Federal Register: November 1, 2005

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.

III. Summary of Comments and Changes From Proposed Rule to Final Rule

EPA received over 400 public comments in response to the August 26, 2004 proposed rule. Comments were received from environmental consultants with experience in performing site assessments, trade associations, state government agencies, environmental interest groups, and other public interest associations. Commenters generally supported the purpose and goals of the proposed rule. Many commenters complimented the Agency on its decision to develop the proposed rule using the negotiated rulemaking process. However, commenters had differing views on certain aspects of the proposed rule. In particular, the Agency received widely differing views on the proposed definition of ``environmental professional.'' Although many commenters supported the definition as proposed, other commenters raised concerns regarding the stringency of the proposed qualifications. A significant number of commenters applauded the proposed definition of an environmental professional and stated that it may increase the rigor and caliber of environmental site investigations. Commenters who would not qualify as an environmental professional under the proposed definition raised concerns with regard to the specific qualifications proposed.
EPA received a significant number of comments regarding the statutory requirements for qualifying for the CERCLA liability protections. Several commenters also raised concerns with regard to the performance-based approach to the all Appropriate inquiries investigation included in the proposed rule. Commenters were concerned that the proposed performance-based approach would make it more difficult to qualify for the CERCLA liability protections than an approach that requires strict adherence to prescriptive data gathering requirements that do not allow for the application of professional judgment. However, the vast majority of commenters who commented on the performance-based nature of the proposed rule supported the proposed approach.

Other commenters raised concerns with regard to the proposed rule's requirements to identify and comment upon the significance of ``data gaps'' where the lack of information may affect the ability of an environmental professional to render an opinion regarding conditions at a property that are indicative of releases or threatened releases of hazardous substances. Commenters were concerned that if any data gaps exist potential contamination would not be identified, allowing property owners to escape liability for contamination. Other commenters supported the proposed requirement to identify data gaps, or missing information, that may affect the environmental professional's ability to render an opinion regarding the environmental conditions at a property and comment on their significance in this regard and stated that the requirement would lend credibility to the inquiry's final report.

We received many comments on the proposed provision to compare the purchase price of a property to the fair market value of the property (if the property were not contaminated). One concern raised is that commenters believe that the exact market value of a property is difficult to determine. Some commenters took exception to the fact that EPA did not propose that prospective landowners have to conduct formal real estate appraisals of the property to determine fair market value. Although this provision has been a statutory requirement for the conduct of all Appropriate inquiries since 1986, some commenters thought the requirement should not be included within the scope of all Appropriate inquiries. Other commenters stated that the environmental professional should not be required to undertake the comparison.

We received some comments on the results of the economic impact analysis that was conducted to assess the potential costs and impacts of the proposed rule. Many commenters generally agreed with the Agency's conclusion that the average incremental cost increase associated with the requirements in the proposed rule over the current industry standard would be minimal. However, some commenters asserted that EPA underestimated the incremental costs associated with the proposed rule. Although a few commenters mentioned particular activities included as requirements in the proposed rule that would increase the burdens and costs associated with conducting all Appropriate inquiries, most of these commenters did not provide specific reasons for claimed cost increases over baseline activities. Some commenters simply stated that the proposed requirements would result in an increase in the price of phase I environmental site assessments. We provide a summary of the comments received on the economic impact analysis for the proposed rule, our responses to issues raised by commenters, and the results of some additional analyses conducted based on some of the issues raised, in an addendum to the economic impact analysis, which is provided in the docket for today's final rule.

In section IV of this preamble, we discuss the requirements of the final rule, including a summary of the provisions included in the August 26, 2004 proposed rule, the significant comments raised in response to the proposed provisions, and a summary of our rationale for the final rule requirements. Generally, the final rule closely resembles the provisions included in the proposed rule. We adopted relatively minor changes in response to public comments. For example, we received a number of comments urging EPA to modify the proposed definition of environmental professional to allow individuals who have significant experience in conducting environmental site assessments, but do not have a Baccalaureate degree, to qualify as environmental professionals. We were convinced by the arguments presented in many of these public comments. Therefore, the definition of an environmental professional included in today's final rule allows individuals with ten years of relevant full time experience to qualify as an environmental professional for the purpose of overseeing and performing all Appropriate inquiries.
With respect to the proposed requirements governing the use of previously-conducted environmental site assessments for a particular property, we agreed with commenters who pointed out the proposed rule was unclear. In today's final rule, we modify the proposed rule language to allow for the use of information contained in previously-conducted assessments, even if the information was collected more than a year prior to the date on which the subject property is acquired. The final rule does require that all aspects of a site assessment, or all Appropriate inquiries investigation, completed more than one year prior to the date of acquisition of the subject property be updated to reflect current conditions and current property-specific information. In the case of all Appropriate inquiries investigations completed less than one year prior to the date of acquisition of the subject property but more than 180 days before the acquisition date, the final rule retains the requirements of the proposed rule that only certain aspects of the all Appropriate inquiries must be updated.
In the case of the requirement to search for institutional controls that was included in the proposed requirements to review federal, state, tribal and local government records, we agreed with commenters who pointed out that searching for institutional controls associated with properties located within a half mile of the subject property is overly burdensome and without sufficient benefit to the purpose of the investigation. The final rule requires that the search for institutional controls be confined to the subject property only.
We adopted one other change in the final rule, based upon public comments. In the proposed rule, we delineated responsibilities for particular aspects of the all Appropriate inquiries investigation between the environmental professional and the prospective landowner of the subject property (or grantee). We defined the inquiry of the environmental professional to include: interviews with past and present owners, operators and occupants; reviews of historical sources of information; reviews of federal state tribal and local government records; visual inspections of the facility and adjoining property; commonly known or reasonably ascertainable information; and degree of obviousness of the presence or likely presence of contamination at the property and the ability to detect the contamination by Appropriate investigation. We also defined ``additional inquiries'' that must be conducted by the prospective landowner or grantee (or an individual on the prospective landowner's or grantee's behalf). These ``additional inquiries'' include: specialized knowledge or experience of the prospective landowner (or grantee); the relationship of the purchase price to the fair market value of the property, if the property was not contaminated; and commonly known or reasonably ascertainable information. The requirement to search for environmental cleanup liens was proposed to be the responsibility of the prospective landowner (or grantee), if the search is not conducted by the environmental professional. The proposed rule required the prospective landowner (or grantee) to provide all information collected as part of the ``additional inquiries'' to the environmental professional.

The final rule retains the proposed delineation of responsibilities. However, based upon the input provided in public comments, the final rule does not require the prospective landowner (or grantee) to provide the information collected as part of the ``additional inquiries'' to the environmental professional. Although we continue to believe that the information collected or held by the prospective landowner (or grantee) should be provided to the environmental professional overseeing the other aspects of the all Appropriate inquiries, we agree with commenters who asserted that prospective landowners and grantees should not be required to provide this information to the environmental professional. Commenters argued that property owners (and grantees) may want to hold some information (e.g., the purchase price of the property) confidential. CERCLA liability rests with the owner or operator of a property and not with an environmental professional hired by the prospective landowner and who is not involved with the ownership or operation of the property. Since it ultimately is up to the owner or operator of a property to defend his or herself against any claims to liability, we agree with commenters that asserted that the regulations should not require that prospective landowners (or grantees) provide information collected to comply with the ``additional inquiries'' provisions to the environmental professional. Should the required information not be provided to the environmental professional, the environmental professional should assess the impact that the lack of such information may have on his or her ability to render an opinion with regard to conditions indicative of releases or threatened releases of hazardous substances on, at, in or to the property. If the lack of information does impact the ability of the environmental professional to render an opinion with regard to the environmental conditions of the property, the environmental professional should note the missing information as a data gap in the written report. We discuss each of the requirements of the final rule in Section IV of this preamble.

IV. Detailed Description of Today's Rule

A. What Is the Purpose and Scope of the Rule?

The purpose of today's rule is to establish federal standards and practices for the conduct of all Appropriate inquiries. Such inquiries must be conducted by persons seeking any of the landowner liability protections under CERCLA prior to acquiring a property (as outlined in Section II.D. of this preamble). In addition, persons receiving federal brownfields grants under the authorities of CERCLA section 104(k)(2)(B) to conduct site characterizations and assessments must conduct such activities in compliance with the all Appropriate inquiries regulations.
In the case of persons claiming one of the CERCLA landowner liability protections, the scope of today's rule includes the conduct of all Appropriate inquiries for the purpose of identifying releases and threatened releases of hazardous substances on, at, in or to the property that would be the subject of a response action for which a liability protection would be needed and such a property is owned by the person asserting protection from liability. CERCLA liability is limited to releases and threatened releases of hazardous substances which cause the incurrence of response costs. Therefore, in the case of all Appropriate inquiries conducted for the purpose of qualifying for protection from CERCLA liability (CERCLA section 107), the scope of the inquiries is to identify releases and threatened releases of hazardous substances which cause or threaten to cause the incurrence of response costs.
In the case of persons receiving Federal brownfields grants to conduct site characterizations and assessments, the scope of the all Appropriate inquiries standards and practices may be broader. The Brownfields Amendments include a definition of a ``brownfield site'' that includes properties contaminated or potentially contaminated with substances not included in the definition of ``hazardous substance'' in CERCLA section 101(14). Brownfields sites include properties contaminated with (or potentially contaminated with) hazardous substances, petroleum and petroleum products, controlled substances, and pollutants and contaminants (as defined in CERCLA section 101(33)). Therefore, in the case of persons receiving federal brownfields grant monies to conduct site assessment and characterization activities at brownfields sites, the scope of the all Appropriate inquiries may include these other substances, as outlined in Sec. 312.1(c)(2), to ensure that persons receiving brownfields grants can appropriately and fully assess the properties as required. It is not the case that every recipient of a brownfields assessment grant has to include within the scope of the all Appropriate inquiries petroleum and petroleum products, controlled substances and CERCLA pollutants and contaminants (as defined in CERCLA section 101(33)). However, in those cases where the terms and conditions of the grant or the cooperative agreement with the grantee designate a broader scope to the investigation (beyond CERCLA hazardous substances), then the scope of the all Appropriate inquiries should include the additional substances or contaminants.
The scope of today's rule does not include property purchased by a non-governmental entity or non-commercial entity for ``residential use or other similar uses * * * [where] a facility inspection and title search * * * reveal no basis for further investigation.'' (Pub. L. 107-
118 Sec. 223). CERCLA section 101(35)(B)(v) states that in those cases, title search and facility inspection that reveal no basis for further investigation shall satisfy the requirements for all Appropriate inquiries.
We note that today's rule does not affect the existing CERCLA liability protections for state and local governments that acquire ownership to properties involuntarily in their functions as sovereigns, pursuant to CERCLA sections 101(20)(D) and 101(35)(A)(ii). Involuntary acquisition of properties by state and local governments fall under those CERCLA provisions and EPA's policy guidance on those provisions, not under the all Appropriate inquiry provisions of CERCLA section 101(35)(B).

B. To Whom Is the Rule Applicable?

Today's rule applies to any person who may seek the landowner liability protections of CERCLA as an innocent landowner, contiguous property owner, or bona fide prospective purchaser. The statutory requirements to obtain each of these landowner liability protections include the conduct of all Appropriate inquiries. In addition, the rule applies to individuals receiving Federal grant monies under CERCLA section 104(k)(2)(B) to conduct site characterization and assessment activities. Persons receiving such grant monies must conduct the site characterization and assessment in compliance with the all Appropriate inquiries regulatory requirements.

C. Does the Final Rule Include Any New Reporting or Disclosure Obligations?

The final rule does not include any new reporting or disclosure obligations. The rule only applies to those property owners who may seek the landowner liability protections provided under CERCLA for innocent landowners, contiguous property owners or bona fide prospective purchasers. The documentation requirements included in this rule are primarily intended to enhance the inquiries by requiring the environmental professional to record the results of the inquiries and his or her conclusions regarding conditions indicative of releases and threatened releases on, at, in, or to the property and to provide a record of the environmental professional's inquiry. Today's rule contains no new requirements to notify or submit information to EPA or any other government entity.
Although today's rule does not include any new disclosure requirements, CERCLA section 103 does require persons in charge of vessels and facilities, including on-shore and off-shore facilities, to notify the National Response Center of any release of a hazardous substance from the vessel or facility in a quantity equal to or greater than a ``reportable quantity,'' as defined in CERCLA section 102(b). Today's rule includes no changes to this reporting requirement nor any changes to any other reporting or disclosure requirements under federal, tribal, or state law.

D. What Are the Final Documentation Requirements?

The proposed rule required that the environmental professional, on behalf of the property owner, document the results of the all Appropriate inquiries in a written report. As explained in the preamble to the proposed rule, the property owner could use this report to document the results of the inquiries. Such a report can be similar in nature to the type of report previously provided under generally accepted commercial practices. We proposed no requirements regarding the length, structure, or specific format of the written report. In addition, the proposed rule did not require that a written report of any kind be submitted to EPA or any other government agency, or that a written report be maintained on-site at the subject property for any length of time.
Today's final rule retains the requirements, as proposed, for documenting the results of the all Appropriate inquiries investigation conducted under the supervision or responsible charge of an environmental professional. As noted above, the primary purpose of the documentation requirement is to enhance the inquiry of the environmental professional by requiring that the environmental professional record the results of the inquiries and his or her conclusions. The written report may allow any person claiming one of the CERCLA landowner liability protections to offer documentation in support of his or her claim that all Appropriate inquiries were conducted in compliance with the federal regulations.\1\ The Agency notes that while today's final regulation does not require parties conducting all Appropriate inquiries to retain the written report or any other documentation discovered, consulted, or created in the course of conducting the inquiries, the retention of such documentation and records may be helpful should the property owner need to assert protection from CERCLA liability after purchasing a property.
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\1\ Nothing in this regulation or preamble is intended to suggest that any particular documentation prepared in conducting all Appropriate inquiries will be admissible in court in any litigation where a party raises one of the liability protections, or will in any way alter the judicial rules of evidence.
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The final rule requires that a written report documenting the results of the all Appropriate inquiries include an opinion of an environmental professional as to whether the all Appropriate inquiries conducted identified conditions indicative of releases or threatened releases of hazardous substances on, at, in or to the subject property. The rule also requires that the report identify data gaps in the information collected that affect the ability of the environmental professional to render such an opinion and that the environmental professional comment on the significance of the data gaps.
Several commenters raised issues with regard to the proposed requirement that the environmental professional document and comment on the significance of data gaps that affect the ability of the environmental professional to identify conditions indicative of releases or threatened releases of hazardous substances on at, in, or to the subject property. Some commenters stated that the need to identify data gaps will make it difficult to determine when an all Appropriate inquiries investigation is complete and therefore the requirement would act as a disincentive to the development of potentially contaminated properties. Other commenters asserted that the fact that the regulations recognize data gaps creates a loophole that would result in property owners claiming to be protected from CERCLA liability after conducting an incomplete investigation that includes significant data gaps. These commenters raised concerns that CERCLA liability protection could be claimed by property owners simply because they conducted an all Appropriate inquiries investigation, even in those cases where releases on, at, in, or to the property were missed during the investigation. Other commenters stated their support for the requirements to document data gaps, as proposed. A summary of EPA's response to these comments and the requirements for documenting data gaps included in the final rule is provided below in Section IV.N.
The final rule, at Sec. 312.21(d), retains the proposed requirement that the environmental professional who conducts or oversees the all Appropriate inquiries sign the written report. There are two purposes for the requirement to include a signature in the report. First, the individual signing the report must declare, on the signature page, that he or she meets the definition of an environmental professional, as provided in Sec. 312.10. In addition, the rule requires that the environmental professional declare that: [I, We] have developed and performed the all Appropriate inquiries in conformance with the standards and practices set forth in 40 CFR part 312.
Some commenters raised concerns about whether the proposed rule would require the environmental professional to certify the all Appropriate inquiries report and its findings. Today's final rule does not require the environmental professional to ``certify'' the results of the all Appropriate inquiries when signing the report. The two statements or declarations mentioned above and required to be included in the final written report documenting the conduct of all Appropriate inquiries are meant to document that an individual meeting the qualifications of an environmental professional was involved in the conduct of the all Appropriate inquiries and that the activities performed by, or under the supervision or responsible charge of, the environmental professional were performed in conformance with the regulations. Reports signed by individuals holding a Professional Engineer (P.E.) or Professional Geologist (P.G.) license, need not include the individual's professional seal.
A few commenters requested that EPA include specific requirements for the content of a final report in the final rule. Given that the type and extent of information available on a particular property may vary greatly with its size, type, past uses, and location, and the type and extent of information necessary for an environmental professional to render an opinion regarding conditions indicative of releases or threatened releases of hazardous substances associated with any property may vary, we decided not to include in the final rule specific requirements governing the content of all reports.
The provisions of the final rule allow for the property owner (or grantee) and any environmental professional engaged in the conduct of all Appropriate inquiries for a specific property to design and develop the format and content of a written report that will meet the prospective landowner's (or grantee's) objectives and information needs in addition to providing documentation that all Appropriate inquiries were completed prior to the acquisition of the property, should the landowner (or grantee) need to assert protection from liability after purchasing a property.

E. What Are the Qualifications for an Environmental Professional?

Proposed Rule

In the Brownfields Amendments, Congress required that all Appropriate inquiries include ``the results of an inquiry by an environmental professional'' (CERCLA section 101(35)(B)(iii)(I)). The proposed rule included minimal qualifications for persons managing or overseeing all Appropriate inquiries. The intent of setting minimum professional qualifications, is to ensure that all inquiries are conducted at a high level of professional ability and ensure the overall quality of both the inquiries conducted and the conclusions or opinions rendered with regard to conditions indicative of the presence of a release or threatened release on, at, in, or to a property, based upon the results of all inquiries. The proposed rule required that an environmental professional conducting or overseeing all Appropriate inquiries possess sufficient specific education, training, and experience necessary to exercise professional judgment to develop opinions and conclusions regarding the presence of releases or threatened releases of hazardous substances to the surface or subsurface of a property. In addition, the proposed rule included minimum qualifications, including minimum levels of education and experience, that characterize the type of professional who is best qualified to oversee and direct the development of comprehensive inquiries and provide the landowner with sound conclusions and opinions regarding the potential for releases or threatened releases to be present at the property. The proposed rule allowed for individuals not meeting the proposed definition of an environmental professional to contribute to and participate in the all Appropriate inquiries on the condition that such individuals are conducting inquiries activities under the supervision or responsible charge of an individual that meets the regulatory definition of an environmental professional.

The proposed rule required that the final review of the all Appropriate inquiries and the conclusions that follow from the inquiries rest with an individual who qualifies as an environmental professional, as defined in proposed section Sec. 312.10 of the proposed rule. The proposed rule also required that in signing the report, the environmental professional must document that he or she meets the definition of an ``environmental professional'' included in the regulations.
The proposed definition first and foremost required that, to qualify as an environmental professional, a person must ``possess sufficient specific education, training, and experience necessary to exercise professional judgment to develop opinions and conclusions regarding the presence of releases or threatened releases * * * to the surface or subsurface of a property, sufficient to meet the objectives and performance factors'' that are provided in the proposed regulation. The proposed definition of an environmental professional included individuals who possess the following combinations of education and experience.