What Does the AAI Rule Entail?

In writing the rule, one of EPA’s goals was to minimize disruption in the commercial real estate market. To that end, although some key areas are different, EPA’s AAI rule does not drastically differ from ASTM Standard E 1527-00. The AAI rule takes the basic components of an environmental site assessment site investigation, interviews with the property’s current and past occupant or owner (if available) and a review of applicable current and historical government records summarized in a written report a few steps further by requiring that significant gaps in data be recorded; by including provisions for interviewing past owners and occupants of the subject property if necessary to meet AAI objectives; by requiring an interview with a neighboring property owner if the subject property is abandoned, and by requiring that tribal and local government records are researched. The rule also emphasizes several areas of AAI that must be addressed by the property owner upfront, such as consideration of any “specialized knowledge” about the property that may be indicative of an environmental concern, a search for environmental cleanup liens and consideration of the market price for the property versus its value if not contaminated.

With regards to timing, AAI must be conducted or updated within one year of the date of acquisition of a property. If AAI is conducted more than 180 days prior to the acquisition date, certain elements of the
assessment must be updated. Additionally, the final rule lays out specific guidelines for who is qualified to develop findings and opinions about a property’s potential environmental contamination: EPA’s rule is very specific in defining environmental professional; lenders must ensure their AAI-compliant ESAs are performed under the supervision of one.

Lenders concerned with having their borrowers meet CERCLA liability requirements should review the final rule and plan for changes accordingly. Pay particular attention to the preamble: Both here and at various conferences, EPA has taken a strong position that the 2002 Brownfields Law imposes
obligations on the owner over the course of property ownership, not just during pre-transaction environmental
due diligence. The rule, as well as its preamble, contains the following key elements:
• guidance on AAI’s applicability for the purposes of CERCLA liability protection;
• EPA’s final estimate of the rule’s impact on Phase I ESA pricing;
• Responses to more than 400 public comments;
• details on a property owner’s continuing obligations after taking title;
• professional qualifications to be met by the environmental professionals overseeing Phase I work and interpreting the results;
• requirements for performing Phase I ESAs; and
• the rule’s effective date and the interim standards that apply.

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