The commenter is incorrect in asserting that the conduct of all appropriate inquiries ( with or without an on site visual inspection) results in encouraging purchasers to argue they have no duty to mitigate contamination while retaining a liability exemption. Purchasers must stop ongoing releases regardless of whether they are documented in the all appropriate inquiries report. The Small Business Liability Relief and Brownfields Revitalization Act ( the " Brownfields Amendments") establishes many conditions with which a property owner must comply to obtain protection from CERCLA liability. The conduct of all appropriate inquiries is merely an initial, pre acquisition, requirement for obtaining liability protection. Once a person owns a property, he or she must comply with continuing obligations, including stopping on going releases and taking appropriate care to reduce exposure to releases and threatened releases of hazardous substances. A person cannot simply claim he or she is not responsible or did not know of the contamination. Innocent landowners and contiguous property owners must establish in a court that they did not know and had no reason to know of contamination. Bona fide prospective purchasers may buy property with the knowledge of contamination, but must identify the contamination prior to purchase. In addition, the Brownfields Amendments provides no liability protections for sellers of contaminated properties. 495 <IP_ADDRESS> Physical Limitations Commenter Organization Name: Beaver, Christine Comment Number: 0074 Excerpt Number: 1 Excerpt Text: With regard to the proposed requirement for visual inspection of the subject property, it should be noted that physical limitations could include a building that is in structurally poor condition making it unsafe for the environmental professional to gain access ( as per OSHA regulations). It is my opinion that the exemption from conducting on site inspection when good faith efforts result in inability to obtain access to the property should also apply to a property where the building is in structurally poor condition.

Response: The final rule does not require environmental professionals to enter unsafe buildings. If an environmental professional concludes that the on site visual inspection cannot be completed because of unsafe conditions, the environmental professional should document the limitations and the data gaps associated with the limited access. In addition, the significance of any data gaps on the environmental professional's ability to render an opinion regarding conditions indicative of releases or threatened releases of hazardous substances must be noted in the written report.

Commenter Organization Name: Westward Environmental Comment Number: 0429 Excerpt Number: 4 Excerpt Text: Regarding the heading of What Are the Proposed Requirements for Visual Inspections of the Subject Property and Adjoining Properties? on page 52564 of the proposed rule:

 it states "  on site inspection of the subject property be conducted in all but a few very limited cases and that physical limitations  be documented."

 If the EPA has ideas if which properties fall into the " very limited cases" they should be listed to avoid suppositions.

 Regarding the issue of documenting physical limitations ( such as snow cover, locked doors, flooding, etc.), how do these limitations come into play with the statement 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." Notwithstanding the economic considerations, would not a prudent EP make another attempt to overcome these physical limitations?

Response: Examples of limited circumstances that could result in an ability to claim the exemption from 496 conducting an on site visual inspection are provided in the final rule, and were provided in the proposed rule. These limited circumstances include physical limitations, remote and inaccessible location, or other inability to obtain access to the property.

When an environmental professional signs a written report indicating "[ I, We] have developed and performed the all appropriate inquiries in conformance with the standards and practices set forth in 40 CFR Part 312," conformance includes conforming with any applicable exemptions and the conditions for qualifying for the exemptions.

EPA agrees with the commenter that it would be prudent for an environmental professional to make more than one attempt to gain access to a property to conduct a visual on site inspection. 497 3.6.3 Visual Inspection of Adjoining Properties Commenter Organization Name: PBS & J Comment Number: 0270 Excerpt Number: 4 Excerpt Text: Adjacent property inspections should only be performed from inside the boundary of subject tract or public rights of way. Visual inspection of adjacent properties can be hindered by those landowners not being willing to grant access. Additional this can become extremely expensive because and time consuming, both in the field and in the office, report writing.

Response: The final rule does not require the visual inspection of adjoining properties to be conducted onsite Inspections of adjoining properties may be conducted from off site vantage points, including the property boundaries and public rights of way.

Commenter Organization Name: FAA Comment Number: 0334 Excerpt Number: 22 Excerpt Text: VISUAL INSPECTIONS OF NEIGHBORING PROPERTIES 1) FAA agrees that allowing visual inspections of neighboring properties from the shared property line or public right of ways is a good idea. Requiring an on site inspection of adjoining properties is a very bad idea  especially at potentially dangerous property ( e. g., bad neighborhoods, hostile neighbors, construction sites).

Response: The statute ( at § 101( 35)( B)( iii)( VI)) clearly requires that all appropriate inquiries include inspections of adjoining properties. The final rule does not require the visual inspection of adjoining properties to be conducted on site. Inspections of adjoining properties may be conducted from off site vantage points, including the property boundaries and public rights ofway

Commenter Organization Name: McKerr, Thomas Comment Number: 0347 Excerpt Number: 16 Excerpt Text:  Adjoining property: Why does it have to be a public thoroughfare? Railroads are not public thoroughfares. Delete " public" or change to " public and private thoroughfares." 498 Response: " Public" rights of way or thoroughfares were provided as an example of an alternative vantage point. Environmental professionals may know of other vantage points and may make use of them.

Commenter Organization Name: Greenlining Institute Comment Number: 0354 Excerpt Number: 15 Excerpt Text:  Visual Inspections of Adjoining Properties The criteria provided by Congress in the Brownfields Revitalization Act include " Visual inspections of the facility and of adjoining properties." ASTM E1527 00 § 8 " Site Reconnaissance" provides that " To the extent that current uses of adjoining properties are visually and/ or physically observed on the site visit. . . they shall be identified in the report, and current uses so identified shall be described." ASTM E1527 00 § <IP_ADDRESS>. In the proposed rule, the committee allowed visual inspections of adjacent properties to be fulfilled by inspection of aerial photographs. Proposed § 312.27( a)( 2). Review of aerial photographs showing the subject property and adjacent properties is already customary practice under ASTM E1527 00 § <IP_ADDRESS>. The committee also recognizes that on site access to adjacent properties is not required and that visual inspection from the subject property or public right of way may not yield an entire view of the adjacent property. We see no reason why existing ASTM practice and the wording of ASTM section <IP_ADDRESS> does not fulfill the statutory criteria of including visual inspections of adjoining properties.

To the extent EPA desires additional comfort it could change the word " that" to " practicable" and change the word " are" to the words " shall be" in the above quoted sentence from ASTM section <IP_ADDRESS>.

Response: EPA appreciates the commenter's input. The statute ( at § 101( 35)( B)( iii)( VI)) clearly requires that all appropriate inquiries include inspections of adjoining properties. EPA's point, in the preamble to the proposed rule, was that the ASTM E1527 2000 does not explicitly require the inspection of adjoining properties in all circumstances.

Commenter Organization Name: USWAG Comment Number: 0367 Excerpt Number: 6 Excerpt Text: EPA is mistaken when it states that " ASTM E 1527 2000 does not mandate visual inspections of adjoining properties." Ibid. Section <IP_ADDRESS> of the ASTM standard requires visual inspections of adjoining properties. In addition, section <IP_ADDRESS> requires identification of property uses beyond adjoining properties if in the environmental professional's judgment the uses are likely to 499 indicate recognized environmental conditions on the subject property. The standard also requires that historical uses of adjoining properties " shall be described in the report if they are likely to indicate recognized environmental conditions in connection with the adjoining properties or the property." ASTM El527 00 § <IP_ADDRESS>.

Response: EPA appreciates the commenter's input. The statute ( at § 101( 35)( B)( iii)( VI)) clearly requires that all appropriate inquiries include inspections of adjoining properties. EPA's point, in the preamble to the proposed rule, was that the ASTM E1527 2000 does not explicitly require the inspection of adjoining properties in all circumstances.

Commenter Organization Name: SCANA Comment Number: 0373 Excerpt Number: 10 Excerpt Text: The current wording requires a visual inspection of adjoining properties, from the subject property line, public rights of way, or other vantage point ( such as aerial photography). The Agency is urged to consider the following points: There is potential for trespass to occur in an effort to meet this requirement, regardless of the Agency's intentions Visibility can be obstructed at available vantage points, due to woodlands, topographic features, and size of the adjoining property Aerial photography is frequently of insufficient detail to allow proper observation of the adjoining property to meet the intent, and is typically only useful in confirming likely conditions The size of the adjoining property could dictate an unusually time consuming process of trying to guess where hazardous substances may have been utilized/ stored on an aerial photograph  this approach has very little benefit for the effort involved and could likely raise needless questions rather than establishing a better picture of the adjoining property.

Based on these facts, it is suggested that the Agency retain this as a suggested approach ( rather than required), and allow the environmental professional the discretion to make appropriate determinations for the performance of the inquiry. We do concur that past and present uses of adjoining properties should always be considered in the AAI process. We disagree with the Agency that specific standards are necessary for an environmental professional to complete the inquiry in this regard. As stated previously in our comments, please note that the environmental professional and the purchaser have the burden of, and the potential liability from, performing AAIs.

Response: The statute ( at § 101( 35)( B)( iii)( VI)) clearly requires that all appropriate inquiries include inspections of adjoining properties. The final rule does not require the visual inspection of adjoining properties to be conducted on site. Inspections of adjoining properties may be conducted from off site vantage points, including the property boundaries and public rights of 500 way. If, due to circumstances beyond the control of the environmental professional, an inspection of adjoining properties cannot be completed, the environmental professional should consider whether or not data gaps will result. If the inability to visually inspect adjoining properties results in data gaps, they should be noted in the written report, as well as the significance of such data gaps upon the environmental professional's ability to render an opinion regarding conditions indicative of releases or threatened releases at the property.

Commenter Organization Name: NPCA Comment Number: 0403 Excerpt Number: 4 Other Sections: NEW  3.1.2  Interview of the past owners, occupants, employees, and/ or managers of the subject property Excerpt Text: The Proposed Rule notably increases the content requirements under Phase I ESAs. An environmental professional ( EP) must interview past owners, operators and occupants of the property, not just the current owner, and if the property is abandoned, the EP must interview owners or occupants of adjacent properties. What if the adjacent property is abandoned? How far must the EP go to track down past owners, operators and occupants? How far back in a line of owners, operators and occupants must the EP go?

Response: Prospective property owners, grantees, and environmental professionals must complete the all appropriate inquiries activities in compliance with the provisions of the final rule while seeking to meet the objectives and performance factors of § 312.20( e) and ( f). Past owners and occupants of the subject property must be interviewed if necessary to meet the objectives and performance factors.

If all properties neighboring an abandoned property are abandoned and there is no chance of the environmental professional locating a neighboring property owner, the inability to fulfill the requirement should be noted in the final rule and all data gaps that result from the environmental professional not being able to either interview an owner or operator of the property or interview a neighboring property owner and the significance of all data gaps should be noted in the written report.

Commenter Organization Name: NPCA Comment Number: 0403 Excerpt Number: 5 Excerpt Text: In addition, the EP must visually inspect not only the subject property, but adjacent properties as well. How is this to be accomplished if physical or visual access to the adjacent properties is restricted? The inability of an EP to find such persons or gain such access must be identified in the AAI report as a data gap. 501 Response: Prospective property owners, grantees, and environmental professionals must complete the all appropriate inquiries activities in compliance with the provisions of the final rule while seeking to meet the objectives and performance factors of § 312.20( e) and ( f).

If there is no opportunity to view adjacent properties to conduct a visual inspection, the obstacles should be noted in the written report and all data gaps that result and their significance also should be noted.

If all properties neighboring an abandoned property are abandoned and there is no chance of the environmental professional locating a neighboring property owner, the inability to fulfill the requirement should be noted in the final rule and all data gaps that result from the environmental professional not being able to either interview an owner or operator of the property or interview a neighboring property owner and the significance of all data gaps should be noted in the written report.

Commenter Organization Name: Thornhill, James Comment Number: 0414 Excerpt Number: 3 Excerpt Text: Visual inspection of adjoining properties should be limited as in Section 312.27( a)( 2) of the proposed rule, and should not include even a good faith effort requirement to conduct on site visual inspections of adjoining properties. The proposed rule requests comments on this component on page 52,565 of the preamble. Physically inspecting adjoining properties would require increased time and expense to negotiate terms of access for multiple sites. This is simply impractical in completing due diligence in a timely manner.

Use of aerial photography to satisfy the review of adjoining properties needs clarification in Section 312.37( a)( 2). The rule should be clarified to provide that recent aerial photography ( e. g. last 2 to 5 years) could be used to satisfy the component. As written, it is unclear whether the prospective purchaser is to have the property flown to obtain current aerial photographs.

Response: The final rule does not require the visual inspection of adjoining properties to be conducted onsite The use of aerial photography is allowed as long as the use of the photography allows the environmental professional to perform the inquiries in compliance with the objectives and performance factors of § 312.20( e) and ( f).

Commenter Organization Name: Georgia Power Comment Number: 0423 Excerpt Number: 12 Excerpt Text: In § 312.27 " Visual inspections of the facility and of adjoining properties" ( a) ( 2), the 502 requirement for visual inspections of adjoining properties to include "  a visual inspection of areas where hazardous substances may be or may have been stored, treated, handled, or disposed" is often not possible to accomplish without obtaining access from the adjoining property owners. We recommend striking this concept entirely.

Rationale:  Because it is not EPA's intent to create a regulation that requires the EP to attempt to gain access to adjoining properties in order to inspect areas of where hazardous substances may be or may have been stored, treated, handled, or disposed, such a requirement will often result in the documentation of a data gap. Further, how would the EP be able to determine which areas within adjacent properties contain or may have contained hazardous substances without conducting interviews or other intrusive analyses of the adjacent properties ( e. g., an area within a storage shed on an adjacent property could not be visually inspected from off site)?

 This requirement seems to be a major deviation from current ASTM practices and could result in a significant cost increase per assessment.

Response: The statute ( at § 101( 35)( B)( iii)( VI)) clearly requires that all appropriate inquiries include inspections of adjoining properties. The final rule does not require the visual inspection of adjoining properties to be conducted on site. Inspections of adjoining properties may be conducted from off site vantage points, including the property boundaries and public rights ofway If, due to circumstances beyond the control of the environmental professional, an inspection of adjoining properties cannot be completed, the environmental professional should consider whether or not data gaps will result. If the inability to visually inspect adjoining properties results in data gaps, they should be noted in the written report, as well as the significance of such data gaps upon the environmental professional's ability to render an opinion regarding conditions indicative of releases or threatened releases at the property. 503 3.7 Inclusion of Specialized Knowledge or Experience Commenter Organization Name: Koch, Donald Comment Number: 0234 Excerpt Number: 1 Other Sections: NEW  3.4  Recorded environmental cleanup liens searches NEW  3.8  Considering the relationship of the purchase price to the value of the property NEW  3.9  Considering commonly known or reasonably ascertainable information about the property Excerpt Text: I would like to comment on proposed 40 CFR 312.22. 40 CFR 312.21 defines the results of an inquiry by an environmental professional. 40 CFR 312.22 defines four additional requirements of an all appropriate inquiry and requires that this information must be provided to the environmental professional responsible for the inquiry. The mandatory provision of these criteria is inappropriate. The four criteria of an all appropriate inquiry mentioned in proposed 40 CFR 312.22 do not require the judgement of an environmental professional to interpret.

I recommend the following change in 40 CFR 312.22. 312.11 Additional Inquiries ( a) Persons identified under 312.1( b) may provide the following information to the environmental responsible for conducting the activities listed in 312.21.

Response: EPA agrees with the commenter. The final rule does not require the prospective landowner or grantee to provide the results of inquiries for which he or she is responsible to the environmental professional.

Commenter Organization Name: Koch, Donald Comment Number: 0234 Excerpt Number: 2 Excerpt Text: There are immense practical difficulties implementing the mandatory provision of " specialized knowledge or experience of the defendant" ( proposed 312.22 ( a)( 2)) to the environmental professional. What should I do? Give my client a short test on environmental science. Claim my client is dumber than dirt to improve their chances of being found an " innocent landowner". I would interview my client to find out what they know about the property and include the results of this interview in my report but that interview should not be the basis of the " innocent landowner" defense. The environmental professional has no way of ascertaining the truthfulness of what they are being told by their client ( I am assuming that the purchaser is the client of the environmental professional, which is typically, but not always, the case). The statute ( CERCLA 101( 35)( B)( iii)) requires that the " Specialized knowledge or experience on the part of the defendant ( 101( 35)( B)( iii)( VII))" is an essential part of the all appropriate inquiry criteria, but 504 the statute does not mandate that this criteria is part of the report of the environmental professional. In fact, " The results of an inquiry by an environmental professional ( 101( 35)( B)( iii)( I))" is listed at the same level as the " Specialized knowledge or experience on the part of the defendant ( 101( 35)( B)( iii)( VII))". There was clearly no statutory mandate to include this criterion in the report of the environmental professional.

Response: The final rule does not require the prospective landowner or grantee to provide information regarding his or her specialized knowledge to the environmental professional. However, any specialized knowledge held by the prospective landowner, grantee, and environmental professional remains relevant to the all appropriate inquiries investigation.

Commenter Organization Name: Anthony, Tony, et. al. Comment Number: 0292 Excerpt Number: 12 Excerpt Text: 312.28 Specialized knowledge or experience on the part of the defendant We support this section.

Response: EPA thanks the commenter for the stated support of this provision.

Commenter Organization Name: Intertox Comment Number: 0396 Excerpt Number: 16 Excerpt Text:  The proposed provisions governing the inclusion of specialized knowledge or experience on the part of the purchaser and the environmental professional.

 Specialized knowledge or experience is one of the things that separate the marketability of one environmental professional over another. Their ability to tout special knowledge or experience means that the all appropriate inquiry playing field is not level. Therefore, we support the use of specialized knowledge and/ or experience by the environmental professional provided that it is documented in the all appropriate inquiry report.

Response: EPA thanks the commenter for the stated support of this provision.

Commenter Organization Name: Rybak, John Thomas Comment Number: 0412 Excerpt Number: 8 Excerpt Text: 505 Prospective purchaser governing including of specialized knowledge.

a) Page # 52580 b) View: This should not be part of a Phase I report. The EP should not be required to obtain specialized knowledge from the purchaser and/ or prospective purchaser, as their communications may be limited or non existent with the purchaser.

c) Assumptions: The purchaser should be willing to provide any information pertaining to a site that could be negatively affected. They should not withhold specialized knowledge. However the EP cannot force them to reveal such information, and therefore this should not be a performance standard of the AAI Phase I report.

d) Burden: Including this section would create an unreasonable burden on the EP, in an area they have no expertise, and in a situation they may not have complete information. It is not reasonable to require the EP to comment on this topic in their Phase I process.

e) Alternative: AAI is intended to preserve certain CERCLA defenses of a purchaser. The purchaser should be educated that specialized knowledge is one consideration in the application of these defenses. The Phase I ' could' have a narrative paragraph in the Executive Summary discussion the Purchaser's responsibility to seek legal counsel to preserve their CERCLA defenses in the event Purchaser Specialized Knowledge would indicate a potential concern.

Response: The final rule does not require the prospective landowner or grantee to provide information regarding his or her specialized knowledge to the environmental professional. However, any specialized knowledge held by the prospective landowner, grantee, and environmental professional remains relevant to the all appropriate inquiries investigation.

Commenter Organization Name: Georgia Power Comment Number: 0423 Excerpt Number: 13 Other Sections: NEW  3.9  Considering commonly known or reasonably ascertainable information about the property NEW  3.10  Considering the degree of obviousness of the presence or likely presence of contamination at the property Excerpt Text: § 312.28, § 312.30 and § 312,31, the term " person"

Please consider including the need to define the term " Persons" in § 312.1 ( b)( 1), should be further defined, either in the preamble or in § 312.10 Definitions. Under § 312.28, § 312.30 and § 312,31, the term " person" should not include every individual in a firm, corporation, association, partnership, consortium, joint venture, commercial entity, United States Government, State, Tribe, municipality, commission, political subdivision of a State, or any 506 interstate body, but should be limited to those persons directly involved with conducting the AAI for the purpose of § 312.28, § 312.30 and § 312.31. For example, specialized knowledge or experience cannot mean the specialized knowledge or experience of every employee in a corporation of 25,000 employees. Clarifying language and instructive examples in the preamble will ensure that the applicability of these sections is practical.

Response: The term " person" is defined in CERCLA at section 101( 21) as " an individual, firm, corporation, association, partnership, consortium, joint venture, commercial entity, United States Government, State, municipality, commission, political subdivision of a State, or any interstate body."

It is difficult for EPA to predict how a court would interpret the term " person" or who a court may define as " the defendant" in cases involving a corporation. 507 3.7.1 Specialized Knowledge of the Current Owner( s) of the Subject Property Commenter Organization Name: Tweedale, Tony Comment Number: 0045 Excerpt Number: 2 Excerpt Text: Proposed Sec. 312.29, Requirements for Inclusion of Specialized Knowledge. I am a CERCLA law neophyte, but it is worth my asking you why your preamble ( and therefore the rule language) doesn't seem to require the inclusion of any specialized knowledge on the part of the current owner( s) of a property.

Response: The prospective purchaser or the grantee is the party who would be seeking liability protection and who would be conducting the all appropriate inquiries investigation.

Commenter Organization Name: NSPE Comment Number: 0230 Excerpt Number: 13 Excerpt Text: The proposed provisions governing the inclusion of specialized knowledge or experience on the part of the purchaser and the environmental professional ( page 52566).

NSPE agrees with EPA's perspective as it relates to the specialized knowledge of the defendant. In this rule, it appears that the prospective purchaser has an affirmative duty to update the inquiries and include any relevant specialized knowledge held by the current purchaser and the environmental professional. However, it seems somewhat inconsistent for the innocent purchaser defense to be made available to some, but not others, even if both parties conducted the same research under the same conditions and with the same degree of diligence. Holding a purchaser to a higher standard just because the purchaser may, or may not, have some specialized knowledge would seem to be counterintuitive as it pertains to CERCLA liability. If a party, who had no role in the creation of the environmental situation, possesses some specialized and valuable knowledge that is not in the possession of another, it would seem appropriate for that individual to be able to use that knowledge for his benefit without penalty or liability. On the contrary, if another person possesses little, if any, specialized knowledge and performed all appropriate inquiries, that person would be held to a lower standard of care. While it may seem unfair to have a single objective standard, regardless of specialized knowledge, it likewise seems incongruous to have inconsistencies in the standards as they apply to prospective purchasers' knowledge. Some uniformity is needed and the information required under all appropriate inquiries is adequate without application of a subjective knowledge based standard.

Response: The final rule requires that the prospective purchaser or grantee and the environmental professional account for their specialized knowledge of the subject property, the area 508 surrounding the subject property, the conditions of adjoining properties, and any other experience relevant to the inquiry, for the purpose of identifying conditions indicative of releases or threatened releases at the subject property. If an individual has specialized knowledge about the circumstances of a property that should lead him or her to conclude that there may be releases or threatened releases at or to the property, such information should not be ignored by the parties conducting the inquiry. If the parties do not have any specialized knowledge regarding the property or its potential conditions, they obviously could not apply such knowledge.

In the SARA amendments to Superfund in 1986, Congress directed courts evaluating a defendant's showing of all appropriate inquiries to take into account, among other things, " any specialized knowledge or experience on the part of the defendant." Nothing in today's rule changes the nature or intent of this requirement as it has existed in the statute since 1986. As provided in the preamble to the proposed rule, existing case law related to the innocent landowner defense shows that courts appear to have interpreted the " specialized knowledge" factor to mean that the professional or personal experience of the defendant may be taken into account when analyzing whether the defendant made all appropriate inquiries. 509 3.8 Considering the Relationship of the Purchase Price to the Value of the Property Commenter Organization Name: Appraisal Institute Comment Number: 0212 Excerpt Number: 3 Excerpt Text: Concerns Regarding Appraisal Costs Halting Brownfield Development Representatives of the Negotiated Rulemaking Committee have stated that that they feared hundreds of thousands of appraisals would be needed and would " halt" brownfield redevelopment. We disagree with this position.

The vast majority of commercial real estate transactions utilize financing. In virtually all lending transactions, an appraisal is being prepared to substantiate the loan while the All Appropriate Inquiry is being conducted. Rather than avoid the appraisal issue, we suggest the EPA utilize this opportunity to encourage a link between environmental issues and valuation issues. This is a reasonable and productive approach to protecting the public good.

Underwriters at financial institutions tell our members that they often review appraisals disclaiming any environmental issues; while at the same time they review other reports describing contamination issues at the property. If the lender were to simply subtract remediation costs from the " unimpaired value," the true market value impact of environmental conditions may not be accurately addressed. An environmental appraisal considers not only remediation costs, but also ongoing costs, responsibilities and stigma ( market resistance).

Competent appraisers understand the valuation effects of environmental issues and can render opinions of value for the property as if " unimpaired" as well as an opinion of value in consideration of the environmental impairment. USPAP actually provides that the " impaired" value is the actual base value. The " unimpaired" value must invoke a hypothetical condition, meaning the state of appraised condition is not true, but is assumed to be true for the appraisal. This kind of information can assist prospective purchasers in making the market value/ purchase price determination.

Linkage of the appraisal being prepared for other purposes to All Appropriate Inquiry is simple, reasonable and cost efficient. Generally, only a slight change in the scope of work would be needed to effect this change. Our organizations have a large body of knowledge on this subject and can help establish a coordinated solution. Our organizations stand committed to assist you in this endeavor, and we recommend the EPA encourage this inter communication in its Final Rule.

Response: Please note that the negotiated rulemaking committee was assembled from a diverse group of stakeholders. The Agency went to great lengths to be inclusive in this process so industry professionals, environmental justice groups, and federal government partners could all be adequately represented and have voices in this rulemaking process. Further, the recommendation of the rulemaking committee was to not require that an appraisal be performed as part of all 510 appropriate inquiries. However an appraisal conducted for the subject property may include valuable information regarding the market value and conditions of the property that contribute to the all appropriate inquiries investigation. The evaluation of the relationship between the purchase price and the fair market value of the property, if it were not contaminated, is left to the discretion of the prospective property owner or grantee. The evaluation may or may not need in depth research or benefit from a formal appraisal, depending on the property.

EPA agrees with commenter that there is an opportunity to coordinate appraisal activities in a better organized fashion. It is the Agency's hope that the appraisal industry will be recognized by environmental professionals and owners/ grantees of property as valuable partners in many instances. However, we reiterate, using an appraisal is within the discretion of the prospective property owner or grantee and in some instances, the environmental professional, where this duty has been delegated by the owner and accepted by the EP.

Commenter Organization Name: Koch, Donald Comment Number: 0234 Excerpt Number: 1 Other Sections: NEW  3.4  Recorded environmental cleanup liens searches NEW  3.7  Inclusion of specialized knowledge or experience NEW  3.9  Considering commonly known or reasonably ascertainable information about the property Excerpt Text: I would like to comment on proposed 40 CFR 312.22. 40 CFR 312.21 defines the results of an inquiry by an environmental professional. 40 CFR 312.22 defines four additional requirements of an all appropriate inquiry and requires that this information must be provided to the environmental professional responsible for the inquiry. The mandatory provision of these criteria is inappropriate. The four criteria of an all appropriate inquiry mentioned in proposed 40 CFR 312.22 do not require the judgement of an environmental professional to interpret.

I recommend the following change in 40 CFR 312.22. 312.11 Additional Inquiries ( a) Persons identified under 312.1( b) may provide the following information to the environmental responsible for conducting the activities listed in 312.21.

Response: The Agency agrees with the commenter. The final rule does not require the prospective landowner or grantee to provide the results of inquiries for which he or she is responsible to the environmental professional.

Commenter Organization Name: Maloy, Richard Comment Number: 0255 Excerpt Number: 2 Excerpt Text: 511 Concerns Regarding Appraisal Costs Halting Brownfield Development Representatives of the Negotiated Rulemaking Committee have stated that they feared hundreds of thousands of appraisals would be needed and would " half Brownfield redevelopment. We believe that this could not be further than the truth.

The vast majority of commercial real estate transactions utilize financing. In virtually all lending transactions, an appraisal is being prepared to substantiate the loan, at the same time the all appropriate inquiry is being conducted. Rather than avoid the appraisal issue, we suggest the EPA utilize this opportunity to encourage a link between environmental issues and valuation issues. This is a reasonable and productive approach to protecting the public good.

Lending underwriters tell me that they often review appraisals disclaiming any environmental issues; while at the same time they review other reports describing contamination issues at the property when an appraisal is being performed on a property with contamination and the appraisal has disclaimed any environmental issues, the fails to consider important details of remediation costs, ongoing costs and stigma ( market resistance).

In contrast, competent appraisers understand the valuation effects of environmental issues and can render opinions of value for the property as if " unimpaired" as well as an opinion of value in consideration of the environmental impairment. The Uniform Standards of Professional Appraisal Practice actually provides that the " impaired" value is the actual value. The " unimpaired" value must invoke the hypothetical condition rule, meaning the state of appraised condition is not true, but is assumed to be true for the appraisal. Linkage of the appraisal being prepared to all appropriate inquiry is simple, reasonable and cost efficient. Generally, only a slight change in the scope of work would be needed to affect this change.

The Appraisal Institute is the most respected depository of knowledge on this subject and can help establish a coordinated solution.

Response: Please see response to comment 0212, excerpt 3.

Commenter Organization Name: FAA Comment Number: 0334 Excerpt Number: 23 Excerpt Text: PROPERTY VALUE DETERMINATION 1) The requirement to analyze the significance of the relationship of the purchase price to the value of the property if the property weren't contaminated is a questionable parameter in the overall data analysis. If the subject property has a lower price than similar properties nearby, should the EP automatically assume that the property is contaminated? Similarly, should the EP or purchaser take a slightly higher price as an indication that the property must be clean and 512 therefore the investigations may be less rigorous? FAA believes that the regulations should not allow the purchase price of the property to enter into the EPs considerations until the EP is satisfied that AAI do not reveal a threatened or actual release at the subject property.

Response: A great strength of the performance based inquiry is its flexibility. The comparison of the purchase price and the fair market value of a property provides a flexible indicator of possible environmental contamination. EPA understands that a discrepancy is not determinative, however, it may indicate that further investigation is necessary.

Commenter Organization Name: Greenlining Institute Comment Number: 0354 Excerpt Number: 9 Other Sections: NEW  6.1  EPA should adopt ASTM standard rather than develop separate regulations Excerpt Text:  b. Congress intended to continue the ASTM E1527, § 5.4 " actual knowledge" requirement, not impose a new market valuation requirement.

EPA states that the new market valuation requirement of § 312.29 is required by the Brownfields Revitalization Act of 2001, and the existing ASTM E1527 treatment of the relationship of purchase price to value cannot continue because " ASTM limits this requirement to actual knowledge by the defendant of a significantly lower price for a property when compared with comparable properties. The statute's criteria does not limit this to actual knowledge." 69 Fed. Reg. at 52575.

We do not agree with EPA's construction of the statute. The " statute's criteria" that EPA refers to is "[ t] he relationship of the purchase price to the value of the property, if the property was not contaminated." 42 U. S. C. § 9601( 35)( B)( iii)( VIII). This statutory criteria has been a part of all appropriate inquiry since 1986. See Pub. L. No. 99 499, 100 Stat 1613 ( SARA Amendments) ( 1986). ASTM E1527 00, § 5.4, the " actual knowledge" requirement regarding the relationship of the purchase price to the value of the property if the property was not contaminated, was developed in direct response to the statutory criteria cited by EPA. See ASTM E1527 93, § X1.2.4; See also ASTM E1527 93, § 5.4.

The Brownfield Revitalization Act's command is to promulgate a regulation " to carry out all appropriate inquiries" in accordance with " good commercial and customary standards and practices." 42 U. S. C. § 9601( B). All parties concerned with this rule, including EPA, have agreed that ASTM E1527 00 represents current good commercial and customary standards and practices. Therefore, by definition and as a matter of law, ASTM's limitation of the purchase price requirement to " actual knowledge" does satisfy the statutory criteria. Whereas the committee's new valuation requirement is not consistent with good commercial practice, increases uncertainty, and does not satisfy the statutory criteria. 513 Upon reconsideration, we hope you will agree with us and will retain the " actual knowledge" standard of ASTM E1527.

Response: " Good commercial and customary standards and practices" are not exclusive to the ASTM E1527 standard. That is to say that there is not just one method that satisfies this standard. However, that is not the only charge of Congress. In addition to implementing such standards and practices, EPA must comply with Congressional intent which is more consistent with eliminating the limiting nature of the ASTM standard's " actual knowledge" criteria. Again, the Agency went to every effort to include industry leaders in its development of the proposed rule, in part to allow EPA to rely on professional's judgment regarding " good commercial and customary standards and practices." EPA reiterates that the requirement in the final rule to consider the relationship of the purchase price of the property to the fair market value of the property, if the property was not contaminated, is consistent with the statute in that it is not limited to " actual knowledge," and some amount of research or evaluation may be necessary to meet the requirement. However, the activities and level of effort necessary to evaluate the relationship of the purchase price to the fair market value of the property, if it were not contaminated, are not beyond good commercial and customary practice. Many prospective property owners conduct property appraisals or evaluate the market value of a property by way of another commercial or customary practice. The ASTM E1527 standard is not the only commercial practice that would meet the Congressional standard.

Commenter Organization Name: USWAG Comment Number: 0367 Excerpt Number: 7 Excerpt Text: EPA faults the ASTM standard for limiting the inquiry of the " relationship of the purchase price to the value of the property, if the property was not contaminated" to actual knowledge on the part of the property owner. 69 Fed. Reg. at 52575 ( quoting CERCLA § 101( 35)( B)( iii)( IV) ( internal quotes omitted). Proposed section 312.29( a) simply requires the property owner to " consider whether the purchase price of the subject property reasonably reflects the fair market value of the property, if the property is not contaminated." The regulatory obligation to " consider" the relationship of the purchase price to the value of the property cannot be achieved in the absence of " actual knowledge" of this relationship. EPA's criticism of the ASTM standard appears to be an unreasonable stretch. Nevertheless, we understand that the ASTM task group has proposed to modify the language in a way that removes the " actual knowledge" phrase. If this language change wins approval in the ASTM consensus process, that should remove EPA's objection to this provision.

Response: Although EPA found ASTM E1527 2000 noncompliant with Congress' mandate to establish All Appropriate Inquiries, since publication of the proposed rule, ASTM International and its committee responsible for the development of the ASTM E1527 Phase I Environmental Site Assessment Process reviewed and dated the A2000" version of the E1527 standard to address the differences between the ASTM E1527 standard and the criteria established by Congress in the 514 Brownfields Amendments to CERCLA. These activities were conducted within the normal review and updating process that ASTM International undertakes for each standard over a fiveyear cycle. EPA determined that the updated standard is compliant with the statutory criteria and consistent with the final rule. Therefore, in the final rule, EPA is referencing the standards and practices developed by ASTM International and known as Standard E1527 05 ( entitled " Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process)." Persons conducting all appropriate inquiries may use the procedures included in the ASTM E1527 05 standard to conduct all appropriate inquiries in compliance with the final rule.

Commenter Organization Name: Monger, Chris Comment Number: 0448 Excerpt Number: 1 Excerpt Text: Reducing the rqmts to eliminate appraisals is probably a good practice in many instances.

However, complicated and high value impact situations should still involve an appraisal to establish a good framwork and to greatly reduce potential for fraud and other questionable practices.

Response: EPA agrees that there are instances, especially in transactions that are complicated and consist of high value property, where an appraisal is very appropriate. This tool is always available and the Agency anticipates that it will be used often. Information gained during an appraisal regarding the fair market value of the property and the environmental conditions of the property may provide valuable information for use in the all appropriate inquiries investigation. 515 3.8.1 The EP Should Not Be Required to Consider the Relationship of the Purchase Price to the Value of the Property Commenter Organization Name: Marshtein, Nina G Comment Number: 0031 Excerpt Number: 1 Excerpt Text: I disagree with requiring environmental professionals to determine the " relationship of the purchase price to the value of the property, if the property was not contaminated," We are not appraisers and we don't have the qualifications to determine the value of land based on your definition of what a qualified site assessor is. I feel that this should be struck from the proposed regulation.

Response: Please note that the evaluation of the relationship of the purchase price to the fair market value of the property, if the property were not contaminated need not be performed by the environmental professional. Sections 312.22( a)( 3) and 312.29 of the final rule designates that this activity is the responsibility of the prospective property owner or grantee.

Commenter Organization Name: None Comment Number: 0050 Excerpt Number: 1 Excerpt Text: In regard to 312.29 ( the relationship of the purchase price to the value of the property, if the property was not contaminated), I do not feel that the majority of persons that meet the proposed definiton of an Environmental Professional are qualified to determine the value of a property. I do not think 312.29 should be included in the rule.

Response: Please see response to comment number 0031, excerpt 1.

Commenter Organization Name: Souther, Timothy G Comment Number: 0058 Excerpt Number: 1 Excerpt Text: The Thursday August 26, 2004 proposed regulations include one provision that is a dramatic departure from typical environmental site assessment ( ESA) practice: proposed " Section 312.29  The Relationship of the Purchase Price to the Value of the Property, if the Property was not Contaminated."

( a) persons to whom this part is applicable per Section 312.1( b) must consider whether the 516 purchase price of the subject property reasonably reflects the fair market value of the property, if the property were not contaminated

This provision presumes that the fair market value, the purchase price, and the actual presence of property contamination have been determined prior to completion of the all appropriate inquiry ( AAI) document the proposed replacement for the existing ESA document. For most ESAs I have been involved with, these determinations are not necessarily completed at the time of the ESA. Many ESAs are conducted in advance of listing the property for sale, in advance of completing an assessment of property value, and in advance of determining if there is actual contamination on the property. Theoretically, the AAI could await completion of these steps in a property transaction. Awaiting completion of these determination is impractical because it puts the AAI report at the very end of the due diligence process of property transactions and prevents it from being an effective planning tool for the seller, buyer, and lender. From my experience, the earlier in the transaction process the due diligence environmental assessment documentation is completed, the more time is available for environmental sampling to verify the presence of suspected releases and potentially for negotiating actions to remedy any verified releases.

The late timing of the AAI report would not be a problem for properties that the qualified environmental professional was able to determine there is no contamination of the property. However, it is unlikely that a qualified environmental professional can determine that there is no contamination on the property based solely on an AAI scope of work. The AAI process will only identify visual or recorded evidence of releases and cannot determine the actual existence of or lack of releases on the property. Appropriate site characterization based on environmental sampling/ analysis completed subsequent to the environmental site assessment is typically the basis for a finding of no contamination on property. As such, I would expect this AAI requirement to be a significant timing problem for all transaction that do not have a comprehensive site characterization completed prior to initiation the AAI process.

Based on this provision, the AAI report cannot be prepared in advance of the purchase price negotiation because the AAI report has to evaluate the purchase price against the fair market value. This again is a timing problem because the results of the AAI cannot be used in negotiating the purchase price, if that is appropriate for the buyer, seller, and lender. Not all property transactions involve CERCAL liability and imposing this CERCAL requirement at all non residential property transactions will again delay the AAI report until late in the transaction, where its non CERCAL benefits of the report would be difficult to consider or resolve late in the transaction.

In addition to the timing problem, the proposed regulation assumes that the property is being transferred as a single property with a single price. Many property transactions involve purchase of the property, the property improvements, personal property on the premises ( such as inventory), and may include intangibles such as the reputation ( goodwill) of the business. These transactions will not necessarily have a purchase price solely for the contaminated property, as envisioned in the regulation. Some transactions involve a single purchase price for several properties some of which may include contamination. Again, this transaction would not involve a single purchase price solely for the contaminated property( s). Some transactions involve 517 trading property for other non cash assets such as another property or other personal property. Such transactions may not have an established purchase value for either property. In each of these cases, it will be very difficult and much more costly than estimated by EPA to determine a purchase price for these property properties. If AAI timing and AAI costs are consideration in the transaction, establishing a purchase price for these transactions would likely be found a " data gap" by the environmental professional pursuant to Section 312.21 of the proposed regulation.

Based on this provision, the AAI report cannot be prepared until the fair market value is determined. California governmental assessed valuation for taxation purposes is not necessarily representative of fair market value ( Assessor's Handbook, California Board of Equalization). Assessed valuation does not provide fair market valuation for tax exempt or tax immune properties and does not use the fair market value standard for valuation of some properties. Many " federally related property transactions" will have a determination of the fair market value for the property by a State licensed Appraiser as part of the due diligence process. However, the appraisal is typically completed concurrent with environmental site assessment and which would require that the AAI report be delayed until late in the transaction after the appraisal is completed. Some transactions do not require determination of the fair market value by an Appraiser and no valuation of the fair market value will be available to the qualified environmental professional in that case. For example, the State of California has a long standing Appraiser licensing process ( California Business and Professions Code, Division 4, Part 3, Sections 11300 et seq.) administered by the California Office of Real Estate Appraisers. In some cases, the licensing program may prevent the qualified environmental professional from providing a determination of fair market value, which would automatically result in this provision being found a data gap by the environmental professional. Because of this limitation, fair market value determinations should be prepared for " federally related property transaction" by State licensed Appraisers as a routine. I would argue that such evaluation should be prepared for any contaminated property by a State licensed Appraiser in accordance with established professional appraiser standards.

EPA indicates that determination of the fair market value of the property can be made by comparing the " price paid for other similar properties located in the area" or by contracting with " a real estate expert familiar with properties in the general area  to provide a comparability analysis." This would not be determination of fair market value, but merely a rough estimate of potential property value. This also assumes that there are other similar properties in the area that have sold recently, that the purchase price for those properties is based solely on a cash transaction, and that the information is readily available. This information may be available for some transactions, but not all. For some transactions, some or all of this information may not be available to the environmental professional to evaluate the applicability of similar property transaction. There are some properties that are sufficiently unique ( right of ways, for example) that there will be no similar property transactions to compare with.

If the EPA is serious about including a professional opinion of the whether the purchase price of the subject property reasonably reflects the fair market value of the property, the EPA needs to identify in the AAI regulation, the tasks necessary to: determine if the property is currently contaminated using environmental testing or other definitive means, determine the purchase 518 price under many transaction scenarios, such as described above, and determine the fair market value of the property in accordance with State Appraiser licensing requirements.

EPA also needs to accurately estimate the potential costs of these tasks and discuss the costbenefits of the delay this requirement would result in typical transactions ( those with no evidence of contamination) and in some less typical transactions, as described above. The estimate of incremental costs relative to the typical ESA, as described in the preamble to the proposed regulation, appears inadequate for that purpose. I do not believe that EPA can justify this AAI requirement on a cost benefit basis. Because of the delay aspects of this requirement, I believe this requirement is inappropriate for many, if not most, property transactions.

Alternatively, I would suggest that this provision be more properly addressed as a subsequent phase of environmental site assessment. If the property is determined to be contaminated by the environmental professional based on previous assessment, comparison of purchase price with fair market value could be identified as " additional appropriate investigation" in the AAI under proposed Section 312.31. As described above, I believe a legally supportable comparison of purchase price and fair market value should be prepared by a State licensed Appraiser.

Response: At the onset of this response we note from the preamble of the proposed rule that " § 312.29 would require that the purchaser of the property consider whether or not the purchase price paid for the property reflects the fair market value of the property, assuming that the property is not contaminated." ( 69 FR 52567).

A proper reading of this language should make it easy to address the commentor's timing concerns. The comparison in prices here is made between the purchase price and the fair market value of the property, assuming that the property is not contaminated. This means that the comparison can take place at any time, and doesn't require any amount of contamination to be detected. The purpose of this comparison is to look at the difference between the price paid and the market value of the property as an indicator of possible contamination. If the prices are significantly different, this should indicate to the purchaser that additional inquiry should be done if liability protection is desired.

" Market Value" is defined by Barron's Legal Guides Law Dictionary as " the price that goods or property would bring in a market of willing buyers and willing sellers in the ordinary course of trade  Market value is generally established on the basis of sales of similar goods or property in the same locality, but where there have been no such prior sales, there is no single measure of value, and other evidence of value must be considered." ( Gifis, Steven H., Law Dictionary, Third Edition, 1991.) Fair market value is generally synonymous with market value.

The preamble of the proposed rule suggests, " Such a determination may be made by comparing the price paid for a particular property to prices paid for similar properties located in the same vicinity as the subject property, or by consulting a real estate expert familiar with properties in the general locality and who may be able to provide a comparability analysis." ( 69 FR at 52567). 519 The commenter correctly states that the local assessor's office's determination as to the value of the property for tax purposes often will not suffice. The Agency cautions the use of this tool in many instances. In certain circumstances this information is nonexistent, or outdated and hence inaccurate. However, when this information is available, it may be used as an accurate gauge in some instances and as a useful indicator in others. But, as the above quoted law dictionary states, often times " there is no single measure of value, and other evidence must be considered." We leave this issue to the discretion of those performing the inquiry.

Commenter Organization Name: Goodman, J. Dwight Comment Number: 0097 Excerpt Number: 3 Excerpt Text: Any data which involves the comparison of the " actual taxable property value" versus the " actual sale price" is not a reasonable criteria in the private sector. Perhaps in the government sector those prices are well known, but private markets that I have experienced would often times not divulge that cost data. Clients giving public knowledge of private markets is not often well received, and may be data which is hard, if not impossible, to obtain.

Response: The all appropriate inquiry rule does not require a comparison between " actual taxable property value" and " actual sale price." The comparison is between the purchase price and the fair market value of the property, assuming that the property is not contaminated. Also, please note that the evaluation of the relationship of the purchase price to the fair market value of the property, if the property were not contaminated need not be performed by the environmental professional. Sections 312.22( a)( 3) and 312.29 of the final rule designates that this activity is the responsibility of the prospective property owner or grantee. Therefore, the prospective property owner does not need to make information regarding the price paid for the property or its value available to the environmental professional or the public if he or she chooses not to.

Commenter Organization Name: Scalise, Frederick W, et al Comment Number: 0105 Excerpt Number: 6 Excerpt Text: This section should clearly indicate that it is NOT the responsibility of the Environmental Professional to evaluate the relationship between the purchase price and the fair market price of the subject property. Such evaluations are not within the scope of expertise of an Environmental Professional, and, and in many states, requires possession of a real estate appraisers license. Analysis of property valuation should be conducted by a real estate appraiser. It should be solely the responsibility of the person defined in § 312.1 to provide any information regarding property valuation, as prepared by a qualified real estate appraiser, to the Environmental Professional. 520 Response: Please note that the evaluation of the relationship of the purchase price to the fair market value of the property, if the property were not contaminated need not be performed by the environmental professional. Sections 312.22( a)( 3) and 312.29 of the final rule designates that this activity is the responsibility of the prospective property owner or grantee.

Commenter Organization Name: Koch, Donald Comment Number: 0234 Excerpt Number: 3 Excerpt Text: Similarly, the provision of " the relationship of the purchase price to the fair market value of the property to the market value of the property, if the property was not contaminated" ( proposed 312.22 ( a)( 3)) to the environmental professional is problematical. Most environmental professionals are not real estate appraisers. I do not see how this information can be evaluated by the environmental professional. Certainly if the property is being purchased far below market value, I should be suspicious as to the reason, which certainly could be environmental contamination. There are many reasons, however, that a property does not sell at market value. The job of the environmental professional is to ascertain whether a release ( as defined under CERCLA) has occurred. I really have no use for the market value comparison, because I am already suspicious. I was hired to be suspicious and to perform a site assessment. Sharing the appraisal and purchase price with me, the environmental professional, will not help me do my job. My client will not want to share this information with me either. I foresee many clients not wanting to share appraisal and purchase price information with the environmental professional and being asked to identify this information as a " data gap" on advice of the client's counsel. I believe the statute makes this a criteria of an " all appropriate inquiry" to be used in court to establish an " innocent landowner" defense. In the situation where the purchaser paid a small fraction of the market value and the environmental professional failed to find evidence of a release, there would be a conundrum to be unraveled in court. The environmental professional is in no position to evaluate this information when there is no indication of a release. The environmental professional is able to estimate remediation costs when there is evidence of a release, but in absence of that data, the purchase price of the property and its market value in the absence of contamination is extraneous information. The statute ( CERCLA 101( 35)( B)( iii)) requires that the " The relationship of the purchase price to the fair market value of the property to the market value of the property, if the property was not contaminated ( 101( 35)( B)( iii)( VIII))" is an essential part of the all appropriate inquiry criteria, but the statute does not mandate that this criteria is part of the report of the environmental professional. In fact, " The results of an inquiry by an environmental professional ( 101( 35)( B)( iii)( I))" is listed at the same level as the " The relationship of the purchase price to the fair market value of the property to the market value of the property, if the property was not contaminated ( 101( 35)( B)( iii)( VIII))". There was clearly no statutory mandate to include this criterion in the report of the environmental professional.

Response: As stated in the preamble, the assessment of the relationship of the purchase price to the fair market value is the responsibility of the prospective landowner or grantee. The information may 521 be provided to the environmental professional overseeing the all appropriate inquiries investigation if it has any bearing on the investigation ( that is to say that it sheds some light on the environmental conditions of the property). If the owner or grantee does not communicate this information to the environmental professional or does not otherwise reach an agreement with the EP to conduct such an analysis on his or her behalf, this should be reported as a data gap.

A great strength of the performance based inquiry is its flexibility. The comparison of the purchase price and the fair market value of a property provides a flexible indicator of possible environmental contamination. EPA understands that a discrepancy is not determinative, however, it may require further investigation above and beyond what would normally occur.

Commenter Organization Name: Anthony, Tony, et. al. Comment Number: 0292 Excerpt Number: 4 Excerpt Text: The difference between purchase price verses regular market value could be affected by other factors. It seems unreasonable to require purchase information to be disclosed to the environmental professional performing the all appropriate inquiry.

We suggest the following text addition:  Purchaser is required to inform environmental professional if the purchase price is lower than fair market value because of contamination concerns. Or REMOVE THIS SECTION FROM THE STANDARD ENTIRELY.

Response: As stated in the preamble, the assessment of the relationship of the purchase price to the fair market value is the responsibility of the prospective landowner or grantee. The information may be provided to the environmental professional overseeing the all appropriate inquiries investigation if it has any bearing on the investigation ( that is to say that it sheds some light on the environmental conditions of the property). If the owner or grantee does not communicate this information to the environmental professional or does not otherwise reach an agreement with the EP to conduct such an analysis on his or her behalf, this should be reported as a data gap.

Commenter Organization Name: Anthony, Tony, et. al. Comment Number: 0292 Excerpt Number: 13 Excerpt Text: 312.29 The relationship of the purchase price to the value of the property, if the property was not contaminated. This section should clearly state that it is the responsibility of the purchaser to evaluate the relationship between fair market value of the property, if the property were not contaminated, to the purchase price. 522 Or THIS SECTION SHOULD BE OMMITTED FROM ALL APPROPRIATE INQUIRY.

Environmental professionals are not qualified to evaluate fair market value of the property. It is unreasonable to impose the role of real estate market professional on to the environmental professional.

Response: As stated in the preamble, the assessment of the relationship of the purchase price to the fair market value is the responsibility of the prospective landowner or grantee. The information may be provided to the environmental professional overseeing the all appropriate inquiries investigation if it has any bearing on the investigation ( that is to say that it sheds some light on the environmental conditions of the property). If the owner or grantee does not communicate this information to the environmental professional or does not otherwise reach an agreement with the EP to conduct such an analysis on his or her behalf, this should be reported as a data gap.

Commenter Organization Name: Anonymous Comment Number: 0294 Excerpt Number: 2 Excerpt Text: 312.29 The requirement to assess the fair market value of the property may be in conflict with USPAP appraisal regulations for financial institutions.

Response: The all appropriate inquires final rule does not require that an appraisal be conducted and has no effect on requirements imposed by lenders on borrowers.

Commenter Organization Name: ENSR International Comment Number: 0314 Excerpt Number: 10 Excerpt Text: The proposed rule § 312.29 ( a) states that the AAI must consider whether the purchase price of the subject property reasonably reflects the fair market value of the property, if the property were not contaminated. This section ( b) goes on to state that if this is not the case, there is a need to consider whether the differential is due to the presence of releases or threatened releases.

Comment: There are several potential reasons why a purchase price may not reflect fair market value. These include a highly motivated seller ( needs to relocate, needs cash flow, seeking to avoid bankruptcy, trying to sell before the market dips, stock holder driven sale, etc.), structural issues with the existing building, other development constraints at the site ( i. e. presence of wetlands), an uninformed seller ( doesn't realize that the property may be worth more to the buyer) or any number of reasons. Asking a buyer to include in a report that the seller may see a statement as to whether they are getting " too good of a deal" on the site, is counterproductive to 523 the pricing negotiations which would be underway. In addition, because of the many reasons possible for the selling price to be below fair market value, it would be nearly impossible for the buyer to evaluate whether the reason behind this lower price is because of potential releases. If the price decrease is due to known releases, there is still no value in this evaluation, as the releases are already known to exist ( and disclosure is required under most jurisdictions), without the benefit of the price comparison. It also should be noted that an EP would have no basis or qualifications to judge the veracity of the buyer's evaluation of this pricing issue.

Response: The Agency understands this is not a bright line test and that it is merely an indicator of potential environmental issues affecting the subject property. There is no requirement for the purchaser or the environmental professional to share the all appropriate inquiry report with the seller.

It is not the EPA's prerogative to judge the veracity of the buyer's evaluation of this pricing issue. Any evaluation of the veracity would be conducted by a court in an attempt to determine if the buyer qualifies for liability protection. This provides an incentive for an accurate, thorough analysis.

As stated in the preamble, the assessment of the relationship of the purchase price to the fair market value is the responsibility of the prospective landowner or grantee. The information may be provided to the environmental professional overseeing the all appropriate inquiries investigation if it has any bearing on the investigation ( that is to say that it sheds some light on the environmental conditions of the property). If the owner or grantee does not communicate this information to the environmental professional or does not otherwise reach an agreement with the EP to conduct such an analysis on his or her behalf, this should be reported as a data gap.

Commenter Organization Name: Kane Environmental Comment Number: 0317 Excerpt Number: 5 Other Sections: NEW  3.8.4  The rule should require a commercial appraisal by a real estate expert/ appraiser Excerpt Text: Section 312.29 needs to be completely eliminated. Trained and licensed appraisers should be the only ones to provide property market value analysis Response: Section 101( 35)( B)( iii)( VIII) requires that the relationship of the purchase price to the value of the property, if the property was not contaminated, be included in all appropriate inquiries federal regulations. The final regulations includes this requirement within the responsibilities for the prospective landowner or grantee ( see § 312.22 and § 312.29). This activity does not have to be conducted by the environmental professional. A prospective landowner or grantee may hire the services of a licensed appraiser if he or she determines that such expertise is necessary to fulfill the requirement. 524 Commenter Organization Name: Mille Lacs Ojibwe Comment Number: 0330 Excerpt Number: 12 Excerpt Text: The Mille Lacs Band does not agree with the proposed requirement in this section in its entirety as to providing the purchase price and fair market value and their relationship of those properties not contaminated.

If a property is not contaminated, the Band does not see a valid reason for why both dollar values must be indicated in an all appropriate inquiry. In the Band's opinion, there are numerous variables that may affect a purchase price, whether that purchase price is above or below a market value price. For instance, factors that may affect a purchase price include, but are not limited to, appraisal, negotiations with a seller, condition of structures on a property, and so forth.

The Band will look at the relationship between the purchase price and the fair market value through the use of a cost analysis, and will provide all necessary documentation as to a the reasons for a property's purchase price ( whether above or below a fair market value).

Response: A great strength of the performance based inquiry is its flexibility. The comparison of the purchase price and the fair market value of a property provides a flexible indicator of possible environmental contamination. EPA understands that a discrepancy is not determinative, however, it may require further investigation above and beyond what would normally occur. This is not designed to be a bright line test.

Commenter Organization Name: Mille Lacs Ojibwe Comment Number: 0330 Excerpt Number: 17 Excerpt Text: The Mille Lacs Band does not agree with the proposed requirement in this section in its entirety as to providing the purchase price and fair market value and their relationship of those properties not contaminated.

If a property is not contaminated, the Band does not see a valid reason for why both dollar values must be indicated in an all appropriate inquiry. In the Band's opinion, there are numerous variables that may affect a purchase price, whether that purchase price is above or below a market value price. For instance, factors that may affect a purchase price include, but are not limited to, appraisal, negotiations with a seller, condition of structures on a property, and so forth.

The Band will look at the relationship between the purchase price and the fair market value through the use of a cost analysis, and will provide all necessary documentation as to a the 525 reasons for a property's purchase price ( whether above or below a fair market value).

For properties that are contaminated, the Mille Lacs Band supports providing a cost analysis of the relationship and a list of reasons of why there may be a discrepancy between a purchase price and a fair market value, but not the actual dollar values. Again, the reason is that tribal acquisition plans could be adversely affected.

These concerns are raised because it is uncertain whether the all appropriate inquiry reports are confidential or not. Without assurances that the reports are confidential, the Mille Lacs Band is extremely reluctant to provide information that may jeopardize our interests and ability to acquire more lands. If confidentiality is assured, the Band is willing to provide all relevant information necessary to comply with federal laws and regulations.

Response: A great strength of the performance based inquiry is its flexibility. The comparison of the purchase price and the fair market value of a property provides a flexible indicator of possible environmental contamination. EPA understands that a discrepancy is not determinative, however, it may require further investigation above and beyond what would normally occur. This is not designed to be a bright line test.

Section 101( 35)( B)( iii)( VIII) requires that the relationship of the purchase price to the value of the property , if the property was not contaminated be included in all appropriate inquiries federal regulations. The final regulations includes this requirement within the responsibilities for the prospective landowner or grantee ( see § 312.22 and § 312.29). This activity does not have to be conducted by the environmental professional and the information collected in carrying out the activity does not have to be provided to the environmental professional if the prospective property owner or grantee does not wish to disclose the information. Documentation of reasons for discrepancies between the purchase price and the value of the property should be noted in the written report. In addition, there is no requirement in the final rule to disclose the contents of the written report to any party.

Commenter Organization Name: CBPA Comment Number: 0344 Excerpt Number: 5 Other Sections: NEW  4.1  The impact of the rule is underestimated Excerpt Text:  Proposed § 312.29 " The Relationship of the Purchase Price to the Value of the Property, if the Property was not Contaminated" Imposes a new Requirement for a Property Valuation Analysis and Unduly Intrudes Into Market Transactions Proposed § 312.29 requires that purchasers " must consider whether the purchase price of the subject property reasonably reflects the fair market value of the property, if the property were not contaminated." 526 With this requirement in place, failure to commission a valuation analysis of the property would expose prospective purchasers to subsequent claims that the purchase price was below market and should have alerted the purchaser to the presence of contamination. Although the preamble of the proposed rule states that a formal appraisal is not necessary, it states that the intent is to determine if the " price paid for the property is reflective of its market value," and may be accomplished by retaining a " real estate expert" to conduct a " comparability analysis" ( page 52567). It is often difficult to ascertain market value without making various adjustments to comparable sales, such as size, location, availability of parking, rail or truck access, etc. Given the potential exposure to second guessing, prudent purchasers will probably commission appraisals, and in any event it is not likely that the non appraisal market valuation envisioned by proposed rule will differ much in scope or cost from a formal appraisal. Therefore, the cost of an appraisal should be included in the additional costs associated with the rule The rulemaking committee may believe that § 312.29 is required by the Brownfields Act of 2002, which does recite the phrase " the relationship of the purchase price to the value of the property, if the property was not contaminated." However, this element of All Appropriate Inquiry remains unchanged since 1986 and to the extent that EPA may believe that it is a statutorily required element of future All Appropriate Inquiries, it is already covered by ASTM El 527. ASTM El 527 properly limits " the relationship of the purchase price to the value of the property" to " actual knowledge that the purchase price is significantly less than the purchase price of comparable properties." ASTM El527 00 § 5.4 There is no requirement that the purchaser ascertain and consider the price of comparable properties or ascertain and consider the fair market value of the subject property. Hence, existing practice does not intrude into market transactions and does not require an appraisal.

Response: Section 101( 35)( B)( iii)( VIII) requires that the relationship of the purchase price to the value of the property , if the property was not contaminated be included in all appropriate inquiries federal regulations. The final regulations includes this requirement within the responsibilities for the prospective landowner or grantee ( see § 312.22 and § 312.29). This activity does not have to be conducted by the environmental professional. The requirement goes beyond an assessment of " actual knowledge." The relationship between the purchase price and the value of the property must be determined, regardless of the level of knowledge held by the prospective purchaser or the grantee prior to conducting the all appropriate inquiries.

The commenter accurately points out that the preamble of the proposed rule explains that an appraisal is not necessary to fulfill this requirement of an all appropriate inquiry. Because this is a flexible, performance based approach, there very well may be times when an appraisal is warranted, but in most cases information regarding the relationship between the price paid for a property and the market value of the property should be available from other sources. The final rule does not dictate that any particular methodology be used to fulfill the requirement.

The Agency disagrees with the commenter's assertion that non appraisal market valuation will not differ much in the scope or cost of a formal appraisal. In many instances any discrepancy between price and market value will be readily apparent. In others it may take some review. Whatever the case, the Agency believes that this is a variable that a prudent environmental 527 professional would take account of in determining the possibility or extent of environmental risk of a property.

Commenter Organization Name: Greenlining Institute Comment Number: 0354 Excerpt Number: 8 Excerpt Text:  a. The new valuation requirement is inconsistent with customary practice, imposes substantial costs, and inappropriately intrudes into market transactions.

Proposed § 312.29 requires that purchasers " must consider whether the purchase price of the subject property reasonably reflects the fair market value of the property, if the property were not contaminated."

With this requirement in place, failure to commission a valuation analysis of the property would expose prospective purchasers to subsequent claims that the purchase price was below market and should have alerted the purchaser to the presence of contamination. Although the preamble states at page 52567 that a formal appraisal is not necessary, it states that the intent is to determine if the " price paid for the property is reflective of its market value," and may be accomplished by retaining a " real estate expert" to conduct a " comparability analysis." It is often difficult to ascertain market value without making various adjustments to comparable sales, such as size, availability of parking, rail or truck access, etc. Given the potential exposure to second guessing, prudent purchasers will probably commission appraisals, and in any event it is not likely that the non appraisal market valuation envisioned by EPA will differ much in scope or cost from a formal appraisal. Therefore, the cost of an appraisal should be included in the additional costs associated with the rule if this section is to be retained.

Prices of commercial real estate fluctuate for any number of reasons and it is ranging rather far afield for EPA to require purchasers to explain why a particular price was appropriate in a particular transaction. It is also often difficult to explain significant inconsistencies in the sale prices of apparently comparable properties that have no environmental conditions of concern. Every source we have consulted to date has agreed that this valuation requirement is entirely new to environmental site assessment and is not consistent with existing generally accepted good commercial practice. See, e. g., Latham & Watkins, Client Alert All Appropriate Inquiry (" Client Alert"), October 4, 2004 at 3, available at http:// www. lw. com ( noting that the proposed AAI rule will force purchasers to conduct a " much more extensive investigation, including for the first time a property valuation analysis"). We believe that the new rule imposes substantial costs and improperly intrudes into private market transactions.

Response: Section 101( 35)( B)( iii)( VIII) requires that the relationship of the purchase price to the value of the property, if the property was not contaminated, be included in all appropriate inquiries federal regulations. The final regulations includes this requirement within the responsibilities for the prospective landowner or grantee ( see § 312.22 and § 312.29). This activity does not have to 528 be conducted by the environmental professional.

The commenter is incorrect in asserting that " failure to commission a valuation analysis of the property would expose prospective purchasers to subsequent claims that the purchase price was below market and should have alerted the purchaser to the presence of contamination." The criterion to consider the relationship of the purchase price of the property to the fair market value of the property, if not contaminated has been part of the statutory provisions governing all appropriate inquiries since the 1986 SARA amendments. Today's final rule does nothing to alter the original statutory requirement and represents no change from current practice. The Agency does not advocate, and the final rule does not require, commissioning an elaborate market analysis for every property. In addition, as explained in the preamble to the proposed rule, the regulation does not require that a formal appraisal of a property be conducted. As noted in the preamble of the proposed rule, " The objective is not to ascertain the exact value of the property, but to determine whether or not the purchase price paid for the property is reflective of its market value." ( 69 FR at p. 52567).

If there is a price discrepancy between the purchase price and the market value, the Agency notes that the rule merely requires that the purchaser consider whether the difference is due to the presence of contamination at the property or note that the difference is due to other factors or circumstances.

Commenter Organization Name: EAA Comment Number: 0366 Excerpt Number: 4 Excerpt Text: From 312.29 regarding: the relationship of purchase price to the value of the property...

The EAA objects to the fact that both directly and indirectly, the EC is being placed into a position that he/ she is neither qualified or licensed to certify. Specifically, this proposed rule places the EC into the position of a property appraiser. In many states, a license is required to valuate a property in any way. By Certifying, even what the proposed purchaser disseminates to the EC places him/ her into the appraisal position, which is a clear violation of the law in most states.

The EAA feels this section should be revisited in the spirit of keeping specialized professions within the scope of their service and to prevent them from being forced to break the law.

Our membership at the Environmental Assessment Association is pleased that legal standards and clear rules and techniques are being developed for our profession. The EPA is commended for that effort. We at EAA wish to be a part of this process, and pray that you will strongly consider our objections in the spirit of preserving a well in trenched industry manned by productive and diligent professionals. 529 Response: Section 101( 35)( B)( iii)( VIII) requires that the relationship of the purchase price to the value of the property, if the property was not contaminated, be included in all appropriate inquiries federal regulations. The final regulations includes this requirement within the responsibilities for the prospective landowner or grantee ( see § 312.22 and § 312.29). This activity does not have to be conducted by the environmental professional. A prospective landowner or grantee may hire the services of a licensed appraiser if he or she determines that such expertise is necessary to fulfill the requirement.

Commenter Organization Name: Intertox Comment Number: 0396 Excerpt Number: 17 Excerpt Text:  The proposed requirements for considering the relationship of the purchase price to the value of a property, if the property was not contaminated.

 Intertox is opposed to any requirement to consider the relationship of purchase price to property value. This is the purview of real estate, land valuation, and appraisers and has no place in the environmental site assessment process. Engineers, geologists, and other environmental processional are neither trained nor should be involved in assessing property value. To do so could sway or impact the findings of an all appropriate inquiry.

Response: Section 101( 35)( B)( iii)( VIII) requires that the relationship of the purchase price to the value of the property, if the property was not contaminated, be included in all appropriate inquiries federal regulations. The final regulations includes this requirement within the responsibilities for the prospective landowner or grantee ( see § 312.22 and § 312.29). This activity does not have to be conducted by the environmental professional. A prospective landowner or grantee may hire the services of a licensed appraiser if he or she determines that such expertise is necessary to fulfill the requirement.

Commenter Organization Name: Dean, Frank Comment Number: 0411 Excerpt Number: 1 Excerpt Text: First, in Section 312.29 regarding the " relationship of the purchase price to the value of the property". If this goes through as written, you are requiring that I break the law in Ohio. In Ohio, and many other states, in order to legally comment upon the valuation of real property one must be a State licensed Appraiser. Section 312.29, as written, would require that I break the law in Ohio, unless I also become a licensed Appraiser. This creates an obvious " Catch 22" situation with competing laws. It will also mean that you will have NO providers in states requiring that Appraisers be licensed. This untenable situation must be re visited and modified or eliminated to remove this conflict or my Clients will suffer severe economic hardship until 530 either Appraisers get science degrees, or geologists can be licensed as Appraisers.

Response: Section 101( 35)( B)( iii)( VIII) requires that the relationship of the purchase price to the value of the property, if the property was not contaminated, be included in all appropriate inquiries federal regulations. The final regulations includes this requirement within the responsibilities for the prospective landowner or grantee ( see § 312.22 and § 312.29). This activity does not have to be conducted by the environmental professional. A prospective landowner or grantee may hire the services of a licensed appraiser if he or she determines that such expertise is necessary to fulfill the requirement. However, the rule does not require an appraisal. If an owner/ grantee must consult an appraiser, there is no conflict with the all appropriate inquiries final rule. The Agency has left the decision of whether or not to perform a formal appraisal to the discretion of the prospective landowner or grantee.

Commenter Organization Name: Rybak, John Thomas Comment Number: 0412 Excerpt Number: 9 Excerpt Text: Proposed requirement for considering the relationship of the purchase price to the value of noncontaminated

a) Page # 52580 b) View: This should not be part of a Phase I report. The EP is not qualified to evaluate and identify a material difference between the Purchase Price and Appraised Value. Furthermore this level of information is often not provided to the EP. It therefore should not be a requirement of the EP's Phase I report to evaluate this issue.

c) Assumptions: The seller and/ or buyer should be willing to provide any information pertaining to a site that could be negatively affected. They should not withhold specialized knowledge. However the EP cannot force them to reveal such information, and therefore this should not be a performance standard of the AAI Phase I report.

d) Burden: Including this section would create an unreasonable burden on the EP, in an area they have no expertise, and in a situation they may not have complete information. It is not reasonable to require the EP to comment on this topic in their Phase I process.

e) Alternative: AAI is intended to preserve certain CERCLA defenses of a purchaser. The purchaser should be educated that price vs. appraised value is one consideration in the application of these defenses. The Phase I ' could' have a narrative paragraph in the Executive Summary discussion the Purchaser's responsibility to seek legal counsel to preserve their CERCLA defenses in the event purchase price is significantly lower then the Appraised Value. 531 Response: Section 101( 35)( B)( iii)( VIII) requires that the relationship of the purchase price to the value of the property, if the property was not contaminated, be included in all appropriate inquiries federal regulations. The final regulations includes this requirement within the responsibilities for the prospective landowner or grantee ( see § 312.22 and § 312.29). This activity does not have to be conducted by the environmental professional. A prospective landowner or grantee may hire the services of a licensed appraiser if he or she determines that such expertise is necessary to fulfill the requirement.

Commenter Organization Name: Freeman & Giler Comment Number: 0417 Excerpt Number: 4 Excerpt Text: Proposed Rule § 312.29( a) requires that the User, and not the EP, evaluate whether the purchase price of the property reasonably reflects the market value of the property in an uncontaminated condition. Given the fact that the EPs are not required to have any education, training or experience in property valuation and are not necessarily familiar with the local real estate market, we agree that the price versus value determination should be made by the User. The User ultimately negotiates the purchase price or agrees to finance the project at the purchase price; thus, the User is in the best position to assess the relationship between the purchase price and the market value at the time of purchase.

Response: The Agency agrees with the commenter. The final regulations includes this requirement within the responsibilities for the prospective landowner or grantee ( see § 312.22 and § 312.29). This activity does not have to be conducted by the environmental professional.

Commenter Organization Name: Westward Environmental Comment Number: 0429 Excerpt Number: 5 Excerpt Text: Regarding the heading of What Are the Proposed Requirements for the Relationship of the Purchase Price to the Value of the Property, if the Property Was Not Contaminated? on page 52567 of the proposed rule:

 The question itself makes an initial assumption that any significant discrepancy in the purchase price to the perceived value of the property is due to contamination issues. This may or may not be the case.  The EP is oftentimes not in contact with the person( s) that have knowledge of the purchase price and thus this information may not be available.  Thirdly, there may be many circumstances why the purchaser may be reluctant to provide reasons for a price vs. value discrepancies ( such as how the real estate vs. physical assets are valuated). This disclosure could be of particular concern when it becomes " documented" in a 532 report.

Response: If there is a price discrepancy between the purchase price and the market value, the Agency notes that the rule merely requires that the purchaser consider whether the difference is due to the presence of contamination at the property or note that the difference is due to other factors or circumstances. The final regulations includes this requirement within the responsibilities for the prospective landowner or grantee ( see § 312.22 and § 312.29). This activity does not have to be conducted by the environmental professional and the information collected in carrying out the activity does not have to be provided to the environmental professional if the prospective property owner or grantee does not wish to disclose the information. Documentation of reasons for discrepancies between the purchase price and the value of the property should be noted in the written report. In addition, there is no requirement in the final rule to disclose the contents of the written report to any party.

Commenter Organization Name: Geomatrix Consultants Comment Number: 0433 Excerpt Number: 4 Excerpt Text: One provision in the proposed AAI rule is to establish whether the property is selling at significantly less than fair market value, presumably due to an environmental impairment deduction. When an ESA is commissioned, the fair market value may not be known; often real estate appraisals are occurring concurrently. In a commercial or industrial area, where the majority of ESA's are conducted, appraisals can vary significantly between professional appraisers, depending on the comparables found and the experience of the appraiser. It is not uncommon to have two or three appraisals conducted by various firms to establish a property value. Although we understand and agree with the intent of this requirement, as a practical matter the fair market value is often not known, and the potential deduction for environmental impairment is never clear until an RI/ FS is complete. We recommend that this is removed as a requirement for AAI.

Response: A great strength of the performance based inquiry is its flexibility. The comparison of the purchase price and the fair market value of a property provides a flexible indicator of possible environmental contamination. EPA understands that a discrepancy is not determinative, however, it may require further investigation above and beyond what would normally occur. This is not designed to be a bright line test.

Section 101( 35)( B)( iii)( VIII) requires that the relationship of the purchase price to the value of the property , if the property was not contaminated be included in all appropriate inquiries federal regulations. The final regulations includes this requirement within the responsibilities for the prospective landowner or grantee ( see § 312.22 and § 312.29). This activity does not have to be conducted by the environmental professional and the information collected in carrying out the activity does not have to be provided to the environmental professional if the prospective 533 property owner or grantee does not wish to disclose the information. Documentation of reasons for discrepancies between the purchase price and the value of the property should be noted in the written report. In addition, there is no requirement in the final rule to disclose the contents of the written report to any party.

Commenter Organization Name: Hearn, J Clark Comment Number: 0434 Excerpt Number: 3 Other Sections: NEW  4.1  The impact of the rule is underestimated Excerpt Text: Although the proposed rule apparently envisions that the valuation analysis will be conducted by the purchaser rather than the environmental professional, it also requires the report of the environmental professional to take into account this information. The Environmental Professional simply has no business in this part of a real estate transaction. In the private sector, the purchase price of a property is confidential to the buying and selling parties involved in the transaction. The third party vendors are not commonly privy to this information and are not expected to ask. If I were to make common practice of asking my clients about the financial specifics of their deal, they would tell me that it is none of my business, and they would be right. Private sector transactions as they are being conducted are just that, private.

In any event, the ICF analysis includes a modicum of time for the Environmental Professional to consider this market value information, but no time or cost allocation for the purchaser to conduct the market value analysis. The actual conduct of the market valuation will definitely have some cost. If the environmental professional were to be responsible for considering this information ( which I oppose) it would surely take longer than the half hour allotted by ICF and would surely come into play in virtually all transactions because the purchaser would conduct a defensive appraisal for fear of liability exposure.

Beyond this, an EP is not in an informed position to be able to " take into account" such comparable price analyses of multiple parcels of real estate in an area and draw an experienced conclusion regarding purchase price. But that is what proposed section 312.21( b) would require. This is a separate industry altogether. I urge that this proposed section 3.12.29 be removed.

Response: Section 101( 35)( B)( iii)( VIII) requires that the relationship of the purchase price to the value of the property, if the property was not contaminated, be included in all appropriate inquiries federal regulations. The final regulations includes this requirement within the responsibilities for the prospective landowner or grantee ( see § 312.22 and § 312.29). This activity does not have to be conducted by the environmental professional and the information collected in carrying out the activity does not have to be provided to the environmental professional if the prospective property owner or grantee does not wish to disclose the information. Documentation of reasons for discrepancies between the purchase price and the value of the property should be noted in the written report. In addition, there is no requirement in the final rule to disclose the contents of the written report to any party. 534 The cost of conducting this activity was not accounted for in the economic analysis for the proposed rule because this does not constitute a change over the interim standard or statutory requirements. The criterion to consider the relationship of the purchase price of the property to the fair market value of the property, if not contaminated, has been part of the statutory provisions governing all appropriate inquiries since the 1986 SARA amendments. Today's final rule does nothing to alter the original statutory requirement and represents no change from current practice.

Commenter Organization Name: Wohlers Environ Svcs Comment Number: 0435 Excerpt Number: 2 Excerpt Text: The proposed rule revision language appears to place the onus of consideration of the relationship between purchase price and value of the property on the potential buyer. Does the EPA expect that the EP and/ or firm conducting the AAI investigation should be involved in this task?

Response: Section 101( 35)( B)( iii)( VIII) requires that the relationship of the purchase price to the value of the property, if the property was not contaminated, be included in all appropriate inquiries federal regulations. The final regulations includes this requirement within the responsibilities for the prospective landowner or grantee ( see § 312.22 and § 312.29). This activity does not have to be conducted by the environmental professional and the information collected in carrying out the activity does not have to be provided to the environmental professional if the prospective property owner or grantee does not wish to disclose the information. Documentation of reasons for discrepancies between the purchase price and the value of the property should be noted in the written report. In addition, there is no requirement in the final rule to disclose the contents of the written report to any party.

Commenter Organization Name: McLeod, Jeff Comment Number: 0444 Excerpt Number: 6 Excerpt Text: It is not clear from either the preamble or proposed rule why the relationship between the purchase price to the fair market value of the property should be a consideration in the AAI. The objective of the AAI as stated in 312.20 ( d) is to identify conditions indicative of releases and threatened releases of hazardous substances. While we agree that contamination of a property will effect the purchase price, it is not reasonable to require that this relationship be part of the AAI report. Persons meeting the definition of an EP are not likely to have knowledge of real estate prices and the impact of contamination on them. While the regulation does not require the EP to make this determination, the determination is required to be included in the report. It would seem that someone knowledgeable in real estate pricing would be involved in the 535 transaction and they should be required to address costs issues. Issues of cost are not a component of determining if a property is contaminated and should not be part of a report addressing such.

Response: A great strength of the performance based inquiry is its flexibility. The comparison of the purchase price and the fair market value of a property provides a flexible indicator of possible environmental contamination. EPA understands that a discrepancy is not determinative, however, it may require further investigation above and beyond what would normally occur. This is not designed to be a bright line test.

Section 101( 35)( B)( iii)( VIII) requires that the relationship of the purchase price to the value of the property, if the property was not contaminated, be included in all appropriate inquiries federal regulations. The final regulations includes this requirement within the responsibilities for the prospective landowner or grantee ( see § 312.22 and § 312.29). This activity does not have to be conducted by the environmental professional and the information collected in carrying out the activity does not have to be provided to the environmental professional if the prospective property owner or grantee does not wish to disclose the information. Documentation of reasons for discrepancies between the purchase price and the value of the property should be noted in the written report. In addition, there is no requirement in the final rule to disclose the contents of the written report to any party.

Commenter Organization Name: Jerose, Dave Comment Number: PM 0127 0010 Excerpt Number: 1 Excerpt Text: I have kind of taken exception to 312.29, the relationship of the purchase price to the value of the property, if the property was not contaminated.

Most environmental professionals aren't really qualified to comment on fair market pricing for properties. I would like to see that removed from all appropriate inquiries, and that issue should be handled under a separate letter. I don't really see where it implies to this proposed legislation.

Response: Section 101( 35)( B)( iii)( VIII) requires that the relationship of the purchase price to the value of the property, if the property was not contaminated, be included in all appropriate inquiries federal regulations. The final regulations includes this requirement within the responsibilities for the prospective landowner or grantee ( see § 312.22 and § 312.29). This activity does not have to be conducted by the environmental professional and the information collected in carrying out the activity does not have to be provided to the environmental professional if the prospective property owner or grantee does not wish to disclose the information. Documentation of reasons for discrepancies between the purchase price and the value of the property should be noted in the written report. In addition, there is no requirement in the final rule to disclose the contents of the written report to any party. 536 Commenter Organization Name: Dillman, Malcolm Comment Number: PM 0359 0001 Excerpt Number: 2 Excerpt Text: Another concern that I have is with 312.29, the relationship of the purchase price to the value of the property if the property was not contaminated. This section is asking for expertise outside the area of an Environmental Professional, and require the services of a certified and licensed appraiser, which, in my opinion, will increase substantially the cost of the investigation.

Response: Section 101( 35)( B)( iii)( VIII) requires that the relationship of the purchase price to the value of the property, if the property was not contaminated, be included in all appropriate inquiries federal regulations. The final regulations includes this requirement within the responsibilities for the prospective landowner or grantee ( see § 312.22 and § 312.29). This activity does not have to be conducted by the environmental professional and the information collected in carrying out the activity does not have to be provided to the environmental professional if the prospective property owner or grantee does not wish to disclose the information. Documentation of reasons for discrepancies between the purchase price and the value of the property should be noted in the written report. In addition, there is no requirement in the final rule to disclose the contents of the written report to any party. 537 3.8.2 Explanation of the Assessment Process Provided in the Preamble/ Rule is Inadequate Commenter Organization Name: Appraisal Institute Comment Number: 0212 Excerpt Number: 2 Excerpt Text: The application of the sales comparison approach is simply more complicated than described in the Preamble. It is frequently difficult to find highly similar property sales ( or comparable sales), and thus the services of a professional appraiser are required. Professional appraisers analyze details of verified comparable sales and know how to make adjustments to the sales or expand the search to other, similar areas. Public policy and case law have well outlined what is needed to produce a credible opinion of market value.

In many cases, the sales comparison approach is not the primary approach utilized by the marketplace. The " cost approach" and " income approach" sometimes provide the definitive value for a property. Thus, the Preamble provision specifying consultation by a real estate expert who can perform a " comparability analysis" is confusing because of its vagueness.

Because of this, we believe the proposed rule provides deficient appraisal methodology advice without adequately explaining the valuation process, which could come to haunt a property owner ( or the EPA) in the future. That being said, it is not our intent to inject additional expenses to the transaction process. Our goal is to caution the EPA that the issue should not be avoided or taken lightly, and that a ready solution is available to address this confusion.

Suggested Modification We suggest a minor clarification in the Preamble, Section III, M, Paragraph 2, would help provide better direction to the public and prospective purchasers. We believe this recommendation will require little or no additional cost to the prospective purchaser if incorporated correctly.

We request EPA amend Section III, M, of the Preamble to read as follows:

The comparison of purchase price to Fair Market Value required to meet Section 312.29 of the Act may be accomplished in several ways. While the proposed rule does not require that a real estate appraisal be conducted to achieve compliance with this criterion, the prospective purchaser should make the decision regarding scope of this study in light of a potential need to defend against liability as a prospective purchaser. An informal assessment of the property may be conducted using acceptable valuation methodology. The Prospective Purchaser must decide if the informal assessment is sustainable in a later action. But, it should be noted that in most transactions, a formal appraisal is being prepared for lending or other purposes. The intended use section of the appraisal can include its utilization for AAI compliance. Appraisals are prepared to meet the Uniform Standards of Appraisal Practice ( USPAP). USPAP requires that appraisers analyze the details of the current transaction. This analysis can and should include a study of the relationship of the price being paid to market value. 538 The objective is to determine whether or not the purchase price to be paid for the property is reflective of the environmental conditions present at the site. Significant differences between the Market Value of the property " as if unimpaired" and the purchase price provide a basis for this observation. Reasons for any differences between unimpaired market value and sales price should be noted.

Response: The preamble to the proposed rule states, " The objective is not to ascertain the exact value of the property, but to determine whether or not the purchase price paid for the property is reflective of its market value" ( 69 FR at 52567). The preamble also notes that an appraisal is not required in this comparison. The Agency disagrees with the commenter as to the complicated nature of this comparison. In the preamble to the final rule, EPA states that if an appraisal is conducted for the property, the results of the appraisal may provide valuable information for the all appropriate inquiries investigation. The final rule does not dictate how the prospective property owner or grantee must undertake this analysis. This type of comparison has been included in the statutory provisions governing all appropriate inquiries since the 1986 SARA amendments to CERCLA. Today's final rule does nothing to alter the original statutory requirement and represents no change from current practice.

Commenter Organization Name: Myers, Steve Comment Number: 0242 Excerpt Number: 9 Excerpt Text: 9 Steve Myers Property Value Determination 312.22( a)( 3), 312.29( a) Who should determine the fair market value if the property isn't contaminated? Will there be qualifications required? Should the value come from the Assessor's office?

Response: Section 101( 35)( B)( iii)( VIII) requires that the relationship of the purchase price to the value of the property , if the property was not contaminated be included in all appropriate inquiries federal regulations. The final regulations includes this requirement within the responsibilities for the prospective landowner or grantee ( see § 312.22 and § 312.29). This activity does not have to be conducted by the environmental professional. A prospective landowner or grantee may hire the services of a licensed appraiser if he or she determines that such expertise is necessary to fulfill the requirement.

Commenter Organization Name: Myers, Steve Comment Number: 0242 Excerpt Number: 10 Excerpt Text: 10 Steve Myers Property Value Determination 312.22( a)( 3) and 312.29( b) How do you determine the fair market value of the contaminated property without doing a complete site characterization? It is my understanding that these reports are due the time the title changes 539 hands. Without a site characterization, who should determine the fair market value if the property is contaminated? Will there be qualifications required for this person?

Response: At the onset of this response we note from the preamble of the proposed rule that " § 312.29 would require that the purchaser of the property consider whether or not the purchase price paid for the property reflects the fair market value of the property, assuming that the property is not contaminated" ( 69 FR 52567).

A proper reading of this language should make it easy to address the commentor's timing concerns. The comparison in prices here is made between the purchase price and the fair market value of the property, assuming that the property is not contaminated. This means that the comparison can take place at any time, and doesn't require any amount of contamination to be detected. The purpose of this comparison is to look at the difference between the price paid and the market value of the property as an indicator of possible contamination. If the prices are significantly different, this should indicate to the purchaser that additional inquiry should be done if liability protection is desired.

The preamble to the proposed rule states, " The objective is not to ascertain the exact value of the property, but to determine whether or not the purchase price paid for the property is reflective of its market value" ( 69 FR at 52567). The preamble also notes that an appraisal is not required in this comparison. The Agency disagrees with the commenter as to the complicated nature of this comparison. In the preamble to the final rule, EPA states that if an appraisal is conducted for the property, the results of the appraisal may provide valuable information for the all appropriate inquiries investigation. The final rule does not dictate how the prospective property owner of grantee must undertake this analysis. This type of comparison has been included in the statutory provisions governing all appropriate inquiries since the 1986 SARA amendments to CERCLA. Today's final rule does nothing to alter the original statutory requirement and represents no change from current practice.

Commenter Organization Name: Maloy, Richard Comment Number: 0255 Excerpt Number: 1 Excerpt Text: I am concerned that the Congressional mandate for comparison of fair market value of the property to the purchase price was not sufficiently addressed by the Negotiated Rule Making Committee and in the proposed rule. If left unaddressed, we believe Section 312.29 will leave prospective purchasers ( and EPA) in a precarious position, and that vagaries in the proposed rule will continue to dissuade the purchase of contaminated or potentially contaminated properties.

Environmental Litigation and Market Value Market value, or " fair market value," is one of the most understood and recognized legal and public policy terms in use today. Fair market value is defined and mandated to be used throughout federal law, our judicial system, interstate and international commerce, and 540 throughout the financial services communities. Federal Agencies which utilize market value in their regulations include: the Department of Transportation, Department of Interior, General Services Administration, Office of Management and Budget and the federal financial institution regulatory agencies.

I am not aware of a case where a federal agency requires the consideration of market value yet states in its regulations that " an appraisal need not be utilized". To the contrary, most federal agencies seek to promote the most accurate estimate of market value by a competent appraisal professional.

Similarly, to ensure the quality of compliance with public policy, all state governments regulate appraisers and a majority have adopted " mandatory appraiser licensing" requirements that require market value be estimated by licensed or certified appraisers ( see attachment for mandatory appraiser licensing states). In these states, all opinions of market value must be performed by a licensed or certified appraiser and in compliance with the Uniform Standards of Professional Appraisal Practice, the accepted standards of the appraisal profession. It does not appear that the proposed rule has taken this into consideration, or else this would have been discussed in the proposed rule. As it is, the proposed rule may be advising prospective purchasers to violate appraiser licensing laws in mandatory appraiser licensing states.

I along with other appraisers who testify in environmental litigation regarding property market value before and after contamination in conjunction work with other qualified environmental professionals. My experience is that opinions of market value " affected" and " unaffected", by professional appraisers are given far stronger weight. I believe it is unlikely that a competent attorney would prepare a defense for a client in federal court utilizing the concepts in the proposed rule, which contradict the law itself.

To provide a sustainable defense, a proper baseline, must be established. This baseline is market value. Market value is established through the appraisal process. Unfortunately, the procedures outlined in Section 111, M, Paragraph 2, fall short of providing a sustainable baseline ( market value).

Throughout most of the proposed rule, EPA is careful to require that research be conducted in a competent manner. The Preamble does not state that specific types of research methodology are acceptable or unacceptable. For example, it does not state that a history of ownership achieves compliance by using Sanborn Maps or tax records. Yet in Section III M, Paragraph 2, of the Preamble, EPA defines a specific on how to comply with regard to the purchase price market value comparison. In Section III M, Paragraph 2, EPA loses its standard of referral to competency and provides its own version of valuation methodology. Valuation methodology noted is, inconsistent with accepted appraisal methodology, public policy and case law.

The application of the Sales Comparison Approach is simply more complicated than described in the Preamble. It is frequently difficult to find highly similar property sales ( or comparable sales), and thus the services of a professional appraiser are required. Professional appraisers analyze 541 details of verified comparable sales and know how to make adjustments to the sales or expand the search to other, similar areas. Public policy and case law have well outlined what is needed to produce a credible opinion of market value.

In many cases, the sales comparison approach is not the primary approach utilized by the marketplace. The " Cost Approach" and " Income Approach" sometimes provide the definitive value for a property. Thus, the Preamble provision specifying consultation by a real estate expert who can perform a " comparability analysis" is confusing because of its vagueness.

Because of this, I believe the proposed rule provides deficient appraisal methodology advice without adequately explaining the valuation process, which could come to haunt a property owner ( or EPA) in the future. That being said, it is not our intent to inject additional expenses than will be added into the transaction process by the new all appropriate inquiry. Our goal is to caution EPA that the issue should not be avoided or taken lightly, and that a ready solution is available to address this confusion.

Suggested Modification I suggest a minor clarification in the Preamble, Section III M paragraph 2 would help provide better direction to the public and prospective purchasers. I believe this recommendation will require little or no additional cost to the prospective purchaser if incorporated correctly.

I request EPA amend Section III M of the Preamble to read as follows: The comparison of purchase price to Fair Market Value required to meet Section 312.29 of the Act may be accomplished in a several ways. While the proposed rule does not require that a real estate appraisal be conducted to achieve compliance with this criterion, the prospective purchaser should make the decision regarding scope of this study in light of a potential need to defend against liability as a prospective purchaser. An informal valuation may be made using acceptable valuation methodology. The Prospective Purchaser must decide if the informal value opinion is sustainable in a later action. But, it should be noted that in most transactions, a formal appraisal is being prepared for lending or other purposes. The intended use section of the appraisal can include its utilization for AAI compliance. Appraisals are prepared to meet the Uniform Standards of Appraisal Practice ( USPAP). USPAP requires that appraisers analyze the details of the current transaction. This analysis can and should include a study of the relationship of the price being paid to market value. The objective is to determine whether or not the purchase price to be paid for the property is reflective of the environmental conditions present at the site. Significant differences between the Market Value of the property " as if unimpaired" and the purchase price provide a basis for this observation. Reasons for any differences between unimpaired market value and sales price should be noted.

Response: EPA thanks the commenter for the information on appraisals and the assessment of market value. We remind the commenter that the statutory requirement is to consider the relationship between the purchase price and the value of the property, if the property were not contaminated. Although the Agency sees the value in conducting formal assessments and appreciates the 542 commenter's concerns, EPA emphasizes that the purpose of the all appropriate inquiries investigation is not to attain an exact assessment of the financial value of the property, but to determine whether or not there are conditions at the property that are indicative of releases or threatened releases of hazardous substances. The results of a formal appraisal may be helpful for making this determination, but in many cases not essential.

EPA notes that the final rule does not dictate how the prospective property owner or grantee must undertake this analysis. This type of comparison has been included in the statutory provisions governing all appropriate inquiries since the 1986 SARA amendments to CERCLA. Today's final rule does nothing to alter the original statutory requirement and represents no change from current practice.