Part I: Overview of the
New Phase I
•“All Appropriate Inquiries”
(AAI) Final Rule
•New Phase I ESA Standard:
ASTM E 1527-05
November 1, 2006
2002 Federal Brownfield
The Small Business Liability Relief and
Brownfields Revitalization Act of 2002
• Innocent landowner defense
• Contiguous property owner protection
• Bona fide prospective purchaser
The Brownfields Defenses
The Innocent Landowner Defense
• Where the release or threatened
release of hazardous substances
occurred before the innocent
landowner acquired the property.
– The property owner must show they did not know and
had no reason to know of the contamination prior to
– To demonstrate they did not/had no reason to know,
the owner must show that they conducted “all
appropriate inquiries” at the time of purchase.
CERCLA §§ 101(35), 107(b)(3)
The Brownfields Defenses
The Contiguous Property Owner
• Where contamination on the person’s
property was due solely to migrating
contamination from a contiguous
– This is an exception to the normal rule under CERCLA,
which holds “owners” and “operators” liable for
contamination on their property.
– Property owners seeking this protection must demonstrate
that they conducted “all appropriate inquiries” at the time
they acquired the property.
CERCLA § 107(q)
The Brownfields Defenses
Bona Fide Prospective Purchaser (“BFPP”)
• Where a purchaser who could be
considered the “owner” or “operator”
of a facility meets the definition of a
– Disposal of all hazardous materials occurred
before the person acquired the facility.
– The person conducted “all appropriate inquires”
into the previous ownership and uses of the
facility at the time of acquisition.
CERCLA §§ 101(40); 107(r)
To maintain liability protection, a
person qualifying for a brownfields
• Maintain compliance with and not impede the efficacy of
all land use restrictions and institutional controls.
• Provide full cooperation and access to persons authorized
to conduct response actions.
• Comply with all information requests and subpoenas.
• Provide all legally required notices regarding releases.
• Take “reasonable steps” regarding releases of hazardous
“Common Elements” Reference Sheet, U.S. EPA
Reasonable steps under CERCLA with
regard to releases of hazardous
• Stopping any continuing releases.
• Preventing any threatened future release.
• Preventing or limiting human,
environmental, or natural resource
exposure to earlier hazardous substance
“Common Elements” Reference Sheet, U.S. EPA
CERCLA §§101, 107
ASTM E 1527-05’s Purpose
“[T]his practice is intended to permit
a user to satisfy one of the
requirements to qualify for the
innocent landowner, contiguous
property owner, or bona fide
prospective purchaser limitations on
The AAI Rule and ASTM Require:
• Site inspections
– New standard requires interviews of “users” and, for abandoned
properties, neighboring property owners
• Reviews of historical sources
– New standard requires review of recorded land title records
• Reviews of government records
– New standard includes more sources
• Consideration of “commonly known” information
• Search for environmental cleanup liens
• Consideration of “specialized knowledge”
• Consideration of relationship of purchase price to fair market value
of property, if not contaminated
• Consideration of “degree of obviousness of contamination”
For How Long is a Phase I Report
• Presumed valid if completed 180 days prior to
the date of acquisition of the property.
• Presumed valid if completed within 1 year prior
to the date of acquisition of the property if the
following five items are updated within 180 days
of the date owner takes title:
Search for environmental cleanup liens,
Review of government records,
Site visit, and
Declaration/signature by EP.
For How Long is a Phase I
• A report more than 1 year old must be updated “in
its entirety,” i.e. a new Phase I Site Assessment must
be performed and new report prepared.
See ASTM 4.6 and 70 Fed. Reg. 66070, 66084
• A report prepared pursuant to ASTM E 1527-00 may
NOT be “updated” to meet ASTM E 1527-05.
See ASTM § 4.6
• Any Phase I reports performed for acquisitions that
may occur after October 31, 2006 should be
performed pursuant to the new AAI Rule and ASTM E
Timing of Phase I Reports
• The Phase I must be completed
less than 180 days before
– Phase I reports older than 1 year old
may not be submitted to DCA, even
– A Phase I 180 days old or more, but
less than 1 year old, may be
submitted to DCA if updated in
accordance with ASTM.
Qualifications to Conduct AAI
An Environmental Professional is
defined in the AAI rule as:
• A person with a PE or PG license AND 3 years
relevant experience; or
• A Baccalaureate (or higher) degree in
engineering or science AND 5 years relevant
• A license or certification by government agency
AND 3 years relevant experience; or
• 10 years relevant experience
What is “Relevant Experience”?
• Environmental Site Assessments, other
investigations and remediation.
• Involves understanding of surface and
subsurface environmental conditions.
• Proven experience using professional
judgment to develop opinions regarding
releases or threatened releases of
Documentation of Qualifications
• The Phase I report must identify the
qualifications of EP and of person(s) who
conducted site reconnaissance and
• The Phase I must also include the
declaration language from AAI rule that
– I/We declare that I/We meet definition of EP, and
– I/We developed and performed the AAI in
conformance with the federal rule.
Who Performs the Phase I?
• site visit
• report writing
• review of report
Additions to the Records Review
• Certain new standard federal
• Engineering controls and
institutional controls records search
• Tribal government records search
• Local government records search
Additional Historical Use
• Internet sites;
• Community organizations;
• Local libraries/historical societies;
• Current owners/occupants of
neighboring properties; and
• As many standard historical sources as
are reasonably ascertainable and
likely to provide useful information to
identify previous uses of the property.
Who is a “User” of a Phase I?
• “User” is broadly defined in ASTM as
“the party seeking to use Practice E
1527 to complete an environmental
site assessment of the property.”
• Users can include:
• Review of reasonably ascertainable recorded land title
records and lien records for environmental liens.
• Communication to the EP of any specialized knowledge
of the user relevant to identifying Recognized
Environmental Conditions (“RECs”).
• Communication to the EP of any actual knowledge of
the user relevant to identifying RECs.
• Investigation into the relationship between the actual
purchase price of the property and the fair market
value of the property, if not contaminated (if the
property is being purchased).
• Communication of commonly known or reasonably
ascertainable information within the local community
relevant to identifying RECs.
• Communication to the EP of the purpose for which the
user is requesting the ESA.
User “Interview” Format
• What does an investigation into the
relationship between the market value and
purchase price of the property mean?
– The user (and EP) must compare the purchase
price of the property to the “market value” of the
• If the purchase price is not the same as the
market value, the user and EP must then
consider the potential causes of that
differential--could the differential be due to
any environmental conditions at the property?
Are there other explanations?
• The EP must address any differential and its
causes in the Phase I.
Property Valuation for
• The EP must inquire of the seller, broker,
or real estate professional associated
with the project as to the market value
as compared to the purchase price.
– The actual purchase price itself
need not be included in the report,
just whether a differential exists
between the market value and the
• A “data failure” has occurred if all reasonably
ascertainable sources have been reviewed, but
objectives of the records-review have not been met.
• A “data gap” is when, despite all good faith efforts,
there remains a lack of or inability to obtain
information required under the practice.
• A Phase I must give reasons why sources were
excluded and identify any document data failures.
• EP must determine:
– If the data failure represents a significant data gap;
– The impact of a data gap on ability to identify RECs.
What is “Reasonably
• Information that is:
– Publicly available
– Obtainable within reasonable time
and cost constraints
– Practically reviewable
• What does that mean in the real
Part II: Review of the
Environmental Manual Table of
Section A: DCA
Regarding Phase I
the ASTM Scope
Reliance for Phase I and Phase II
The following parties must be listed as
“users” of the Phase I Report and
interviewed for the “user interview”
Entity that has title or will take title
Project development partners
Equity partners for the project
Any other party meeting the definition of
“user” under ASTM.
Any Phase I or Phase II Report must state
that DCA and GHFA may rely upon it.
• Phase I Format is dictated by the
manual, and has been made very
– Subsections may not be added.
– Additional appendices may be added.
– A site map conforming to DCA
specifications must be included.
• The Phase I must conform to ASTM E
1527-05, or any updated version.
– Where the DCA regulations are more
stringent, they are to be considered
Phase I Format
Purpose of the Phase I
• The EP shall ask the Applicant what the
Applicant’s purpose is for having the
Phase I perfomed and must include
the purpose in the Report.
– The purpose may be to qualify for one of
the three Brownfields protections, for bond
issuance, for tax credits, or for loans.
– The Phase I Report must also state that the
purpose is to determine whether the
property is suitable for construction of
Responsibilities & Qualifications
• The definition of “EP” for DCA purposes
matches that of ASTM.
– Resumes for personnel involved in the
Phase I assessment must be included in the
• The EP is not required to perform the
site reconnaissance, but must supervise
and review the Phase I Report.
• The EP must sign the Environmental
Consultant Signature Page.
• The EP must hire a title company or title
professional to research recorded land
title records, records of environmental
liens, and records of activity and use
limitations, unless these records have
already been provided by a user.
• The report from the title company or
title professional must be included in
the Report, as well as any records
discovered for any environmental liens
or activity and use limitations.
Summary, Conclusions, and
• The Phase I must set forth the EP’s
findings, clearly written conclusions,
• The Report must identify and comment
– Supporting data and test results.
– Data gaps
• Including the good faith efforts made to gather
the information that could not be obtained.
– Commonly known and reasonably
ascertainable information available to the
user or to the EP.
Professional Opinion—Phase I
The EP must provide an opinion as to:
• The existence or non-existence of RECs
• Whether the property has any known
or is at risk of contamination
• Whether further assessment activities
• Whether “AAI” was conducted.
• Whether the review of pertinent
information in Sections 4.0 and 5.0
indicates or does not indicate RECs.
Ways to Address Regulatory
Record Sources (Section 4.1)
Ways to Address Regulatory
Record Sources (Section 4.1)
Section B: Non-Scope
Issues for Phase I
Issues For Which Requirements Have
Not Changed Significantly
• Lead In Drinking Water
– Phase I must include the most current documentation
regarding compliance with EPA standards.
– Buildings more than 25 years old must be tested.
– Phase I must include documentation regarding potential
PCB-containing equipment both on-site and off-site.
– The photographs must be dated and labeled with a
description of the view presented
• Other Hazards
– The EP must provide documentation that water and
sewer services is available to the property (a record of a
phone call by the EP to the local authority or copy of
letter sent to the Applicant by local authority is sufficient).
Water Leaks, Mold,
Fungi, Microbial Growth
• For multi-family units, the EP must
evaluate water leaks, mold, fungi, and
microbial growth for every unit in which
the EP also is assessing lead based
paint, radon, or asbestos.
• The EP must visually examine the
following areas in the selected units
where readily accessible:
– Ventilation systems
– Areas behind walls, under floors and
Renovation or use of existing structure
• A radon test must be performed unless
an EPA approved test has been
performed in the lowest areas within
the last 6 months demonstrating levels
at or below 4 pci/l.
• The Phase I report must indicate that
the buildings will be constructed in
accordance with EPA requirements.
• An asbestos survey must be performed
on all buildings scheduled for demolition
• The EP must assume that there is ACM in
all buildings constructed before 1980.
– Representative sampling must be
performed, unless a comprehensive
asbestos survey was performed on or after
January 1, 1986.
• Friable ACM must be remediated by
removal or encapsulation.
– An O&M Plan must be included for all nonfriable ACM and/or encapsulated friable
Lead Based Paint
Where any current or former structure
was constructed before 1979:
• If such structures are not planned for
demolition, sampling must be
performed on the interior and exterior
of the building.
• If such structures are planned for
demolition, soil sampling is required,
with some exceptions
Prior to conducting any soil sampling,
Applicants are encouraged to submit
a proposed scope of work in the same
manner as a proposal for a Phase II.
• No project will be accepted for DCA
funding or tax credits if it disturbs more
than 1/10 acre of wetlands.
• If wetlands will be filled or impacted
and the project involves HOME funds
or other HUD funding sources, the
HOME and HUD Environmental
Questionnaire must demonstrate
compliance with the wetland
management 8-step process.
– This process may be found at 55 Fed. Reg.
396, 403 (January 4, 1990).
Wetland Management 8-Step Process
Determine whether proposed action is located in a
If so, notify the public.
Identify and evaluate practicable alternatives to
construction in the wetland.
Identify potential direct and indirect impacts
associated with the modification of the wetland.
Design or modify the proposed action to minimize
potential effects on the wetland.
Reevaluate proposed action to determine whether:
a. It is practicable; b. any potential alternatives are
Publish final notice regarding action in the wetland.
Implement the proposed action, and fulfill continuing
responsibility to ensure mitigation measures are also
• The EP must identify any potential
state waters and applicable
buffer areas and show them on
the Site Map.
• If a project will disturb any buffer
areas, the Applicant must apply
for, receive and document any
necessary variances, or the
project will not be accepted.
• The FEMA map for the property must be
included, even if the property is not within the
• If any buildings will be within the 100-year
– Tax credit rehab projects—the Phase I must include
evidence that the lowest existing floor is 6” above
the floodplain elevation.
– Tax credit new construction--the project will not be
accepted unless the property will be reclassified
out of the floodplain prior to completion and
certain documentation is included.
• HOME projects which are in the floodplain
require additional documentation, including
compliance with the Floodplain
Management 8-Step Process, 24 C.F.R. § 55.20.
• The EP must determine if the property is within:
– 5 miles of a civil airport
– 15 miles of a military airport
– 1000 feet of a major highway or busy road (greater
than 10,000 average daily count)
– 3000 feet of a railroad or rail line.
• If so, the EP must complete a noise
assessment for the property using 10 year
projections for traffic, aircraft, and railway
– Where not available for traffic noise, estimate 3%
yearly growth to determine the projection.
– Where not available for aircraft or railway noise, use
Major Highway or Busy Road
New Construction Projects, Rehabilitation
Projects, and Tax Credit Allocations
• If the assessment indicates any part of
the project is over 65 decibels (“dB”),
but less than 75 dB, the Phase I must:
– Include a noise attenuation plan
completed in accordance with HUD
guidelines which demonstrates exterior
attenuation to below 65 dB and interior
attenuation to below 45 dB.
• If the assessment indicates any part of the
project is over 75 dB, the project will NOT be
accepted by DCA unless:
– The project incorporates noise attenuation and
– The project addresses other important public policy
• Where interior noise levels exceed 45 dB,
projects must include a letter from the project
architect discussing the sound transmission
class of construction materials and the
estimated interior noise level should be
Phase II Reports
When a Phase II is Recommended
in the Phase I Report
• Must submit a draft or final Phase I report (text
only), a draft of the Phase II scope of work,
and a site map no fewer than 60 days before
– If the Applicant does not do so, DCA may require
additional actions by the Applicant (e.g. testing or
• DCA will issue its concurrence or ask for
additional scope items.
– If DCA does not respond by 15 days prior to
Application submission, the Applicant should
proceed with the Phase II work.
– DCA may, at its sole discretion, require additional
actions by the Applicant
Phase II Reports
• If the Phase I investigation documents
an REC, suspected environmental
concern, or non-scope issue, the Phase
II investigation must be completed as
part of the Application submission.
– The Phase II Scope of Services must be
included in Appendix E of the Phase I, but
the final Phase II Report may be submitted
• An EP must supervise, review, and sign
the Phase II Report using the
Environmental Consultant Signature
Professional Opinion—Phase II
The EP must provide an opinion as to:
• Whether the property is contaminated.
• Whether any identified contamination
is from on-site or off-site sources.
• Whether any reporting or cleanup
obligations are triggered.
• Whether the property is likely to be
listed on the HSI.
Part III: Submission
Required Documentation for
Phase I Reports
• Environmental Consultant Signature
Page (as seen above)
• Environmental Certification
• Owner Environmental Questionnaire &
• Property Log and Information Checklist
• HOME and HUD Environmental
Questionnaire (where required)
• Proof of Insurance
• Letters of Reference for the Consulting
Owner Environmental Questionnaire
& Disclosure Statement
Property Log and Information
HOME and HUD
• Insurance coverage amounts are
dictated in the DCA manual and
• DCA and GHFA must be named
as an additional insured on the
commercial general liability
• Proof of insurance must be
included in the Phase I Report in
Part IV: Common
Omissions and Errors
Report Date (not included on the cover).
Environmental Certification Form.
Signature of the EP on the Environmental Certification.
Signature of the Applicant on the Environmental Certification.
Environmental Professional’s resume, qualifications, letters of
Proof of insurance in specified amounts; GHFA and DCA listed
on the certificate as a certificate holder and as an additional
insured for commercial general liability policy.
Owner Environmental Questionnaire & Disclosure Statement.
HOME and HUD Environmental Questionnaire.
Professional Opinion, conclusions, and recommendations in
the Executive Summary and in Sections 4.0 and 5.0.
Date of Site Reconnaissance.
Comprehensive historical review in accordance with ASTM
requirements and DCA standards.
Interviews – names and titles of interviewees; documentation
of all interviews and attempts to interview in the Appendices.
Common Omissions (cont.)
Floodplain investigation and map.
Wetlands investigation, including wetlands maps.
Location map indicating groundwater flow.
Discussion of each property identified in the environmental
regulatory database(s) and rationale(s) for determining
whether or not each property presents an REC to the subject
Photographs: dates and description of view presented.
Noise Assessment Report and professional opinion (including
NAG when noise levels exceed HUD limitations).
Radon site classification for new construction; Radon testing
in buildings for rehabilitation.
Survey of mold conditions in buildings for rehabilitation.
Lead in Drinking Water documentation.
Lead Based Paint sampling.
Map locating all sites identified in Regulatory Review.
• Report Date (outdated).
• Noise Assessment Report and professional
opinion (not including 10 year traffic
• Use of disclaimer language inconsistent with
requirements of these Environmental
• Site reconnaissance observations not
• Photographs: observations and potential
environmental impacts not sufficiently
• Not following the DCA format.