided to the EP. If not provided, EP to treat as a “data gap” and comment on the significance of this data gap. • E1527-00 stated “the EP shall note in the report” if the user information was provided. This is not a new –05 requirement. • E1527-05: “Appendix X-3 provides an optional User Questionnaire to assist the user and the EP” in gathering info • If User does not provide the information, IT’S OKAY. EP comments on the significance of not obtaining that info from the User. The EP has fulfilled the EP requirements. The User may not be AAI-compliant, but that’s a User’s decision.

29. Users • ASTM E1527-05 Definition: “The party seeking to use Practice E1527 to complete an environmental site assessment of the property” • User responsibilities are also reflected in the optional questionnaire included as Appendix X-3. The questionnaire addresses the responsibilities outlined by legislation and AAI • User responsibilities are similar to previous versions • Challenge for industry: Who is the “user”

30. Environmental Liens • AAI-Compliant requires search for ELs filed or recorded under federal, tribal, state, or local law • E1527-00 Section 5 “User Responsibilities” • User should user engage a title company or title professional to identify ELs • Section 6.3.2 states “the EP shall note in the report whether or not the user has reported to the EP any environmental liens . . . “ • E1527-05 clarifies where to look, and suggests the user engage a title company or title professional (same as –00 language) OR negotiate with the EP to engage a title company

31. Windfall Lien • BFPP’s property subject to “windfall lien” in favor of U.S., if: • response action conducted on the property for which the U.S. has unrecovered costs, and • response action increases the FMV of the property • Lien arises at time costs incurred by U.S. • Lien amount not to exceed increase in FMV

32. Data Gaps • Reality: Data Gaps exist in every ESA • Time • Money • Key points: • Comment is only needed for significant data gaps which affect the ability to identify RECs • A data gap is only significant if other information and/or professional experience raises reasonable concern • Does the EP consider a significant data gap defaulting to a REC?

33. Degree of Obviousness • AAI states “the inquiry of the EP should include an opinion regarding additional appropriate investigation, if any” • 1527-00 contained no similar provision • 1527-05 mirrors AAI, with some added guidance. • When might an EP render an opinion regarding additional appropriate investigation? • To address significant data gaps • To evaluate whether steps need to be taken to stop continuing releases • Not intended to verify suspicion of a release (reason to know has already been established)

34. Non-scope Considerations • Business environmental risk considerations • Matters outside of the scope of CERCLA HS and PP • Typical non-scope issues (X1.6) • Asbestos-containing materials • Radon • Lead-based paint • Lead in drinking water • Wetlands • Regulatory compliance • Other Issues

35. Where are We Now?E1528 Transaction Screens • ASTM E1528 Transaction Screen Revised in ’06 • Designed to be conducted by a non-EP • Complete a defined checklist • Interviews with owners and occupants • Site visit • Government databases mirror E1527-05 • Minimal historical records • No longer appropriate for CERCLA liability protections