How Will It Affect My Business?

By Phil Brewer, Alpha Environmental Services, Inc.,

If you have begun hearing the term AAI, you may be unclear about what it means and how it will affect you. This article explains the basics of AAI, its relationship with existing ASTM standards, and its potential effects on your business.

AAI stands for "All Appropriate Inquiry." You are likely familiar with other industry terms such as ASTM, due diligence, Phase Ones and Transactions Screens. AAI will eventually be used alongside these terms, and in many respects, is designed to encompass all of them.

To begin, let's start with a brief review of environmental law. In 1980, Congress passed legislation called CERCLA, also known as Superfund. It contained a concept -- that an innocent purchaser of a property would be held liable although they did not cause contamination.

In 1986, Congress passed legislation to keep CERCLA alive. As part of the new legislation, the EPA included liability protection known as the "innocent landowner provision" for purchasers of property, as long as the purchaser completed an "All Appropriate Inquiry" (AAI).

The confusion with this new legislation was because Congress never defined AAI.

With no federal definition of AAI, in 1993 the American Society for Testing and Materials (ASTM) came out with its own interpretation of AAI - commonly known as Phase I Environmental Site Assessments and transaction screens.

These have since become the accepted standards for minimum levels of environmental due diligence within the environmental consulting, legal and financial services industries. The standards have gone through several updates and revisions since 1993 and the industry has evolved to where Phase One and transaction screens are relatively standardized throughout the United States.

Congress again passed new legislation in 2002 called the Brownfields Act, which amended CERCLA. One of the mandates was that the EPA needed to define AAI. Until the EPA publishes its regulations for the AAI, the ASTM Environmental Site Assessments remain the interim standard. As of today, the EPA has yet to develop its version of the AAI. It is predicted that the new standards will be in place in late 2005 or 2006.

So, what does this mean to commercial property owners, investors and consultants? Greater reliability for environmental investigations and increased protection.

In short, here are the facts as we understand them today:

  • The Brownfields version of AAI is not the law - yet. The EPA has drafted language for AAI and has put it out on the Federal Register for public comment. The comment period closed at the end of November, 2004. The EPA will review all comments, make changes and return the law to Congress for enactment.
  • The new AAI will incorporate much of the current ASTM standards with some changes.
  • The transaction screen will not be eliminated, but it will not be the "risk elimination" tool it is now. Once AAI is enacted, the ASTM standard will no longer suffice as a tool for eliminating environmental risk. However, for most initial efforts on seemingly benign properties, it will serve as a "risk reduction" tool.

We anticipate the following changes:

  • A definition of the Environmental Professional (EP) and a more involved role for the EP role in the AAI process
  • Data gaps will also be defined and a process for dealing with data gaps
  • New research about databases such as industrial and engineering controls

To define these terms:

  • Industrial Controls are a form of "deed restriction" placed on a property by a governing authority to reduce exposure to contaminants. A common deed restriction might be to prohibit residential or school use of the property.
  • Engineering Controls are a form of physical modification to a site to restrict exposure to certain contaminants such as a "vapor barrier" below a building or a clean soil cap on a contaminated soil area.

Until the final regulations are approved, this is the most current information to date. Changes that will directly impact industry will be in cost and greater definition of due diligence standards.

? 2008 Alpha Envrionmental Inc.