ECONOMIC
IMPACT
ANALYSIS
FOR
THE
PROPOSED
ALL
APPROPRIATE
INQUIRIES
REGULATION
Prepared
for
Office
of
Brownfields
Cleanup
and
Redevelopment
US
Environmental
Protection
Agency
By
ICF
Consulting
August
3,
2004
This
page
intentionally
left
blank
TABLE
OF
CONTENTS
EXECUTIVE
SUMMARY.................................................................................................
ES­
1
CHAPTER
1:
Introduction
..................................................................................................
1­
1
1.1
Liability
Under
the
Comprehensive
Environmental
Response
Compensation
and
Liability
Act
(
CERCLA)
......................................................................................................
1­
1
1.1.1
CERCLA,
Prior
to
January
2002.......................................................................
1­
1
1.1.2
Small
Business
Liability
Relief
and
Brownfields
Revitalization
Act
.................
1­
1
1.1.3
Role
of
"
All
Appropriate
Inquiries"
..................................................................
1­
2
1.2
Need
for
the
Proposed
Action...................................................................................
1­
3
1.3
Regulatory
Negotiation
as
a
Rule
Making
Process
....................................................
1­
4
1.3.1
Overview..........................................................................................................
1­
4
1.3.2
The
Negotiated
Rulemaking
for
Establishing
All
Appropriate
Inquiries
Standards
..............................................................................................................................
1­
5
1.4
The
Interim
Standard
for
All
Appropriate
Inquiries
..................................................
1­
7
1.5
Analytical
Requirements...........................................................................................
1­
7
1.6
Organization
of
This
Document
................................................................................
1­
8
CHAPTER
2:
Market
Effects
of
the
Proposed
Rule;
Net
Social
Costs
and
Benefits
.........
2­
1
CHAPTER
3:
Affected
Sectors
of
the
Economy..................................................................
3­
1
3.1
Affected
Entities.......................................................................................................
3­
1
3.2
Profile
of
Firms
Providing
Phase
I
Environmental
Site
Assessments.........................
3­
1
3.2.1
Size
and
Geographic
Distribution......................................................................
3­
2
3.2.2
Current
Practices...............................................................................................
3­
3
CHAPTER
4:
All
Appropriate
Inquiries
Regulation
..........................................................
4­
1
4.1
The
AAI
Regulation
.................................................................................................
4­
1
4.2
Considered
Options
..................................................................................................
4­
8
4.2.1
Option
1:
Environmental
Professional...............................................................
4­
8
4.2.2
Option
2:
Interview
Requirement
......................................................................
4­
9
4.2.3
Option
3:
Sampling...........................................................................................
4­
9
4.2.4
Use
of
the
ASTM
E1527­
2000..........................................................................
4­
9
CHAPTER
5:
Analytical
Approach
to
Estimating
Costs
and
Benefits...............................
5­
1
5.1
Base
Case
for
the
EIA
..............................................................................................
5­
2
5.2
Timeframe................................................................................................................
5­
2
5.3
Estimated
Transactions
per
Year...............................................................................
5­
2
5.4
Projection
of
Number
of
Phase
I
ESAs
in
the
Base
Case...........................................
5­
3
5.5
Projected
Changes
in
Assessments
with
the
Regulation
............................................
5­
3
5.5.1
Projection
of
Number
of
Phase
I
ESAs..............................................................
5­
3
5.5.2
Projected
Number
of
Transaction
Screens
Transitioning
to
Phase
I
ESAs
.........
5­
4
5.6
Estimation
of
Unit
Costs...........................................................................................
5­
4
5.6.1
Environmental
Site
Assessment
Activities
under
Base
Case..............................
5­
4
5.6.2
Estimates
of
Hours
per
Action
........................................................................
5­
13
5.6.3
Identification
of
Labor
Categories
for
Actions
and
Labor
Distribution
............
5­
13
5.6.4
Estimates
of
Other
Direct
Costs
......................................................................
5­
15
5.6.5
AAI
Unit
Costs
...............................................................................................
5­
16
5.7
The
AAI
Options
....................................................................................................
5­
24
5.7.1
Considered
Option
1
­
Environmental
Professional
.........................................
5­
24
5.7.2
Considered
Option
2
­
Interview
Requirement
................................................
5­
25
5.7.3
Considered
Option
3
­
Sampling
.....................................................................
5­
25
CHAPTER
6:
Analytical
Approach
to
Estimating
Benefits................................................
6­
1
6.1
Benefits
After
Promulgation
.....................................................................................
6­
1
6.2
Interim
Period...........................................................................................................
6­
4
6.3
Benefits
from
the
Cleanup
and
Redevelopment
of
Brownfields
................................
6­
4
CHAPTER
7:
Data
Collection..............................................................................................
7­
1
7.1
Source
for
the
Annual
Number
of
ESAs
...................................................................
7­
1
7.1.1
Environmental
Data
Resources,
Inc...................................................................
7­
1
7.2
Distribution
of
Properties
by
Size
.............................................................................
7­
1
7.3
Unit
costs
.................................................................................................................
7­
2
7.3.1
Estimates
of
Hour
Burden.................................................................................
7­
2
7.3.2
Estimates
of
Other
Direct
Costs
........................................................................
7­
6
7.3.3
Incremental
Cost
 
AAI
Regulation
..................................................................
7­
6
7.3.4
Incremental
Cost
 
Considered
Option
3
...........................................................
7­
9
7.3.5
Estimates
of
Hourly
Labor
Costs.....................................................................
7­
10
CHAPTER
8:
Estimates
of
Costs
.........................................................................................
8­
1
8.1
Base
Case
Estimates
.................................................................................................
8­
1
8.1.1
Phase
I
ESA......................................................................................................
8­
1
8.1.2
Transaction
Screen............................................................................................
8­
2
8.1.3
Total
Cost
.........................................................................................................
8­
3
8.2
Estimates
under
the
Proposed
AAI
Regulation..........................................................
8­
4
8.2.1
Hour
Burden
for
Conducting
Interviews
at
Abandoned
Sites.............................
8­
5
8.2.2
Phase
I
ESA
Cost..............................................................................................
8­
6
8.2.3
Total
Cost
.........................................................................................................
8­
8
8.3
Estimates
under
Considered
Option
1
 
Environmental
Professional
........................
8­
9
8.4
Estimates
under
Considered
Option
2
 
Interview
Requirement..............................
8­
11
8.5
Estimates
under
Considered
Option
3
 
Limited
Sampling
....................................
8­
13
8.6
Estimates
associated
with
the
use
of
the
ASTM
E1527­
2000
standard
....................
8­
15
8.7
Summary
of
Annual
Cost
Estimates.......................................................................
8­
16
CHAPTER
9:
Sensitivity
Analyses.......................................................................................
9­
1
9.2
Sensitivity
Analysis
2
­
Volume
of
Transaction
Screens
Transitioning
to
Phase
I
ESAs
......................................................................................................................................
9­
3
9.3
Sensitivity
Analysis
3
 
Variability
in
Property
Transactions....................................
9­
4
CHAPTER
10:
Small
Entity
Analysis
................................................................................
10­
1
10.1
Affected
Industries
.................................................................................................
10­
1
10.2
Definition
of
Small
Firms
.......................................................................................
10­
1
10.3
Size
Distribution
and
Number
of
Small
Firms.........................................................
10­
2
10.4
Cost
Impact
on
Small
Firms
...................................................................................
10­
5
10.5
Cost
Impact
on
Small
Governmental
Jurisdictions
..................................................
10­
6
10.5.1
Number
of
Small
Governmental
Jurisdictions
.................................................
10­
6
10.5.2
Number
of
Potentially
Affected
Small
Governmental
Jurisdictions
.................
10­
7
10.5.3
Cost
Impact
on
Small
Governmental
Jurisdictions
..........................................
10­
8
10.6
Cost
Impact
on
Small
Not­
for­
Profit
Organizations
................................................
10­
9
BIBLIOGRAPHY......................................................................................................................
i
Appendix
I:
Proposed
AAI
Regulation
................................................................................
I­
1
Appendix
II:
Summary
of
Main
Differences
between
the
AAI
Standard
and
ASTM
E1527­
2000........................................................................................................................................
II­
1
Appendix
III:
Unit
Cost
Estimates
for
the
AAI
Regulatory
Option
3
.............................
III­
1
Appendix
IV:
EDR's
Methodology
for
Estimating
the
Volume
of
ESAs.........................
IV­
1
Appendix
V:
Volatility
in
Property
Transactions................................................................
V­
1
LIST
OF
EXHIBITS
ES­
1:
Summary
of
Incremental
Per­
Assessment
Cost
Estimates............................................
ES­
4
ES­
2:
Summary
of
Annual
Cost
Estimates
(
in
millions),
Discounted
at
Three
Percent
..........
ES­
5
ES­
3:
Summary
of
Annual
Cost
Estimates
(
in
millions),
Discounted
at
Seven
Percent
..........
ES­
5
Exhibit
3­
1:
Number
of
Phase
I
ESAs
Conducted
Annually
and
the
Average
Pricing
Nationally,
1997­
2002........................................................................................................................
3­
3
Exhibit
4­
1:
Summary
of
the
Statutory
Requirements...............................................................
4­
8
Exhibit
5­
1:
Distribution
of
Labor,
by
Labor
Category...........................................................
5­
15
Exhibit
5­
2:
The
AAI
Regulatory
Requirements
and
the
Phase
I
ESA
Activities
....................
5­
17
Exhibit
5­
3:
The
Expected
Changes
in
Phase
I
ESA
Activities
under
the
AAI
Regulation
......
5­
18
Exhibit
5­
4:
Distribution
of
Labor,
by
Labor
Category
under
an
Alternative
AAI
Regulatory
Option............................................................................................................................
5­
24
Exhibit
7­
1:
Property
Distribution
by
Type
..............................................................................
7­
1
Exhibit
7­
2:
Property
Distribution
by
Size................................................................................
7­
2
Exhibit
7­
3:
ASTM
E1527­
2000
(
Base
Case)
­
Estimated
Level
of
Effort
in
Hours,
by
Activity
and
Property
Size/
Type
....................................................................................................
7­
3
Exhibit
7­
4:
Distribution
of
Labor
Hours,
by
Labor
Category
(
under
ASTM
E1527­
2000).......
7­
4
Exhibit
7­
5:
Transaction
Screen
(
Base
Case)
­
Estimated
Level
of
Effort
in
Hours,
by
Activity
and
Property
Size/
Type
....................................................................................................
7­
5
Exhibit
7­
6:
ASTM
E1527­
2000
(
Base
Case)
 
Estimated
Other
Direct
Costs..........................
7­
6
Exhibit
7­
7:
Incremental
Labor
Hour
Burden
under
AAI
Regulation
­
Properties
Transitioning
from
ASTM
E1527­
2000
.................................................................................................
7­
6
Exhibit
7­
8:
Incremental
Labor
Hour
Burden
under
AAI
Regulation
­
Properties
Transitioning
from
Transaction
Screen...................................................................................................
7­
8
Exhibit
7­
9:
Sampling
Incremental
Costs
.................................................................................
7­
9
Exhibit
7­
10:
Unit
Labor
Cost,
by
Labor
Category.................................................................
7­
10
Exhibit
8­
1:
ASTM
E1527­
2000
(
Base
Case)
­
Estimated
Unit
Cost
........................................
8­
2
Exhibit
8­
2:
Transaction
Screen
(
Base
Case)
­
Estimated
Unit
Cost
.........................................
8­
3
Exhibit
8­
3:
ASTM
E1527­
2000
(
Base
Case)
­
Estimated
Total
Cost
.......................................
8­
4
Exhibit
8­
4:
AAI
Regulation
­
Estimated
Unit
Cost
(
Upper
Bound)
.........................................
8­
6
Exhibit
8­
5:
AAI
Regulation
­
Estimated
Unit
Cost
(
Lower
Bound)
.........................................
8­
7
Exhibit
8­
6:
AAI
Regulation
­
Estimated
Total
Cost
(
Upper
Bound)
........................................
8­
8
Exhibit
8­
7:
AAI
Regulation
­
Estimated
Total
Cost
(
Lower
Bound)........................................
8­
9
Exhibit
8­
8:
Considered
Option
1
­
Estimated
Unit
Cost
........................................................
8­
10
Exhibit
8­
9:
Considered
Option
1
­
Estimated
Total
Cost
.......................................................
8­
11
Exhibit
8­
10:
Considered
Option
2
­
Estimated
Unit
Cost
......................................................
8­
12
Exhibit
8­
11:
Considered
Option
2
­
Estimated
Total
Cost
.....................................................
8­
13
Exhibit
8­
12:
Considered
Option
3
­
Estimated
Unit
Cost
......................................................
8­
13
Exhibit
8­
13:
Considered
Option
3
­
Estimated
Total
Cost
.....................................................
8­
14
Exhibit
8­
14:
Option
Using
ASTM
E1527­
2000­
Estimated
Total
Cost..................................
8­
16
Exhibit
8­
15:
Summary
of
Annual
Cost
Estimates
(
in
millions),
Discounted
at
Three
Percent8­
16
Exhibit
8­
16:
Summary
of
Annual
Cost
Estimates
(
in
millions),
Discounted
at
Seven
Percent8­
17
Exhibit
9­
1:
Annual
Cost
Estimates
(
in
millions)
 
Volume
of
Phase
I
ESAs
in
2004...............
9­
2
Exhibit
9­
2:
Annual
Cost
Estimates
(
in
millions)
 
Volume
of
Transaction
Screens
Transitioning
to
Phase
I
ESAs................................................................................................................
9­
3
Exhibit
9­
3:
Annual
Cost
Estimates
(
in
millions)
 
Lower
and
Upper
Bound
Estimates
...........
9­
5
Exhibit
10­
1:
Small
Business
Administration's
Size
Standard
for
Small
Businesses
by
NAICS
.......................................................................................................................................
10­
1
Exhibit
10­
2:
Distribution
of
Firms
by
Size,
in
Year
2001......................................................
10­
3
Exhibit
10­
3:
Disribution
of
Establishments
by
Firm
Size,
in
Year
2001
................................
10­
3
Exhibit
10­
4:
Distribution
of
Governmental
Jurisdictions,
by
Population­
Size
Group
(
1996)
.10­
7
Exhibit
10­
5:
Distribution
of
Municipal
and
Township
Annual
Revenues
..............................
10­
8
EIA
for
the
AAI
Regulation
ES­
1
EXECUTIVE
SUMMARY
Background
of
the
Regulation
On
January
11,
2002,
President
Bush
signed
into
law
the
Small
Business
Liability
Relief
and
Brownfields
Revitalization
Act
(
the
Brownfields
Amendments).
The
Brownfields
Amendments
increased
funding
for
assessing
and
cleaning
up
brownfields
sites,
clarified
CERCLA
liability
protections
for
certain
landowners,
and
enhanced
State
and
Tribal
response
programs.

The
Brownfields
Amendments
require
EPA
to
develop
regulations
establishing
standards
and
practices
for
how
to
conduct
"
all
appropriate
inquiries"
and
promulgate
the
standards
within
two
years
of
its
enactment.
All
appropriate
inquiries
provide
for
assessing
the
previous
ownership,
uses
and
environmental
conditions
of
a
property.
The
Brownfields
Amendments
require
that
any
person
purchasing
commercial
property
who
may
want
to
claim
liability
protection
for
any
release
or
threatened
release
as
an
innocent
landowner,
a
contiguous
property
owner,
or
a
bona
fide
prospective
purchaser
conduct
all
appropriate
inquiries
prior
to
acquiring
the
property.
In
addition,
grantees
conducting
assessments
with
Federal
brownfields
grants
must
conduct
the
assessments
in
accordance
with
the
all
appropriate
inquiries
standards.

EPA
determined
that
the
regulatory
negotiation
process
was
the
best
way
to
develop
the
proposed
Federal
standards
and
practices
for
conducting
all
appropriate
inquiries
and
established
the
Negotiated
Rulemaking
Committee
for
All
Appropriate
Inquiries.
The
Committee,
composed
of
25
members
representing
parties
with
an
interest
in
the
rulemaking,
held
six
multiple­
day
meetings
over
the
course
of
seven
months,
beginning
in
April
2003.
The
Committee
arrived
at
a
consensus
document
representing
its
recommendation
for
a
proposed
regulation
on
November
14,
2003.
It
is
this
regulatory
language
that
represents
the
preferred
Agency
option
in
the
analysis
presented
in
this
document.

Methodology
Our
first
step
in
assessing
the
regulatory
impacts
of
the
proposed
regulation
was
establishing
a
baseline
to
represent
the
relevant
aspects
to
the
commercial
real
estate
market
in
the
absence
of
any
changes
in
regulations.
Because
under
existing
conditions
almost
all
transactions
concerning
commercial
properties
are
accompanied
by
either
an
environmental
site
assessment
(
ESA)
conducted
in
accordance
with
a
protocol
established
by
the
American
Society
of
Testing
and
Materials,
designated
ASTM
E1527­
2000
or
a
transaction
screen
as
specified
in
ASTM
E1528,
these
practices
were
assumed
to
continue
even
in
the
absence
of
the
all
appropriate
inquiries
regulation.
The
numbers
of
each
type
of
assessment
were
estimated
on
the
basis
of
industry
data
for
recent
years,
with
recent
growth
rates
in
transactions
assumed
to
continue
for
the
10­
year
period
covered
by
the
Economic
Impact
Analysis
(
EIA).
An
adjustment
in
the
relative
numbers
of
the
ESAs
and
transaction
screens
was
made
to
account
for
the
fact
that,
under
the
proposed
regulation,
an
ESA
will
provide
more
certain
protection
from
liability.
This
adjustment
was
made
by
comparing
shifts
between
the
two
procedures
that
occurred
when
the
Brownfields
Amendments
established
the
ASTM
E1527­
2000
standard
as
the
interim
standard
for
all
EIA
for
the
AAI
Regulation
ES­
2
appropriate
inquiries.
We
then
considered
the
requirements
included
in
the
recommendation
of
the
Negotiated
Rulemaking
Committee
and
those
included
in
a
few
options
that
the
committee
considered
but
did
not
adopt
and
compared
each
alternative
option
to
the
requirements
for
assessments
conducted
under
ASTM
E1527­
2000
and
ASTM
E1528.
We
also
compared
the
cost
of
each
of
these
alternatives
to
the
costs
associated
with
promulgating
the
current
interim
standard
(
i.
e.,
the
current
ASTM
E1527­
2000
standard).
When
compared
to
the
baseline,
the
All
Appropriate
Inquiries
(
AAI)
regulation
generally
follows
current
practice,
but
is
expected
to
result
in
less
time
spent
on
interviews
for
those
cases
where
the
subject
property
is
abandoned;
increased
time
spent
documenting
recorded
environmental
cleanup
liens;
increased
time
spent
documenting
cases
in
which
the
purchase
price
of
the
subject
property
is
below
the
market
price;
and
increased
time
for
recording
the
degree
of
obviousness
of
contamination.
The
three
options
that
were
considered
but
not
adopted
would
require:
(
1)
all
non­
clerical
work
to
be
performed
by
an
environmental
professional;
(
2)
no
interviews
with
owner/
occupants
of
neighboring
properties;
(
3)
limited
soil
or
water
sampling.
We
also
compare
the
costs
of
these
options
to
the
to
the
costs
associated
with
using
the
ASTM
E1527­
2000
standard.

To
estimate
the
changes
in
costs
resulting
from
the
regulation
or
the
regulatory
options,
we
developed
a
costing
model.
This
model
estimates
the
total
costs
of
conducting
site
assessments
as
the
product
of
costs
per
assessment,
numbers
of
assessments
per
year,
and
the
number
of
years
in
the
analysis.

The
costs
per
assessment,
in
turn,
are
calculated
by
separating
each
assessment
into
individual
labor
activities,
estimating
the
labor
time
associated
with
each
labor
activity,
and
assigning
a
perhour
labor
cost
to
each
activity.
Labor
times
and
categories
are
assumed
to
depend
on
the
size
and
type
of
property
being
assessed,
with
the
nationwide
distribution
of
properties
based
on
data
from
industry
on
environmental
site
assessments
and
brownfields
sites.
The
estimates
and
assignments
of
categories
are
made
based
on
the
experience
of
professionals
who
have
been
involved
in
large
numbers
of
site
assessments,
and
who
are
therefore
skilled
in
cost
estimation
for
the
relevant
activities.
Other
costs,
such
as
reproduction
and
the
purchase
of
data,
are
added
to
the
labor
costs
to
form
the
estimates
of
total
costs
per
assessment.

These
total
costs
per
assessment,
stratified
by
size
and
type
of
property,
are
then
multiplied
by
estimated
numbers
of
assessments
of
each
size
and
type
to
generate
our
estimates
of
total
annual
costs.
The
model
was
tested
by
comparing
its
results
to
industry­
wide
estimates
of
average
costs
of
conducting
assessments
under
baseline
conditions,
and
found
to
agree
quite
well.

We
used
the
model
to
estimate
total
costs
per
year
under
the
proposed
regulation,
and
each
option.
The
differences
between
these
estimated
costs
and
the
estimated
costs
in
the
baseline
constituted
our
estimates
of
the
incremental
regulatory
costs.

The
types
of
benefits
considered
included
improved
information
about
environmental
conditions
as
well
as
benefits
from
the
cleanup
of
brownfields
such
as
increased
numbers
of
cleanups,
reduced
use
of
greenfields,
and
attendant
commuting,
congestion,
and
mobile
source
emissions.
The
benefits
of
the
proposed
regulation
are
considered
only
qualitatively,
however,
due
to
the
difficulty
of
predicting
how
many
additional
transactions
may
occur
in
response
to
the
increased
certainty
of
liability
protections
provided
by
the
proposed
regulation,
as
well
as
the
difficulty
in
EIA
for
the
AAI
Regulation
ES­
3
getting
data
on
changes
in
behaviors
and
practices
in
response
to
the
availability
of
the
liability
protections.
Also,
it
is
difficult
to
estimate
what
proportion
of
identified
benefits
may
be
the
direct
result
of
the
liability
protections
and
the
proposed
regulation
and
what
proportion
of
the
identified
benefits
may
be
the
result
of
the
overall
brownfields
program.
EPA
expects
that
the
new
liability
protections
afforded
to
prospective
property
owners,
if
they
comply
with
the
all
appropriate
inquiries
provisions,
will
result
in
increased
benefits.
EPA
is
not
able
to
quantify,
with
any
significant
level
of
confidence,
the
exact
proportion
of
the
benefits
attributed
only
to
the
availability
of
the
liability
protections
and
the
AAI
regulation.
For
these
reasons,
the
costs
and
benefits
could
not
be
directly
compared.

Summary
of
the
Regulatory
Cost
Estimates
For
a
given
property,
the
costs
of
compliance
with
the
proposed
regulation
relative
to
the
baseline
depend
on
whether
that
property
would
have
been
assessed,
in
absence
of
the
AAI
regulation,
with
an
ASTM
E1527­
2000
assessment
process
or
with
a
simpler
transaction
screen
(
ASTM
E1528).
The
Exhibit
ES­
1
shows
that
the
average
incremental
costs
of
the
proposed
regulation
relative
to
conducting
an
ASTM
E1527­
2000
are
estimated
to
be
between
$
41
and
$
47.
For
the
small
percentage
of
cases
for
which
a
transaction
screen
would
have
been
preferred
to
the
ASTM
E1527­
2000
in
the
base
case,
but
which
now
would
require
an
assessment
in
compliance
with
the
proposed
regulation,
the
incremental
costs
are
estimated
to
be
between
$
1,448
and
$
1,454.

The
three
regulatory
options
considered
by
the
Negotiated
Rulemaking
Committee,
but
not
recommended,
would
result
in
higher
incremental
costs
from
the
base
case.
Option
1,
which
would
require
more
of
the
tasks
in
the
all
appropriate
inquiries
to
be
performed
by
an
environmental
professional,
would
add
an
average
of
$
539
per
assessment
(
or
approximatly
$
1,946
per
property,
assuming
a
transition
from
a
transaction
screen).
Option
2,
which
would
have
the
same
interview
requirement
as
under
the
base
case,
would
add
an
average
of
$
54
per
assessment
(
or
$
1,460
per
property,
assuming
a
transition
from
a
transaction
screen),
which
reflects
costs
associated
with
complying
with
other
provisions
of
the
proposed
rule.
Option
3,
which
would
require
the
all
appropriate
inquiries
to
include
limited
sampling
and
analysis,
would
result
in
average
incremental
costs
of
either
$
1,439
or
$
2,845,
depending
on
whether,
under
base
case
conditions,
an
ASTM
E1527­
2000
process
or
a
transaction
screen
(
ASTM
E1528)
would
have
been
used.
The
alternative
of
using
the
ASTM
E1527­
2000
standard
as
the
federal
regulation
would
result
in
lower
costs.
We
note,
however,
that
for
reasons
explained
in
the
preamble
to
the
proposed
rule,
EPA
has
found
that
the
ASTM
E1527­
2000
standard
does
not
address
all
ten
statutory
criteria
and
is
inconsistent
with
the
statutory
requirements
for
all
appropriate
inquiries.
The
incremental
per­
assessment
costs
are
summarized
in
Exhibit
ES­
1.
EIA
for
the
AAI
Regulation
ES­
4
ES­
1:
Summary
of
Incremental
Per­
Assessment
Cost
Estimates
Average
Incremental
Cost
Relative
to
Phase
I
ESA
under
ASTM
E1527­
2000
(
97%
of
transactions)
Average
Incremental
Cost
for
Transition
from
Transaction
Screen
(
under
ASTM
E1528)
(
3%
of
transactions)
Proposed
AAI
Regulation
$
41
­
$
47
$
1,448
­
$
1,454
AAI
Option
1
 
Environmental
Professional
Only
$
539
$
1,946
AAI
Option
2
 
Unchanged
Interview
Requirement
$
54
$
1,460
AAI
Option
3
 
Limited
Sampling
$
1,439
$
2,845
ASTM
E1527­
2000
$
0
$
1,407
Source:
ICF
Analysis.

The
total
annualized
costs
of
the
proposed
regulation
and
the
four
additional
options
considered,
in
total
and
relative
to
the
base
case,
are
shown
in
Exhibits
ES­
2
and
ES­
3.
The
total
costs
were
calculated
over
a
period
of
ten
years
from
the
start
of
2004
and
then
annualized
at
a
three
and
seven
percent
discount
rate.
When
a
discount
rate
of
three
percent
is
used,
the
estimated
total
annual
costs
for
the
options
considered
by
the
Negotiated
Rulemaking
Committee
range
from
just
under
$
700
million
to
over
$
1
billion
per
year,
compared
to
the
baseline
costs
of
$
663.8
million
and
the
costs
associated
with
using
the
ASTM
E1527­
2000
of
over
$
677
million.
The
proposed
regulation
adds
between
$
26
and
$
28
million
per
year
(
the
range
occurs
because
we
modeled
the
distribution
of
abandoned
and
non­
abandoned
properties
as
a
range,
see
Chapter
5),
while
the
incremental
costs
associated
with
the
options
range
from
$
30
million
to
almost
$
460
million
per
year.
The
incremental
cost
of
using
the
ASTM
E1527­
2000
standard
is
over
$
13
million.
When
a
discount
rate
of
seven
percent
is
used,
the
estimated
total
annual
costs
for
the
options
considered
by
the
Negotiated
Rulemaking
Committee
range
from
$
710
million
to
over
$
1
billion
per
year,
compared
to
the
baseline
costs
of
$
683.5
million
and
the
costs
associated
with
using
the
current
ASTM
standard
of
over
$
697
million.
The
proposed
regulation
adds
between
$
27
and
$
29
million
per
year,
while
the
incremental
costs
association
with
the
options
range
from
$
31
million
to
over
$
470
million
per
year.
The
incremental
cost
for
the
alternative
of
using
the
ASTM
standard
is
close
to
$
14
million.
EIA
for
the
AAI
Regulation
ES­
5
ES­
2:
Summary
of
Annual
Cost
Estimates
(
in
millions),
Discounted
at
Three
Percent
Base
Case
Proposed
AAI1
AAI
Option
1
AAI
Option
2
AAI
Option
3
ASTM
E1527­
2000
Total
Annual
Cost
$
663.8
$
690.1
­
$
691.9
$
844.0
$
693.9
$
1,122.0
$
677.3
Incremental
Total
Annual
Cost
Relative
to
the
Base
Case
$
0
$
26.3
­
$
28
$
180.2
$
30.0
$
458.1
$
13.5
ES­
3:
Summary
of
Annual
Cost
Estimates
(
in
millions),
Discounted
at
Seven
Percent
Base
Case
Proposed
AAI
AAI
Option
1
AAI
Option
2
AAI
Option
3
ASTM
E1527­
2000
Total
Annual
Cost
$
683.5
$
710.5
­
$
712.3
$
868.9
$
714.4
$
1,155.0
$
697.3
Incremental
Total
Annual
Cost
Relative
to
the
Base
Case
$
0
$
27
­
$
28.8
$
185.4
$
30.8
$
471.5
$
13.8
Source:
ICF
Analysis.

As
shown
in
Exhibit
ES­
3,
the
estimated
total
annual
cost
of
the
proposed
AAI
regulation,
calculated
using
a
discount
rate
of
seven
percent,
would
be
between
$
710.5
and
$
712.3
million
and
the
estimated
total
annual
incremental
cost
would
be
between
$
27
and
$
29
million.
Thus,
we
estimated
that
the
proposed
regulation
would
have
an
incremental
annual
effect
on
the
economy
of
less
than
$
100
million
per
year.

Small
Entity
Analysis
Since
all
non­
residential
property
transactions
could
be
affected
by
the
proposed
AAI
regulation,
large
numbers
of
small
entities
could
be
affected
to
some
degree.
Our
analysis
shows
that
the
effects,
on
the
whole,
would
be
insignificant
for
small
entities.
For
the
majority
of
small
entities
the
cost
of
conducting
an
environmental
site
assessment
would
increase,
on
average,
between
$
41
and
$
47
under
the
proposed
regulation.
For
the
small
percentage
of
cases
for
which
a
transaction
screen
would
have
been
preferred
to
the
ASTM
E1527­
2000
in
the
baseline,
but
which
now
would
require
an
assessment
in
compliance
with
the
proposed
regulation,
the
cost
of
conducting
an
environmental
site
assessment
would
increase,
on
average,
between
$
1,448
and
1,454.
When
we
annualized
the
incremental
cost
of
$
47
per
property
transaction
over
ten
years
at
a
seven
percent
discount
rate,
we
estimated
that
for
the
majority
of
small
entities
the
average
1
Throughout
this
document
the
costs
for
the
proposed
AAI
rule
are
shown
as
a
range.
This
is
because
we
modeled
the
distribution
of
abandoned
and
non­
abandoned
properties
as
a
range.
As
explained
in
Chapter
5,
the
percentage
of
property
transactions
involving
abandoned
properties
is
an
important
variable
to
our
cost
estimates.
Given
that
data
on
abandoned
properties
are
scarce,
we
modeled
the
distribution
of
abandoned
and
non­
abandoned
properties
as
a
range,
using
two
independent
sources
of
information.
EIA
for
the
AAI
Regulation
ES­
6
annual
cost
increase
per
establishment
per
property
transaction
would
be
approximatly
$
7.
For
the
small
percentage
of
entities
transitioning
from
transaction
screens
to
Phase
I
ESAs,
the
average
annual
cost
increase
per
establishment
per
property
transaction
would
be
approximatly
$
207.
Thus,
the
cost
impacts
to
small
entities
are
estimated
to
be
insignificant.
EIA
for
the
AAI
Regulation
1­
1
CHAPTER
1:
Introduction
1.1
Liability
Under
the
Comprehensive
Environmental
Response
Compensation
and
Liability
Act
(
CERCLA)

1.1.1
CERCLA,
Prior
to
January
2002
An
essential
step
in
real
property
transactions
is
evaluating
a
property
for
potential
environmental
contamination
and
assessing
potential
liability
for
any
contamination
present
at
the
property.
The
process
for
assessing
properties
for
the
presence
of
environmental
contamination
often
is
referred
to
as
"
environmental
due
diligence,"
or
"
environmental
site
assessment."
Under
the
Comprehensive
Environmental
Response
Compensation
and
Liability
Act
(
CERCLA)
or
Superfund,
this
process
is
referred
to
as
"
all
appropriate
inquiries."

Under
CERCLA,
private
parties
and
public
entities
can
be
held
strictly
liable
for
cleaning
up
contamination
at
properties
that
they
either
own
or
operate.
In
addition,
parties
may
be
assigned
liability
under
CERCLA
when
they
are
found
to
have
caused
or
contributed
to
the
contamination
of
a
property.
Any
person
or
party
owning
a
property
on
which
hazardous
substances
came
to
be
located
could
be
found
potentially
liable
for
any
releases
of
such
hazardous
substances
under
Section
107(
a)(
1)
of
CERCLA,
even
where
the
owner
had
no
participation
in
the
handling
of
the
hazardous
substances
and
took
no
action
to
exacerbate
the
release.
Strict
liability
under
CERCLA
means
liability
for
environmental
contamination
can
be
assigned
based
solely
on
property
ownership.

In
1986,
Congress
amended
CERCLA
with
the
Superfund
Amendments
and
Revitalization
Act
(
SARA).
In
particular,
SARA
amended
the
liability
provisions
of
CERCLA
by
allowing
for
an
"
innocent
landowner"
defense.
The
new
Section
101(
35)(
B)
of
CERCLA
provided
some
landowners
with
a
defense
from
the
strict
liability
provisions
of
CERCLA
for
those
persons
who
could
establish
that
they
did
not
know
and
"
had
no
reason
to
know"
that
any
hazardous
substance
that
is
the
subject
of
a
release
or
threatened
release
was
disposed
of
on,
in,
or
at
the
property.
Such
persons,
to
demonstrate
they
did
not
know
and
had
"
no
reason
to
know"
must
have
undertaken,
at
the
time
of
acquisition
of
the
property,
"
all
appropriate
inquiries"
into
the
previous
ownership
and
uses
of
the
property
consistent
with
good
commercial
or
customary
practice.
As
a
result,
the
conduct
of
all
appropriate
inquiries
became
part
of
many
commercial
property
transactions.

1.1.2
Small
Business
Liability
Relief
and
Brownfields
Revitalization
Act
On
January
11,
2002,
President
Bush
signed
into
law
the
Small
Business
Liability
Relief
and
Brownfields
Revitalization
Act
(
the
Brownfields
Amendments).
The
Law
amended
CERCLA
by
providing
EPA
with
the
authority
to
provide
funding
to
eligible
entities
for
the
assessment
and
cleanup
of
brownfields
sites,
clarifying
CERCLA
liability
provisions
for
certain
landowners,
and
providing
funding
authority
to
enhance
State
and
Tribal
voluntary
clean
up
and
response
programs.
Subtitle
B
of
Title
II
of
the
Brownfields
Amendments
revised
the
liability
provisions
EIA
for
the
AAI
Regulation
1­
2
of
CERCLA
Section
101(
35)
by
clarifying
the
requirements
necessary
to
establish
the
innocent
landowner
defense
under
CERCLA.
In
addition,
the
Brownfields
Amendments
amended
CERCLA
by
providing
additional
liability
protections
on
Superfund
liability
for
purchasers
of
properties
who
could
qualify
as
bona
fide
prospective
purchasers
and
contiguous
property
owners.
For
the
first
time
since
the
enactment
of
CERCLA
in
1980,
a
person
could
buy
property
with
the
knowledge
of
contamination
on
the
property,
without
being
held
potentially
liable
for
the
cleanup
of
the
contamination,
provided
the
person
complies
with
each
of
the
provisions
governing
the
liability
defense
in
the
law.
Among
the
requirements
added
to
CERCLA,
as
part
of
the
liability
protection
for
bona
fide
prospective
purchasers
and
contiguous
landowners,
is
the
requirement
that
such
persons
undertake
"
all
appropriate
inquiries"
into
prior
ownership
and
use
of
a
property
at
the
time
at
which
a
party
acquires
the
property.

The
Brownfields
Amendments
require
EPA
to
develop
regulations
establishing
standards
and
practices
for
how
to
conduct
all
appropriate
inquiries
and
promulgate
the
standards
within
two
years
of
its
enactment.
Congress
included
in
the
Brownfields
Amendments
a
list
of
criteria
that
the
Agency
must
address
in
the
regulations
establishing
standards
and
practices
for
conducting
all
appropriate
inquiries
(
§
101(
35)(
2)(
B)(
ii)
of
CERCLA).
The
Brownfields
Amendments
also
require
parties
receiving
funding
under
the
Federal
brownfields
program
for
the
conduct
of
site
characterizations
and
assessments
to
conduct
the
site
characterizations
and
assessments
in
accordance
with
the
standards
and
practices
for
all
appropriate
inquiries
established
under
the
same
provision
of
CERCLA.

1.1.3
Role
of
"
All
Appropriate
Inquiries"

"
All
appropriate
inquiries,"
or
environmental
site
assessment
standards
provide
a
framework
or
process
for
assessing
commercial
property
for
the
presence
or
potential
presence
of
a
release
or
threatened
release
of
a
hazardous
substance
at,
on,
or
to
a
property
for
which
a
party
could
be
found
potentially
liable
under
CERCLA.
Congress
has
established
that
it
is
essential
for
any
person
purchasing
commercial
property
who
may
want
to
claim
liability
protection
for
any
release
or
threatened
release
as
an
innocent
landowner,
a
contiguous
property
owner,
or
a
bona
fide
prospective
purchaser
to
conduct
all
appropriate
inquiries
prior
to
acquiring
the
property.
All
appropriate
inquiries
must
be
conducted
for
the
purposes
of
either
establishing
that
the
purchaser
did
not
know
and
"
had
no
reason
to
know"
of
contamination
at
the
property,
or
in
the
case
of
the
bona
fide
prospective
purchaser,
the
purchaser
bought
the
property
with
knowledge
of
the
contamination
and
is
not
responsible
for
the
contamination.
Failure
to
perform
all
appropriate
inquiries
defeats
each
of
the
landowner
liability
protections.

In
addition
to
conducting
all
appropriate
inquiries
prior
to
acquiring
a
property,
the
statute
requires
that
a
person
claiming
to
qualify
as
a
bona
fide
prospective
purchaser
or
contiguous
property
owner
must
prove
that
he
or
she
is
not
potentially
liable
or
affiliated
with
any
other
person
who
is
potentially
liable
for
response
costs.
The
statute,
as
amended
by
the
Brownfields
Amendments,
also
imposes
other
continuing
obligations
that
landowners
must
meet
to
claim
the
CERCLA
liability
protections.
These
continuing
obligations
include
complying
with
land
use
restrictions
and
institutional
controls;
taking
reasonable
steps
with
respect
to
hazardous
substance
releases;
providing
full
cooperation,
and
providing
assistance
and
access
to
persons
that
are
authorized
to
conduct
response
actions
or
natural
resource
restoration;
complying
with
EIA
for
the
AAI
Regulation
1­
3
CERCLA
information
requests
and
administrative
subpoenas;
and
complying
with
legally
required
notices.

1.2
Need
for
the
Proposed
Action
Prior
to
the
enactment
of
the
Small
Business
Liability
Relief
and
Brownfields
Revitalization
Act
(
the
"
Brownfields
Amendments"),
anyone
purchasing
a
contaminated
property,
regardless
of
whether
the
purchaser
caused
or
contributed
to
the
contamination,
could
be
held
responsible
under
CERCLA
for
the
contamination
and
associated
damages.
Therefore,
many
otherwise
attractively­
located
properties
remained
abandoned
and
potentially
contaminated,
while
other
uncontaminated
properties
or
"
greenfields"
were
purchased
for
development.
The
development
of
"
greenfields"
often
translates
into
additional
infrastructure
and
municipal
services
costs
for
already
financially­
strapped
cities
and
towns.
Additionally,
the
continued
existence
of
abandoned
properties
within
municipal
limits
contributes
to
blight.

To
address
this
problem,
Congress
included
in
the
Brownfields
Amendments
to
CERCLA,
provisions
providing
for
liability
protection
for
Bona
Fide
Prospective
Purchasers.
To
encourage
the
purchase
and
redevelopment
of
contaminated
and
potentially­
contaminated
properties
(
e.
g.,
brownfields
sites),
Congress
for
the
first
time
provided
liability
protection
for
purchasers
who
buy
properties
with
the
knowledge
that
the
property
is
contaminated.
Congress
included
within
this
provision
several
criteria
for
ensuring
that
a
purchaser
buys
a
contaminated
property
with
adequate
knowledge
of
potential
contamination
and
ensuring
that
the
property
owner
does
not
exacerbate
the
environmental
conditions
at
the
property
after
the
purchase.
One
criterion
established
by
Congress
for
obtaining
the
CERCLA
liability
protections
is
that
prospective
purchasers
must
conduct
all
appropriate
inquiries
into
the
previous
owners
and
uses
of
a
property
to
identify
potential
contamination
prior
to
purchasing
the
property.
Congress
also
mandated
that
EPA
develop
regulations
setting
federal
standards
for
the
conduct
of
all
appropriate
inquiries.

The
all
appropriate
inquiries
proposed
rule
presented
and
analyzed
in
this
economic
impacts
analysis
responds
to
the
Congressional
mandate.
EPA
was
granted
discretion
in
defining
all
appropriate
inquiries,
but
this
discretion
was
limited
by
a
mandate
to
address
a
set
of
ten
criteria,
specified
in
the
statute.
In
addition,
it
contributes
to
addressing
the
problem
of
brownfields
and
other
contaminated
properties
remaining
idle,
abandoned,
and
potentially
contaminated
because
of
the
disincentives
attached
to
these
properties
due
to
the
strict,
joint,
and
several
liability
provisions
of
CERCLA.

EPA
notes
that
the
problem
to
be
addressed
by
the
AAI
rule
represents
a
market
failure
due
to
asymmetric
information
which
impedes
the
functioning
of
private
market­
based
solutions
and
makes
government
interventions
more
appropriate.
Asymmetric
information
is
a
feature
of
real
estate
transactions
for
properties
that
may
be
contaminated;
because
buyers
have
much
less
information
than
sellers
about
potential
clean­
up
liabilities,
and
because
it
is
both
costly
to
collect
information
and
difficult
for
buyers
to
be
sure
how
much
information
is
necessary
to
determine
their
liabilities,
properties
will
tend
to
be
less
valuable
to
potential
buyers
than
to
their
current
owners.
EIA
for
the
AAI
Regulation
1­
4
The
reason
a
federal
response
is
most
appropriate
in
this
case
is
that
the
risk
of
liability
under
a
federal
statute
(
CERCLA)
is
an
important
component
of
the
increased
risk
as
perceived
by
prospective
purchasers.
Because
only
the
federal
government
can
define
the
actions
that
qualify
for
exemption
from
CERCLA,
interventions
at
other
levels
of
government
would
be
ineffective
at
addressing
the
problem.

1.3
Regulatory
Negotiation
as
a
Rule
Making
Process
1.3.1
Overview
Negotiated
rulemaking
is
a
process
in
which
a
proposed
rule
is
developed
by
a
committee,
established
under
the
provisions
of
the
Federal
Advisory
Committee
Act
(
FACA)
and
the
Negotiated
Rulemaking
Act
(
NRA),
and
composed
of
representatives
of
interests
that
may
be
significantly
affected
by
the
rule.
Decisions
are
made
by
consensus,
which
generally
require
concurrence
among
all
interests
represented
on
the
committee.
The
process
is
started
by
the
Agency's
careful
identification
of
the
interests
potentially
affected
by
the
rulemaking
under
consideration.
To
help
in
this
identification
process,
the
Agency
publishes
a
notice
in
the
Federal
Register,
which
identifies
a
preliminary
list
of
interests
and
requests
public
comment
on
that
list.
Following
receipt
of
the
comments,
the
Agency
establishes
a
Federal
advisory
committee
representing
these
various
interests
to
negotiate
a
consensus
on
the
terms
of
a
proposed
rule.
The
Agency
is
a
member
of
the
committee
representing
the
Federal
government's
own
set
of
interests.
The
negotiated
rulemaking
advisory
committee
is
facilitated
by
a
trained
mediator,
who
facilitates
the
negotiation
process.
The
role
of
this
mediator,
or
facilitator,
is
to
apply
proven
consensus
building
techniques
to
the
advisory
committee
setting.
Using
a
trained
mediator
to
facilitate
the
process
assists
all
potential
parties,
including
EPA,
to
identify
their
interests
in
the
rule
and
be
able
to
reevaluate
previously
stated
positions
on
issues
involved
in
the
rulemaking
effort.

Negotiation
allows
interested
and
affected
parties
to
discuss
possible
approaches
to
various
issues
rather
than
only
asking
them
to
respond
to
details
on
an
Agency
proposal.
The
negotiation
process
involves
a
mutual
education
of
the
parties
by
each
other
on
the
practical
concerns
about
the
impact
of
such
approaches.
Each
committee
member
participates
in
resolving
the
interests
and
concerns
of
other
members,
rather
than
leaving
it
up
to
EPA
to
bridge
different
points
of
view.

A
key
principle
of
negotiated
rulemaking
is
that
agreement
is
by
consensus
of
all
the
interests.
Thus,
no
one
interest
or
group
of
interests
is
able
to
control
the
process.
The
Negotiated
Rulemaking
Act
defines
consensus
as
the
unanimous
concurrence
among
interests
represented
on
a
negotiated
rulemaking
committee,
unless
the
committee
itself
unanimously
agrees
to
use
a
different
definition.

Once
a
regulatory
negotiation
advisory
committee
reaches
consensus
on
the
provisions
of
a
proposed
rule,
the
Agency,
consistent
with
its
legal
obligations,
uses
such
consensus
as
the
basis
of
its
proposed
rule,
to
be
published
in
the
Federal
Register.
This
provides
the
required
public
notice
and
allows
for
a
public
comment
period.
Other
interested
parties
not
represented
on
the
EIA
for
the
AAI
Regulation
1­
5
committee
retain
their
rights
to
comment,
participate
in
an
informal
hearing
(
if
requested)
and
judicial
review.

1.3.2
The
Negotiated
Rulemaking
for
Establishing
All
Appropriate
Inquiries
Standards
EPA
determined
that
the
regulatory
negotiation
process
was
the
best
way
to
develop
the
proposed
Federal
standards
and
practices
for
conducting
all
appropriate
inquiries
after
initiating
a
convening
process
to
identify
appropriate
stakeholder
groups
and
solicit
advice
and
input
from
experienced
public
and
private
sector
users
of
all
appropriate
inquiries
standards.
We
retained
an
experienced
facilitator
to
contact
stakeholders
that
could
potentially
be
affected
by
the
all
appropriate
inquiries
regulation
to
determine
whether
or
not
stakeholders
were
interested
in
participating
in
a
negotiated
rulemaking
process
and
determine
the
potential
for
stakeholder
issues
to
be
successfully
addressed
through
a
regulatory
negotiation.
Following
an
evaluation
of
stakeholder
interest
and
input
during
the
convening
process,
EPA
determined
that
there
was
sufficient
enthusiasm
among
stakeholders
for
a
negotiated
rulemaking
process
and
almost
all
stakeholders
interviewed
expressed
a
belief
that
potential
issues
and
differences
between
interested
parties
could
be
successfully
addressed
and
negotiated
through
the
regulatory
negotiation
process.

The
negotiated
rulemaking
process
allowed
EPA
to
obtain
a
diverse
array
of
input
from
both
private
sector
stakeholders
and
state
and
tribal
program
officials
familiar
with
and
experienced
in
implementing
currently
available
processes
for
conducting
all
appropriate
inquiries.
By
building
upon
currently
available
private
sector
standards
for
undertaking
all
appropriate
inquiries
as
well
as
building
on
the
experience
of
state
and
Federal
government
site
assessment
programs
the
Agency
could
efficiently
develop
Federal
regulatory
standards
that
both
meet
the
criteria
provided
in
the
Brownfields
Amendments
and
ensure
minimal
disruption
to
the
private
market
and
state
and
Federal
site
assessment
programs.

The
Negotiated
Rulemaking
Committee
for
All
Appropriate
Inquiries
was
formed
and
operated
in
full
compliance
with
the
requirements
of
the
Federal
Advisory
Committee
(
FACA)
and
in
a
manner
consistent
with
the
requirements
of
the
Negotiated
Rulemaking
Act
(
NRA).
The
Agency
conducted
the
negotiated
rulemaking
proceedings
with
particular
attention
to
ensuring
full
and
adequate
representation
of
those
interests
that
may
be
significantly
affected
by
the
regulations
that
will
set
standards
for
conducting
all
appropriate
inquiries.
Section
562
of
the
NRA
defines
the
term
"
interest"
as
"
with
respect
to
an
issue
or
matter
multiple
parties
which
have
a
similar
point
of
view
or
which
are
likely
to
be
affected
in
a
similar
manner."

The
Negotiated
Rulemaking
Committee
for
All
Appropriate
Inquiries
was
composed
of
25
members
representing
parties
with
an
interest
in
the
rulemaking.
EPA
monitored
committee
membership
carefully
throughout
the
process
to
ensure
that
there
was
a
balanced
representation
from
affected
and
interested
stakeholder
groups.
The
committee
included
representatives
from
the
following
types
of
interest
groups:

 
Environmental
Interest
Groups
 
Environment
Justice
Community
 
Federal
Government
EIA
for
the
AAI
Regulation
1­
6
 
Tribal
Government
 
State
Government
 
Local
Government
 
Real
Estate
Developers
 
Bankers
and
Lenders
 
Environmental
Professionals.

Membership
on
the
committee
consisted
of
individuals
representing
the
following
organizations:

 
Trust
for
Public
Land
 
National
Groundwater
Association
 
American
Society
of
Civil
Engineers
 
International
Council
of
Shopping
Centers
 
International
Municipal
Lawyers
Association
 
Mortgage
Bankers
of
America
 
National
Brownfields
Association
 
Association
of
State
and
Territorial
Solid
Waste
Management
Officials
 
Environmental
Defense
 
Partnership
for
Sustainable
Brownfields
Redevelopment
 
Gila
River
Indian
Community
 
Cherokee
Nation
 
Wasatch
Environmental,
Inc.
 
ASFE
 
EPA
 
West
Harlem
Environmental
Action
 
National
Association
of
Home
Builders
 
National
Association
of
Development
Organizations
 
The
Real
Estate
Roundtable
 
Center
for
Public
Environmental
Oversight
 
US
Conference
of
Mayors
 
Environmental
Bankers
Association
 
National
Association
of
Industrial
and
Office
Properties
 
National
Association
of
Local
Government
Environmental
Professionals
 
US
Public
Interest
Research
Group.
2
The
Negotiated
Rulemaking
Committee
on
All
Appropriate
Inquiries
held
six
multiple­
day
meetings
over
the
course
of
seven
months,
beginning
in
April
2003.
The
Committee
arrived
at
a
consensus
document
representing
its
recommendation
for
a
proposed
regulation
on
November
14,
2003.
All
25
members
of
the
Committee
participated
in
the
development
of
the
document
and
came
to
consensus
without
dissent.
Appendix
I
to
this
document
contains
the
Committee's
2
EPA
notes
that
after
all
members
of
the
Negotiated
Rulemaking
Committee
reached
consensus
on
November
14,
2003
and
such
consensus
was
confirmed
by
all
Committee
members
through
approval
of
the
final
meeting
summary,
US
PIRG
submitted
a
letter,
dated
December
19,
2003,
notifying
EPA
that
it
wished
to
withdraw
from
the
Committee.
EIA
for
the
AAI
Regulation
1­
7
recommended
regulatory
language.
It
is
this
regulatory
language
that
represents
the
preferred
Agency
option
in
the
analysis
presented
in
this
document.

EPA
notes
that
in
responding
to
the
statutory
mandate
included
in
the
Brownfields
Amendments,
the
Agency
determined
that
the
existing
ASTM
E1527­
97
and
ASTM
E1527­
2000
standards
do
not
address
all
of
the
ten
required
criteria
outlined
in
the
Brownfields
Amendments.
As
a
result,
use
of
the
ASTM
standards
would
be
inconsistent
with
applicable
law
and
would
not
adequately
serve
EPA's
needs
in
promulgating
the
all
appropriate
inquiries
regulation.
In
the
preamble
for
this
proposed
rule,
EPA
has
requested
public
comment
on
this
determination.

EPA's
proposed
all
appropriate
inquiry
regulation
adopts
the
consensus
language
agreed
to
by
the
Negotiated
Rulemaking
Committee,
which
translated
the
ten
criteria
required
by
the
Brownfields
Amendments
into
a
performance­
based
regulatory
standard.
This
EIA
compares
the
costs
and
other
practical
differences
between
the
current
site
assessment
practices,
which
predominantly
employ
the
interim
ASTM
standard,
and
the
projected
site
assessment
practices
once
AAI
is
promulgated.

1.4
The
Interim
Standard
for
All
Appropriate
Inquiries
In
the
Brownfields
Amendments,
Congress
established,
as
the
Federal
interim
standard
for
conducting
all
appropriate
inquiries,
the
procedures
of
the
American
Society
for
Testing
and
Materials
(
ASTM)
including
Standard
E1527­
97
(
entitled
"
Standard
Practice
for
Environmental
Site
Assessment:
Phase
1
Environmental
Site
Assessment
Process").
This
interim
standard
applies
to
properties
purchased
on
or
after
May
31,
1997
until
EPA
promulgates
Federal
regulations
establishing
standards
and
practices
for
conducting
all
appropriate
inquiries.

On
May
9,
2003,
EPA
promulgated
a
final
rule
clarifying
the
interim
standard
for
all
appropriate
inquiries
and
establishing
that,
in
the
case
of
property
purchased
on
or
after
May
31,
1997,
the
requirements
for
conducting
"
all
appropriate
inquiries,"
including
the
conduct
of
such
activities
to
qualify
as
a
bona
fide
prospective
purchaser
and
to
establish
an
innocent
landowner
defense
under
CERCLA,
can
be
satisfied
through
the
use
of
ASTM
Standard
E1527­
2000
(
as
well
as
the
E1527­
97
standard),
entitled
"
Standard
Practice
for
Environmental
Site
Assessment:
Phase
1
Environmental
Site
Assessment
Process."
In
addition,
the
rule
clarified
that
recipients
of
brownfields
site
assessment
grants
will
be
in
compliance
with
the
all
appropriate
inquiries
requirements
if
they
comply
with
either
the
ASTM
Standard
E1527­
97,
or
the
ASTM
E1527­
2000
Standard.

1.5
Analytical
Requirements
Executive
Order
12866
(
EO
12866)
"
Regulatory
Planning
and
Review,"
issued
on
September
30,
1993
by
President
Clinton,
requires
a
cost/
benefit
analysis
for
all
regulatory
actions
determined
to
be
"
significant."
The
proposed
rules
can
be
considered
significant
on
the
basis
of
their
likely
impact
on
the
US
economy,
which
may
impose,
under
some
regulatory
options,
annual
economic
impacts
in
excess
of
the
$
100
million
threshold
set
for
significant
regulatory
actions.
The
executive
order
requires
a
statement
of
the
need
for
the
proposed
action,
consideration
of
alternatives,
and
analyses
of
costs
in
comparison
to
benefits.
Separately,
the
Regulatory
EIA
for
the
AAI
Regulation
1­
8
Flexibility
Act
(
RFA),
(
Pub.
L.
No.
96­
354,
94
Stat.
1164
(
codified
at
5
U.
S.
C.
§
601))
enacted
in
September
1980,
and
amended
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act
(
SBREFA),
Pub.
L.
No.
104­
121,
110
Stat.
857
(
codified
at
5
U.
S.
C.
§
601
et
seq.)
enacted
in
March
1996,
requires
agencies
to
consider
the
impact
of
their
regulatory
proposals
on
small
entities,
consider
ways
to
cut
impacts
on
small
entity
impacts
through
effective
alternatives,
and
provide
for
public
comment
on
the
analyses.
3
These
acts
require
the
preparation
of
an
Initial
Regulatory
Flexibility
Analysis
(
IRFA)
for
proposed
rules
that
might
have
significant
economic
impacts
on
a
substantial
number
of
small
entities.

1.6
Organization
of
This
Document
The
remaining
of
this
EIA
is
organized
as
follows:
 
Chapter
2
 
Market
Effects
of
the
Proposed
Rule
 
Chapter
3
 
Affected
Sectors
of
the
Economy
 
Chapter
4
 
All
Appropriate
Inquiries
Regulation
 
Chapter
5
 
Analytical
Approach
to
Estimating
Costs
 
Chapter
6
 
Analytical
Approach
to
Estimating
Benefits
 
Chapter
7
 
Data
Collection
 
Chapter
8
 
Total
and
Incremental
Cost
Estimates
 
Chapter
9
 
Sensitivity
Analyses
 
Chapter
10
 
Small
Entity
Impacts
Analysis
 
Appendix
I
 
All
Appropriate
Inquiries
Proposed
Regulation
 
Appendix
II
 
Summary
of
the
Main
Differences
between
the
All
Appropriate
Inquiries
Standard
and
the
ASTM
E1527­
2000
 
Appendix
III
 
Unit
Cost
Estimates
for
the
Regulatory
Option
3
 
Appendix
IV
 
EDR's
Methodology
for
Estimating
the
Volume
of
ESAs
 
Appendix
V
 
Volatility
in
Property
Transactions.

3
"
The
Regulatory
Flexibility
Act:
An
Implementation
Guide
for
Federal
Agencies,"
The
Office
of
Advocacy,
US
Small
Business
Administration,
p.
1,
November
2002.
EIA
for
the
AAI
Regulation
2­
1
CHAPTER
2:
Market
Effects
of
the
Proposed
Rule;
Net
Social
Costs
and
Benefits
The
most
straightforward
assessment
of
social
costs
of
a
rule
can
be
made
by
measuring
the
actual
changes
in
the
regulated
community's
costs
of
engaging
in
the
same
activities
as
in
the
base
case
(
except
insofar
as
the
AAI
rule
requires
changes).
Ideally,
however,
we
should
also
measure
the
other
effects
of
the
rule.
In
particular,
the
number
of
commercial
property
transactions
per
year
could
change,
and
the
number
of
commercial
property
transactions
that
include
the
conduct
of
an
ESA
could
change.
In
this
section,
we
lay
out
what
we
see
as
the
underlying
economics
determining
commercial
real
estate
transaction
volume,
and
how
this
could
be
affected
by
changes
in
the
costs
and
benefits
of
conducting
ESAs
caused
by
the
AAI
rule.
We
also
sketch
out
what
might
be
an
ideal
analysis,
incorporating
the
induced
changes
in
the
commercial
real
estate
market
and
the
effects
on
social
costs
and
benefits.
We
show,
however,
that
this
ideal
analysis
is
unlikely
to
contribute
substantially
to
the
estimate
of
the
social
costs.
In
addition,
we
discuss
the
data
constraints
that
render
this
ideal
analysis
to
be
impractical.
Due
to
the
impracticality
of
undertaking
an
ideal
analysis,
we
estimated
the
total
cost
impacts
of
the
proposed
rule
using
an
engineering
cost
analysis.

The
commercial
real
estate
market
can
be
described
as
a
market
consisting
of
a
large
number
of
heterogeneous
properties.
Within
this
heterogeneous
market,
brownfields,
which
are
abandoned,
idle,
or
underutilized
properties
compete
for
commercial
development
dollars
with
other
previously
undeveloped
properties,
often
referred
to
as
"
greenfields."
In
fact,
in
a
report
published
by
the
Council
for
Urban
Economic
Development
(
CUED),
"
Brownfields
Redevelopment:
Performance
Evaluation,"
the
authors
point
out
that
economic
development
practitioners
attending
a
1998
CUED­
organized
workshop
stated
that
brownfields
should
be
treated
as
a
real
estate
deal:
the
process
is
driven
by
location
and
market
demand.
...
contamination
merely
adds
complexity
to
the
process
 
it
does
not
change
the
process...
."
4
One
of
the
many
costs,
or
attributes,
that
contribute
to
a
buyer's
preference
for
one
piece
of
real
estate
over
another
is
the
potential
cost
of
any
real
or
perceived
environmental
liabilities
associated
with
a
property.
Liability
concerns
are
greater
for
brownfields
than
for
greenfields.
Other
property
attributes
that
may
influence
a
buyer's
preferences
for
a
particular
piece
of
real
estate
are
location,
and
the
availability
of
infrastructure.
Brownfields
may
offer
better
locations
than
greenfields
and
may
offer
the
benefit
of
existing
infrastructure,
where
greenfields
properties
may
be
in
less
desirable
locations
and
have
no
existing
infrastructure.

To
address
the
problem
of
environmental
liability,
Congress
included
in
the
Brownfields
Amendments
to
CERCLA,
provisions
providing
for
liability
protection
for
Bona
Fide
Prospective
Purchasers.
To
encourage
the
purchase
and
redevelopment
of
contaminated
and
potentially­
contaminated
properties
(
e.
g.,
brownfields),
Congress
for
the
first
time
provided
liability
protection
for
purchasers
who
buy
properties
with
the
knowledge
that
the
property
is
contaminated,
if
they
conduct
all
appropriate
inquires
prior
to
purchasing
a
property.
Given
a
relatively
constant
total
demand
for
commercial
real
estate
properties,
reducing
liability
concerns
regarding
commercial
properties
will
have
a
greater
effect
on
the
demand
for
brownfields.
This
4
Error!
Main
Document
Only."
Brownfields
Redevelopment:
Performance
Evaluation,"
Council
for
Urban
Economic
Development,
1999,
P.
10.
EIA
for
the
AAI
Regulation
2­
2
effect
would
have
the
impact
of
shifting
consumer
preference
within
the
commercial
real
estate
market
toward
brownfields
and
away
from
greenfields.
A
primary
impact
of
increasing
the
redevelopment
of
brownfields
is
the
reduction
in
urban
blight.
In
fact,
the
results
of
a
232­
city
survey
published
in
a
February
2000
report
by
the
U.
S.
Conference
of
Mayors,
"
Recycling
America's
Land:
A
National
Report
on
Brownfields
Redevelopment,"
documents
that
two
of
the
major
benefits
of
brownfields
redevelopment
are
neighborhood
revitalization
and
increased
environmental
protection.

Based
on
industry
data
for
the
commercial
real
estate
market
on
the
number
of
Phase
I
environmental
site
assessments
and
transaction
screens,
and
consensus
that
significant
purchases
are
unlikely
to
take
place
without
the
assurance
of
an
assessment,
we
have
estimated
the
annual
number
of
affected
transactions.
The
AAI
rule
changes
the
net
costs
of
those
transactions
­­
increasing
average
costs
by
a
small
amount,
and
providing
increased
information
and
greater
certainty
of
liability
protection.
These
changes
in
the
costs
of
commercial
real
estate
transactions
might
change
the
incentives
for
buying
real
estate,
resulting
in
a
different
number
of
transactions
per
year
as
well
as
causing
changes
in
consumer
preferences
for
the
type
of
real
estate
purchased.
Changing
the
rate
of
transactions,
in
turn,
will
cause
changes
in
social
welfare
through
various
mechanisms.
This
concept
is
illustrated
in
Exhibit
1
(
below)
which
shows
the
rate
of
commercial
property
transactions
on
the
horizontal
axis,
and
the
costs
and
benefits
of
properties
on
the
vertical
axis.

The
upward­
sloping
line
indicates
the
supply
of
all
commercial
properties
offered
per
year
as
a
function
of
price;
at
higher
prices,
more
owners
will
find
it
in
their
interests
to
sell
in
a
given
year.
The
two
downward­
sloping
lines
show
the
annual
demand
for
properties,
with
and
without
transaction
costs.
Both
the
supplies
and
demands
shown
here
include
commercial
properties
of
all
kinds,
whether
previously
undeveloped
properties
("
greenfields")
or
existing
properties
that
may
be
contaminated
("
brownfields").
Though
these
two
types
of
properties
differ
in
their
characteristics,
with
brownfields
having
the
advantages
of
existing
infrastructure
and
often
more
convenient
locations,
along
with
the
disadvantage
of
greater
risks
of
clean­
up
liabilities,
they
compete
within
the
same
market.
The
solid
downward­
sloping
line
indicates
the
demand
in
the
absence
of
transaction
costs,
while
the
lower,
dashed
line
shows
how
the
demand
is
shifted
downward
and
to
the
left
by
transaction
costs.
Essentially,
the
transaction
costs
drive
a
wedge
between
buyer
and
seller
 
they
are
costs
to
the
buyer
that
are
not
realized
by
the
sellers.
The
transaction
costs
can
be
seen
to
reduce
the
total
net
social
value
of
property
transactions,
which
can
be
measured
as
the
sum
of
producer
and
consumer
surplus
 
the
area
between
the
supply
and
demand
curves
to
the
left
of
their
intersection
point.
The
total
net
social
surplus
in
the
absence
of
transaction
costs
is
shown
in
the
exhibit
as
the
sum
of
all
three
shaded
areas,
from
the
vertical
axis
out
to
the
equilibrium
point
at
Q*,
above
the
supply
curve
and
below
the
demand
curve
in
the
absence
of
transaction
costs.
Once
transaction
costs
are
acknowledged,
the
demand
curve
can
be
seen
to
shift
downward
by
the
magnitude
of
the
transaction
costs,
and
the
net
social
surplus
drops
to
the
area
shown
by
the
diagonal
shading.
The
transaction
rate
drops
from
Q*
to
Qo
(
because
there
are
now
fewer
transactions
that
have
net
benefits
exceeding
their
costs),
and
the
net
surplus
drops
by
the
checked
area
(
the
transaction
costs
for
the
remaining
transactions)
and
the
vertically
shaded
area
(
the
"
deadweight
loss"
from
transactions
that
are
no
longer
made).
EIA
for
the
AAI
Regulation
2­
3
Cost
of
Properties
Supply
of
Properties
per
Year
Demand
with
No
Transaction
Costs
Demand
for
Properties
per
Year
Qo
Q*

Supply
of
Properties
per
Year
Demand
with
No
Transaction
Costs
Exhibit
1
Exhibit
2
The
effects
of
changing
transaction
costs
due
to
the
AAI
rule
can,
in
theory,
be
shown
as
a
shift
in
the
dashed
line
indicating
the
demand
for
commercial
properties.
To
the
extent
the
AAI
rule
increases
the
costs
of
ESAs,
or
induces
individuals
to
choose
to
conduct
a
Phase
I
ESA
in
place
of
a
less­
costly
transaction
screen,
we
would
expect
the
transaction
costs
to
increase,
increasing
the
difference
between
the
two
demand
curves
shown
in
the
exhibit,
and
reducing
the
net
social
surplus.
This
shift
is
shown
in
Exhibit
2
(
above).
With
somewhat
higher
transaction
costs,
the
demand
for
properties
shifts
down
as
shown
by
the
downward
sloping
line
with
the
alternating
long
and
short
dashes.
The
rate
of
transactions
drops
from
Qo
to
Q1
as
fewer
property
sales
are
worth
concluding.
As
a
result,
the
net
social
surplus
drops
by
the
area
consisting
of
the
narrow
dotted
parallelogram,
plus
the
small
black
triangle.
The
dotted
parallelogram
is
equivalent
to
the
EIA
for
the
AAI
Regulation
2­
4
increase
in
per­
transaction
costs
for
conducting
ESAs,
while
the
small
black
triangle
represents
the
dead­
weight
loss
resulting
from
the
drop
in
transactions.

The
very
small
size
of
the
black
triangle
in
this
case
indicates
something
important:
if
the
shift
in
transaction
costs
is
very
small
compared
to
the
total
value
of
each
transaction,
then
neglecting
the
deadweight
loss
resulting
from
changes
in
transactions
will
not
have
an
important
effect
on
the
estimate
of
the
net
total
social
costs
of
the
AAI
rule.
Rather,
making
an
estimate
of
the
rule's
costs
based
on
transactions
multiplied
by
the
change
in
the
cost
per
transaction
(
i.
e.,
the
area
of
the
dotted
parallelogram)
will
be
a
reasonably
accurate
measure
of
the
change
in
social
costs.
5
As
will
be
shown,
the
AAI
rule's
effects
on
costs
are
less
than
$
100
per
property
transaction,
on
average.
By
contrast,
though
it
is
difficult
to
measure
the
average
size
of
a
non­
residential
real
estate
transaction,
a
rough
analysis
presented
below
suggests
that
it
is
close
to
$
1
million,
which
is
thousands
of
times
greater
than
$
100.
Thus,
if
the
concern
is
that
the
AAI
rule
may
increase
the
costs
of
transactions
and
thereby
affect
the
volume
of
transactions,
it
would
appear
that
the
drop
in
transactions
is
very
unlikely
to
affect
the
results
of
the
analysis
of
total
social
costs
significantly.

The
costs
associated
with
complying
with
the
AAI
rule
are
not
the
only
manner
in
which
the
rule
may
affect
commercial
property
transactions,
however.
By
improving
information
about
the
environmental
conditions
of
a
property,
and
(
especially)
by
increasing
the
certainty
of
CERCLA
liability
protection,
the
AAI
rule
is
expected
to
provide
benefits
to
property
purchasers
that
exceed
the
increase
in
costs.
The
excess
of
benefits
over
costs
to
property
purchases
is
particularly
likely
in
those
cases
in
which
full
ESAs
are
conducted
in
place
of
transaction
screens,
because
this
substitution
is
voluntary.
An
additional
affect
of
improved
information
and
the
liability
protections
afforded
by
the
AAI
rule
may
be
to
change
people's
preferences
for
the
type
of
commercial
property
bought.
Although
the
total
number
of
transactions
may
not
be
affected,
a
greater
number
of
transactions
may
include
brownfields
sites,
due
to
the
liability
protections
afforded
to
buyers
who
comply
with
the
AAI
requirements,
rather
than
the
competing
"
greenfields."
A
secondary
source
of
net
benefits
is
likely
to
flow
from
the
improved
information
provided
by
the
site
assessments:
to
the
extent
that
contamination
is
detected
and
cleaned
up,
there
will
be
reductions
in
risks
and
increases
in
welfare.
Of
course,
there
will
also
be
increased
costs
due
to
the
expenses
of
cleaning
up
the
affected
sites,
but
because
the
costs
of
correcting
environmental
problems
are
generally
reduced
by
early
detection
and
the
Brownfields
Amendments
promotes
cost­
effective
cleanups,
the
benefits
of
the
cleanups
should
exceed
their
costs.
Still
more
benefits
will
often
result
from
the
increased
transactions
and
cleanups
as
economic
development
takes
place
in
previously
depressed
neighborhoods.
These
benefits
can
be
"
external"
to
both
the
buyers
and
the
sellers,
accruing
to
the
surrounding
communities
and
the
local
government,
though
they
can
be
offset
to
some
degree
by
external
costs
imposed
by
the
resulting
changes
to
living
conditions
in
the
immediate
area.
The
categories
of
benefits
resulting
from
the
AAI
rule
and
possible
increases
or
shifts
in
transactions
are
covered
more
completely
in
Chapter
6.

5
If
the
cost
estimate
is
made
by
multiplying
the
change
in
per­
transaction
cost
by
current
transactions,
the
estimate
will
be
slightly
greater
in
magnitude
than
the
dotted
parallelogram
shown
in
the
second
exhibit,
because
the
latter
is
based
on
a
smaller
number
of
transactions.
See
Exhibit
3
below.
EIA
for
the
AAI
Regulation
2­
5
The
shift
in
demand
is
illustrated
in
Exhibit
3,
below.
The
downward
shift
in
demand
caused
by
the
AAI
rule's
effects
on
transaction
costs,
which
was
introduced
in
Exhibit
2,
is
shown
in
Exhibit
3.
In
addition,
though,
the
exhibit
shows
an
upward
shift
in
demand
caused
by
the
liability­
reduction
benefits
of
the
AAI
rule,
leading
to
a
very
small
net
increase
in
transactions,
from
Q0
to
Q2.
Benefits
(
excluding
the
net
external
benefits
discussed
above)
are
approximately
equal
to
the
trapezoid
bounded
by
the
lowest
and
highest
demand
curves
in
Exhibit
3,
between
the
origin
and
Q2,
and
benefits
net
of
costs
are
shown
as
the
checked
trapezoid
lying
between
the
two
highest
demand
curves.
The
shaded
parallelogram
between
the
lower
two
demand
curves
represents
the
costs
of
the
AAI
rule
as
measured
for
this
EIA:
it
is
the
per­
transaction
increase
in
the
cost
of
ESAs
times
the
existing
rate
of
transactions,
without
trying
to
account
for
the
effects
on
transactions
of
either
the
costs
or
the
benefits
of
the
rule.
It
will
differ
from
the
"
correct"
measurement
of
costs
in
the
absence
of
benefits
by
only
a
small
amount
 
the
dotted
triangle
shown
below
the
supply
curve,
which
will
be
very
small
for
the
reasons
outlined
above.

Taking
benefits
into
account,
and
their
positive
effects
on
transactions,
the
true
costs
of
the
AAI
rule
can
be
shown
to
be
slightly
larger
than
the
cost
estimate
made
in
this
EIA,
again
because
of
the
differences
in
transactions.
Because
the
change
in
transactions
is
expected
to
be
quite
small,
though,
the
differences
between
the
measured
costs
and
the
true
costs
will
be
insignificant.
The
only
situations
in
which
using
existing
transaction
rates
would
be
an
inadequate
measure
of
the
change
in
the
social
surplus
would
be
if
the
benefits
provided
by
the
AAI
rule
were
substantially
greater
than
their
costs
 
e.
g.,
if
AAI's
benefits
were
a
substantial
fraction
of
the
typical
cost
of
an
affected
property
 
or
if
the
rate
of
commercial
real
estate
transactions
were
highly
elastic,
and
hence
extremely
sensitive
to
small
changes
in
transaction
costs.
We
do
not
consider
either
situation
to
be
very
likely,
but
 
as
discussed
in
the
section
below
 
the
data
required
to
confirm
this
view
would
be
quite
difficult
to
collect.
The
effects
of
benefits6
on
the
theoretically
correct
measurement
of
social
surpluses
can
be
seen
as
well
in
Exhibit
3:
the
net
increase
in
social
welfare
can
be
seen
as
the
increase
in
the
sum
of
consumer
and
producer
surplus.
This
increase
is
shown
as
the
checked
area,
which
is
the
net
increase
of
benefits
over
costs.
This
quantity
differs
from
the
quantitative
estimate
of
the
effects
of
the
AAI
rule
prepared
for
this
EIA
(
which,
again,
is
represented
by
the
dotted
parallelogram)
because
neither
the
benefits
nor
the
change
in
transactions
could
be
quantified.
The
EIA,
therefore,
is
limited
to
an
engineering
estimate
of
the
change
in
costs
per
transaction
multiplied
by
baseline
transactions.

6
Again,
the
benefits
shown
in
the
diagram
exclude
the
net
social
benefits
that
are
external
to
the
transactions;
those
benefits
do
not
affect
the
demand
curve
for
properties
because
they
accrue
to
society
at
large
rather
than
to
the
purchasers.
In
theory
 
and
in
practice,
to
the
extent
allowed
by
data
limitations
 
they
too
should
be
included
in
the
measurement
of
net
social
benefits.
EIA
for
the
AAI
Regulation
2­
6
To
calculate
the
directions
and
magnitudes
of
the
demand
shifts
and
social
welfare
changes
introduced
above,
we
need
to
understand
the
determinants
of
the
annual
rate
of
transactions,
and
how
they
are
affected
by
the
costs
of
the
transactions.
We
see
the
rate
of
transactions
of
existing
properties
as
determined
by
the
economically
efficient
time
between
changes
of
ownership.
At
the
time
a
firm
purchases
a
property,
it
chooses
the
most
preferable
property.
Over
time,
changes
in
the
property,
and
especially
the
firm's
operations
(
such
as
its
size
or
customer
base)
lead
to
other
properties
becoming
superior
overall.
The
firm
will
not
necessarily
move
every
time
this
happens,
though,
because
there
are
costs
for
moving.
The
moving
costs
are
particularly
high
for
properties
that
must
be
sold,
because
of
the
transaction
costs,
which
can
be
several
percent
of
the
total
value
of
a
property.
(
Note
that,
for
much
the
same
reason,
rental
properties
turn
over
much
more
often
than
owner­
occupied
houses.)
A
move
will
be
made
only
when
the
value
of
the
current
property
has
declined
enough
to
push
the
relative
advantages
of
the
most
attractive
other
property
above
the
transaction
costs.
With
high
transaction
costs,
the
value
of
the
current
property
must
decline
substantially,
which
is
likely
to
take
a
relatively
long
time,
other
things
equal.
Property
Transactions
per
Year
Cost
of
Properties
Supply
of
Properties
per
Year
Baseline
Demand
Q1QoQ2
Exhibit
3
Demand
Including
Costs
of
AAI
Rule:
Higher
per­
transaction
Cost
Demand
Including
both
Costs
of
AAI
Rule
and
Benefits,
Showing
Possible
Net
Increase
in
Demand
Theoretical
Increase
in
Social
Surplus
Measured
Increase
in
Costs
EIA
for
the
AAI
Regulation
2­
7
With
lower
transaction
costs,
the
breakeven
point
will
come
sooner
(
shown
by
the
arrow
in
Exhibit
4
above),
and
the
expected
time
before
moving
will
fall.
In
turn,
the
turnover
rate
for
existing
properties
will
increase,
manifesting
itself
as
an
increase
in
transactions.

Actually
collecting
data
on
transaction
frequencies,
transaction
costs,
and
the
elasticity
of
transaction
frequencies
with
respect
to
costs,
however,
is
very
difficult.
A
search
for
data
and
literature
on
these
issues
turned
up
limited
data,
accompanied
by
comments
expressing
this
difficulty.
For
example,
Anderson,
McLemore,
Conner,
and
Liang
note
that
"
The
predictability
of
[
apartment]
demand
is
due
in
part
to
the
numerous
private,
government
and
governmentrelated
sources
that
collect
and
report
(
or
rely)
on
residential
market
information.
Examples
include
the
United
States
Census
Bureau,
[
Department
of
Housing
and
Urban
Development],
[
Federal
National
Mortgage
Association],
[
National
Multi
Housing
Council],
[
Government
National
Mortgage
Association],
[
Federal
Home
Loan
Mortgage
Corporation],
and
the
Federal
Reserve,
just
to
name
a
few.
With
data
readily
available,
household
growth
can
be
forecast
down
to
the
Metropolitan
Statistical
Area
and
even
county
level.
This
is
in
contrast
to
most
other
property
types,
like
retail,
where
the
analysis
is
much
more
complicated
and
the
quality
and
availability
of
data
can
be
limited."
7
One
reference
was
available
with
a
comprehensive
estimate
of
non­
single­
family
transactions,
stating
".
.
.
among
core
assets
such
as
major
office,
industrial,
retail
and
multifamily
properties,
there
was
an
18%
increase
in
sales
volume
over
2001
figures
to
$
93.5
billion.
By
including
non­
core
assets
(
hotels,
land,
etc.)
the
total
amount
of
commercial
real
estate
sales
volume
rose
to
an
estimated
$
200
billion
for
2002.8"
This
reference
was
not,
however,
documented
as
to
its
source.
A
few
attempts
have
been
made
to
estimate
the
total
value
of
all
non­
single­
family
real
estate,
which
can
be
used
along
with
estimates
of
total
sales
to
7
Randy
Anderson,
Richard
McLemore,
Philip
Conner,
and
Youguo
Liang,
"
Portfolio
Implications
of
Apartment
Investing,"
Journal
of
Real
Estate
Research,
vol.
25
(
2),
2003,
pp.
113
­
131,
available
at
http://
cbeweb­
1.
fullerton.
edu/
finance/
journal/
papers/
pdf/
past/
vol25n02/
02.113_
132.
pdf.
8
Colliers
International
Market
Report,
available
at
http://
www.
colliers.
com/
Content/
Repositories/
Base/
Markets
/
Honolulu/
English/
Market_
Report/
PdFs/
InvestmentReport2002to2003WEB1.
pdf
Exhibit
4
$
Net
advantage
of
current
property
over
next
best
alternative
(
with
low
and
high
transaction
costs)

Time
before
sale
of
property
(
inverse
of
transaction
frequency)
EIA
for
the
AAI
Regulation
2­
8
calculate
average
transaction
frequencies.
Hartzell,
Pittman,
and
Downs9
estimated
total
commercial
real
estate
in
44
MSAs
to
be
worth
1.338
trillion
dollars,
based
on
1989
data,
and
extrapolated
this
estimate
to
2.429
trillion
dollars
for
the
country
as
a
whole.
Combining
the
estimate
of
total
commercial
real
estate
sales
volumes
from
Collier
at
$
93.5
to
$
200
billion
per
year
with
Hartzell
et
al.'
s
estimate
of
$
2.429
trillion
would
imply
that
four
to
eight
percent
of
properties
turn
over
per
year.

This
is
only
a
rough
estimate,
though,
given
the
differences
in
the
time
periods
studied
and
the
questions
about
the
definitions
of
the
property
types
that
were
included.
Furthermore,
Hartzell
et
al.
state,
in
contrast
to
the
ease
of
determining
the
value
of
stocks
and
bonds,
due
in
part
to
the
public
nature
of
data
reported,
"
For
real
estate,
however,
the
problem
of
determining
the
"
market"
is
exceedingly
difficult.
Real
estate
trades
in
a
multitude
of
local
markets,
generally
with
little
public
information
available.
Trades
are
often
made
by
individuals
or
closely
held
institutions
who
have
little
to
gain
by
making
the
details
of
the
trades
public,
beyond
the
reporting
that
exists
when
deeds
and
mortgages
are
reported
within
local
jurisdictions.
.
.
.
It
is
difficult
to
have
a
great
deal
of
confidence
in
measures
of
investment
performance
for
much
of
the
real
estate
market,
it
is
difficult
to
gauge
the
frequency
of
transactions,
and
it
is
difficult
to
determine
the
value
of
this
very
significant
portion
of
total
wealth
in
the
United
States."

Perhaps
the
best
available
estimate
of
transaction
frequencies
was
recently
published
in
Real
Estate
Economics.
In
"
An
Analysis
of
the
Determinants
of
Transaction
Frequency
of
Institutional
Commercial
Real
Estate
Investment
Property,"
10
Fisher
et
al.
note
that
"
relatively
little
attention
has
been
given
to
examining
transaction
frequencies,"
(
p.
239)
and
that
"
We
know
surprisingly
little
about
the
private
market
"
transaction
cycles"
of
investment­
grade
commercial
property,
despite
its
importance
to
the
institutional
investment
communities.
Even
less
is
known
about
the
factors
underlying
these
sales
cycles
.
.
."
The
authors
base
their
analysis
of
transactions
on
properties
in
the
National
Council
of
Real
Estate
Investment
Fiduciaries
(
NCREIF)
database,
which
have
a
total
value
of
about
$
100
billion.
They
found
that
the
fraction
of
properties
sold
per
year
varies
over
time,
along
with
periods
of
rising
or
falling
prices,
averaging
8.4
percent
per
year
over
the
period
1984
 
2001.
Thus,
their
estimate
is
broadly
consistent
with
the
estimate
derived
from
the
Colliers'
and
Hartzell
et
al.
analyses
mentioned
above,
though
it
covered
only
a
fraction
of
the
total
real
estate
market.
Fisher
et
al.
did
not
include
transaction
costs
in
their
analysis
of
the
primary
factors
that
"
explain"
intertemporal
variation
in
transaction
frequency,
which
leaves
open
the
question
of
whether
transactions
are
at
all
sensitive
to
those
costs.

Combining
Fisher
et
al.'
s
estimate
of
8.4
percent
per
year
with
Hartzell
et
al.'
s
estimate
of
$
2.429
trillion,
we
can
make
a
rough
estimate
of
the
total
transaction
volume
of
commercial
real
estate
of
just
over
$
200
billion
per
year.
With
transactions
running
at
approximately
250,000
per
year,
the
average
value
of
each
transaction
is,
by
this
calculation,
about
$
850,000.
However,
it
is
clear
that
the
information
that
would
be
needed
simply
to
refine
these
rough
estimates,
let
alone
to
make
estimates
of
the
sensitivity
of
transaction
frequencies
to
transaction
cost
changes
on
the
9
David
J.
Hartzell,
Robert
H.
Pittman,
David
H.
Downs,
"
An
Updated
Look
at
the
Size
of
the
U.
S.
Real
Estate
Market
Porfolio,"
Journal
of
Real
Estate
Research,
vol.
9
(
2),
Spring
1994,
pp.
197
 
212.
10
Jeffrey
Fisher,
Dean
Gatzlaff,
David
Geltner,
and
Donald
Haurin,
"
An
Analysis
of
the
Determinants
of
Transaction
Frequency
of
Institutional
Commercial
Real
Estate
Investment
Property,"
Real
Estate
Economics,
vol.
32
(
2),
Summer
2004,
pp.
239­
264.
EIA
for
the
AAI
Regulation
2­
9
order
of
the
small
changes
at
issue
in
the
context
of
the
AAI
rule,
would
be
very
difficult
to
locate
or
develop.

The
only
situations
in
which
transactions
would
be
expected
to
be
very
sensitive
to
the
changes
in
transaction
costs
caused
by
the
AAI
rule
are
those
where
properties
have
market
values
that
are
small
relative
to
the
uncertainties
surrounding
the
magnitude
of
the
liabilities
that
new
owners
might
face
after
the
purchase.
These
cases,
although
relatively
uncommon,
are
precisely
the
ones
in
which
the
AAI
rule
is
most
likely
to
make
the
difference
between
a
sale
and
redevelopment,
and
continued
underutilization
or
vacancy.
Thus,
the
fact
that
the
increase
in
numbers
of
transactions
is
not
expected
to
be
large
does
not
mean
that
there
will
not
be
important
benefits
flowing
from
increased
purchases
or
uses
of
brownfields.
In
fact,
one
benefit
of
the
new
liability
protections
provided
by
the
Small
Business
Liability
Relief
and
Brownfields
Revitalization
Act
and
the
AAI
rule
may
be
to
increase
the
relative
value
of
brownfields
compared
to
undeveloped
properties,
or
"
greenfields."
Such
an
effect
would
result
not
in
an
increase
in
total
transactions,
but
an
increase
in
the
percentage
of
transactions
that
include
brownfields.

In
summary,
the
analysis
presented
in
this
chapter
suggests
strongly
that
(
as
stated
on
page
2­
3)
the
effects
of
the
rule
on
total
transactions
will
be
small,
and
therefore
very
little
error
will
be
introduced
into
the
estimate
of
social
costs
if
transactions
are
assumed
to
be
fixed.
Given
the
difficultly
of
collecting
accurate
data
on
the
changes
in
transactions,
and
the
small
effect
this
additional
analysis
would
be
expected
to
have
on
estimated
social
costs,
we
can
conclude
that
an
engineering
cost
estimate
is
the
most
appropriate
approach
to
assessing
the
social
costs
of
the
AAI
rule.
EIA
for
the
AAI
Regulation
3­
1
CHAPTER
3:
Affected
Sectors
of
the
Economy
3.1
Affected
Entities
The
proposed
All
Appropriate
Inquiries
regulation
(
AAI)
will
potentially
apply
to
all
commercial
property
transactions.
The
AAI
requirements
will
be
applicable
to
any
public
or
private
party,
who
may
potentially
claim
protection
from
CERCLA
liability
as
an
innocent
landowner,
a
bona
fide
prospective
purchaser,
or
a
contiguous
property
owner.
However,
the
conduct
of
all
appropriate
inquiries,
or
environmental
due
diligence,
is
not
new
to
the
commercial
property
market.
Prior
to
the
Brownfields
Amendments
to
CERCLA,
commercial
property
transactions
often
included
an
assessment
of
the
environmental
conditions
at
prospective
properties
prior
to
the
closing
of
any
real
estate
transaction
for
the
purposes
of
confirming
the
conditions
at
the
property
and/
or
to
establish
an
innocent
landowner
defense
should
environmental
contamination
be
discovered
after
the
property
was
purchased.
The
process
most
prevalently
used
for
conducting
all
appropriate
inquiries
is
the
process
developed
by
the
American
Society
for
Testing
and
Materials
(
ASTM)
and
entitled
E1527,
Phase
I
Environmental
Site
Assessment
Process.

3.2
Profile
of
Firms
Providing
Phase
I
Environmental
Site
Assessments
Although
environmental
site
assessments
(
ESAs)
are
common
practice
in
the
commercial
real
estate
industry,
there
are
very
few
sources
of
data
describing
the
environmental
site
assessment
industry.
This
may
be
because
the
conduct
of
ESAs
is
not
a
primary
business
activity
for
many
firms.
ESAs,
particularly
Phase
I
site
assessments,
often
are
conducted
by
environmental
services
firms
or
environmental
consulting
firms
offering
an
array
of
environmental
and/
or
engineering
services.
As
of
the
writing
of
this
EIA,
Environmental
Data
Resources,
Inc.
(
EDR),
is
likely
the
only
firm
collecting
data
characterizing
the
Phase
I
ESA
industry
on
a
continuing
and
systematic
basis
at
the
national
level.

Phase
I
ESAs
are
performed
by
engineering,
geology,
hydrogeology,
and
environmental
sciences
consulting
firms.
EDR
estimates
that
there
are
approximately
7,500
firms
currently
performing
Phase
I
ESAs.
11
The
large
number
of
firms
performing
Phase
I
assessments
strongly
suggests
that
it
is
a
competitive
industry.
Many
firms
operate
regionally,
so
large
numbers
of
firms
must
compete
directly.

11
Consultations
with
Dianne
Crocker
of
EDR,
November
2003.
EIA
for
the
AAI
Regulation
3­
2
3.2.1
Size
and
Geographic
Distribution
The
most
recent
publicly
available
source
of
information
on
the
Phase
I
ESA
industry
is
the
Benchmarking
Survey
of
Environmental
Professionals:
Nuts
and
Bolts
of
the
Phase
I
Process
conducted
by
EDR
in
2002.
EDR
surveyed
over
280
firms
across
the
nation
on
a
variety
of
issues
including
firm
characteristics
(
such
as
size
and
location)
and
the
scope
of
Phase
I
ESA
activities
performed.
Although
the
information
on
the
EDR
sampling
strategy
is
not
disclosed,
EDR
asserts
that
the
survey
is
a
reasonably
good
representation
of
the
Phase
I
ESA
industry.
12
EDR
survey
results
indicate
that
the
size
distribution
of
firms
conducting
Phase
I
ESAs
ranges
from
less
than
$
1
million
in
annual
revenues
to
over
$
50
million.
Approximately
19
percent
of
the
firms
surveyed
earn
less
than
$
1
million
in
annual
revenues.
More
than
half
of
the
firms
(
57
percent)
surveyed
earn
between
$
1
and
$
10
million
dollars
in
annual
revenues.
The
rest
of
the
firms
(
24
percent)
have
annual
revenues
of
$
10
million
or
more,
with
approximately
7
percent
earning
over
$
50
million.

According
to
EDR
estimates,
in
2002
the
average
price
for
a
Phase
I
ESA
was
$
2,050.13
Thus,
a
firm
that
specializes
in
performing
Phase
I
ESAs
would
have
conducted
approximately
500
assessments
in
2002
to
generate
$
1
million
in
annual
revenues.
However,
the
EDR
survey
results
show
that
only
10
percent
of
the
firms
performed
250
to
500
Phase
I
ESAs,
and
only
11
percent
of
the
firms
performed
500
or
more
Phase
I
ESAs
in
2002.
Although
we
do
not
know
the
size
distribution
of
these
firms,
the
EDR
survey
results
indicate
that
conducting
Phase
I
ESAs
is
not
the
primary
activity
for
most
of
the
firms
surveyed.

The
majority
of
the
firms
surveyed
(
68
percent)
have
indicated
that
their
work
is
confined
to
one
of
the
seven
US
regions:
Northeast,
Mid­
Atlantic,
Southeast,
South,
Central,
Midwest,
or
West.
Close
to
one
third
of
the
firms
(
28
percent)
performs
Phase
I
ESAs
in
more
than
one
US
region.
The
rest
of
the
firms,
less
than
five
percent,
operate
in
a
single
locality.

12
Consultations
with
Dianne
Crocker
of
EDR,
November
2003.
13
Source:
EDR
ESA
Report,
Vol.
8
(
3).
EIA
for
the
AAI
Regulation
3­
3
3.2.2
Current
Practices
According
to
data
provided
by
EDR,
there
were
approximately
241,000
Phase
I
ESAs
conducted
in
2002.14
As
shown
in
Exhibit
3­
1,
the
annual
number
of
Phase
I
ESAs
conducted
from
1997
to
2002
ranged
between
210,000
and
260,000.
During
that
period,
the
national
average
price
for
a
Phase
I
ESA
was
in
the
range
of
$
1,800
to
$
2,100.
A
discussion
of
the
methodology
used
by
EDR
to
estimate
the
annual
volume
of
Phase
I
ESAs
is
provided
in
Appendix
IV.
The
shortcomings
associated
with
using
the
EDR
data
in
the
economic
analyses
include
the
fact
that
EDR
has
been
collecting
and
compiling
data
on
the
number
of
ESAs
performed
for
only
a
few
years.
In
addition,
we
could
not
identify
any
other
sources
for
this
data
and
therefore
we
cannot
compare
EDR's
estimates
to
other
sources.
Because
the
results
of
our
analyses
rely
significantly
on
the
accuracy
of
this
data,
we
conducted
sensitivity
analyses
on
the
assumed
number
of
total
ESAs
performed.
Our
sensitivity
analyses
are
presented
in
Chapter
9.

Exhibit
3­
1:
Number
of
Phase
I
ESAs
Conducted
Annually
and
the
Average
Pricing
Nationally,
1997­
2002
Source:
EDR.

A
recent
survey
conducted
by
EDR
shows
that
Phase
I
ESAs
are
not
exclusively
driven
by
a
need
for
the
property
owner
to
qualify
for
protection
from
CERCLA
liability.
It
is
estimated
that
close
to
45
percent
of
ESAs
is
driven
by
a
desire
for
property
owners
to
assess
business
environmental
risk
concerns.
As
a
result,
ESAs
conducted
prior
to
the
2002
Brownfields
Amendments
to
CERCLA
often
were
broader
in
scope
than
ESAs
conducted
for
the
purposes
of
establishing
a
CERCLA
liability
defense
and
often
included
such
components
as
evaluations
of
potential
asbestos
and
lead­
based
paint
contamination.

Although
the
most
common
all
appropriate
inquiries
process
conducted
as
part
of
typical
commercial
real
estate
transactions
is
the
ASTM
E1527­
2000
Phase
I
Environmental
Site
Assessment
Standard,
this
standard
is
not
used
for
assessing
all
commercial
properties.
For
properties
that
are
believed
to
be
free
of
the
presence
or
potential
presence
of
a
hazardous
14
Ibid.
0
50,000
100,000
150,000
200,000
250,000
300,000
1997
1998
1999
2000
2001
2002
Number
of
Phase
I
ESAs
Performed
Annualy
$
1,700
$
1,750
$
1,800
$
1,850
$
1,900
$
1,950
$
2,000
$
2,050
$
2,100
$
2,150
Average
Price
of
Phase
I
ESA
Total
Number
of
Phase
I
ESAs
Average
Price
of
Phase
I
ESA
EIA
for
the
AAI
Regulation
3­
4
substance,
pollutant,
or
contaminant,
a
less
stringent
and
less
costly
assessment
may
be
conducted
that
involves
only
a
site
visit
and
a
search
for
and
review
of
property­
specific
documents
and
some
government
records.
This
less
stringent
process
often
is
called
a
"
transaction
screen"
and
may
be
deemed
sufficient
for
undeveloped
properties
or
properties
where
a
prospective
buyer
has
reason
to
believe
that
no
adverse
environmental
conditions
exist
at
the
site.
The
process
most
prevalently
used
to
conduct
transaction
screens
for
commercial
properties
is
the
ASTM
E1528
standard.
Transaction
screens
are
less
comprehensive
in
scope
than
Phase
I
ESAs,
and
cost
about
half
as
much
to
conduct.
The
number
of
transaction
screens
performed
annually
has
decreased
steadily
over
the
past
5
years
from
50,000
in
1998
to
32,000
in
2002.
The
annual
rate
of
decline
is
approximately
10
percent
(
4,500
screens).
EDR
reports
that
there
is
a
trend
in
the
banking
sector
in
which
small
cap
loans
and
loans
with
perceived
low
risk
are
being
subjected
to
Phase
I
ESAs
instead
of
a
transaction
screen.
Of
the
241,000
Phase
I
ESAs
conducted
in
2002,
EDR
estimates
that
4
to
6
percent
(
or
10,000
to
15,000
Phase
I
ESAs)
is
the
result
of
this
trend.
According
to
EDR,
the
trend
is
largely
driven
by
the
users
who
are
following
the
consultants'
advice
to
select
more
rigorous
ESAs.

At
an
even
less
rigorous
level
of
environmental
screening
is
the
environmental
questionnaire.
Although
there
are
no
data
on
the
annual
volume
of
environmental
questionnaires,
industry
data
indicate
that
a
substantial
number
of
lenders
required
a
questionnaire
and
site
visit
for
small
cap
loans
in
1999.15
The
environmental
questionnaires
are
used
on
the
properties
with
a
very
low
risk
of
presence
or
likely
presence
of
contamination.
It
is
expected
that
the
AAI
regulation
will
not
affect
such
properties.
Given
a
low
probability
that
their
site
is
contaminated,
the
users
will
find
that
the
CERCLA
liability
protection
is
not
worth
the
cost
of
an
AAI
Phase
I
ESA.

The
environmental
due
diligence
practices
are
not
limited
to
the
standards
discussed
above.
The
users
of
properties
with
a
high
risk
of
presence
or
likely
presence
of
contamination
(
e.
g.,
a
dry
cleaning
site)
may
select
a
more
rigorous
type
of
environmental
due
diligence
commonly
referred
to
as
a
Phase
II
ESA.
Given
that
a
Phase
II
environmental
site
assessment
often
goes
well
beyond
a
Phase
I
environmental
site
assessment,
we
do
not
expect
the
proposed
AAI
standards
to
result
in
any
incremental
burden
in
these
cases.

15
EDR
ESA
Report,
October,
1999.
EIA
for
the
AAI
Regulation
4­
1
CHAPTER
4:
All
Appropriate
Inquiries
Regulation
This
chapter
describes
the
AAI
regulation
requirements.
In
addition,
the
chapter
presents
some
of
the
standards
and
practices
that
were
considered
by
the
Regulatory
Negotiating
Committee,
but
were
not
adopted.

4.1
The
AAI
Regulation
In
January
2002,
the
President
signed
the
Small
Business
Liability
Relief
Brownfields
Revitalization
Act
("
the
Brownfields
Amendments").
The
Brownfields
Amendments
revised
the
CERCLA
liability
provisions
by
providing
some
limitations
on
CERCLA
liability
for
bona
fide
prospective
purchasers,
contiguous
property
owners,
and
property
owners
claiming
to
be
innocent
landowners.
The
Brownfields
Law
established
that
such
property
owners
must
conduct
"
all
appropriate
inquiries"
into
prior
ownership
and
use
of
a
property
to
identify
potential
for
environmental
contamination
prior
to
acquiring
the
property.
In
addition,
Congress
directed
EPA
to
include,
within
the
standards
for
all
appropriate
inquiries,
the
following
set
of
criteria:

1.
Results
of
inquiries
by
an
environmental
professional
2.
Interviews
with
past
and
present
owners,
operators,
and
occupants
3.
Reviews
of
historical
sources
of
information
4.
Searches
for
recorded
environmental
cleanup
liens
5.
Reviews
of
Federal,
State,
Tribal,
and
local
government
records
6.
Visual
inspections
of
the
facility
and
of
adjoining
properties
7.
Specialized
knowledge
or
experience
on
the
part
of
the
defendant
8.
The
relationship
of
the
purchase
price
to
the
value
of
the
property,
if
the
property
was
not
contaminated
9.
Commonly
known
or
reasonably
ascertainable
information
about
the
property
10.
The
degree
of
obviousness
of
the
presence
or
likely
presence
of
contamination
at
the
property,
and
the
ability
to
detect
the
contamination
by
appropriate
investigation.

The
Regulatory
Negotiating
Committee
followed
these
criteria
in
developing
the
content
of
the
AAI
standard.
The
AAI
requirements
under
each
of
the
ten
statutory
criteria
are
discussed
below.

Criterion
1:
Results
of
inquiries
by
an
environmental
professional
The
Brownfields
Amendments
direct
EPA
to
promulgate
a
standard
for
all
appropriate
inquiries
that
includes
the
results
of
an
inquiry
by
an
environmental
professional.
As
explained
in
Chapter
1,
EPA
established
a
Negotiated
Rulemaking
Committee
to
develop
a
proposed
regulation
setting
the
Federal
standard
for
all
appropriate
inquiries.
The
Committee's
recommended
definition
of
"
environmental
professional"
is
included
in
§
312.10
of
the
proposed
regulation.
Because
the
all
appropriate
inquiries
process
is
essential
to
a
property
owner's
ability
to
qualify
for
liability
protection
under
CERCLA,
the
proposed
definition
specifies
certain
levels
of
certification,
education,
and
experience
for
environmental
professionals
to
ensure
that
EIA
for
the
AAI
Regulation
4­
2
individuals
responsible
for
supervising,
reviewing,
and
signing
the
report
of
the
all
appropriate
inquiries
are
qualified
individuals
who
meet
a
rigorous
standard
and
are
capable
of
ensuring
the
performance
of
quality
environmental
investigations.
However,
the
Committee
also
realized
that
environmental
investigations
have
been
performed
for
years
by
individuals
with
varying
academic
and
professional
backgrounds.
To
avoid
disrupting
this
market
of
environmental
professionals,
the
Committee
recommended
and
EPA
is
proposing
a
definition
of
an
environmental
professional
whereby
even
those
persons
who
do
not
meet
the
certification
and
educational
requirements
proposed
in
the
regulation
may
continue
to
contribute
to
environmental
investigations.
These
individuals
may
assist
in
the
conduct
of
all
appropriate
inquiries
if
they
do
so
under
the
supervision
or
responsible
charge
of
a
person
who
meets
the
proposed
requirements
for
an
environmental
professional.

Under
the
current
ASTM
E1527
standard,
environmental
site
assessments
generally
are
supervised
by
a
professional
engineer
or
other
senior
environmental
professional
who
is
in
a
supervisory
position.
Therefore,
the
FACA
Committee
members
and
EPA
are
confident
that
the
minimum
requirements
for
qualifying
as
an
environmental
professional
included
in
the
proposed
rule
will
allow
for
those
individuals
currently
supervising
environmental
site
assessments
to
qualify
as
environmental
professionals
and
continue
to
supervise
the
all
appropriate
inquiries
activities.
The
proposed
definition
of
environmental
professional
should
not
impose
any
additional
burden
given
that
the
proposed
rule
requires
that
only
the
person
supervising
the
all
appropriate
inquiries
activities
and
signing
the
final
report
meet
the
proposed
qualifications
for
the
environmental
professional.
FACA
Committee
members
have
advised
EPA
that
most
individuals
currently
supervising
environmental
site
assessments
meet
or
exceed
the
proposed
qualifications
for
the
environmental
professional.

The
proposed
regulation
also
should
not
result
in
any
increase
in
the
amount
of
work
performed
by
those
individuals
who
meet
the
environmental
professional
definition,
as
they
will
continue
to
perform
the
same
supervisory
activities
as
they
conduct
under
the
interim
standard
(
i.
e.,
the
ASTM
E1527­
2000
standard).
These
activities
include:

 
Monitoring
the
conduct
of
all
tasks,
 
Reviewing
the
results
of
the
inquiries,
 
Inserting
an
opinion
with
regard
to
the
environmental
conditions
at
a
property
in
the
report,
and
 
Signing
the
inquiries
report.

Criterion
2:
Interviews
with
past
and
present
owners,
operators,
and
occupants
The
Brownfields
Amendments
require
that
the
AAI
standard
include
interviews
with
past
and
present
owners,
operators,
and
occupants
of
the
facility
for
the
purpose
of
gathering
information
regarding
the
potential
for
contamination
at
the
facility.
The
Negotiated
Rulemaking
Committee
recommended
and
EPA
is
proposing
requirements
for
these
interviews
in
§
312.23
of
the
proposed
regulation.
Under
the
proposed
rule,
the
all
appropriate
inquiries
must
include
at
least
one
interview
with
the
current
owner
or
occupant
of
the
subject
property.
Current
owners
and
occupants
will
have
information
about
current
property
uses,
and
may
have
information
about
past
ownerships
and
uses
for
the
property
as
well.
The
proposed
rule
does
not
require
that
EIA
for
the
AAI
Regulation
4­
3
interviews
be
conducted
with
any
other
specific
individual
or
type
of
individual.
The
proposed
rule
is
based
upon
a
performance
standard
that
allows
the
environmental
professional
to
obtain
necessary
information
on
current
and
past
uses
and
ownerships
of
a
property
from
multiple
sources
of
information.
The
proposed
rule
states
that
interviews
with
past
owners
and
occupants,
current
and
past
facility
managers,
and
employees
of
current
and
past
occupants
of
the
subject
property
should
be
conducted
to
the
extent
necessary
to
learn
the
full
history
of
the
subject
property.
However,
this
information
also
could
be
obtained
from
other
sources
of
information
(
e.
g.,
title
searches,
previously­
conducted
environmental
assessments,
aerial
photographs,
property
tax
files,
zoning/
land
use
records,
etc.)
This
requirement
is
the
same
as
current
practice.
The
ASTM
E1527­
2000
standard
requires
that
a
"
person
with
good
knowledge
of
the
uses
and
physical
characteristics
of
the
property"
be
interviewed
as
part
of
the
site
assessment
to
obtain
information
indicating
recognized
environmental
conditions
in
connection
with
the
property.
The
ASTM
standard
recommends
that
additional
owners
and
occupants
be
interviewed
as
necessary
to
obtain
information
regarding
past
or
historical
uses
and
ownership
of
the
property
and
information
regarding
the
environmental
conditions
of
the
property.

Interviews
of
past
owners
and
occupants
also
may
be
useful
for
obtaining
information
about
historical
uses
of
the
property.
The
ASTM
E1527­
2000
standard
lists
property
owners
and
occupants
as
potential
sources
of
such
information.
Neither
the
ASTM
standard
nor
the
proposed
rule
specifically
require
that
past
owners
and
occupants
be
interviewed
as
part
of
the
all
appropriate
inquiries.
Many
of
the
FACA
Committee
members
pointed
out
that
past
owner
and
occupants
of
a
property
can
be
valuable
sources
of
information
on
historical
uses
of
a
property,
when
such
individuals
can
be
found.
16
Committee
members
with
extensive
experience
in
conducting
site
assessments
using
the
ASTM
E1527­
2000
standard
point
out
that
current
practice
is
to
make
an
effort
to
identify
and
interview
past
owners
and
occupants
to
obtain
historical
information
about
a
site,
and
specific
activities
previously
conducted
at
a
property.
However,
in
some
cases,
particularly
when
the
current
owner
has
been
present
at
the
property
for
a
relatively
long
period
of
time,
it
is
difficult
to
locate
past
owners
or
occupants
of
a
property,
and
in
many
cases
they
may
no
longer
be
alive.
Some
Committee
members
pointed
out
that
it
often
may
be
easier
to
locate,
and
more
valuable
to
interview,
employees
who
are
familiar
with
past
uses
and
ownership
of
a
property.

In
the
case
of
properties
where
a
current
owner
can
be
identified,
the
proposed
rule
is
not
expected
to
change
the
hour
burden
beyond
the
current
industry
practices.
Both
the
interim
standard
and
the
proposed
rule
require
that
at
least
one
current
owner
or
occupant
of
a
property
be
interviewed.
In
addition,
both
also
require
that
additional
sources
of
information
be
consulted
to
obtain
necessary
information
on
historical
uses
of
the
property
and
environmental
conditions
at
the
property.
The
cost
analysis
presented
later
in
this
document
assumes
that
in
both
the
base
case
and
the
requirements
of
the
proposed
rule,
between
2
and
6
hours
will
be
spent
during
the
all
appropriate
inquiries
in
conducting
interviews
to
obtain
information
on
current
and
past
uses
and
ownerships
of
the
subject
property,
depending
on
the
size
and
type
of
property.
This
is
sufficient
time
for
at
least
two,
and
in
many
cases
more
than
two,
interviews
to
be
conducted
at
each
property
with
various
types
of
individuals.
In
addition,
time
allotted
for
other
AAI
16
Personal
communications
with
FACA
Committee
members
including
Julie
Kilgore,
Wasatch
Environmental
Inc.,
David
Lourie,
ASFE,
Eric
Block,
National
Ground
Water
Association,
Tom
Crause,
Illinois
EPA,
Karl
Kalbacher,
Maryland
DEP.
EIA
for
the
AAI
Regulation
4­
4
activities
such
as
reviews
of
historical
sources
of
information
and
accounting
for
"
commonly
known
or
reasonably
ascertainable
information"
may
be
dedicated
to
additional
interview
activities
to
collect
information
about
a
property,
as
necessary
to
satisfy
the
performance
factors
and
objections
of
the
proposed
rule.

The
Committee
and
EPA
recognized
that
some
commercial
properties
and
brownfields
sites
are
abandoned
and
it
may
be
difficult
or
impossible
to
find
or
contact
past
owners,
operators,
and
occupants
of
the
property.
In
these
cases,
the
Committee
recommended
and
EPA
is
proposing
that
the
environmental
professional
interview
owners
and
occupants
of
neighboring
properties
where
such
owners
and
occupants
may
have
observed
uses
of
or
releases
at
the
abandoned
property.
Environmental
assessment
standards
currently
in
use,
including
the
ASTM
E1527­
2000
standard,
do
not
impose
specific
requirements
or
give
guidance
with
respect
to
who
should
be
interviewed
when
the
subject
property
is
abandoned.
Although,
FACA
Committee
members
point
out
that
common
practice
is
that
neighboring
property
owners
are
often
interviewed
when
they
are
easily
located
or
in
cases
where
current
owners
and
occupants
are
not
sufficient
sources
of
necessary
information.
The
proposed
rule
explicitly
requires
that
at
least
one
owner
or
occupant
of
a
neighboring
property
be
interviewed
to
obtain
information
regarding
past
uses
and
ownership
of
a
property,
when
that
property
is
determined
to
be
abandoned.

The
cost
analysis
presented
in
Chapters
6
through
8
of
this
document
includes
an
assessment
of
the
costs
associated
with
finding
and
interviewing
at
least
one
owner
or
occupant
of
a
neighboring
property
to
obtain
information
on
past
uses
and
ownerships
of
an
abandoned
property.
Since,
in
the
case
of
abandoned
properties,
there
is
no
current
owner
or
occupant
of
a
property,
the
cost
analysis
also
eliminates
the
hour
burden
and
costs
associated
with
finding
and
interviewing
current
and,
potentially,
past
owners
and
occupants
of
the
subject
property
(
which
are
attributed
to
properties
with
known
owners
and
occupants
in
the
baseline
scenario).
An
additional
assumption
in
calculating
the
costs
associated
with
identifying
and
interviewing
neighbors
of
abandoned
properties
is
that
locating
owners
and
occupants
of
neighboring
properties
should
be,
in
most
cases,
less
time
consuming
than
locating
past
owners,
operators,
and
occupants
of
the
subject
property.
Therefore,
in
the
cases
where
the
subject
property
is
abandoned,
the
proposed
rule
is
expected
to
reduce
the
total
hour
burden
for
conducting
interviews.

Criterion
3:
Reviews
of
historical
sources
of
information
In
both
the
base
case
and
the
case
of
the
proposed
rule,
all
appropriate
inquiries
must
include
reviews
of
historical
sources
of
information.
The
purpose
of
this
activity
or
inquiry
is
to
ensure
that
a
record
of
current
and
past
uses
of
the
property
is
assembled
to
create
a
comprehensive
review
of
the
potential
for
releases
of
hazardous
substances
at
the
property.
The
proposed
standards
for
reviewing
historical
sources
of
information
are
included
in
§
312.24
of
the
proposed
regulation.
The
proposed
rule,
as
does
the
interim
standard,
requires
that
historical
documents
be
reviewed
as
far
back
in
time
as
the
site
held
structures
or
the
property
was
used
for
agricultural,
residential,
commercial,
industrial,
or
governmental
purposes.
The
proposed
regulation
allows
the
environmental
professional
to
use
professional
judgment
to
determine
how
far
back
in
time
it
is
necessary
to
review
historical
records.
Current
environmental
assessment
practices
suggest
consulting
historical
records
as
far
back
as
1940
or
back
to
the
property's
obvious
first
developed
EIA
for
the
AAI
Regulation
4­
5
use,
whichever
is
first.
The
proposed
regulation
will
not
impose
any
additional
burden
hours
above
the
current
environmental
assessment
practices.

Criterion
4:
Searches
for
recorded
environmental
cleanup
liens
The
Brownfields
Amendments
require
that
the
AAI
standards
include
searches
for
recorded
environmental
cleanup
liens
against
the
facility
that
are
filed
under
Federal,
state,
or
local
laws.
The
objective
of
this
criterion
is
to
ensure
identification
of
recorded
past
releases
and
cleanups
of
hazardous
substances
on
or
near
the
subject
property.
To
ensure
discovery
of
environmental
liens,
the
environmental
professional
may
need
to
search
a
variety
of
sources,
including
land
records
and
court
records.
Current
environmental
assessment
standards,
including
the
ASTM
E1527­
2000
standard,
do
not
contain
any
requirements
significantly
different
from
this
criterion,
but
the
ASTM
standard
does
designate
the
purchaser
as
the
party
responsible
for
the
lien
searches.
At
§
312.25,
the
proposed
regulation
leaves
this
search
responsibility
open
to
the
purchaser
or
the
environmental
professional,
but
requires
that
all
information
collected
regarding
environmental
cleanup
liens
be
provided
to
the
environmental
professional
and
documented
in
the
all
appropriate
inquiries
report.
Therefore,
in
the
cost
analysis
conducted
in
developing
this
EIA,
it
was
assumed
that
the
proposed
regulation
will
result
in
an
increase
in
the
hour
burden
for
preparing
the
all
appropriate
inquiries
report,
specifically
for
including
the
documentation
of
information
on
environmental
cleanup
liens.

Criterion
5:
Reviews
of
Federal,
State,
Tribal,
and
local
government
records
To
ensure
a
complete
picture
of
possible
contamination
at
a
property
site,
the
Brownfields
Amendments
include
a
criterion
for
reviews
of
Federal,
State,
and
local
government
records,
such
as
waste
disposal
records,
underground
storage
tank
records,
and
hazardous
waste
handling,
generation,
treatment,
disposal,
and
spill
records,
for
information
concerning
potential
contamination
at
or
near
the
property.
This
criterion
is
addressed
at
§
312.26
of
the
proposed
regulation.
The
proposed
requirements
for
reviews
of
Federal,
State,
Tribal,
and
local
government
records
are
essentially
the
same
as
the
base
case
standards
currently
in
use
for
Phase
I
ESAs
conducted
using
the
ASTM
E1527­
2000
standard.
However,
the
proposed
rule
does
include
a
few
additional
requirements
regarding
searching
for
governmental
records
concerning
adjacent
properties.
For
instance,
the
current
standard
recommends
a
search
of
Emergency
Response
Notification
System
(
ERNS)
records
for
the
property
only,
while
the
proposed
regulation
requires
ERNS
records
searches
for
the
subject
property
and
adjoining
properties.
The
proposed
regulation,
however,
is
not
likely
to
impose
any
additional
burden
hours
above
the
current
environmental
assessment
practices
due
to
the
relative
ease
in
assessing
government
records
and
given
that
the
base
case
includes
costs
associated
with
searching
government
records
for
information
on
adjacent
properties.

Criterion
6:
Visual
inspections
of
the
facility
and
of
adjoining
properties
The
Brownfields
Amendments
include
a
criterion
for
conducting
a
visual
inspection
of
the
facility
and
adjoining
properties,
which
are
addressed
at
§
312.27
of
the
proposed
regulation.
The
objective
of
this
criterion
is
to
seek
visual
evidence
of
past
or
potential
releases
of
hazardous
substances.
The
requirements
in
the
proposed
regulation
do
not
differ
from
practices
currently
in
EIA
for
the
AAI
Regulation
4­
6
use
for
site
reconnaissance
associated
with
Phase
I
ESAs
conducted
using
the
ASTM
E1527­
2000
standard.
Under
certain
unique
circumstances
where
a
visual
on­
site
inspection
cannot
be
conducted,
the
proposed
regulation
requires
that
the
environmental
professional
do
the
following:


document
efforts
taken
to
gain
access,


document
the
use
of
other
sources
of
information
to
determine
the
existence
of
potential
environmental
contamination,
and

express
an
opinion
about
the
impact
of
the
inability
to
conduct
a
visual
inspection
on
the
completeness
of
the
inquiries.

The
proposed
regulation
is
not
likely
to
impose
any
additional
burden
hours
above
the
current
environmental
assessment
practices
given
that
the
current
interim
standard
includes
requirements
for
significant
documentation
of
the
results
of
the
on­
site
visual
inspection.

Criterion
7:
Specialized
knowledge
or
experience
on
the
part
of
the
defendant
The
Brownfields
Amendments
require
that
all
appropriate
inquiries
include
the
purchaser's
specialized
knowledge
of
the
site
and
any
specialized
knowledge
of
current
and
past
activities
conducted
at
the
property.
The
objective
of
this
criterion
is
to
hold
the
landowner
responsible
for
providing
to
the
environmental
professional
known
information
regarding
potential
environmental
conditions
on
or
near
the
property.
In
other
words,
the
defendant
or
owner
cannot
hide
information
that
is
not
uncovered
by
the
environmental
professional
during
the
inquiries.
This
criterion
is
addressed
in
proposed
§
312.28,
which
states
that
the
defendant
must
disclose
specialized
knowledge
of
the
subject
property
and
the
surrounding
area
to
the
environmental
professional.
This
proposed
requirement
does
not
go
beyond
the
current
standard
established
for
the
CERCLA
innocent
landowner
defense
in
CERCLA
Section
101(
35).
This
requirement
also
is
one
of
the
designated
user
responsibilities
in
the
ASTM
E1527­
2000
standard.
Therefore,
the
proposed
regulation
will
not
impose
any
additional
burden
hours
above
the
current
environmental
assessment
practices.

Criterion
8:
The
relationship
of
the
purchase
price
to
the
value
of
the
property,
if
the
property
was
not
contaminated
A
purchase
price
that
is
lower
than
the
expected
fair
market
value
of
the
property
may
indicate
the
presence
of
contamination
at
the
property
that
was
not
revealed
during
other
steps
in
the
inquiries.
The
requirement
to
consider
the
relationship
of
purchase
price
to
the
value
of
property
is
addressed
at
§
312.29.
The
requirement
was
previously
included
in
the
CERCLA
requirements
for
the
innocent
landowner
defense
and
is
addressed
in
the
current
ASTM
E1527­
2000
standard.

In
cases
where
it
is
determined
that
the
purchase
price
does
not
reflect
the
fair
market
value
of
a
property,
persons
to
whom
the
proposed
regulation
will
apply
must
consider
whether
the
differential
is
due
to
the
fact
that
the
property
contains
releases
or
threatened
releases
of
hazardous
substances.
The
Negotiated
Rulemaking
Committee
realized
that
not
all
environmental
professionals
have
expertise
in
assessing
property
values.
Therefore,
this
EIA
for
the
AAI
Regulation
4­
7
requirement
can
be
fulfilled
by
the
purchaser,
instead
of
the
environmental
professional.
Although
the
current
interim
standard
requires
this
type
of
comparison
and
explanation
of
any
differential
in
the
purchase
price
and
market
value,
the
requirements
under
the
proposed
regulation
are
more
explicit
regarding
what
type
of
information
must
be
documented
in
the
all
appropriate
inquiries
report.
The
proposed
regulation
is,
therefore,
expected
to
increase
the
hour
burden
for
preparing
the
report
for
the
fraction
of
property
transactions
where
there
is
a
significant
differential
in
the
purchase
price
and
fair
market
value
of
the
property.
For
the
purposes
of
the
cost
analysis
presented
in
Chapters
6
through
8
of
the
document,
it
is
assumed
that
15
percent
of
all
commercial
property
transactions
include
properties
where
there
is
a
significant
difference
between
the
purchase
price
and
the
fair
market
value
of
the
property.

Criterion
9:
Commonly
known
or
reasonably
ascertainable
information
about
the
property
Environmental
professionals
are
required
to
supplement
the
searches
and
reviews
discussed
above
with
commonly
known
or
reasonably
ascertainable
information
about
the
property.
This
requirement
was
included
in
the
previous
provisions
for
the
CERCLA
innocent
landowner
defense
and
is
not
an
incremental
burden
imposed
by
the
proposed
rule.
This
provision
is
included
as
§
312.29
of
the
proposed
rule.
Commonly
known
or
reasonably
ascertainable
information
may
be
obtained
from
a
variety
of
sources,
including
newspapers,
local
government
officials,
community
organizations,
and
websites,
among
others.
This
information
must
be
pursued
to
the
extent
necessary
to
achieve
the
objectives
and
performance
factors
of
§
312.20(
c)
and
(
d).
The
proposed
regulation
is
not
expected
to
impose
any
additional
burden
hours
above
the
current
environmental
assessment
practices
to
fulfill
this
requirement.

Criterion
10:
The
degree
of
obviousness
of
the
presence
or
likely
presence
of
contamination
at
the
property,
and
the
ability
to
detect
the
contamination
by
appropriate
investigation
There
may
be
cases
where
environmental
investigation
does
not
reveal
any
contamination
at
the
property,
yet
some
circumstances
lead
the
environmental
professional
to
believe
that
the
site
may
be
contaminated.
In
other
circumstances,
the
condition
of
the
site
may
indicate
obvious
contamination.
Either
situation
might
lead
the
environmental
professional
to
recommend
additional
investigation.
In
these
and
other
cases,
the
environmental
professional
and
persons
to
whom
the
proposed
regulation
applies
must
consider
the
degree
of
obviousness
of
a
release
or
threatened
release
on
the
property.
The
report
of
the
all
appropriate
inquiries
should
include
an
opinion
from
the
environmental
professional
on
whether
additional
investigation
is
warranted.
The
proposed
requirements,
set
forth
at
§
312.31,
are
expected
to
increase
the
hour
burden
for
preparing
the
all
appropriate
inquiries
report
because
the
documentation
requirements
regarding
the
need
for
additional
investigations
in
the
proposed
rule
are
slightly
more
stringent
than
the
ASTM
requirement
that
the
Phase
I
ESA
report
include
an
opinion
of
the
environmental
professional
regarding
environmental
conditions
at
the
property.
EIA
for
the
AAI
Regulation
4­
8
Exhibit
4­
1:
Summary
of
the
Statutory
Requirements
Statutory
Requirements
Expected
to
change
hour
burden
for
conducting
a
Phase
I
ESA
(
relative
to
ASTM
E1527­
2000)
Criterion
1:
Results
of
inquiries
by
an
environmental
professional
No
Criterion
2:
Interviews
with
past
and
present
owners,
operators,
and
occupants
Yes
Criterion
3:
Reviews
of
historical
sources
of
information
No
Criterion
4:
Searches
for
recorded
environmental
cleanup
liens
Yes
Criterion
5:
Reviews
of
Federal,
State,
Tribal
and
local
government
records
No
Criterion
6:
Visual
inspections
of
the
facility
and
of
adjoining
properties
No
Criterion
7:
Specialized
knowledge
or
experience
on
the
part
of
the
defendant
No
Criterion
8:
The
relationship
of
the
purchase
price
to
the
value
of
the
property,
if
the
property
were
not
contaminated
Yes
Criterion
9:
Commonly
known
or
reasonably
ascertainable
information
about
the
property
No
Criterion
10:
The
degree
of
obviousness
of
the
presence
or
likely
presence
of
contamination
at
the
property,
and
the
ability
to
detect
the
contamination
by
appropriate
investigation
Yes
4.2
Considered
Options
During
the
regulatory
negotiating
process,
several
standards
and
practices,
some
of
which
went
beyond
the
scope
of
the
statutory
requirements,
were
considered
by
the
Negotiated
Rulemaking
Committee.
This
section
presents
three
standards
and
practices
that
were
considered
by
the
Committee,
but
were
not
adopted
in
the
proposed
AAI
regulation.

4.2.1
Option
1:
Environmental
Professional
Under
this
regulatory
option,
all
major
activities
would
be
performed
by
a
person
who
meets
the
definition
of
an
environmental
professional
included
in
the
proposed
regulation
under
§
312.10.

The
Regulatory
Negotiating
Committee
did
not
adopt
this
option.
It
was
believed
that
such
a
requirement
would
disrupt
current
market
practices
by
displacing
a
large
number
of
persons
with
relevant
experience
in
conducting
site
assessments
but
who
do
not
meet
the
certification
and
educational
requirements
proposed
in
the
regulation.
In
addition,
the
quality
of
Phase
I
ESAs
could
be
ensured
by
requiring
the
environmental
professional
to
oversee
and
review
the
work
performed
by
such
persons.
EIA
for
the
AAI
Regulation
4­
9
4.2.2
Option
2:
Interview
Requirement
Under
this
regulatory
option,
there
would
be
no
explicit
interview
requirement
for
abandoned
properties.
Therefore,
the
interview
requirements
for
all
properties
would
be
the
same
as
under
the
current
ASTM
standard.

The
Regulatory
Negotiating
Committee
did
not
adopt
this
option.
It
was
believed
that,
in
case
of
abandoned
properties,
interviews
with
owners
and
occupants
of
neighboring
and
nearby
properties,
where
those
owners
and
occupants
may
have
observed
uses
of
or
releases
at
the
subject
property,
may
provide
valuable
additional
information
about
uses
and
potential
conditions
at
the
property
that
may
not
be
gained
from
other
sources.

4.2.3
Option
3:
Sampling
Under
this
option,
limited
sampling
would
be
required
for
properties
where
information
collected
during
the
all
appropriate
inquiries
results
in
a
perceived
risk
of
potential
contamination
at
the
property.
Environmental
sampling
and
testing
of
various
media
(
e.
g.,
soil,
groundwater,
surface
water,
air,
sediment,
building
materials,
etc.)
at
a
property
could
provide
a
user
with
additional
information
to
further
characterize
the
impact
that
a
recognized
environmental
condition
may
have
on
a
property.

The
Regulatory
Negotiating
Committee
did
not
adopt
this
option
due
to
the
potentially
high
burdens
that
such
a
requirement
could
place
upon
a
prospective
purchaser
of
a
property
who
may
choose,
based
upon
the
results
of
the
assessment,
not
to
purchase
the
subject
property.
However,
the
properties
that
this
option
likely
would
affect,
or
that
most
likely
would
require
sampling
to
ascertain
the
likely
presence
of
a
release,
are
those
with
a
high
probability
of
contamination.
These
are
the
properties
on
which,
without
this
regulatory
option,
a
Phase
II
ESA
would
most
likely
be
performed
in
addition
to
the
AAI
investigation.
The
result
would
be
that
the
AAI
regulation
would
make
a
Phase
I
ESA
more
expensive
and
a
Phase
II
ESA
less
expensive
for
such
properties
because
the
sampling
and
analysis
normally
undertaken
as
part
of
the
Phase
II
ESA
would
be
required
to
be
conducted
during
the
AAI
investigation
(
or
in
many
cases,
preacquisition
rather
than
after
the
property
is
purchased.

4.2.4
Use
of
the
ASTM
E1527­
2000
The
Office
of
Management
and
Budget's
(
OMB)
"
Circular
A­
4"
document
defines
"
best
practices"
for
developing
regulatory
analyses.
Section
C
of
this
document
provides
guidance
to
regulatory
agencies
on
identifying
and
considering
alternative
regulatory
options.
Section
E.
3
of
Circular
A­
4,
"
Evaluation
of
Alternatives,"
states
that
where
there
is
a
continuum
of
alternatives
for
a
standard
(
such
as
level
of
stringency),
agencies
"
generally
should
analyze
at
least
three
options:
the
preferred
option;
a
more
stringent
option
that
achieves
additional
benefits
(
and
presumably
costs
more)
beyond
those
realized
by
the
preferred
option;
and
a
less
stringent
option
that
costs
less
(
and
presumably
generates
fewer
benefits)
than
the
preferred
option.

All
of
the
regulatory
alternatives
considered
by
the
Negotiated
Rulemaking
Committee
are
more
stringent
than
the
Committee's
consensus
standard,
or
EPA's
preferred
regulatory
option.
In
addition,
the
preferred
option
is
estimated
to
impose
a
relatively
low
incremental
cost,
less
than
EIA
for
the
AAI
Regulation
4­
10
$
50
per
transaction.
Therefore,
complying
with
the
OMB
Circular
A­
4
guidance
to
consider
a
less
stringent
or
less
costly
regulatory
alternative
is
challenging.
EPA
considered
the
alternative
of
using
the
current
ASTM
E1527­
2000
standard
as
a
regulatory
option.

As
discussed
in
the
preamble
to
the
proposed
rule,
EPA
determined
that
the
existing
ASTM
E1527­
2000
standard
does
not
address
all
of
the
ten
required
criteria
outlined
in
the
Brownfields
Amendments.
As
a
result,
use
of
the
ASTM
standard
would
be
inconsistent
with
applicable
law
and
would
not
adequately
serve
EPA's
needs
in
promulgating
the
all
appropriate
inquiries
regulation.
In
the
preamble
for
this
proposed
rule,
EPA
has
requested
public
comment
on
this
determination.

Given
that
OMB
guidance
requires
EPA
to
evaluate
a
less
stringent,
or
less
costly,
regulatory
alternative,
this
EIA
compares
the
costs
of
the
Agency's
preferred
alternative,
three
more
stringent
options
considered
by
the
Negotiated
Rulemaking
Committee,
and
the
alternative
of
using
the
ASTM
E1527­
2000
standard.
EIA
for
the
AAI
Regulation
5­
1
CHAPTER
5:
Analytical
Approach
to
Estimating
Costs
and
Benefits
The
general
approach
used
in
this
analysis
to
estimate
the
impact
of
the
AAI
proposed
regulation
is
to
identify
the
incremental
cost
burdens
associated
with
the
changes
in
the
ESA
activities
imposed
by
the
proposed
rule
relative
to
Phase
I
site
assessment
practices
using
the
ASTM
E1527­
2000
standard,
add
up
the
costs
of
costs
associated
with
those
changes,
and
then
assess
the
impacts
of
those
costs.

To
implement
this
approach,
we
first
reviewed
the
activities
and
practices
associated
with
conducting
a
Phase
I
ESA
using
the
ASTM
E1527­
2000
standard,
the
current
interim
standard
and
the
baseline
standard
for
this
analysis.
To
simplify
the
analysis,
we
grouped
the
Phase
I
ESA
activities
into
a
few
key
activities,
and
then
estimated
the
cost
of
each
activity
based
on
estimates
of
labor
hours
to
conduct
these
activities
and
labor
categories.
As
Phase
I
ESAs
are
more
laborious
at
more
complex
sites,
labor
hours
were
estimated
as
a
function
of
property
type.
The
labor
hours
also
were
adjusted
to
account
for
property
size.
Summing
up
costs
over
Phase
I
ESA
activities,
we
derived
an
average
cost
per
Phase
I
ESA.
The
total
costs
were
then
calculated
by
multiplying
the
average
cost
per
Phase
I
ESA
by
the
number
of
Phase
I
ESAs
projected
over
the
modeling
period.

The
next
step
in
the
analysis
was
to
identify
the
changes
in
Phase
I
ESA
activities
that
will
result
from
the
incremental
burdens
imposed
by
the
proposed
AAI
regulation.
By
comparing
the
current
Phase
I
ESA
activities
to
the
requirements
of
the
proposed
regulation,
we
identified
the
necessary
changes
in
current
procedures
for
conducting
a
Phase
I
ESA
that
will
be
required
for
a
property
owner
to
comply
with
the
provisions
of
the
proposed
rule.
Once
we
determined
that
the
changes
from
the
current
practices
would
be
manifested
in
terms
of
additional
Phase
I
ESA
activities,
we
estimated
the
cost
of
each
additional
activity
based
on
the
labor
hours
and
labor
categories
required
to
perform
them.
We
then
followed
the
same
procedure
as
explained
above
to
derive
the
average
cost
per
Phase
I
ESA
and
the
total
cost
of
compliance
with
the
proposed
regulation.

To
estimate
the
total
cost
to
all
affected
parties
imposed
by
the
proposed
AAI
regulations,
we
estimated
the
number
of
transaction
screens
likely
to
shift
to
Phase
I
ESAs
as
a
result
of
the
Brownfields
Amendments.
We
first
estimated
the
average
incremental
cost
per
transaction
screen,
and
then
multiplied
that
cost
by
the
estimated
number
of
transaction
screens
that
would
transition
to
Phase
I
ESAs.
The
total
cost
of
the
proposed
regulation
includes
the
incremental
cost
for
property
transactions
where
the
assessment
was
previously
conducted
using
the
ASTM
standard
and
the
total
incremental
cost
associated
with
transactions
transitioning
from
a
transaction
screen
to
the
proposed
AAI
requirements.

The
benefits
of
the
AAI
regulation
are
assessed
qualitatively.
We
first
identify
the
nature
of
the
different
categories
of
benefits,
and
explain
that
the
net
private
benefits
are
the
reduction
in
the
resource
costs
of
qualifying
for
protection
from
CERCLA
liability.
We
also
discuss
the
social
benefits
of
increasing
the
number
of
transactions
involving
brownfields
and
contaminated
or
EIA
for
the
AAI
Regulation
5­
2
potentially­
contaminated
properties,
reducing
the
number
of
abandoned
properties,
and
increasing
cleanups,
but
without
estimating
these
benefits
quantitatively.

The
following
sections
describe
in
detail
the
methodology
for
estimating
the
costs
and
benefits
of
the
proposed
AAI
regulation.

5.1
Base
Case
for
the
EIA
The
publicly
available
literature
on
the
Phase
I
ESA
industry
indicates
that
the
most
commonly
used
standard
is
the
current
ASTM
standard
entitled
E1527,
Phase
I
Environmental
Site
Assessment
Process.
During
the
regulatory
negotiating
process,
the
FACA
committee
members
confirmed
this
finding.
In
addition
to
being
the
most
commonly
used
standard,
the
ASTM
E1527­
2000
is
the
Federal
interim
standard
for
conducting
all
appropriate
inquiries.
Therefore,
we
established
the
ASTM
E1527­
2000
standard
as
the
base
case
for
this
analysis.
It
is
assumed
that
absent
the
AAI
regulation,
the
Phase
I
ESA
industry
would
continue
to
use
the
ASTM
E1527­
2000
standard
for
conducting
all
appropriate
inquiries.

5.2
Timeframe
This
economic
impact
analysis
examines
costs
incurred
over
the
10­
year
period
following
the
promulgation
of
the
AAI
regulation.
Based
on
the
US
Census
Bureau
and
the
Small
Business
Administration
data,
ICF
estimated
that
the
average
life
of
a
firm
is
10
years.
17
As
explained
in
Chapter
3,
it
is
a
customary
practice
in
the
commercial
real
estate
market
to
conduct
an
environmental
site
assessment
at
the
prospective
property
prior
to
the
closing
of
the
real
estate
transaction.
Therefore,
modeling
the
regulatory
impacts
over
a
10­
year
period
ensures
that
all
costs
incurred
as
a
result
of
the
AAI
regulation
properly
are
accounted
for
over
the
timeframe
that
an
individual
purchaser
is
expected
to
own
a
particular
property.
In
addition,
this
period
allows
us
to
take
growth
and
turnover
of
properties
into
account,
but
without
going
out
so
far
into
the
future
that
the
projections
become
questionable.
18
The
costs
incurred
by
the
property
owners
who
performed
ESAs
at
their
properties
in
the
interim
period
(
i.
e.,
2002
through
2003),
are
not
included
in
the
analysis.

5.3
Estimated
Transactions
per
Year
Due
to
data
limitations,
we
assumed
that
the
annual
number
of
applicable
property
transactions
approximates
the
annual
number
of
ESAs
performed.

As
presented
in
Chapter
3,
a
number
of
standards
are
currently
used
by
the
ESA
industry.
The
AAI
regulation,
however,
is
expected
to
affect
only
the
properties
on
which
Phase
I
ESAs
or
transaction
screens
are
currently
being
performed.

17
For
references,
see
Chapter
10.
18
Specifically,
going
beyond
the
10­
year
timeframe,
it
becomes
uncertain
whether
there
would
be
any
structural
change
in
the
ESA
industry,
for
example
imposed
by
the
lending
industry,
which
would
change
ESA
practices
beyond
the
requirements
of
the
proposed
rule.
Such
a
change
could
have
a
significant
impact
on
the
annual
volume
of
Phase
I
ESAs
as
well
as
the
unit
cost
per
ESA.
EIA
for
the
AAI
Regulation
5­
3
5.4
Projection
of
Number
of
Phase
I
ESAs
in
the
Base
Case
To
estimate
the
total
cost
of
conducting
Phase
I
ESAs
in
the
base
case
scenario,
i.
e.,
absent
the
AAI
regulation,
it
is
necessary
to
forecast
how
many
Phase
I
ESAs
will
be
performed
over
the
next
10
years.
One
way
to
project
the
number
of
environmental
site
assessments
conducted
over
the
modeling
period
is
to
calculate
the
historical
average
growth
rate
of
Phase
I
ESAs
over
an
extended
period
of
time
that
includes
complete
business
cycles.
Since
the
number
of
Phase
I
ESAs
conducted
annually
is
a
function
of
property
transactions,
which
to
a
large
extent
are
driven
by
economic
conditions,
this
method
will
ensure
that,
on
average,
the
number
of
Phase
I
ESAs
performed
over
the
modeling
period
is
projected
with
reasonable
accuracy
(
even
though
year­
to­
year
fluctuations
could
be
significant).

As
of
the
writing
of
this
analysis,
EDR
was
identified
as
the
only
firm
that
compiles
and
publishes
the
historical
data
on
the
number
of
ESAs
conducted
annually
in
the
U.
S.
The
EDR
data,
however,
cover
a
relatively
short
period
of
time,
from
1997
to
2002.19
Having
so
few
observations
available
makes
it
impossible
to
estimate
the
average
growth
rate
by
any
method
other
than
computing
a
simple
arithmetic
average.
To
compute
the
average
annual
growth
rate,
we
first
calculated
the
growth
rate
of
Phase
I
ESAs
for
each
year
for
which
industry
data
are
available.
20
The
annual
growth
rates
fluctuated
significantly
from
a
24
percent
increase
in
1998
to
a
10
percent
decline
in
1999.
The
annual
volume
of
Phase
I
ESAs
decreased
by
six
percent
in
2000,
increased
by
12
percent
the
following
year,
and
then
decreased
by
three
percent
in
2002.
Despite
the
year­
to­
year
fluctuations
during
this
period,
the
annual
volume
of
Phase
I
ESAs
exhibited
an
upward
trend.
Averaging
the
annual
growth
rates
presented
above,
we
calculated
that
the
average
annual
growth
rate
over
this
period
was
three
percent.
We,
therefore,
assumed
that
the
number
of
Phase
I
ESAs
will
continue
to
grow
in
the
base
case
at
an
average
rate
of
three
percent
per
year.

5.5
Projected
Changes
in
Assessments
with
the
Regulation
5.5.1
Projection
of
Number
of
Phase
I
ESAs
Projecting
the
number
of
Phase
I
ESAs
that
will
occur
following
promulgation
of
the
AAI
regulation
is
made
difficult
by
the
uncertainty
surrounding
the
number
of
affected
parties.
Although
EPA
believes
that
the
certainty
provided
by
the
AAI
regulation
in
obtaining
the
CERCLA
liability
protections
will
encourage
redevelopment
of
brownfields
properties,
the
increase
in
the
total
number
of
commercial
property
transactions
involving
brownfields
is
difficult
to
predict.
Therefore,
in
conducting
this
analysis,
we
assumed
that
the
number
of
Phase
I
ESAs
would
continue
to
grow
at
an
annual
rate
of
three
percent
after
the
regulation
is
promulgated.

19
See
Appendix
IV
for
a
discussion
of
EDR's
methodology
for
estimating
the
annual
volume
of
Phase
I
ESAs
conducted.
20
The
annual
volume
of
Phase
I
ESAs
in
the
period
1997­
2002
is
presented
graphically
in
Exhibit
3­
1.
EIA
for
the
AAI
Regulation
5­
4
5.5.2
Projected
Number
of
Transaction
Screens
Transitioning
to
Phase
I
ESAs
It
is
difficult
to
project
how
many
prospective
purchasers
will
opt
for
a
Phase
I
ESA
instead
of
a
transaction
screen
under
the
AAI
regulation.
What
makes
the
analysis
complex
is
that
a
relatively
large
number
of
prospective
purchasers
did
not
find
the
availability
of
CERCLA
liability
protection
worth
the
cost
of
an
ASTM
Phase
I
ESA
during
the
interim
period.
The
volume
of
transaction
screens
decreased
from
34,000
in
2001
to
32,000
in
2002.

To
estimate
the
number
of
Phase
I
ESAs
that
would
be
performed
as
a
result
of
switching
from
transaction
screens,
we
examined
the
volume
of
Phase
I
ESAs
and
transaction
screens
in
2001,
2002,
and
the
first
two
quarters
of
2003.
The
ratio
of
transaction
screens
to
Phase
I
ESAs
decreased
from
14
percent
in
2001
to
11
percent
in
the
second
quarter
of
2003
(
the
ratio
was
13
percent
in
2002
and
12
percent
in
the
first
quarter
of
2003).
We
assumed
that
three
percent,
the
difference
between
the
2001
and
2003
ratios,
is
the
upper
bound
for
the
annual
number
of
Phase
I
ESAs
that
could
be
performed
under
the
AAI
regulation
as
a
result
of
liability
protection
driving
a
transition
from
transaction
screens
to
a
full
AAI
investigation.
The
transition
rate
of
three
percent,
used
in
this
EIA,
is
likely
an
overestimate.
The
EDR
data
on
transaction
screens
indicate
that
there
was
a
downward
trend
in
the
volume
of
transaction
screens
conducted
annually
prior
to
the
interim
period.
Therefore,
it
is
likely
that
the
volume
of
transaction
screens
would
continue
to
decrease
even
in
the
absence
of
the
AAI
regulation.

5.6
Estimation
of
Unit
Costs
This
section
presents
the
methodology
used
for
estimating
the
cost
of
performing
a
Phase
I
ESA
under
the
base
case
and
under
the
AAI
regulation.
The
first
step
in
deriving
unit
costs
was
to
identify
primary
activities
performed
under
a
Phase
I
ESA.
Once
the
primary
activities
were
identified,
we
estimated
two
parameters
for
each
activity:

 
Labor
time
required
per
ESA
activity;
and
 
Per
unit
labor
costs.

This
section
is
organized
as
follows.
We
first
explain
the
ESA
activities
performed
under
the
ASTM
E1527­
2000
standard,
i.
e.,
the
base
case
activities.
We
then
describe
how
the
labor
hour
burden
under
each
activity
was
estimated
and
how
the
labor
costs
were
derived.
Following
the
base
case
discussion,
we
identify
the
changes
in
ESA
requirements
resulting
from
the
AAI
regulation
and
then
present
the
methodology
for
estimating
the
incremental
unit
costs.
In
addition,
we
present
the
method
for
estimating
the
cost
of
the
various
AAI
options
that
were
considered
by
the
FACA
committee,
but
were
not
included
in
the
proposed
regulation.

5.6.1
Environmental
Site
Assessment
Activities
under
Base
Case
This
section
describes
the
ESA
activities
that
are
included
in
the
model
used
to
develop
cost
estimates
of
the
ASTM
Phase
I
ESA
base
case.
The
types
of
activities
described
below
are
consistent
with
the
ASTM
E1527­
2000
standard,
which
specifies
four
key
components
to
a
Phase
I
ESA,
including:
1)
records
review,
2)
site
reconnaissance,
3)
interviews,
and
4)
report.
EIA
for
the
AAI
Regulation
5­
5
In
an
effort
to
better
quantify
the
estimation
of
unit
costs
for
certain
key
activities,
we
have
grouped
the
ESA
activities
into
eight
separate
activity
categories:

 
Review
of
Federal
and
state
regulatory
databases
 
Review
of
state
and
local
environmental
records
 
Review
of
historical
use
information
 
Review
of
site
documents,
if
provided
by
client
 
Site
reconnaissance
 
Interviews
with
the
property
owner(
s)
and/
or
property
managers
 
Interviews
with
local
government
officials
 
Preparation
of
Phase
I
ESA
report.

The
activities
were
grouped
in
this
manner
because,
from
a
cost
estimating
perspective,
they
are
fairly
well­
defined
unique
tasks
for
which
it
is
easier
to
generate
unit
labor
cost
estimates
individually
rather
than
in
combination.
The
specific
tasks
performed
under
each
of
the
eight
activity
categories
are
discussed
in
the
following
sections.

5.6.1.1
Review
of
Federal
and
State
regulatory
databases
Under
this
category,
Federal
and
state
environmental
records
are
obtained
and
reviewed
to
help
identify
recognized
environmental
conditions
at
the
property.
According
to
ASTM
E1527­
2000,
standard
Federal
and
state
environmental
record
sources
include
(
with
their
approximate
minimum
search
distances):

 
Federal
NPL
site
list
(
1.0
mile)
 
Federal
CERCLIS
list
(
0.5
mile)
 
Federal
CERCLIS
NFRAP
site
list
(
property
and
adjoining
properties)
 
Federal
RCRA
CORRACTS
facilities
list
(
1.0
mile)
 
Federal
RCRA
non­
CORRACTS
TSD
facilities
list
(
0.5
mile)
 
Federal
RCRA
generators
list
(
property
and
adjoining
properties)
 
Federal
ERNS
list
(
property
only)
 
State
lists
of
hazardous
waste
sites
identified
for
investigation
or
remediation:
o
State­
equivalent
NPL
(
1.0
mile)
o
State­
equivalent
CERCLIS
(
0.5
mile)
 
State
landfill
and/
or
solid
waste
disposal
site
lists
(
0.5
mile)
 
State
leaking
UST
lists
(
0.5
mile)
 
State
registered
UST
lists
(
property
and
adjoining
properties).

These
standard
record
sources
are
reasonably
ascertainable,
meaning
that
they
are
publicly
available,
obtainable
within
reasonable
time
and
cost
constraints,
and
practically
reviewable.
The
records
are
obtained
directly
from
appropriate
government
agencies
through
on­
line
data
base
searches,
written
requests
to
government
officials,
or
are
purchased
from
a
commercial
services
firm
such
as
EDR.
EIA
for
the
AAI
Regulation
5­
6
In
addition
to
the
above­
mentioned
Federal
and
state
records,
a
current
USGS
7.5
Minute
Topographic
Map
(
or
equivalent)
is
obtained
and
reviewed,
showing
the
area
on
which
the
property
is
located.
This
map
shows
important
information
about
geologic,
hydrologic,
hydrogeologic,
and
topographic
characteristics
of
the
property
and
its
surroundings,
that
may
affect
identified
conditions
at
the
property.

The
labor
included
in
the
cost
models
for
this
activity
includes
the
estimated
labor
hours
required
to
obtain
and
review
these
records
and
the
current
USGS
7.5
Minute
Topographic
Map.
These
hours
are
shown
by
property
size
and
type
in
Exhibit
7­
3.
The
other
direct
costs
(
ODCs)
of
$
250
included
in
the
model
for
this
activity
are
for
acquiring
a
report
of
all
database
search
results
from
a
commercial
service.

5.6.1.2
Review
of
State
and
Local
environmental
records
Under
this
category,
additional
state
or
local
environmental
records
are
obtained
and
reviewed,
at
the
discretion
of
the
environmental
professional,
to
enhance
and
supplement
Federal
and
state
sources
identified
above.
Several
factors
should
be
considered
in
determining
which
of
these
additional
records,
if
any,
are
necessary:
whether
they
are
reasonably
ascertainable;
whether
they
are
sufficiently
useful,
accurate,
and
complete;
and
whether
they
are
generally
obtained
in
initial
ESAs
in
the
type
of
real
estate
transaction
involved.
Some
types
of
records
and
sources
that
may
be
useful
include
the
following:

Types
of
Local
Records
 
Brownfields
sites
 
Lists
of
landfill/
solid
waste
disposal
sites
 
Lists
of
hazardous
waste/
contaminated
sites
 
Lists
of
registered
underground
storage
tanks
 
Local
land
records
(
for
activity
and
use
limitations)
 
Records
of
emergency
release
reports
(
SARA
§
304)
 
Records
of
contaminated
public
wells.

Local
Sources
 
Department
of
health/
environmental
division
 
Fire
department
 
Planning
department
 
Building
permit/
inspection
department
 
Local/
regional
pollution
control
agency
 
Local/
regional
water
quality
agency
 
USGS
and/
or
state
geological
survey
­
surficial
geology
maps
 
Soil
conservation
service
­
soil
maps
 
Other
physical
setting
sources.

The
labor
included
in
the
cost
models
for
this
activity
and
shown
in
Exhibit
7­
3
includes
the
estimated
time
required
for
visiting
local
or
regional
record
sources
and
reviewing
available
EIA
for
the
AAI
Regulation
5­
7
records.
The
ODCs
included
in
the
model
under
this
activity
are
for
photocopying
or
mailing
associated
with
obtaining
these
additional
records.

5.6.1.3
Review
of
historical
use
information
The
ASTM
E1527­
2000
standard
requires
that
various
standard
historical
sources
of
information
are
obtained
and
reviewed
to
develop
a
history
of
the
previous
uses
of
the
property
and
the
surrounding
area,
and
to
help
determine
whether
these
previous
uses
may
have
led
to
recognized
environmental
conditions
in
connection
with
the
property.
ASTM
E1527­
2000
requires
that
all
obvious
uses
of
the
property
be
identified
from
the
present
back
to
the
property's
obvious
first
developed
use,
or
back
to
1940,
whichever
is
earlier.
Historical
sources
of
information
regarding
past
uses
of
a
property
include
the
following:

 
Aerial
photographs
 
Fire
insurance
maps
 
Property
tax
files
 
Recorded
land
title
records
 
USGS
7.5
minute
topographic
maps
 
Local
street
directories
 
Building
department
records
 
Zoning/
land
use
records
 
Personal
knowledge
of
property
owners
and/
or
occupants
 
Other
historical
sources
(
e.
g.,
miscellaneous
maps,
newspaper
archives,
records
in
files).

Only
those
standard
historical
sources
that
are
necessary
and
are
both
reasonably
ascertainable
and
likely
to
be
useful
are
required
to
be
reviewed.
While
identifying
the
general
type
of
historical
use
(
e.
g.,
office,
retail,
residential)
is
sufficient,
more
specific
information
about
the
property
uses
is
helpful,
especially
if
the
property's
uses
included
industrial
or
manufacturing
operations.

In
addition
to
the
historical
uses
of
the
property,
uses
of
properties
in
the
surrounding
area
also
should
be
identified,
but
only
to
the
extent
that
this
information
is
available
in
the
course
of
researching
the
property
itself.

The
labor
included
in
the
cost
models
for
this
activity
includes
the
estimated
time
required
for
obtaining
(
either
by
visiting
local
sources
or
from
commercial
services)
and
reviewing
the
available
records.
The
ODCs
included
in
the
model
under
this
activity
are
for
photocopying
or
mailing
associated
with
obtaining
these
historical
source
records.

5.6.1.4
Review
of
site
documents,
if
provided
by
client
Under
this
category,
the
ASTM
E1527­
2000
standard
recommends
that
the
environmental
professional
request
and
review
any
helpful
property­
related
documentation
that
is
provided
by
the
property
owner,
the
key
site
manager,
and/
or
the
user.
Examples
of
helpful
property­
related
documentation
include
the
following:
EIA
for
the
AAI
Regulation
5­
8
 
ESA
reports
 
Environmental
audit
reports
 
Environmental
permits
(
e.
g.,
solid
waste
disposal
permits,
hazardous
waste
disposal
permits,
wastewater
permits,
NPDES
permits)
 
Registrations
for
underground
and
above­
ground
storage
tanks
 
Material
safety
data
sheets
 
Community
right­
to­
know
plan
 
Safety
plans;
preparedness
and
prevention
plans;
spill
prevention,
countermeasure
and
control
plans;
etc.
 
Reports
regarding
hydrogeologic
conditions
on
the
property
or
surrounding
area
 
Notices
or
other
correspondence
from
any
government
agency
relating
to
past
or
current
violations
of
environmental
laws
with
respect
to
the
property
or
relating
to
environmental
liens
encumbering
the
property
 
Hazardous
waste
generator
notices
or
reports
 
Geotechnical
studies.

Ideally,
these
documents
(
or
parts
of
these
documents)
are
provided
to
the
environmental
professional
within
reasonable
time
and
cost
constraints,
and
are
reviewed
by
the
environmental
professional
either
prior
to
or
at
the
beginning
of
the
site
reconnaissance
visit.

The
labor
included
in
the
cost
models
for
this
activity,
in
the
baseline,
includes
the
estimated
time
required
to
review
the
available
property­
related
documents.
It
is
common
that
some
of
the
documents
are
available
and
reviewed
prior
to
the
site
visit,
while
other
documents
must
be
reviewed
during
the
site
visit
or
during
the
report
preparation.
The
ODCs
included
in
the
model
under
this
activity
are
for
photocopying
associated
with
obtaining
these
property­
related
documents.

5.6.1.5
Site
reconnaissance
The
ASTM
E1527­
2000
standard
requires
that
a
site
reconnaissance
be
performed
to
obtain
information
to
help
identify
recognized
environmental
conditions
at
the
property.
To
the
extent
possible,
the
environmental
professional
must
visually
and
physically
observe
the
property
and
any
structures
on
the
property.
The
periphery
of
the
property
and
all
structures
on
the
property
also
must
be
observed.
The
interiors
of
all
structures
on
the
property
should
be
observed,
including
(
but
not
limited
to)
common
areas
(
lobbies,
hallways,
recreation
areas),
utility
rooms,
maintenance
and
repair
areas,
boiler
rooms,
and
a
representative
sample
of
occupant
spaces.
A
Phase
I
ESA
generally
consists
of
only
one
site
visit
to
the
property
by
the
environmental
professional,
although
this
site
visit
may
be
several
days
long.

During
the
site
reconnaissance,
the
environmental
professional
notes
the
uses
and
conditions
specified
in
ASTM
E1527­
2000,
to
the
extent
visually
and/
or
physically
observed
during
the
site
visit.
These
uses
and
conditions
also
should
be
the
subject
of
questions
asked
during
the
interviews
with
property
owners
and
occupants
(
as
discussed
later
in
this
report).
The
uses
and
conditions
that
should
be
observed
include
the
following:
EIA
for
the
AAI
Regulation
5­
9
 
General
Site
Setting
o
Current
use(
s)
of
the
property
o
Past
use(
s)
of
the
property
o
Current
uses
of
adjoining
properties
o
Past
uses
of
adjoining
properties
o
Current
or
past
uses
in
the
surrounding
area
o
Geologic,
hydrogeologic,
hydrologic,
and
topographic
conditions
o
General
description
of
structures
o
Roads
o
Potable
water
supply
o
Sewage
disposal
system
 
Interior
and
Exterior
Observations
o
Current
use(
s)
of
the
property
o
Past
use(
s)
of
the
property
o
Hazardous
substances
and
petroleum
products
in
connection
with
identified
uses
o
Storage
tanks
o
Odors
o
Pools
of
liquid
o
Drums
o
Hazardous
substance
and
petroleum
products
containers
(
not
necessarily
in
connection
with
identified
uses)
o
Unidentified
substance
containers
o
PCBs
 
Interior
Observations
o
Heating/
cooling
systems
o
Stains
or
corrosion
o
Drains
and
sumps
 
Exterior
Observations
o
Pits,
ponds,
or
lagoons
o
Stained
soil
or
pavement
o
Stressed
vegetation
o
Solid
waste
o
Waste
water
o
Wells
o
Septic
systems.

The
type
of
information
the
environmental
professional
gathers
related
to
each
of
the
abovementioned
uses
and
conditions
are
described
in
detailed
in
ASTM
E1527­
2000
(
Sections
8.4.1
through
8.4.4).
The
environmental
professional
is
responsible
for
recording
the
uses
and
conditions
of
the
property
in
his
or
her
field
notes.

The
labor
included
in
the
cost
models
for
this
activity,
in
the
base
case,
includes
the
estimated
time
required
for
performing
the
site
reconnaissance.
Though
the
site
reconnaissance
is
typically
performed
in
conjunction
with
the
interviewing
of
the
property
owners
and
occupants,
the
labor
hour
estimates
provided
in
the
cost
model
are
specific
to
the
site
reconnaissance.
The
cost
model
EIA
for
the
AAI
Regulation
5­
10
does
not
include
travel­
related
costs
(
e.
g.,
airfare,
hotel,
meals,
mileage,
car
rental,
etc.)
that
may
be
incurred
during
the
course
of
performing
the
site
visit.
Given
the
competitive
nature
of
the
market
for
environmental
site
assessment
services
and
the
diversity
in
locations
of
firms
providing
these
services,
all
travel
is
expected
to
be
local
travel.
The
estimated
labor
hours
for
conducting
the
site
reconnaissance
by
property
size
and
property
type
is
presented
in
Exhibit
7­
3.

5.6.1.6
Interviews
with
the
property
owner
and/
or
occupant(
s)

The
ASTM
E1527­
2000
standard
requires
that
interviews
be
conducted
with
at
least
the
current
owners
and
occupants
of
the
subject
property
to
obtain
information
to
help
identify
recognized
environmental
conditions
in
connection
with
the
property.
Questions
asked
during
the
interviews
attempt
to
obtain
information
related
to
the
uses
and
conditions
of
the
property
(
as
discussed
above
in
Section
5.6.1.5),
information
related
to
helpful
site
documents
(
as
discussed
above
in
Section
5.6.1.4),
and
any
information
related
to
known
litigation,
administrative
proceedings,
violations,
or
governmental
actions
(
as
specified
in
ASTM
E1527­
2000,
Section
9.9)
relevant
to
hazardous
substances
or
petroleum
products
in,
on,
or
from
the
property.

The
key
site
manager,
who
is
identified
by
the
property
owner
as
a
person
with
good
knowledge
of
the
uses
and
physical
characteristics
of
the
property,
is
interviewed
in
conjunction
with
the
site
visit.
Examples
of
the
key
site
manager
include
the
property
manager,
the
chief
physical
plant
supervisor,
the
head
maintenance
person,
or
the
user.
A
reasonable
attempt
should
also
be
made
to
interview
some
occupants
of
the
property,
as
specified
in
ASTM
E1527­
2000,
Section
9.5.2.
Though
interviews
are
typically
performed
in
person
during
the
site
visit,
they
may
also
be
done
in
writing
or
by
telephone
before
or
after
the
site
visit,
or
in
some
combination
thereof.

The
labor
included
in
the
cost
models
for
this
activity
includes
the
estimated
time
required
performing
the
interviews
with
the
property
owner
and
occupants.
The
estimate
of
labor
costs
for
the
interviewing
activities
in
the
base
case
were
derived
by
first
estimating
the
total
number
of
hours
typically
spent
conducting
interviews,
then
multiplying
the
total
hours
by
the
weighted
average
distribution
of
hourly
labor
costs,
which
is
shown
in
section
5.6.3.
The
estimated
number
of
hours
typically
spent
conducting
interviews
of
current
and
past
owners
and
occupants
was
developed
as
follows:

 
Professional
engineers
at
ICF
Consulting
with
experience
conducting
hundreds
of
environmental
site
assessments
provided
labor
hour
estimates
for
the
amount
of
time
they
typically
spend
conducting
interviews.
Labor
hour
estimates
were
estimated
for
three
property
sizes
and
four
property
types
within
each
size
category
(
see
section
5.6.2
for
summary
of
property
sizes
and
types).


ICF
Consulting
professional
engineers
estimated
that
in
the
case
of
undeveloped/
agricultural
properties
and
residential
properties
of
all
sizes,
2
hours
are
typically
spent
conducting
interviews
of
current
and
past
owners.
In
the
case
of
commercial
properties
of
all
sizes,
4
hours
are
typically
spent
conducting
interviews.
In
the
case
of
small­
and
medium­
sized
industrial
properties,
ICF
professional
engineers
estimate
that
they
typically
spend
4
hours
conducting
interviews.
In
the
case
of
large
industrial
properties,
it
is
typical
to
spend
6
hours
EIA
for
the
AAI
Regulation
5­
11
conducting
interviews
of
current
and
past
owners.
(
The
labor
distribution
by
task
and
size
and
type
of
property
is
summarized
in
Exhibit
7­
3
of
this
EIA).


The
estimated
average
amount
of
time
spent
per
interview
is
one­
half
hour
to
one
hour.
Therefore,
the
estimated
labor
hours
distribution
used
in
the
cost
model
used
in
developing
this
EIA
allows
enough
time
for
between
2
and
4
interviews
at
undeveloped
and
residential
properties;
between
4
and
8
interviews
at
commercial
properties
and
small­
and
mediumsized
industrial
properties;
and
between
6
and
12
interviews
at
large
industrial
properties.

 
For
the
purposes
of
the
cost
model,
the
time
estimate
for
this
activity
assumes
that
one­
half
of
the
interviewing
is
performed
during
the
site
visit,
while
the
other
half
is
performed
via
writing/
phone.

 
ICF
Consulting's
estimated
distribution
of
labor
hours
across
tasks,
as
well
as
the
other
cost
assumptions
for
developing
the
cost
model,
was
presented
to
the
FACA
Committee
members
charged
with
the
development
of
language
for
the
proposed
rule.
The
FACA
Committee
members,
including
four
individuals
with
extensive
experience
in
conducting
environmental
site
assessments
reviewed
the
estimated
labor
distribution,
unit
cost
estimates,
and
other
cost
analysis
assumptions
and
agreed
with
the
labor
hour
distributions
estimated
by
ICF
Consulting's
professional
engineers.

5.6.1.7
Interviews
with
local
government
officials
Under
this
category,
interviews
with
the
local
government
officials
are
conducted
to
obtain
information
to
help
identify
recognized
environmental
conditions
at
the
property.
Interviews
with
local
government
officials
generally
include
questions
related
to
identifying
recognized
environmental
conditions
at
the
property,
but
are
at
the
discretion
of
the
environmental
professional.

The
ASTM
E1527­
2000
standard
provides
that
interviews
can
be
performed
in
person
or
by
telephone,
either
before
or
after
the
site
visit,
or
in
some
combination
thereof.
A
reasonable
attempt
should
be
made
to
interview
at
least
one
staff
member
of
any
one
of
the
following
types
of
local
government
agencies:

 
Local
fire
department
that
serves
the
property
 
Local
health
agency
or
local/
regional
office
of
state
health
agency
serving
the
area
in
which
the
property
is
located,
or
 
Local
agency
or
local/
regional
office
of
state
agency
having
jurisdiction
over
hazardous
waste
disposal
or
other
environmental
matters
in
the
area
in
which
the
property
is
located.

The
labor
included
in
the
cost
models
for
this
activity
is
the
estimated
time
required
performing
the
interviews
with
the
local
government
agencies.
For
the
purposes
of
the
cost
model,
the
time
estimate
for
this
activity
assumes
that
one­
half
of
the
interviewing
is
performed
during
the
site
visit,
while
the
other
half
is
performed
via
telephone.
The
estimated
distribution
on
labor
hours
EIA
for
the
AAI
Regulation
5­
12
for
this
task
is
similar
to
that
presented
above
for
interviews
of
current
and
past
owners
and
operators
and
is
summarized
in
Exhibit
7­
3.

5.6.1.8
Preparation
of
Phase
I
ESA
report
Under
this
category,
a
report
is
prepared
that
describes
the
findings
of
the
Phase
I
ESA.
Under
the
baseline
scenario,
the
ASTM
E1527­
2000
standard
recommends
that
all
documentation
generated
during
the
ESA
that
supports
the
findings,
opinions,
and
conclusions
of
the
Phase
I
ESA
be
included
in
the
report
(
as
appendices)
or
adequately
referenced
in
the
report.
If
certain
documentation
is
excluded
from
the
report,
the
environmental
professional
should
provide
the
rationale
for
its
exclusion.

Under
the
ASTM
standard,
the
content
of
the
report
should
include
all
matters
required
to
be
included
in
the
report
pursuant
to
various
provisions
stated
in
ASTM
E1527­
2000.
This
includes
a
statement
of
whether
the
user
reported
to
the
environmental
professional
any
information
pursuant
to
the
user's
responsibilities
described
in
Section
5.0
of
ASTM
E1527­
2000
(
e.
g.,
environmental
liens,
activity
or
use
limitations,
specialized
knowledge
or
experience
of
user,
or
reason
for
a
purchase
price
that
is
significantly
below
the
market).

The
ASTM
standard
recommends
that
the
report
include
a
findings
section
that
describes
the
known
or
suspected
environmental
conditions
associated
with
the
property.
These
environmental
conditions
could
include
recognized
environmental
conditions,
historical
recognized
conditions,
and
de
minimus
conditions.

The
report
should
include
the
environmental
professional's
opinion(
s)
of
the
impact
that
known
or
suspect
environmental
conditions
may
have
on
the
property,
and
the
rationale
for
concluding
that
an
environmental
condition
is
or
is
not
a
recognized
environmental
condition.
The
conclusions
section
of
the
report
should
summarize
any
and
all
identified
recognized
environmental
conditions
connected
with
the
property
and
their
impact
on
the
property.

Under
the
baseline
scenario,
all
deviations
(
including
additions
and
deletions)
from
ASTM
E1527­
2000
should
be
listed.
Additional
contracted
services
(
e.
g.,
broader
scope,
Phase
II
testing
recommendations,
liability/
risk
evaluations,
etc.)
performed
by
the
environmental
professional
should
be
included
in
the
Phase
I
ESA
only
if
contractually
agreed
to
by
the
user
and
the
environmental
professional.

The
environmental
professional
responsible
for
the
Phase
I
ESA
should
sign
the
report,
and
include
a
qualifications
statement.
The
report
should
include
a
references
section
and
appendices
containing
supporting
documentation.

The
labor
included
in
the
cost
models
for
this
activity
includes
the
estimated
time
required
to
prepare
the
Phase
I
ESA
report
in
accordance
with
ASTM
E1527­
2000.
The
ODCs
included
in
the
model
under
this
activity
are
for
reproducing
and
shipping
the
complete
Phase
I
ESA
report.
The
distribution
of
labor
hours
for
this
task
is
presented
in
Exhibit
7­
3
and
is
based
on
the
experiences
of
professional
engineers
at
ICF
Consulting.
EIA
for
the
AAI
Regulation
5­
13
5.6.2
Estimates
of
Hours
per
Action
In
an
effort
to
simplify
costs
associated
with
the
wide
range
of
property
sizes
and
property
types
that
might
be
subject
to
a
Phase
I
ESA,
labor
hour
estimates
were
developed
for
various
categories
of
transactions.

The
property
size
category
includes
small,
medium,
and
large
property/
facility
classifications.
These
size
classifications
are
based
on
the
following
specifications:

 
Small
<
5
acres
or
<
5,000
square
feet
 
Medium
5
to
100
acres
or
5,000
to
50,000
square
feet
 
Large
>
100
acres
or
>
50,000
square
feet.

The
property
type
category
includes
the
following
classifications:

 
Undeveloped/
Agricultural
 
Residential
 
Commercial
 
Industrial.

The
property
size
categories
were
selected
based
on
ICF
Consulting's
experience
conducting
ESAs.
The
three
selected
property
size
categories
allowed
for
modeling
the
variation
in
the
cost
of
a
Phase
I
ESA
that
is
driven
by
the
sizes
of
the
subject
properties.
The
property
type
categories
were
selected
based
on
the
2002
EDR
data
on
property
use
at
the
time
a
Phase
I
ESA
was
performed.
For
simplicity,
we
have
combined
commercial/
office,
retail,
telecommunications,
and
hotel
sites
into
a
single
property
category,
denoted
as
commercial
property
type.

5.6.3
Identification
of
Labor
Categories
for
Actions
and
Labor
Distribution
5.6.3.1
Difficulties
with
ASTM
Definition
of
"
Environmental
Professional"

The
current
ASTM
standard
defines
"
environmental
professional"
as
a
person
possessing
sufficient
training
and
experience
to
perform
ESAs
in
accordance
with
the
ASTM
E1527­
2000
standard.
Thus,
individuals
with
varying
academic
and
professional
backgrounds
may
qualify
as
environmental
professionals
under
the
ASTM
standard.
Such
a
broad
definition
presents
a
difficulty
when
modeling
labor
costs
associated
with
Phase
I
ESAs.
However,
given
the
flexibility
incorporated
in
the
proposed
definition
of
"
environmental
professional"
in
the
proposed
rule
we
can
assume
that
persons
currently
supervising
the
conduct
of
all
appropriate
inquiries
under
the
interim
standard
meet
at
least
the
proposed
minimum
requirements
for
an
environmental
professional
(
i.
e.,
a
B.
S.
in
science
or
engineering
and
5
years
of
relevant
full
time
experience).
EIA
for
the
AAI
Regulation
5­
14
5.6.3.2
Proxy
Labor
Categories
Based
on
the
Bureau
of
Labor
Statistics
information
on
specific
occupations,
we
have
selected
three
labor
categories
that
best
reflect
education,
experience,
and
seniority
of
personnel
involved
in
conducting
Phase
I
ESAs.
The
labor
categories
are
as
follows:

 
Environmental
Engineers
(
e.
g.,
the
Environmental
Professionals)
 
Environmental
Scientists
and
Specialists,
Including
Health
 
Environmental
Engineering
Technicians.

5.6.3.3
Labor
Distribution
The
labor
categories
used
in
the
development
of
the
cost
model
for
the
EIA
include
environmental
engineer,
environmental
scientist/
specialist,
environmental
engineering
technician,
and
administrative
assistant.
The
types
of
activities
associated
with
a
Phase
I
ESA
are
typically
performed
through
a
combination
of
efforts
from
each
of
these
four
labor
categories.
The
degree
to
which
a
senior
environmental
professional
(
e.
g.,
environmental
engineer)
or
a
junior
environmental
professional
(
e.
g.,
environmental
engineering
technician)
plays
a
more
significant
role
in
an
ESA
depends
on
factors
such
as
the
type
of
property,
the
complexity
of
the
property
and
its
operations,
anticipated
environmental
conditions,
staff
expertise
and
availability,
and
the
level
of
sensitivity
of
ESA
(
e.
g.,
potential
for
litigation).

For
the
purposes
of
the
ASTM
E1527­
2000
base
case
cost
model,
we
assumed
that
the
majority
(
or
65
percent
of
the
labor
hours)
of
the
activities
in
the
ESA
are
performed
by
the
environmental
scientist/
specialist
labor
category.
The
environmental
scientist/
specialist
plays
a
key
role
in
all
eight
ESA
activities
described
in
Section
5.6.1.
These
activities
include
the
review
of
Federal
and
state
regulatory
databases,
review
of
state
and
local
environmental
records,
review
of
historical
use
information
and
site
documentation,
site
reconnaissance,
interviews
with
the
property
owner(
s),
property
managers,
and
local
government
officials,
and
preparation
of
the
Phase
I
ESA
report.

Certain
ESA
activities
are
supported
by
the
remaining
three
labor
categories.
The
environmental
engineer
(
for
which
we
have
assumed
15
percent
of
the
labor
hours),
typically
supports
the
preparation
of
the
Phase
I
ESA
report,
often
times
as
a
key
author
or
in
a
review
capacity,
is
responsible
for
including
an
opinion
in
the
report,
and
signs
the
report.
He
or
she
may
also
provide
specialized
knowledge
for
complex
conditions
at
certain
properties,
and
may
manage
the
project
and
interact
with
the
client.

The
environmental
engineering
technician
(
whom
we
have
assumed
contributes
15
percent
of
the
labor
hours)
assists
by
obtaining
and
reviewing
Federal
and
state
databases,
Federal
and
state
environmental
records,
and
site
and
historical
use
documentation.
He
or
she
may
also
assist
with
telephone
interviews
to
local
government
officials,
if
these
interviews
cannot
be
performed
during
the
site
reconnaissance.

The
administrative
assistant
(
whom
we
have
assumed
contributes
five
percent
of
the
labor
hours),
typically
supports
the
Phase
I
ESA
report
preparation
activities
by
performing
editing,
EIA
for
the
AAI
Regulation
5­
15
reproduction,
and
shipping
services.
The
administrative
assistant
also
occasionally
assists
with
obtaining,
coordinating,
and/
or
copying
site
documents
and
historical
use
information.

The
labor
distribution
is
presented
in
Exhibit
5­
1.
A
summary
of
the
distribution
of
labor
hours
by
labor
category
and
property
type
and
size
is
presented
in
Exhibit
7­
4.

Exhibit
5­
1:
Distribution
of
Labor,
by
Labor
Category
Labor
Category
Distribution
of
Labor
Environmental
Engineers
15
%
Environmental
Scientists
and
Specialists,
Including
Health
65
%
Environmental
Engineering
Technicians
15
%
Administrative
Assistant
5
%
Total
100
%
Source:
ICF
Analysis.

5.6.4
Estimates
of
Other
Direct
Costs
The
cost
model
developed
for
this
EIA
includes
the
ODCs
for
certain
ESA
activities
described
in
Section
5.6.1.
For
each
activity,
the
following
ODC
assumptions
were
included
in
the
model:

 
Review
of
Federal
and
state
regulatory
databases:
ODCs
of
$
250/
property
were
included
for
acquiring
the
database
report
from
a
commercial
service.

 
Review
of
state
and
local
environmental
records:
ODCs
ranging
from
$
15/
property
(
for
undeveloped
and
residential
properties)
to
$
25/
property
(
for
commercial
and
industrial
properties)
were
included
for
photocopying
and/
or
mailing
associated
with
obtaining
state
and
local
records.

 
Review
of
historical
use
information:
ODCs
ranging
from
$
15/
property
(
for
undeveloped
and
residential
properties)
to
$
25/
property
(
for
commercial
and
industrial
properties)
were
included
for
photocopying
and/
or
mailing
associated
with
obtaining
historical
source
records.

 
Review
of
site
documents,
if
provided
by
client:
ODCs
ranging
from
$
15/
property
(
for
undeveloped
and
residential
properties)
to
$
25/
property
(
for
commercial
and
industrial
properties)
were
included
for
photocopying
associated
with
obtaining
property­
related
documents.

 
Site
reconnaissance:
No
ODCs
were
included
for
this
activity.

 
Interviews
with
the
property
owner(
s)
and/
or
property
managers:
No
ODCs
were
included
for
this
activity.

 
Interviews
with
local
government
officials:
No
ODCs
were
included
for
this
activity.
EIA
for
the
AAI
Regulation
5­
16
 
Preparation
of
Phase
I
ESA
report:
ODCs
ranging
from
$
25/
property
(
for
undeveloped
and
residential
properties)
to
$
50/
property
(
for
commercial
and
industrial
properties)
were
included
for
reproducing
and
shipping
the
completed
Phase
I
ESA
report.

The
model
does
not
include
any
travel­
related
costs
(
e.
g.,
airfare,
hotel,
meals,
mileage,
and
car
rental)
that
may
be
incurred
during
the
course
of
performing
a
Phase
I
ESA.
These
costs
can
vary
greatly
depending
on
the
relative
locations
of
the
subject
site
and
the
firm
providing
the
services.
Given
the
wide
distribution
and
availability
of
environmental
engineering
services,
travel
costs
should
be
minimal,
assuming
that
such
services
will
be
purchased
from
a
firm
located
in
relative
close
proximity
to
the
property
being
purchased.

5.6.5
AAI
Unit
Costs
This
section
explains
the
methodology
for
estimating
unit
costs
of
performing
a
Phase
I
ESA
under
the
AAI
regulation.

5.6.5.1
Activities
and
Labor
Categories
In
an
effort
to
better
quantify
the
estimation
of
unit
costs
for
each
of
the
AAI
activity
requirements,
we
grouped
the
AAI
Phase
I
ESA
requirements
into
eight
separate
activity
categories.
The
AAI
requirements
are
presented
in
Exhibit
5­
2,
first
column.
The
eight
Phase
I
ESA
activities
are
presented
across
the
top
row
of
Exhibit
5­
2.
A
shaded
area
indicates
the
Phase
I
ESA
activity
under
which
an
AAI
requirement
will
be
fulfilled.
For
example,
pursuant
to
§
312.31
of
the
proposed
AAI
regulation,
the
environmental
professional
would
be
required
to
include
a
discussion
regarding
the
degree
of
obviousness
of
the
presence
or
likely
presence
of
contamination
in
the
all
appropriate
inquiries
report.
The
discussion
would
be
based
on
the
conclusions
that
summarize
all
recognized
environmental
conditions
connected
with
the
property
and
the
potential
impact
of
these
recognized
environmental
conditions
on
the
property.
The
hour
burden
associated
with
this
AAI
requirement
is
estimated
under
Preparation
of
Phase
I
ESA
report
activity.
EIA
for
the
AAI
Regulation
5­
17
Exhibit
5­
2:
The
AAI
Regulatory
Requirements
and
the
Phase
I
ESA
Activities
ASTM
Phase
I
ESA
Activities
The
AAI
Requirements
Interviews
with
the
property
owner(
s),

operators,
and
occupants
Review
of
historical
use
information
Review
of
Federal
and
State
regulatory
databases
Review
of
State
and
Local
environmental
records
Site
visit
Review
of
site
documents,
if
provided
by
client
Interviews
with
local
government
officials
Preparation
of
Phase
I
ESA
report
Sec.
312.21
 
Results
of
inquiries
by
an
environmental
professional
Sec.
312.23
 
Interviews
with
past
and
present
owners,
operators,
and
occupants
Sec.
312.24
 
Reviews
of
historical
sources
of
information
Sec.
312.25
 
Searches
for
recorded
environmental
cleanup
liens
Sec.
312.26
 
Reviews
of
Federal,
State,

Tribal
and
local
government
records
Sec.
312.27
 
Visual
inspections
of
the
facility
and
of
adjoining
properties
Sec.
312.28
 
Specialized
knowledge
or
experience
on
the
part
of
the
defendant
Sec.
312.29
 
The
relationship
of
the
purchase
price
to
the
value
of
the
property,

if
the
property
was
not
contaminated
Sec.
312.30
 
Commonly
known
or
reasonably
ascertainable
information
about
the
property
Sec.
312.31
 
The
degree
of
obviousness
of
the
presence
or
likely
presence
of
contamination
at
the
property,
and
the
ability
to
detect
the
contamination
by
appropriate
investigation
Source:
ICF
Analysis.
EIA
for
the
AAI
Regulation
5­
18
After
reviewing
the
proposed
AAI
regulation,
we
determined
that
the
AAI
requirements
under
all
Phase
I
ESA
activities,
except
interviews
and
report
writing,
would
require
the
same
level
of
effort
as
under
the
ASTM
E1527­
2000
standard.
Our
findings
are
summarized
in
Exhibit
5­
3
(
a
more
detailed
summary
of
the
main
differences
between
the
propose
AAI
standard
and
the
ASTM
E1527­
2000
standard
is
presented
in
Appendix
II).
We
then
estimated
unit
costs
for
the
four
activity
tasks
representing
incremental
burdens
associated
with
requirements
under
the
AAI
regulation
that
currently
are
not
routinely
performed
under
the
ASTM
E1527­
2000
standard.
These
incremental
activity
tasks
and
corresponding
incremental
unit
costs
are
explained
in
the
following
four
sections.
Following
these
sections,
we
present
the
methodology
for
estimating
incremental
costs
for
the
users
transitioning
from
transaction
screens
to
Phase
I
ESAs
under
the
AAI
regulation.

Exhibit
5­
3:
The
Expected
Changes
in
Phase
I
ESA
Activities
under
the
AAI
Regulation
Phase
I
ESA
Activities
Expected
Changes
in
Phase
I
ESA
Activities
under
the
AAI
Regulation
Interviews
with
the
property
owner(
s),
operators,
and
occupants
Conduct
interviews
with
neighboring
property
owners
and/
or
occupants
for
abandoned
properties
Review
of
historical
use
information
No
Change
Review
of
Federal
and
state
regulatory
databases
No
Change
Review
of
state
and
local
environmental
records
No
Change
Site
visit
No
Change
Review
of
site
documents,
if
provided
by
client
No
Change
Interviews
with
local
government
officials
No
Change
Preparation
of
Phase
I
ESA
report
 
Document
the
results
of
the
searches
for
recorded
environmental
cleanup
liens
 
Document
the
relationship
of
the
purchase
price
to
the
value
of
the
property,
if
the
property
was
not
contaminated
 
Document
the
degree
of
obviousness
of
the
presence
or
likely
presence
of
contamination
at
the
property
Source:
ICF
Analysis.

5.6.5.2
Incremental
Cost
 
Interviews
with
Neighboring
Property
Owners
and/
or
Occupants
Under
the
ASTM
E1527­
2000
standard,
interviews
with
the
property
owner,
operator(
s),
and
occupant(
s)
are
conducted
to
obtain
information
to
help
identify
recognized
environmental
conditions
in
connection
with
the
subject
property.
In
addition,
current
practice
includes
identifying
and
interviewing
past
owners
and
occupants
of
a
property
to
the
extent
necessary
to
identify
and
understand
historical
uses
and
ownerships
of
the
property.
Interviews
are
typically
performed
in
person
during
the
site
visit,
although,
they
may
also
be
done
in
writing
or
by
telephone
before
or
after
the
site
visit,
or
in
some
combination
thereof.
The
proposed
AAI
standard
does
not
impose
any
incremental
requirements
above
those
currently
performed
when
EIA
for
the
AAI
Regulation
5­
19
conducting
an
environmental
site
assessment
using
the
ASTM
standards
in
those
cases
in
which
the
current
owners
and/
or
occupants
of
a
property
can
be
identified.

Questions
asked
during
the
interviews
should
attempt
to
obtain
information
related
to
the
current
and
past
uses
and
conditions
of
the
property,
information
related
to
helpful
site
documents,
and
any
information
related
to
known
litigation,
administrative
proceedings,
violations,
or
governmental
actions
relevant
to
hazardous
substances
or
petroleum
products
in,
on,
or
from
the
property.
Thus,
the
scope
of
the
interviews
would
be
similar
to
the
interviews
performed
under
the
current
ASTM
standard
and
would
likely
be
conducted
before,
during,
or
after
the
site
visit,
as
deemed
appropriate
by
the
environmental
professional.
Therefore,
the
proposed
AAI
rule
would
not
impose
any
additional
burden
with
respect
to
interviewing
the
subject
property
owner(
s)
and
occupant(
s).
21
Unlike
the
current
ASTM
standard,
the
proposed
AAI
standard
imposes
specific
interviewing
requirements
for
abandoned
properties.
In
the
case
of
the
all
appropriate
inquiries
conducted
at
abandoned
properties,
the
proposed
rule
requires
that
owners
and
occupants
of
neighboring
or
nearby
properties
be
interviewed
for
the
purposes
of
obtaining
information
regarding
the
uses
and
potential
conditions
of
the
property.
Questions
asked
during
the
interview
should
attempt
to
obtain
information
related
to
historic
uses
of
the
subject
property,
as
well
as
any
information
related
to
potential
unauthorized
uses
of
the
subject
property
that
could
affect
environmental
conditions
at
the
property.

For
the
purposes
of
this
analysis,
we
have
assumed
that
the
environmental
scientist/
specialist
would
perform
the
required
neighboring
property
interview.
Based
on
ICF
Consulting's
experience
in
conducting
interviews
for
ESAs,
it
is
our
judgment
that
each
neighboring
property
interview
would
take
approximately
one
hour
for
small
abandoned
undeveloped
and
residential
properties
and
up
to
three
hours
for
large
abandoned
industrial
properties.
These
labor
estimates
are
approximately
one­
half
the
estimated
time
for
conducting
interviews
with
the
subject
property
owners/
occupants.
The
rationale
for
the
reduced
labor
estimate
is
based
on
the
likelihood
that
the
neighboring
property
owners/
occupants
will
have
less
knowledge
regarding
the
environmental
conditions
at
the
subject
property
than
the
owners/
occupants
of
the
subject
property.
When
developing
the
hour
burden
estimates,
however,
we
have
taken
into
consideration
that
owners/
occupants
of
neighboring
properties
may
be
harder
to
locate
and
establish
a
contact
with
than
the
subject
property
current
owner/
occupants.
The
neighboring
property
interview
would
involve
obtaining
and
documenting
information
regarding
past
owners
and
uses
of
the
subject
property.
Efforts
must
be
made
to
make
contact
with
the
appropriate
person
at
the
neighboring
property,
coordinate
the
interview,
and
conduct
the
interview.
Logistically,
the
neighboring
property
interview
may
not
necessarily
occur
at
the
same
time
as
the
subject
property
site
visit.
We
expect
that
such
interviews
would
likely
be
done
in
writing
or
by
telephone
before
or
after
the
site
visit,
or
in
some
combination
thereof.
The
higher
hour
21
The
proposed
AAI
rule
does
not
explicitly
require
interviews
with
past
owners
and
occupants.
The
proposed
rule
states
that
such
interviews
should
be
conducted
to
the
extent
necessary
to
learn
the
full
history
of
the
subject
property.
Thus,
some
fraction
of
property
transactions
would
include
interviews
with
past
owners/
occupants.
Such
interviews,
however,
would
not
necessarily
represent
an
incremental
burden.
The
environmental
professional
would
inquire
about
the
past
uses
from
the
past
owners/
occupants,
rather
than
the
current
ones,
which
should
make
the
interviews
with
the
current
owners/
occupants
less
time
consuming.
EIA
for
the
AAI
Regulation
5­
20
estimate
for
interviewing
neighbors
of
commercial/
industrial
properties
(
2
to
3
hours
per
interview)
is
due
to
the
likelihood
that
these
types
of
properties
will
have
a
greater
potential
for
identified
environmental
conditions,
therefore
requiring
more
interviewing
time
and
follow­
up
questioning.

To
develop
the
overall
cost
impact
of
the
required
neighboring
property
interviews,
we
needed
to
make
an
assumption
regarding
the
distribution
of
the
number
of
interviews
that
might
be
required
for
different
types
of
abandoned
properties.
In
other
words,
for
each
abandoned
property,
how
many
interviews
of
neighboring
properties
would
be
required
to
achieve
the
objectives
of
the
proposed
AAI
rule
(
e.
g.,
identifying
potential
past
uses
of
the
property
and
potential
environmental
conditions)?.
The
number
of
required
interviews
will
depend
not
only
on
the
perceived
environmental
conditions
of
the
abandoned
property
but
also
on
factors
such
as
the
turnover
rate
of
neighboring
properties.
We
have
assumed
the
following
distribution,
regardless
of
property
type:

 
60%
of
abandoned
sites
would
require
one
neighboring
property
interview
 
30%
of
abandoned
sites
would
require
two
neighboring
property
interviews
 
10%
of
abandoned
sites
would
require
three
neighboring
property
interviews.

Generally,
all
abandoned
sites
would
require
at
least
one
neighboring
property
interview,
40
percent
would
require
more
than
one,
and
10
percent
would
require
three.
Based
on
ICF
Consulting's
experience
in
conducting
ESAs,
we
expect
that,
in
most
cases,
two
interviews
would
be
sufficient
to
gather
relevant
information
about
the
subject
property.

To
develop
the
overall
cost
impact
of
this
requirement,
we
needed
to
make
an
assumption
regarding
the
distribution
of
abandoned
properties
and
properties
with
known
owners.
Because
data
on
abandoned
properties
are,
at
best,
scarce,
we
modeled
the
distribution
of
abandoned
and
non­
abandoned
sites
as
a
range.
The
lower
and
upper
bound
estimates
of
the
range
were
based
on
an
estimate
of
vacant
lands
in
urban
areas
and
an
estimate
of
abandoned
Superfund
sites,
respectively.

In
the
2000
study
"
Vacant
Land
in
Cities:
An
Urban
Resource,"
the
Brookings
Institution's
Center
on
Urban
and
Metropolitan
Policy
investigated
the
prevalence
of
vacant
and
abandoned
structures
in
70
cities
nation­
wide.
The
study
found
that
"
on
average,
fifteen
percent
of
a
city's
land
was
deemed
vacant."
Although
abandoned
properties
are
a
subset
of
vacant
lands,
for
sake
of
simplicity,
we
assumed
that
at
least
15
percent
of
all
commercial
property
transactions
subject
to
the
all
appropriate
inquiries
requirements
involve
abandoned
properties.
This
estimate,
therefore,
was
modeled
as
a
lower
bound
of
the
range.

To
estimate
an
upper
bound
of
the
range,
we
used
EPA
data
on
Superfund
sites.
EPA
statistics
on
the
National
Priorities
List
(
NPL)
sites
show
that
approximately
28
percent
of
all
Superfund
sites
are
either
abandoned
or
have
no
known
potentially
responsible
party
(
PRP)
from
whom
to
recover
costs.
22
Unlike
abandoned
Superfund
sites,
the
universe
of
all
commercial
properties
that
are
abandoned
are
not
necessarily
contaminated.
Therefore,
we
would
expect
that
the
22
CERCLIS
SCAP­
14
Report,
EPA,
2004.
EIA
for
the
AAI
Regulation
5­
21
percentage
of
all
commercial
properties
that
are
abandoned
is
not
higher
than
the
number
of
abandoned
Superfund
sites,
expressed
as
a
fraction
of
the
total
number
of
the
NPL
sites.
Thus,
for
the
purpose
of
this
analysis,
we
assumed
that
not
more
than
28
percent
of
all
commercial
properties
subject
to
the
all
appropriate
inquiries
requirements
are
abandoned.

5.6.5.3
Incremental
Cost
 
Relationship
of
the
Purchase
Price
to
the
Value
of
the
Property
Under
the
current
ASTM
E1527­
2000
standard
(
Section
5.4,
Reason
for
Significantly
Lower
Purchase
Price),
if
a
user
has
actual
knowledge
that
the
purchase
price
of
the
property
is
significantly
less
than
the
purchase
price
of
comparable
properties,
the
user
should
provide
an
explanation
for
the
reduced
price
and
make
a
written
record
of
the
explanation.
The
ASTM
E1527­
2000
requires
that
some
research
of
the
local
real
estate
market
be
performed
to
determine
if
the
purchase
price
reflects
the
fare
market
value
of
a
property.
The
requirement
imposed
by
the
proposed
AAI
rule
is
not
significantly
different
from
the
interim
standard.
The
environmental
professional
does
not
need
to
perform
a
real
property
appraisal
of
the
property.
However,
the
prospective
owner
must
consider
whether
or
not
the
purchase
price
generally
reflects
the
fair
market
value
of
the
property,
assuming
the
property
is
not
contaminated.
The
requirement
applies
to
all
properties
on
which
a
Phase
I
ESA
is
been
performed.
Therefore,
we
have
assumed
that
some
research
of
the
local
real
estate
market
would
be
performed
in
all
property
transactions
to
determine
whether
the
purchase
price
differs
significantly
from
the
market
value
of
the
subject
property.
This
activity
represents
no
incremental
burden
over
the
general
research
conducted
in
the
base
case.

To
determine
whether
the
purchase
price
reflects
the
fair
market
value
of
the
subject
property,
a
prospective
purchaser
is
expected
to
use
publicly
available
data
or
to
consult
a
local
real
estate
agent.
Again,
a
real
property
appraisal
of
the
subject
property
is
not
required.
Because
the
proposed
rule
does
not
require
a
more
extensive
search
than
currently
performed
under
the
ASTM
E1527­
2000,
there
would
be
no
incremental
cost
to
the
user
associated
with
obtaining
the
necessary
information.

In
the
cases
where
there
is
a
significant
difference
between
the
purchase
price
and
the
fair
market
value
of
the
subject
property,
the
AAI
regulation
imposes
an
additional
requirement.
The
proposed
regulation
requires
the
environmental
professional
to
document
in
the
all
appropriate
inquiries
report
the
information
received
from
the
user
regarding
the
reason
for
the
difference
between
the
purchase
price
and
the
fair
market
value.
The
time
required
to
document
the
information
represents
the
incremental
labor
hour
burden
under
this
activity
task.

The
hour
burden
for
this
requirement
is
expected
to
be
relatively
minimal.
Based
on
ICF
Consulting's
experience,
we
expect
that
explanations
of
purchase
price/
market
value
discrepancies
are
generally
simple,
and
would
require
no
more
than
one­
half
page
of
text
to
document
in
the
Phase
I
ESA
report.
ICF's
experience
indicates
that
composing,
reviewing,
and
editing
this
amount
of
text
takes
approximately
one­
half
hour
of
time
for
the
environmental
professional,
regardless
of
the
property
type
and
size.
This
incremental
labor
involves
the
time
required
for
the
environmental
professional
to
request
the
explanation
for
the
reduced
purchase
price
from
the
user,
and
to
document
the
information
in
the
all
appropriate
inquiries
report.
EIA
for
the
AAI
Regulation
5­
22
The
proposed
regulation's
requirement
that
the
difference
between
the
purchase
price
and
the
fair
market
value
of
the
subject
property
be
considered
would
affect
all
properties
on
which
a
Phase
I
ESAs
are
performed.
We
expect,
however,
that
only
a
small
fraction
of
prospective
property
owners
would
find
the
purchase
price
to
be
significantly
lower
than
the
prices
paid
for
similar
properties
located
in
the
same
vicinity
as
the
subject
property.
Therefore,
the
documentation
requirement
is
expected
to
affect
only
a
small
fraction
of
the
properties
on
which
Phase
I
ESAs
are
performed.
These
are
likely
the
properties
with
a
perceived
risk
of
contamination
or
likely
contamination,
where
the
market
has
already
discounted
the
price
for
the
perceived
risk.
We
have
assumed
that
15
percent
of
the
properties
will
be
affected.
The
assumption
is
based
on
the
EDR
estimate
that
between
10
and
15
percent
of
Phase
I
ESAs
lead
to
Phase
II
ESAs.
Since
it
is
uncertain
what
type
of
properties
(
in
terms
of
size
and
type)
the
additional
requirement
may
impact,
we
assumed
that
all
properties
are
equally
likely
to
be
affected.

5.6.5.4
Incremental
Cost
 
Search
for
Environmental
Liens
and
Institutional
Controls
Under
the
current
ASTM
E1527­
2000
standard
(
Section
5.2),
it
is
the
user's
responsibility
to
check
title
records
for
environmental
liens
or
activity
and
land
use
limitations
(
or
deed
restrictions)
(
if
any)
that
are
recorded
against
the
property,
and
report
any
of
these
to
the
environmental
professional
performing
the
Phase
I
ESA.
This
task
is
not
the
responsibility
of
the
environmental
professional
performing
the
Phase
I
ESA.
Under
the
current
industry
practices,
a
user
is
most
likely
to
engage
a
title
company
or
title
professional
to
check
for
the
required
records,
rather
then
perform
the
search
himself.

Unlike
the
current
ASTM
standard,
the
AAI
regulation
does
not
explicitly
state
that
it
is
the
user's
responsibility
to
perform
the
search
for
environmental
liens
and
institutional
controls
(
ICs).
In
determining
the
unit
cost
for
this
activity,
we
assumed
that
the
user
would
choose
the
least
costly
option
that
would
satisfy
the
AAI
requirement.
It
is
believed
that,
on
average,
the
opportunity
cost
to
the
user
for
searching
for
ICs
should
be
lower
than
what
he
or
she
would
need
to
pay
the
environmental
professional
to
perform
the
search.
Therefore,
for
the
purpose
of
this
analysis,
we
have
assumed
that
the
user
would
be
responsible
for
the
search
for
environmental
liens
and
ICs
and
provide
the
search
results
to
the
environmental
professional.
This
essentially
is
the
same
scenario
as
the
baseline
case.

It
is
believed
that
the
labor
hour
burden
to
the
user
to
perform
the
search
would
not
increase
under
the
AAI
regulation.
We
also
assumed
that
the
ODCs
would
not
increase
under
the
proposed
regulation.
The
labor
hour
burden
associated
with
the
search
for
environmental
liens
and
institutional
controls
could
range
from
approximately
one­
half
hour
for
undeveloped/
residential
properties
to
two
hours
for
commercial/
industrial
properties.
The
higher
labor
hours
for
the
commercial/
industrial
sites
are
due
to
the
greater
likelihood
that
these
types
of
properties
have
possible
environmental
liens
or
institutional
controls
associated
with
them.
The
ODCs
associated
with
these
activities
could
range
from
minimal
(
e.
g.,
$
15/
property)
for
photocopying
obtained
records
up
to
approximately
$
100/
property
for
having
a
commercial
title
company
perform
the
search.
We
would
expect
that,
in
most
cases,
the
user
would
have
a
commercial
title
company
perform
the
search.
EIA
for
the
AAI
Regulation
5­
23
Unlike
the
current
ASTM
standard,
the
AAI
regulation
is
explicit
in
requiring
the
environmental
professional
to
document
the
search
results
in
the
Phase
I
ESA
report.
This
AAI
requirement
is
expected
to
affect
all
properties
on
which
a
Phase
I
ESA
is
performed.
Based
on
ICF
Consulting's
experience,
it
is
our
judgment
that
it
would
require
no
more
than
one­
half
to
one
page
of
text
to
document
the
user's
environmental
lien
and
institutional
control
search
results
in
the
Phase
I
ESA
report.
Our
experience
indicates
that
composing,
reviewing,
and
editing
this
amount
of
text
would
take
between
one­
half
hour
to
one
hour
of
time
for
the
environmental
professional,
with
the
range
depending
on
the
complexity
of
the
site.
We
therefore
estimated
one­
half
hour
for
the
undeveloped/
residential
properties
and
up
to
one
hour
for
the
commercial/
industrial
properties.
The
higher
incremental
hours
for
documenting
the
search
results
for
commercial/
industrial
properties
are
due
to
the
greater
likelihood
that
these
types
of
properties
will
have
environmental
liens
or
institutional
controls
associated
with
them,
and
therefore
will
require
more
effort
to
review
and
summarize
in
the
all
appropriate
inquiries
report.

5.6.5.5
Incremental
Cost
 
The
Degree
of
Obviousness
of
the
Presence
or
Likely
Presence
of
Contamination
Under
the
AAI
regulation,
the
environmental
professional
would
be
required
to
include
a
discussion
regarding
the
degree
of
obviousness
of
the
presence
or
likely
presence
of
contamination
in
the
Phase
I
ESA
report.
The
discussion
would
be
based
on
the
conclusions
that
summarize
all
recognized
environmental
conditions
connected
with
the
property
and
the
potential
impact
of
these
recognized
environmental
conditions
on
the
property.
In
addition,
the
environmental
professional
may
provide
recommendations
for
next
steps
that
the
user
should
consider
in
the
ESA
process.
The
recommendations
could
include
activities
or
considerations
that
are
outside
the
current
scope
of
the
ASTM
E1527­
2000
standard
(
as
appropriate),
that
might
help
the
user
to
more
fully
characterize
the
impact
of
the
recognized
environmental
conditions
on
the
property
and
the
potential
liabilities
associated
with
the
identified
conditions.
The
all
appropriate
inquiries
report
might,
for
example,
recommend
that
the
user
perform
selected
additional
non­
scope
activities
such
as
radon
testing,
lead­
based
paint
testing,
asbestos
surveying,
health
and
safety
assessment,
or
a
full
Phase
II
site
assessment.

For
the
purposes
of
the
cost
model,
we
assumed
that
the
environmental
scientist/
specialist
would
prepare
the
discussion
related
to
the
degree
of
obviousness
of
the
presence
or
likely
presence
of
contamination
and
any
next
step
recommendations.
The
environmental
engineer
would
likely
review
any
recommendations
prepared
by
the
environmental
scientist/
specialist.
Based
on
ICF
Consulting's
experience,
the
incremental
labor
hours
to
perform
this
additional
discussion
are
expected
to
be
relatively
minimal.
We
estimate
that
the
incremental
hours
could
range
from
approximately
one­
half
hour
for
undeveloped/
residential
properties
to
one
hour
for
commercial/
industrial
properties.
This
incremental
labor
involves
the
time
required
for
the
environmental
professional
to
develop,
review,
and
edit
the
discussion
regarding
the
degree
of
obviousness
of
the
presence
or
likely
presence
of
contamination,
and
the
recommendations
for
next
steps
that
the
user
should
consider
in
the
ESA
process.
The
higher
incremental
hours
for
the
commercial/
industrial
properties
are
due
to
the
likelihood
that
these
types
of
properties
will
have
more
identified
environmental
conditions
that
may
warrant
further
assessment,
and
therefore
will
require
more
effort
to
incorporate
recommendations
into
the
all
appropriate
inquiries
report.
EIA
for
the
AAI
Regulation
5­
24
Based
on
the
EDR
estimate
of
the
likelihood
that
a
Phase
I
will
lead
to
a
more
comprehensive
environmental
site
investigation,
we
have
assumed
that
15
percent
of
properties
would
be
affected
by
this
requirement.
Since
it
is
uncertain
what
type
of
properties
(
in
terms
of
size
and
type)
the
additional
requirement
may
impact,
we
have
assumed
that
all
properties
are
equally
likely
to
be
affected.

5.6.5.6
Incremental
Costs
 
Transition
from
Transaction
Screens
Incremental
costs
for
the
users
transitioning
from
transaction
screens
to
Phase
I
ESAs
under
the
AAI
regulation
were
estimated
as
a
difference
between
the
cost
of
a
transaction
screen
and
the
cost
of
an
AAI
Phase
I
ESA.
To
estimate
the
cost
of
a
transaction
screen
by
property
type
and
size,
we
used
the
same
approach
as
explained
in
Section
5.6.1.
We
grouped
the
transaction
screen
activities
into
the
following
activity
categories:

 
Review
of
Federal/
state
databases
and
historical
use
information
 
Site
visit
 
Owner/
occupant
interviews
 
Completion
of
transaction
screen
questionnaire.

The
hour
burden
was
estimated
for
each
activity.
We
assumed
that
all
activities
are
performed
by
an
environmental
scientist/
specialist
and
that
the
environmental
scientist
needs
to
purchase
a
database
report
for
$
250.

5.7
The
AAI
Options
This
section
presents
the
methodology
for
estimating
unit
costs
of
three
regulatory
options
that
were
considered
by
the
Regulatory
Negotiating
Committee,
but
were
not
adopted.
Estimates
of
total
and
incremental
costs
for
each
regulatory
option
are
provided
in
Chapter
7.

5.7.1
Considered
Option
1
­
Environmental
Professional
Under
this
AAI
regulatory
option,
all
major
activities
would
be
performed
by
the
environmental
professional,
as
defined
by
the
AAI
regulation
under
§
312.10.
This
option
was
modeled
by
changing
the
distribution
of
labor
as
presented
in
Exhibit
5­
4.

Exhibit
5­
4:
Distribution
of
Labor,
by
Labor
Category
under
an
Alternative
AAI
Regulatory
Option
Labor
Category
Distribution
of
Labor
Environmental
Engineers
95%
Environmental
Scientists
and
Specialists,
Including
Health
0
%
Environmental
Engineering
Technicians
0
%
Administrative
Assistant
5
%
Total
100
%
EIA
for
the
AAI
Regulation
5­
25
5.7.2
Considered
Option
2
­
Interview
Requirement
Under
this
AAI
option,
the
interview
requirements
would
be
the
same
as
under
the
current
ASTM
standard.
For
the
purpose
of
this
analysis,
we
have
assumed
that
the
environmental
scientist/
specialist
would
interview
current
owner
and
occupants.
In
the
cases
where
current
owner
cannot
be
identified,
the
environmental
scientist/
specialist
would
interview
past
owners,
occupants,
and/
or
operators.
The
labor
included
in
the
cost
models
for
this
activity
includes
the
estimated
time
required
to
perform
the
interviews
with
the
property
owner,
occupants,
and/
or
operators.

5.7.3
Considered
Option
3
­
Sampling
Under
this
AAI
option,
limited
sampling
would
be
required
for
properties
with
perceived
risk
of
contamination.

Environmental
sampling
and
testing
of
various
media
(
e.
g.,
soil,
groundwater,
surface
water,
air,
sediment,
building
materials,
etc.)
at
a
property
can
provide
a
user
with
additional
information
to
further
characterize
the
impact
that
a
recognized
environmental
condition
may
have
on
a
property.
ASTM
E1527­
2000
(
Section
6.4)
does
not
require
any
testing
or
sampling
of
materials.

It
is
difficult
to
anticipate
potential
environmental
sampling
activities
at
a
property
prior
to
completing
a
Phase
I
ESA,
particularly
if
no
prior
sampling
has
been
performed
on
the
property.
Only
after
the
Phase
I
ESA
has
been
completed,
does
an
environmental
professional
begin
to
have
a
sufficient
understanding
of
the
potential
impacts
that
recognized
environmental
conditions
might
have
on
the
property.
Incremental
costs
associated
with
environmental
sampling
are
usually
significant
relative
to
the
cost
of
the
Phase
I
ESA
itself.
Labor
associated
with
collecting
samples,
laboratory
analytical
costs,
subcontracted
services,
and
field
sampling
equipment
costs
all
contribute
to
this
significant
incremental
cost.

For
the
purposes
of
this
AAI
option,
three
typical
environmental
sampling
activities
that
are
commonly
performed
at
properties
as
a
follow­
up
to
a
Phase
I
ESA
are
identified
below,
and
cost
estimates
are
developed
for
each.
The
activities
include
groundwater
monitoring
well
installation,
groundwater
monitoring
well
sampling,
and
surface
soil
sampling.

Groundwater
Monitoring
Well
Installation.
Groundwater
monitoring
wells
are
installed
at
properties
in
order
to
determine
impacts
to
groundwater
from
recognized
environmental
conditions
(
such
as
spills
and
releases)
and
to
gain
a
better
understanding
of
hydrogeologic
conditions
at
a
property.
Monitoring
wells
are
installed
at
all
different
types
of
properties.
For
example,
monitoring
wells
are
often
installed
on
residential
or
commercial
properties
that
have
a
leaking
underground
storage
tank(
s)
(
LUST)
used
for
the
storage
of
petroleum
product.

For
the
purpose
of
this
analysis,
we
have
estimated
labor
and
expense
costs
associated
with
installing
three
shallow
(
20­
feet
deep)
monitoring
wells
at
a
property.
The
total
cost
estimate
for
three
wells
is
approximately
$
13,000,
or
approximately
$
4,300
per
well.
This
includes
costs
associated
with
mobilization/
demobilization,
drill
rig
and
crew
labor,
well
materials,
supervision
EIA
for
the
AAI
Regulation
5­
26
by
the
environmental
professional,
disposal
of
cuttings
and
development
water,
engineering
costs,
and
contingency
costs.
Travel­
related
costs
(
i.
e.,
airfare,
hotel,
meals,
mileage,
car
rental,
etc.)
that
may
be
incurred
during
well
installation
activities
are
not
included.
Detailed
cost
estimates
are
presented
in
Appendix
III.

Groundwater
Monitoring
Well
Sampling.
Following
the
installation
of
monitoring
wells,
groundwater
samples
are
collected
and
analyzed
for
various
chemical
constituents.
The
results
from
these
analyses
provide
information
on
the
impacts
of
identified
environmental
conditions
on
the
groundwater
associated
with
the
property.
Groundwater
samples
can
also
be
collected
at
properties
that
have
existing
monitoring
wells.

For
the
purpose
of
this
analysis,
we
have
derived
labor
and
expense
costs
estimates
associated
with
sampling
three
shallow
(
20
feet
deep)
monitoring
wells
at
a
property.
The
total
cost
estimate
for
three
wells
is
approximately
$
6,000,
or
approximately
$
2,000
per
well.
This
cost
includes
the
labor
to
collect
the
samples,
the
cost
of
the
laboratory
analyses,
data
review,
reporting,
supervision,
and
contingency
costs.
Travel­
related
costs
(
i.
e.,
airfare,
hotel,
meals,
mileage,
car
rental,
etc.)
that
may
be
incurred
during
well
sampling
activities
are
not
included.
Detailed
cost
estimates
are
presented
in
Appendix
III.

Surface
Soil
Sampling.
Surface
soil
sampling
is
performed
at
properties
to
determine
impacts
to
soil
from
recognized
environmental
conditions
(
such
as
spills
and
releases)
at
a
property.
For
example,
soil
samples
are
often
collected
and
analyzed
in
areas
adjacent
to
PCB­
containing
transformers,
hazardous
waste
storage
areas,
solid
waste
disposal
areas,
etc.
to
provide
information
on
the
impacts
of
identified
environmental
conditions
on
the
soil
associated
with
the
property.

For
the
purpose
of
this
analysis,
we
have
derived
labor
and
expense
cost
estimates
associated
with
collecting
and
analyzing
three
surface
soil
samples
at
a
property.
The
total
cost
estimate
for
three
samples
is
approximately
$
4,200,
or
approximately
$
1,400
per
soil
sample.
This
cost
includes
the
labor
to
collect
the
samples,
the
cost
of
the
laboratory
analyses,
data
review,
reporting,
supervision,
and
contingency
costs.
Travel­
related
costs
(
i.
e.,
airfare,
hotel,
meals,
mileage,
car
rental,
etc.)
that
may
be
incurred
during
soil
sampling
activities
are
not
included.
Detailed
cost
estimates
are
presented
in
Appendix
III.

As
discussed
above,
it
is
difficult
to
anticipate
the
level
of
potential
environmental
sampling
that
might
be
required
at
a
property.
It
is
therefore
difficult
to
assign
an
incremental
cost
for
the
purposes
of
this
EIA.
In
an
effort
to
provide
a
representative
range
of
sampling
costs
that
might
reflect
a
range
of
various
sampling
activities
at
a
range
of
possible
properties,
we
have
assumed
the
following:

 
Surface
soil
samples
would
be
collected
for
undeveloped
and
residential
properties;
 
Well
installation
and
groundwater
sampling
would
be
required
for
commercial
properties;
and
 
Soil
sample
collection,
well
installation,
and
groundwater
sampling
would
be
performed
on
industrial
sites.
EIA
for
the
AAI
Regulation
5­
27
In
modeling
this
AAI
regulatory
option,
we
have
assumed
that
a
smaller
fraction
of
industrial
properties
would
be
affected
relative
to
other
property
types.
Industrial
sites
are
more
likely,
relative
to
other
property
types,
to
already
have
some
type
of
sampling
conducted
on
them.

5.7.4
Less
Stringent
Alternative:
The
ASTM
E1527­
2000
Standard
Under
this
option,
the
all
appropriate
inquiries
standard
would
be
the
most
recent
standard
developed
by
ASTM
for
Phase
I
environmental
site
assessments,
the
ASTM
E1527­
2000
standard.
This
alternative
is
essentially
no
change
from
the
base
case.
Only
property
transactions
where
purchasers
currently
assess
a
property's
uses
and
ownership
using
only
a
transaction
screen
and
who
would
switch
to
the
AAI
standard
to
obtain
the
CERCLA
liability
protections
would
incur
incremental
costs.
EIA
for
the
AAI
Regulation
6­
1
CHAPTER
6:
Analytical
Approach
to
Estimating
Benefits
Theoretically,
to
find
the
social
benefits
of
the
AAI
regulation,
we
compare
the
state
of
the
world
with
and
without
the
regulation,
identifying
and
then
valuing
the
differences
other
than
the
costs
of
the
compliance.
Here,
we
need
to
identify
the
direct
effect
of
the
AAI
regulation
and
then
follow
through
the
consequences.

According
to
OMB's
"
Circular
A­
4"
guidance
and
EPA's
Guidelines
for
Preparing
Economic
Analysis
(
2000)
23,
the
appropriate
measure
of
the
benefits
of
a
policy
is
the
sum
of
individual
willingness
to
pay
(
WTP)
values.
WTP
is
the
maximum
amount
of
money
an
individual
would
pay
for
an
environmental
improvement.
In
the
case
of
AAI,
this
would
be
the
amount
an
individual
would
be
willing
to
pay
for
the
liability
protection
offered
by
the
rule.
Unfortunately,
and
not
surprisingly,
WTP
values
of
this
nature
are
unavailable.
Therefore,
we
rely
on
a
qualitative
discussion
of
the
benefits
of
this
rule.

6.1
Benefits
After
Promulgation
The
AAI
proposed
regulation,
for
the
vast
majority
of
users
who
conduct
an
assessment
that
complies
fully
with
its
provisions,
sets
standards
for
meeting
an
essential
criterion
to
qualify
for
CERCLA
liability
protection
that
would
be
either
unavailable
or
more
expensive
otherwise.
More
specifically,
this
protection
is
unavailable
to
owners
who
comply
only
with
the
ASTM
E1527­
2000,
as
is
the
case
in
the
base
case
for
a
majority.
The
effect
of
this
liability
protection
is
to
prevent
the
U.
S.
government
from
collecting
funds
for
environmental
damages
and
cleanups
under
CERCLA
in
those
cases
in
which
the
property
owners
might
have
been
held
liable
in
the
absence
of
AAI
and
the
other
statutory
provisions
for
obtaining
the
liability
protections.

In
addition
to
change
in
liability,
the
AAI
regulation
will
result
in
the
collection
of
some
measure
of
additional
information
regarding
the
actual
and
potential
environmental
conditions
at
a
property,
which
can
result
in
benefits.
The
benefits
that
accrue
due
the
availability
of
this
additional
information
include
allowing
purchasers
to
make
more
informed
choices
regarding
property
transactions
which
may
result
in
changes
in
a
purchaser's
preference
for
any
particular
property
as
well
as
a
purchaser's
decision
not
to
buy
property.
By
helping
to
ensure
that
adequate
information
on
prior
uses
and
environmental
conditions
is
uncovered,
the
regulation
may
be
expected
to
result
in
purchasers
uncovering
cases
of
soil
and
water
contamination
sooner
than
would
otherwise
be
the
case.
In
turn,
contamination
that
is
uncovered
and
dealt
with
sooner
will
often
be
less
extensive,
less
expensive
to
reverse,
cause
less
exposure,
and
do
less
damage
to
human
health
and
the
environment
The
changes
in
relative
costs
result
in
the
benefit
of
increased
purchases
of
brownfields.

The
direct
effect
of
changing
liability
is
a
shift
of
costs
between
the
Superfund
or
other
public
sources
of
cleanup
funds,
and
property
owners
who
would
be
liable
for
environmental
damages
without
the
AAI
standards:
if
the
same
sites
are
cleaned
up
no
matter
what
the
source
of
funds,

23
U.
S.
Environmental
Protection
Agency.
2000.
Guidelines
for
Preparing
Economic
Analyses.
Office
of
the
Administrator,
EPA
240­
R­
00­
003.
EIA
for
the
AAI
Regulation
6­
2
the
change
in
the
source
of
funds
is
only
a
resource
transfer
within
the
economy,
not
a
benefit.
In
other
words,
the
benefit
to
a
landowner
of
not
being
held
liable
for
the
costs
of
environmental
damages
on
a
newly
purchased
property
is
cancelled
out
from
a
social
perspective
by
the
cost
to
taxpayers,
and
society
as
a
whole
should,
in
some
sense,
be
indifferent.

The
change
in
the
source
of
funds,
however,
is
not
the
only
effect
of
the
change
in
liability.
Because
individual
prospective
purchasers
themselves
are
by
no
means
indifferent
to
the
source
of
funds,
whatever
the
view
of
society
as
a
whole,
the
risks
of
being
held
liable
for
cleanups
at
a
newly
purchased
site
have
real
effects
on
their
decisions.
Removing
their
liability
therefore
can
change
these
decisions,
resulting
in
real
resource
savings
from
a
social
perspective.

The
decisions
made
by
prospective
purchasers
in
response
to
potential
liability
can
be
divided
into
two
categories:
effects
on
the
number
of
real
estate
transactions
that
involve
brownfields
or
contaminated
properties,
and
effects
on
existing
transactions.
Reducing
concerns
about
liability
can
be
expected
to
reduce
the
costs
of
owning
certain
properties
such
as
brownfields,
and
thereby
increase
the
number
of
transactions
that
involve
such
properties.
Each
additional
transaction
would
provide
benefits
to
society
equal
to
the
difference
between
the
property's
value
to
the
buyer
and
its
value
to
the
seller,
plus
any
indirect
and
"
external"
benefits
to
society
that
would
result
from
additional
cleanups,
reduced
pollution
and
blight.
Of
course,
in
addition
to
these
additional
benefits,
there
are
additional
external
or
indirect
costs
associated
with
the
rule,
the
most
obvious
is
the
costs
associated
with
the
clean
up
of
brownfields.
The
liability
protections
afforded
under
CERCLA
to
purchasers
who
conduct
AAI
and
comply
with
other
statutory
provisions
may
increase
certain
purchasers'
preferences
for
brownfields
over
previously
undeveloped
properties
or
greenfields.

The
impact
of
the
proposed
AAI
standards
on
existing
transactions
may
result
in
a
change
in
the
value
of
a
property
because
of
the
greater
certainty
regarding
potential
contamination.
If
the
property
is
determined
to
be
clean
as
a
result
of
the
AAI
then
the
value
of
the
property
may
increase.
One
way
in
which
the
relative
value
of
a
brownfields
property
versus
a
greenfield
may
increase
is
through
a
change
in
the
insurance
premiums
associated
with
the
brownfield
property,
as
discussed
below.
24
Although
changes
in
the
cost
of
insurance
premiums
may
not
represent
a
net
social
benefit
attributable
to
the
AAI
rule,
the
reduction
in
insurance
premiums
does
illustrate
how
transaction
costs
for
prospective
property
buyers
may
change
due
to
changes
in
environmental
liabilities.

The
additional
liability
protection
afforded
to
prospective
purchasers
who
comply
with
the
proposed
AAI
standards
may
have
the
effect
of
lowing
insurance
rates.
Because
individual
property
owners
cannot
count
on
having
enough
resources
to
pay
for
cleanups
if
they
are
held
liable
under
CERCLA,
they
will
often
protect
themselves
by
purchasing
property
insurance
that
includes
coverage
for
known
and
potential
risks.
In
many
cases,
the
insurance
policies
explicitly
cover
environmental
liabilities.
In
other
cases,
businesses
have
what
are
called
comprehensive
general
liability
(
CGL)
policies,
which
are
not
intended
to
cover
pollution
liabilities
but
may
do
24
Insurance
premiums
are
a
cost
associated
with
the
property
that
will
be
capitalized
into
the
price
of
the
property.
EIA
for
the
AAI
Regulation
6­
3
so
in
some
cases.
25
Insurance
policies
that
cover
pollution
liabilities
shift
the
risks
of
claims
for
cleanups
costs
from
the
property
owners
to
the
insurance
company.
This
coverage
comes
at
a
cost,
referred
to
as
a
premium.

The
premiums
are
set,
in
a
competitive
market,
to
cover
not
only
the
insurance
company's
expected
payouts
if
its
clients
are
held
liable
but
also
its
administrative
costs
(
such
as
the
costs
of
assessing
liability
and
dealing
with
claims).
This
fact
has
two
consequences:
first,
as
expected
payouts
decline,
premiums
can
be
expected
to
decline
as
well.
Second,
because
the
administrative
costs
that
are
built
into
premiums
 
which
include
costs
of
litigation
and
estimation
of
risks
 
are
related
to
the
potential
losses
to
the
insurance
company,
there
is
likely
to
be
a
reduction
in
administrative
costs
along
with
the
premiums.

The
shift
in
liability
from
the
landowners
to
the
insurance
companies
is
neutral
from
the
point
of
view
of
social
costs
(
because
the
reduced
liability
for
landowners
is
cancelled
out
by
the
increase
for
insurance
companies).
Thus,
reductions
in
the
cost
of
insurance
premiums
due
to
the
proposed
AAI
rule
and
attributable
to
the
expected
payouts
for
cleanups
do
not
yield
a
net
social
benefit,
but
are
merely
a
transfer
in
costs
from
one
sector
of
the
economy
to
another.
Changes
in
the
rest
of
the
premiums,
however,
may
represent
benefits:
by
reducing
the
amount
of
insurance
needed
by
property
owners,
the
AAI
regulation
may
reduce
the
resources
that
are
currently
going
to
the
insurance
industry
for
insurance­
related
expenses
other
than
claims.

Insurance
premiums
are
often
set
at
prices
that
exceed
the
expected
value
of
the
loss
that
is
being
insured
against
to
cover
the
administrative
costs
of
running
the
insurance
business
and
to
cover
the
opportunity
cost
of
the
capital
the
insurance
companies
have
to
set
aside
as
a
reserve
against
potential
liabilities.
Therefore,
not
all
of
the
potential
reduction
in
insurance
premiums,
due
to
the
increased
information
provided
as
a
result
of
the
AAI
rule,
is
a
transfer,
because
not
all
of
the
reduction
in
the
cost
of
insurance
premiums
is
necessarily
directly
related
to
the
change
in
expected
liability.
So,
although
a
substantial
portion
of
any
change
in
insurance
premium
costs
just
represents
a
transfer
(
and
does
not
yield
a
net
social
benefit),
because
insurance
companies
base
the
price
of
environmental
liability
insurance
on
more
than
the
expected
cost
of
liability
(
e.
g.,
to
cover
their
administrative
and
potential
litigation
costs),
some
portion
of
the
reduction
in
payments
made
by
property
buyers
to
the
insurance
companies
represents
social
costs
that
will
indeed
be
reduced.
The
reduction
in
insurance
costs
associated
with
reduced
administrative
costs
for
insurers
and
the
reductions
in
the
opportunity
cost
of
capital
will
constitute
net
social
benefits.

To
an
unknown
extent,
this
reduction
in
administrative
costs
to
insurance
companies
could
be
offset
or
reinforced
by
changes
in
administrative
costs
assumed
by
the
public
sectors
as
a
result
of
the
liability
transfer
and
to
the
extent
that
these
cost
reductions
are
off­
set,
the
net
social
benefits
that
may
be
attributed
to
the
proposed
AAI
rule
are
reduced.
However,
because
of
the
size
of
the
public
sector
compared
to
property
owners,
it
can
act
much
more
risk­
neutral
in
the
face
of
potential
clean­
up
expenses.
The
public
sector
is
unlikely,
therefore,
to
purchase
insurance
to
help
it
avoid
the
risks
of
clean­
up
costs
and
other
damages
when
liability
is
25
See
for
example,
"
The
Resurrection
of
Environmental
Coverages"
Andrew
S.
Boris
and
Jamie
C.
Kandalepas,
Insurance
Journal,
September
22,
2003,
and
"
Superfund
Awakes
in
State
Supreme
Courts,"
RiskWorld,
Donald
Sutherland,
December
5,
1997.
EIA
for
the
AAI
Regulation
6­
4
transferred
to
it
by
the
AAI
regulation.
Thus,
there
is
no
reason
to
expect
a
direct
offset
to
the
savings
of
insurance­
related
costs
when
the
liability
is
transferred.
Nor
will
the
public
sector
be
likely
to
incur
the
insurance­
related
costs
that
the
private
sector
avoids
in
the
transfer
of
liability:
the
public
sector
has
much
less
need
to
predict
the
expected
liabilities
from
each
site,
and
so
will
not
be
likely
to
increase
its
administrative
costs
for
that
reason.
26
The
other
major
insurancerelated
cost
that
could
possibly
be
shifted
from
the
private
to
the
public
sector
 
the
costs
of
litigating
to
ensure
that
payouts
are
not
made
when
they
are
not
absolutely
necessary
 
would
not
necessarily
be
shifted
to
the
public
sector
either.
In
fact,
it
is
not
clear
a
priori
whether
the
public
sector's
litigation
costs
would
rise
or
fall
as
the
number
of
potential
targets
for
cost
recovery
were
reduced
by
the
liability
protections
provided
by
the
AAI
rule.

6.2
Interim
Period
This
view
would
not
apply
during
the
interim
period,
in
which
the
base
case
practices
of
a
large
majority
comply
with
ASTM
E1527­
2000.
Because
the
Brownfields
Amendments
grant
liability
protection
during
the
interim
period
to
owners
who
have
conducted
Phase
I
ESA
under
ASTM
E1527­
2000,
compliance
with
the
somewhat
different
AAI
regulation
provisions
would
offer
no
incremental
liability
protection
and
would
therefore
have
no
benefits.
After
the
date
specified
by
Congress
as
the
end
of
the
interim
period
and
the
date
for
the
promulgation
of
the
AAI
regulation,
compliance
with
ASTM
E1527­
2000
by
itself
will
no
longer
provide
liability
protection.
Only
a
Phase
I
ESA
that
complies
with
the
10
criteria
set
out
by
the
Brownfields
Amendments
will
at
that
point
confer
liability
protection,
and
the
interim
protection
provided
by
ASTM
E1527­
2000
would
lapse
if
it
did
not
address
all
criteria.

For
this
reason,
the
benefits
associated
with
the
AAI
regulation
after
its
promulgation
are
attributable
to
full
compliance
with
its
provisions,
rather
than
to
the
Brownfields
Amendments
in
combination
with
ASTM
E1527­
2000.
(
The
costs
of
the
AAI
regulation,
on
the
other
hand,
are
measured
as
the
increment
over
the
base
case
situation
in
which
most
property
owners
and
prospective
purchasers
conduct
Phase
I
ESAs
under
ASTM
E1527­
2000;
thus,
only
the
difference
between
current
costs
and
the
costs
that
we
project
under
the
AAI
regulation
are
attributable
to
that
regulation.)

6.3
Benefits
from
the
Cleanup
and
Redevelopment
of
Brownfields
Categorization
of
Benefits,
Based
on
Literature
As
discussed
above,
the
benefits
of
the
AAI
regulation
can
be
divided
into
two
types:
benefits
accruing
to
parties
to
existing
transactions,
and
benefits
related
to
increases
in
transactions
that
involve
brownfields.
We
explained
in
Chapter
2
that
previously
undeveloped
properties
("
greenfields")
and
existing
properties
that
may
be
contaminated
("
brownfields")
compete
within
the
same
commercial
real
estate
market.
Although
brownfields
often
have
the
advantages
of
existing
infrastructure
and
more
convenient
locations,
they
also
have
the
disadvantage
of
greater
risks
of
clean­
up
liabilities
that,
prior
to
the
AAI
rule,
made
such
properties
less
desirable
26
Costs
of
administering
clean­
ups
would
be
transferred
from
the
private
to
the
public
sector,
but
these
costs
should
be
included
in
the
clean­
up
costs
rather
than
in
the
insurance­
related
expenses
that
cause
premiums
to
exceed
expected
pay­
outs.
EIA
for
the
AAI
Regulation
6­
5
relative
to
greenfields.
The
AAI
regulation
will
help
reduce
the
potential
liabilities
of
purchasing
a
property
that
might
be
contaminated.
As
a
result
of
the
regulation,
brownfields
and
greenfields
will
be
closer
substitutes,
and
therefore
the
number
of
brownfields
sold,
assessed,
cleaned
up,
and
then
developed
is
expected
to
increase.
27
This
section
provides
a
qualitative
discussion
of
the
benefits
that
may
be
realized
from
brownfields
redevelopment
but
does
not
focus
exclusively
on
social
benefits.
It
is
not
possible
to
monetize
these
benefits
and
therefore
we
rely
on
a
qualitative
discussion.

Numerous
studies
have
documented
the
benefits
of
cleaning
up
and
redeveloping
brownfields
sites.
Some
of
these
benefits,
which
are
discussed
in
the
section,
include:


Reduction
in
releases
of
pollutants
to
the
environment.


Greenspace
and
transportation
benefits,
such
as
reduction
in
use
of
greenfields
for
development,
a
resultant
decrease
in
vehicles
miles
traveled
by
cars,
and
associated
reductions
in
air
pollution
and
traffic
congestion.


Increase
in
property
values
and
tax
revenues
for
localities.


Improved
quality
of
life.
28
Environmental
Benefits
Given
their
industrial
legacy,
brownfields
are
stigmatized
by
the
perceived
or
known
presence
of
contamination.
Some
brownfields
sites
are
assessed
and
no
contamination
is
found
at
the
site.
Many
brownfields,
however,
lie
abandoned
and
contaminated.
A
variety
of
contaminants
can
be
present
at
a
site,
depending
on
its
prior
use,
and
contamination
can
involve
a
variety
of
media,
such
as
soil,
groundwater,
and
surface
water.
Without
redevelopment,
contamination
is
likely
to
persist
at
these
sites,
because
no
one
steps
forward
to
assess
and
remediate
them.

Old
factories,
abandoned
gas
stations,
decrepit
junk
and
salvage
yards,
and
abandoned
rail
yards,
among
other
brownfields,
can
all
pose
a
threat
to
the
environment
and
human
health
as
contaminated
soil,
groundwater,
and
surface
water
go
unassessed
and
unremediated.
A
brownfields
site
that
consists
of
an
abandoned
industrial
factory
might
have
soil
and
surface
water
contamination
from
past
chemical
leaks
or
dumping.
If
contamination
and
chemicals
have
leached
into
the
soil,
contamination
could
reach
groundwater,
threatening
drinking
water
supplies
and
human
health.
An
abandoned
gas
station
might
still
have
leaking
underground
storage
tanks
that
would
not
be
discovered
and
removed
if
not
for
assessment,
cleanup,
and
redevelopment
of
the
brownfields
site.

Brownfields
redevelopment
can
positively
impact
water
quality
for
an
entire
city
or
region.
When
development
takes
place
on
previously
undeveloped
space,
it
is
usually
less
dense
than
the
development
surrounding
brownfields.
A
less
dense
development
leads
to
creation
of
more
impervious
area,
such
as
numerous
new
roads,
sidewalks,
and
large
parking
lots.
One
study
found
that
an
apartment
building
of
10
units
on
one
acre,
such
as
might
be
built
on
a
brownfields
27
Due
to
data
limitations,
however,
we
cannot
estimate
the
exact
rate
of
substitution.
28
This
list
is
not
meant
to
be
exhaustive.
EIA
for
the
AAI
Regulation
6­
6
site,
can
have
less
impervious
surface
area
than
six
single
family
homes
on
the
same
acre.
29
More
impervious
surface
leads
to
high
levels
of
runoff,
causing
sewer
overflows
during
storm
water
events.
These
sewer
overflows,
accompanied
by
the
contamination
(
such
as
oil,
antifreeze,
and
road
salt)
from
roads
and
parking
lots,
causes
a
decline
in
surface
water
quality.

In
addition
to
these
benefits,
redevelopment
of
brownfields
can
also
lead
to
reductions
in
air
emissions,
as
discussed
in
the
section
below
on
greenspace
and
transportation
benefits.

Greenspace
and
Transportation
Benefits
Redevelopment
of
brownfields
can
yield
reduced
use
of
open
space
and
transportation
benefits
like
reduced
vehicles
miles
traveled,
which
results
in
reduced
travel
time,
less
congestion,
and
decreases
in
air
emissions
from
vehicles.

Brownfields
redevelopment
allows
communities
to
reuse
land
that
is
often
located
in
urban
centers,
thus
reducing
the
pressure
to
develop
unused
land
in
outlying
areas,
sometimes
called
"
greenfields."
Because
brownfields
properties
are
often
located
on
parcels
of
land
bounded
by
roads,
sidewalks,
and
other
properties,
development
is
much
more
compact.
A
2001
study
by
George
Washington
University
found
that
for
every
brownfield
acre
redeveloped,
the
same
project
would
have
required
4.5
acres
on
greenfields.
The
study
analyzed
redevelopment
by
category
and
found
that
each
brownfield
acre
redeveloped
for
industrial
purposes
would
have
required
6.2
greenfield
acres
for
the
same
use.
For
commercial
purposes,
2.4
acres
of
greenfield
would
have
been
used,
and
for
residential
purposes,
5.6
acres
would
be
used.
30
Development
on
brownfields
instead
of
greenfields
produces
transportation
benefits,
including
reduced
travel
time
and
congestion
and
reduced
air
pollutant
emissions.
Computer
analysis
of
case
studies
shows
that
average
trip
distances,
travel
times,
and
per
capita
vehicles
miles
traveled
are
much
lower
for
brownfields
sites
than
for
the
same
type
of
development
on
greenfields
sites.
31
These
differences
exist
because
brownfields
are
often
located
in
urban
centers
with
a
variety
of
uses.
Therefore,
residents
might
be
able
to
live
within
a
few
blocks
of
where
they
work
and
shop,
reducing
the
need
for
automobile
travel.
Greenfield
development
tends
to
be
much
more
spread
out
and
is
not
typically
pedestrian­
friendly.
As
a
result,
residents
must
drive
miles
to
get
to
work
or
stores
from
home.
Having
fewer
cars
on
the
road
also
leads
to
less
traffic
congestion,
shortening
travel
times.

An
added
benefit
of
fewer
vehicle
miles
traveled
and
shorter
travel
times
is
a
reduction
in
air
emissions
from
automobiles.
As
cars
travel
fewer
miles,
air
emissions
decrease,
simply
because
the
engines
are
not
running
for
the
same
length
of
time.
In
addition,
a
reduction
in
congestion
29
Schroeer,
William,
"
The
Water
Quality
Impacts
of
Density,"
paper
at
the
Congress
for
the
New
Urbanism
X,
Miami,
FL,
June
14,
2002.
30
Deason,
Jonathon
P.,
George
William
Sherk,
and
Gary
A.
Caroll,
The
George
Washington
University.
Public
Policies
and
Private
Decisions
Affecting
the
Redevelopment
of
Brownfields:
An
Analysis
of
Critical
Factors,
Relative
Weights
and
Areal
Differentials.
Submitted
to
US
EPA
Office
of
Solid
Waste
and
Emergency
Response,
Washington,
DC.
September
2001.
31
Schroeer,
William.
The
Transportation
and
Environmental
Impacts
of
Infill
vs.
Greenfield
Development:
A
Comparative
Case
Study
Analysis.
Prepared
for
US
EPA
Urban
and
Economic
Development
Division.
October
1,
1999.
EIA
for
the
AAI
Regulation
6­
7
results
in
lower
air
emissions
because
less
time
spent
idling
in
traffic
means
reduced
tailpipe
emissions.
Case
study
analysis
suggests
that
brownfield
redevelopment
can
cause
a
decrease
in
NOx
and
CO2
emissions
ranging
from
40
to
60
percent
of
the
emissions
associated
with
greenfields
development.
32
Quality
of
Life
Benefits
Brownfields
redevelopment
also
provides
immeasurable
benefits
in
the
form
of
more
beautiful
communities
and
increased
access
to
services.
Throughout
the
US,
brownfields
are
being
remediated
and
transformed
from
blighted
eyesores
to
new
businesses
and
government
service
centers,
parks
and
recreational
areas,
housing,
and
cultural,
educational,
and
community
centers.
Although
it
cannot
be
measured,
the
pride
associated
with
a
renewed
community
is
real.

The
benefits
of
brownfields
redevelopment
are
not
limited
to
those
summarized
in
this
section.
33
We
should
note,
however,
that
the
benefits
are
predicated
on
brownfields
being
cleaned
up.
The
cleanup,
in
turn,
would
entail
some
added
costs.
This
EIA
does
not
include
an
estimate
of
the
cost
of
cleanups.
A
qualitative
discussion
of
the
potential
costs
that
may
result
from
brownfields
redevelopment
is
provided
below.

Potential
for
Increases
in
Costs
In
addition
to
the
potential
benefits
discussed
in
this
appendix,
increased
development
of
brownfields
would
entail
some
added
costs.
First,
increased
sales
of
brownfield
sites
would
require
increased
spending
on
environmental
site
assessments.
These
costs
would
be
offset
to
some
degree
by
reductions
in
spending
on
greenfield
sites.
Because
previously
undeveloped
sites
are
less
complex
and
hence
time­
consuming
to
assess,
however,
the
cost
savings
would
not
entirely
cover
the
increased
costs
of
ESAs
for
brownfields.
Second,
to
the
extent
that
the
site
assessments
at
brownfields
revealed
existing
contamination,
there
would
be
increased
costs
for
cleanup.
Assuming
efficiency
in
the
selection
of
remedies,
these
costs
would
be
less
than
the
damages
that
would
be
borne
if
the
clean­
ups
were
not
undertaken.

32
Ibid.
33
Brownfields
redevelopment
also
leads
to
increases
in
property
values
and
tax
revenues
for
localities.
Cities
and
towns
benefit
from
the
redevelopment
of
brownfields
as
they
collect
taxes
from
new
businesses
and
homes
located
on
formerly
vacant
properties.
A
2003
survey
of
almost
150
municipalities
indicated
that
if
brownfields
were
redeveloped,
the
cities
could
realize
$
790
million
to
$
1.9
billion
annually
in
additional
tax
revenues.
Actual
local
tax
revenues
collected
from
redeveloped
brownfields
sites
totaled
$
90
million
in
45
cities
(
US
Conference
of
Mayors,
2003).
Additionally,
as
brownfields
are
redeveloped
in
a
neighborhood,
that
area
becomes
a
more
desirable
place
to
live
and
work.
As
a
result,
property
values
tend
to
increase
and
businesses
locate
in
the
renewed
areas.
Municipalities
may
then
collect
more
property
taxes
on
these
higher­
valued
homes
and
sales
taxes
from
businesses.
At
one
site
in
Emeryville,
CA,
redevelopment
of
brownfields
properties
that
were
formerly
used
for
heavy
industrial
purposes
into
office
buildings
and
retail
has
resulted
in
$
3
million
in
property
tax
revenue
and
$
1.5
million
in
sales
tax
annually
(
Source:
US
EPA.
Reusing
Land
Restoring
Hope:
A
Report
to
Stakeholders
from
the
US
EPA
Brownfields
Program.
2003).
These
tax
base
benefits
cannot
all
be
counted
as
net
gains
to
society.
Though
some
businesses
that
are
established
on
a
brownfield
site
are
entirely
new
and
generate
new
revenues,
others
have
relocated
from
other
sites
or
jurisdictions.
Businesses
that
relocate
to
a
brownfield
site
presumably
reduce
their
tax
payments
to
some
other
government,
canceling
out
at
least
part
of
the
social
benefit.
The
tax
benefits,
to
this
degree
at
least,
may
be
a
transfer
rather
than
a
net
benefit.
EIA
for
the
AAI
Regulation
6­
8
EIA
for
the
AAI
Regulation
7­
1
CHAPTER
7:
Data
Collection
7.1
Source
for
the
Annual
Number
of
ESAs
7.1.1
Environmental
Data
Resources,
Inc.

As
previously
stated,
there
are
very
few
sources
of
data
on
the
volume
of
Phase
I
ESAs.
As
of
the
writing
of
this
EIA,
Environmental
Data
Resources,
Inc.
(
EDR)
was
identified
as
the
only
firm
collecting
Phase
I
ESA
industry
data
at
the
national
level.

EDR
has
provided
the
data
on
the
annual
number
of
Phase
I
ESAs
conducted
in
the
period
1997
to
2002.
The
annual
number
of
ESAs
is
estimated
with
a
five
percent
margin
of
error.
EDR's
methodology
for
collecting
and
estimating
the
annual
volume
of
Phase
I
ESAs
is
presented
in
Appendix
IV.
Chapter
9
presents
the
results
of
sensitivity
analyses
conducted
to
show
how
sensitive
our
results
are
to
assumptions
made
using
the
EDR
data.

EDR
classifies
Phase
I
ESAs
by
the
type
of
property
on
which
they
are
performed.
Property
type
indicates
the
use
of
the
subject
property
at
the
time
an
environmental
investigation
was
conducted.
Property
distribution
by
type
is
presented
in
Exhibit
7­
1.

Exhibit
7­
1:
Property
Distribution
by
Type
Type
Distribution
Undeveloped
18
%
Residential
13
%
Commercial
53
%
Industrial
16
%
Note:
Commercial
properties
include:
commercial/
office,
retail,
telecommunications,
and
hotel
properties.
Source:
EDR,
ICF
Analysis.

We
used
the
EDR
data
on
the
property
distribution
by
type
to
estimate
the
average
cost
of
a
Phase
I
ESA.

7.2
Distribution
of
Properties
by
Size
The
data
on
the
distribution
of
properties
on
which
Phase
I
ESAs
have
been
performed
were
not
available
from
any
public
source.
It
is
not
clear
whether
any
institution
collects
such
data.

In
developing
the
cost
model,
we
therefore
constructed
a
proxy
variable
for
the
property
distribution
by
size.
The
proxy
distribution
was
derived
using
the
data
on
the
size
of
brownfields
properties
in
approximately
200
major
cities
from
the
US
Conference
of
Mayors
Recycling
America's
Land:
A
National
Report
on
Brownfields
Redevelopment.
34
We
assumed
that
the
size
34
The
US
Conference
of
Mayors.
Recycling
America's
Land:
A
National
Report
on
Brownfields
Redevelopment,
Vol.
IV,
2003.
EIA
for
the
AAI
Regulation
7­
2
distribution
of
properties
on
which
ESAs
are
performed
mirrors
the
size
distribution
of
brownfields
sites.
The
property
distribution
by
size
is
presented
in
Exhibit
7­
2.

Exhibit
7­
2:
Property
Distribution
by
Size
Size
Distribution
Small
<
5
acres
or
<
5,000
ft
2
71
%

Medium
5
­
100
acres
or
5,000
­
50,000
ft
2
28
%

Large
>
100
acres
or
>
50,000
ft
2
1
%

Note:
The
square
feet
size
threshold
refers
to
structure
sizes.
Source:
US
Conference
of
Mayors,
ICF
Analysis.

7.3
Unit
costs
ICF
Consulting
developed
unit
costs
for
each
of
the
eight
Phase
I
ESA
activities
and
each
of
the
four
transaction
screen
activities
discussed
in
Chapter
5.
These
activities
are
consistent
with
the
current
ASTM
standards
(
ASTM
E1527
and
ASTM
E1528)
and
include
the
typical
activities
performed
by
many
companies
experienced
with
Phase
I
ESAs
and
transaction
screens.

The
unit
cost
estimates
for
each
activity
were
developed
based
on
ICF
Consulting's
extensive
experience
in
performing
Phase
I
ESAs
and
Phase
II
ESAs.
Input
from
our
licensed
environmental
professionals
(
geologists
and
engineers)
who
perform
these
assessments
was
considered
in
developing
the
unit
costs.
The
ICF
Consulting
environmental
professionals
have
performed
hundreds
of
Phase
I
ESAs
and
Phase
II
ESAs
at
properties
ranging
from
small,
undeveloped
parcels
of
land
to
large,
complex
industrial
sites.

7.3.1
Estimates
of
Hour
Burden
This
section
presents
the
estimated
hour
burden
for
performing
a
Phase
I
ESA
and
a
transaction
screen
under
the
base
case
scenario.

7.3.1.1
Estimates
of
Hour
Burden
­
ASTM
E1527­
2000
Phase
I
ESA
Using
the
methodology
presented
in
Section
5.6,
we
estimated
the
labor
hour
burden
for
each
ESA
activity
performed
under
the
ASTM
E1527­
2000
standard.
Our
labor
hour
burden
estimates
indicate
that
the
preparation
of
the
Phase
I
ESA
report
is
the
most
labor­
intensive
activity,
with
the
estimated
hour
burden
ranging
from
eight
to
16
hours,
depending
on
the
property
size
and
type.
The
estimated
total
labor
hour
burden
ranges
from
22
hours
for
small
and
medium
undeveloped
properties
to
66
hours
for
large
industrial
properties.
Our
estimates
indicate
that
the
labor
hour
burden
is
more
driven
by
a
site's
complexity
(
i.
e.,
property
type),
than
by
property
size.
The
labor
hour
burden
by
property
type
and
size
is
presented
in
Exhibit
7­
3.
We
also
present,
in
Exhibit
7­
4,
the
estimated
total
labor
hours
spent
by
each
labor
category
involved
in
performing
a
Phase
I
ESA.
EIA
for
the
AAI
Regulation
7­
3
Exhibit
7­
3:
ASTM
E1527­
2000
(
Base
Case)
­
Estimated
Level
of
Effort
in
Hours,
by
Activity
and
Property
Size/
Type
Size
Type
Interviews
with
the
property
owner(
s)

and/
or
property
managers
Review
of
historical
use
information
Review
of
Federal
and
State
regulatory
databases
Review
of
State
and
Local
environmental
records
Site
visit
Review
of
site
documents,
if
provided
by
client
Interviews
with
local
government
officials
Preparation
of
Phase
I
ESA
report
Total
Hours
Small
Undeveloped/

Agricultural
2
2
2
2
2
2
2
8
22
Residential
2
2
2
2
4
2
2
8
24
Commercial
4
4
4
4
6
4
2
8
36
Industrial
4
6
4
6
6
6
4
10
46
Medium
Undeveloped/

Agricultural
2
2
2
2
2
2
2
8
22
Residential
2
2
2
2
6
2
2
10
28
Commercial
4
4
4
4
8
4
2
10
40
Industrial
4
6
4
6
10
6
4
12
52
Large
Undeveloped/

Agricultural
2
2
2
2
4
2
2
8
24
Residential
2
2
2
2
8
2
2
12
32
Commercial
4
4
4
6
10
6
4
14
52
Industrial
6
6
6
6
12
8
6
16
66
Source:
ICF
Analysis.
EIA
for
the
AAI
Regulation
7­
4
Exhibit
7­
4
presents
the
distribution
of
the
total
labor
hours
by
labor
category
and
by
property
type
and
size.
The
distribution
is
derived
using
the
total
labor
hours
presented
in
Exhibit
7­
3
and
assumed
labor
distribution
shown
in
Exhibit
5­
1.
For
example,
we
estimated
that
it
takes,
on
average,
22
hours
to
perform
a
Phase
I
ESA
on
a
small
undeveloped
property.
We
assumed
that,
on
average,
65
percent
of
that
time
is
spent
by
an
environmental
scientist/
specialist.
Therefore,
the
estimated
total
labor
hour
burden
for
an
environmental
scientist/
specialist
performing
a
Phase
I
ESA
on
a
small
undeveloped
property
is,
on
average,
14
hours
(
22
hours
*
65%
=
14.3
hours).

Exhibit
7­
4:
Distribution
of
Labor
Hours,
by
Labor
Category
(
under
ASTM
E1527­
2000)

Property
Labor
Hours
Size
Type
Environmental
Engineers
Environmental
Scientists/
Specialists
Environmental
Engineering
Technicians
Administrative
Assistants
Total
Labor
Hours
Small
Undeveloped/
Agricultural
3.3
14.3
3.3
1.1
22
Residential
3.6
15.6
3.6
1.2
24
Commercial
5.4
23.4
5.4
1.8
36
Industrial
6.9
29.9
6.9
2.3
46
Medium
Undeveloped/
Agricultural
3.3
14.3
3.3
1.1
22
Residential
4.2
18.2
4.2
1.4
28
Commercial
6.0
26.0
6.0
2.0
40
Industrial
7.8
33.8
7.8
2.6
52
Large
Undeveloped/
Agricultural
3.6
15.6
3.6
1.2
24
Residential
4.8
20.8
4.8
1.6
32
Commercial
7.8
33.8
7.8
2.6
52
Industrial
9.9
42.9
9.9
3.3
66
Source:
ICF
Analysis.

7.3.1.2
Other
Sources
of
Hour
Burden
­
ASTM
E1527­
2000
Phase
I
ESA
In
the
fall
of
2003,
the
National
Ground
Water
Association
(
NGWA)
conducted
a
survey
of
its
members
on
the
labor
hour
burden
associated
with
Phase
I
ESA
activities.
The
members
were
asked
to
provide
estimates
of
the
minimum
and
maximum
labor
hour
burden
to
perform
each
Phase
I
ESA
activity.
The
Phase
I
activities
in
the
NGWA
survey
corresponded
to
the
Phase
I
activities
specified
by
ICF
Consulting
(
see
Chapter
5).
According
to
the
survey
instructions,
minimum
hour
burden
corresponds
to
the
time
spent
on
small
properties
with
limited
history,
and
no
obvious
sensitive
use
issues.
Maximum
hour
burden
is
for
large
properties
(
more
than
20
acres)
with
complex
issues
(
multiple
and
lengthy
historical
uses,
history
of
using
various
hazardous
material,
environmental
sensitivities,
and
the
like).

ICF
Consulting
tabulated
the
survey
results
for
the
industrial
properties.
Based
on
the
survey
results,
the
median
hour
burden
for
performing
a
Phase
I
ESA
on
a
small
industrial
property
with
EIA
for
the
AAI
Regulation
7­
5
no
obvious
sensitive
use
issues
is
32.
The
hour
burden
estimates
range
from
eight
to
159
hours.
The
median
hour
burden
for
performing
a
Phase
I
ESA
on
a
large
and
complex
industrial
property
is
84.
The
estimates
range
from
25
to
448
hours.

The
NGWA
survey
results
are
comparable
with
the
ICF
estimates.
The
ICF
estimate
of
labor
hour
burden
for
small
industrial
properties
is
46,
and
the
estimate
for
large
industrial
properties
is
66.
The
ICF
estimate
of
hour
burden
for
small
industrial
properties
includes
properties
with
no
obvious
sensitive
use
issues
as
well
as
those
with
obvious
sensitive
use
issues.
Therefore,
it
should
be
expected
that
the
ICF
estimate
would
be
larger
than
the
NGWA
estimate.
Similarly,
the
ICF
estimate
of
hour
burden
for
large
industrial
properties
includes
properties
with
no
obvious
sensitive
use
issues
as
well
as
those
with
obvious
sensitive
use
issues.
It
should
be
then
expected
that
the
ICF
estimate
of
hour
burden
would
be
smaller
than
the
NGWA
estimate.

7.3.1.3
Estimates
of
Hour
Burden
­
Transaction
Screen
Using
the
methodology
presented
in
Section
5.6.5.6,
we
estimated
the
hour
burden
for
transaction
screen
activities.
The
estimated
total
labor
hour
burden
ranges
from
four
hours
for
small
undeveloped
properties
to
14
hours
for
medium
and
large
industrial
properties.
The
labor
hour
burden
by
property
size
and
type
is
presented
in
Exhibit
7­
5.

Exhibit
7­
5:
Transaction
Screen
(
Base
Case)
­
Estimated
Level
of
Effort
in
Hours,
by
Activity
and
Property
Size/
Type
Size
Type
Limited
database
search,
historical
use
information
/
records
search
Site
visit
Interviews
with
the
property
owner(
s)
and/
or
property
managers
Preparation
of
Transaction
Screen
Questionnaire
Total
Hours
Undeveloped/
Agricultural
1
1
1
1
4
Residential
1
2
2
1
6
Commercial
2
3
3
2
10
Small
Industrial
2
3
4
3
12
Undeveloped/
Agricultural
1
1
1
1
4
Residential
1
3
2
1
7
Commercial
2
4
3
3
12
Medium
Industrial
3
4
4
3
14
Undeveloped/
Agricultural
1
2
2
1
6
Residential
1
3
2
2
8
Commercial
2
4
3
3
12
Large
Industrial
3
4
4
3
14
Source:
ICF
Analysis.
EIA
for
the
AAI
Regulation
7­
6
7.3.2
Estimates
of
Other
Direct
Costs
Based
on
ICF
Consulting's
experience
in
conducting
ESAs,
we
derived
estimates
of
ODCs
incurred
during
the
course
of
performing
a
Phase
I
ESA.
The
estimated
ODCs
are
presented
in
Exhibit
7­
6.

Exhibit
7­
6:
ASTM
E1527­
2000
(
Base
Case)
 
Estimated
Other
Direct
Costs
Property
Type
Total
Other
Direct
Costs
Undeveloped
/
Agricultural
$
320
Residential
$
320
Commercial
$
375
Industrial
$
375
Source:
ICF
Analysis.

As
stated
in
Section
7.6.5.6,
the
ODCs
for
performing
a
transaction
screen
are
estimated
at
$
250.

7.3.3
Incremental
Cost
 
AAI
Regulation
This
section
summarizes
incremental
costs
under
the
AAI
regulation.
The
incremental
cost
was
estimated
using
the
methodology
presented
in
Section
5.6.

The
estimated
incremental
hour
burden
by
Phase
I
ESA
activity
is
presented
in
Exhibits
7­
7
and
7­
8,
column
four.
We
estimated
that
only
a
fraction
of
the
relevant
properties
would
be
affected
by
the
requirements
set
forth
in
§
312.23,
§
312.29
and
§
312.31
of
the
proposed
regulation.

Exhibit
7­
7:
Incremental
Labor
Hour
Burden
under
AAI
Regulation
­
Properties
Transitioning
from
ASTM
E1527­
2000
AAI
Regulatory
Requirements
ESA
Activity
Property
Type
Affected
Incremental
Hour
Burden
Percent
of
Affected
Properties
Sec.
312.21
 
Results
of
inquiries
by
an
environmental
professional
Preparation
of
Phase
I
ESA
report
All
0
0%

Undeveloped
and
Residential
11
Sec.
312.23
 
Interviews
with
past
and
present
owners,
operators,
and
occupants
Interviews
with
the
property
owner(
s),
operators,
and
occupants
Commercial
and
Industrial
2
­
31,2
15%
EIA
for
the
AAI
Regulation
7­
7
Sec.
312.24
 
Reviews
of
historical
sources
of
information
Review
of
historical
use
information
All
0
0%

Undeveloped
and
Residential
0.5
Sec.
312.25
 
Searches
for
recorded
environmental
cleanup
liens
Preparation
of
Phase
I
ESA
report
Commercial
and
Industrial
1
100%

Sec.
312.26
 
Reviews
of
Federal,
State,
Tribal
and
local
government
records
Review
of
Federal
and
state
regulatory
databases
and
review
of
state
and
local
environmental
records
All
0
0%

Sec.
312.27
 
Visual
inspections
of
the
facility
and
of
adjoining
properties
Site
visit
All
0
0%

Sec.
312.28
 
Specialized
knowledge
or
experience
on
the
part
of
the
defendant
Review
of
site
documents,
if
provided
by
client
All
0
0%

Sec.
312.29
 
The
relationship
of
the
purchase
price
to
the
value
of
the
property,
if
the
property
was
not
contaminated
Preparation
of
Phase
I
ESA
report
All
0.5
15%

Sec.
312.30
 
Commonly
known
or
reasonably
ascertainable
information
about
the
property
Interviews
with
local
government
officials
and
preparation
of
Phase
I
ESA
report
All
0
0%

Undeveloped
and
Residential
0.5
Sec.
312.31
 
The
degree
of
obviousness
of
the
presence
or
likely
presence
of
contamination
at
the
property,
and
the
ability
to
detect
the
contamination
by
appropriate
investigation
Preparation
of
Phase
I
ESA
report
Commercial
and
Industrial
1
15%

1)
Incremental
hour
burden
per
interview
with
owners
and
occupants
of
neighboring
properties.
The
incremental
hour
burden
would
be
incurred
only
at
abandoned
properties.
We
assumed
that
all
abandoned
sites
would
require
at
least
one
neighboring
property
interview,
40
percent
would
require
more
than
one,
and
10
percent
would
require
three
interviews.
2)
For
large
abandoned
industrial
properties
the
incremental
hour
burden
would
be
three
hours.
Source:
ICF
Analysis.

Based
on
our
analysis,
the
ODCs
would
not
increase
under
the
AAI
regulation
for
the
users
transitioning
from
the
ASTM
E1527­
2000.
EIA
for
the
AAI
Regulation
7­
8
Exhibit
7­
8:
Incremental
Labor
Hour
Burden
under
AAI
Regulation
­
Properties
Transitioning
from
Transaction
Screen
AAI
Regulatory
Requirements
ESA
Activity
Property
Type
Affected
Weighted
Average
Incremental
Hour
Burden1
Percent
of
Affected
Properties
Sec.
312.23
 
Interviews
with
past
and
present
owners,
operators,
and
occupants
Interviews
with
the
property
owner(
s),
operators,
and
occupants
All
0.6
100%

Sec.
312.24
 
Reviews
of
historical
sources
of
information
Review
of
historical
use
information
All
3.7
100%

Sec.
312.26
 
Reviews
of
Federal,
State,
Tribal
and
local
government
records
Review
of
Federal
and
state
regulatory
databases
and
review
of
state
and
local
environmental
records
All
5.4
100%

Sec.
312.27
 
Visual
inspections
of
the
facility
and
of
adjoining
properties
Site
visit
All
2.9
100%

Sec.
312.28
 
Specialized
knowledge
or
experience
on
the
part
of
the
defendant
Review
of
site
documents,
if
provided
by
client
All
3.7
100%

Sec.
312.30
 
Commonly
known
or
reasonably
ascertainable
information
about
the
property
Interviews
with
local
government
officials
All
2.3
100%

Sec.
312.21
 
Results
of
inquiries
by
an
environmental
professional
Sec.
312.25
 
Searches
for
recorded
environmental
cleanup
liens
100%

Sec.
312.29
 
The
relationship
of
the
purchase
price
to
the
value
of
the
property,
if
the
property
was
not
contaminated
Sec.
312.31
 
The
degree
of
obviousness
of
the
presence
or
likely
presence
of
contamination
at
the
property,
and
the
ability
to
detect
the
contamination
by
appropriate
investigation
Preparation
of
Phase
I
ESA
report
All
7.9
15%

1)
The
weighted
average
incremental
burden
was
estimated
using
the
property
distribution
by
type
and
size.
Source:
ICF
Analysis.
EIA
for
the
AAI
Regulation
7­
9
The
users
transitioning
from
transaction
screens
to
Phase
I
ESAs
would
incur
additional
direct
costs.
The
ODCs
would
increase
by
$
70
for
undeveloped
and
residential
properties,
and
by
$
125
for
commercial
and
industrial
properties.

7.3.4
Incremental
Cost
 
Considered
Option
3
As
discussed
in
Section
5.7,
we
have
assumed
the
following
sampling
activities
by
property
type:
surface
soil
samples
would
be
collected
for
undeveloped
and
residential
properties;
well
installation
and
groundwater
sampling
would
be
required
for
commercial
properties;
and
soil
sample
collection,
well
installation,
and
groundwater
sampling
would
be
performed
on
industrial
sites.
Exhibit
7­
9
presents
our
estimates
of
incremental
costs
and
affected
properties
based
on
the
assumed
sampling
activities.

Exhibit
7­
9:
Sampling
Incremental
Costs
Property
Type
Property
Size
Possible
Sampling
Scenario
Incremental
Cost
(
Labor
costs
and
ODCs)
Affected
Properties
Undeveloped/
Agricultural
Collect
3
surface
soil
samples
$
4,125
15%

Residential
Collect
3
surface
soil
samples
$
4,125
15%

Commercial
Install
3
new
monitoring
wells,
and
sample
3
new
monitoring
wells
$
18,678
10%
Small
Industrial
Collect
3
surface
soil
samples,
install
3
new
monitoring
wells,
and
sample
3
new
monitoring
wells
$
22,803
5%

Undeveloped/
Agricultural
Collect
3
surface
soil
samples
$
4,125
15%

Residential
Collect
3
surface
soil
samples
$
4,125
15%

Commercial
Install
3
new
monitoring
wells,
and
sample
3
new
monitoring
wells
$
18,678
10%
Medium
Industrial
Collect
6
surface
soil
samples,
install
3
new
monitoring
wells,
sample
3
new
monitoring
wells,
and
sample
3
existing
wells
$
26,928
5%

Undeveloped/
Agricultural
Collect
6
surface
soil
samples
$
8,250
15%
Large
Residential
Collect
6
surface
soil
samples
$
8,250
15%
EIA
for
the
AAI
Regulation
7­
10
Property
Type
Property
Size
Possible
Sampling
Scenario
Incremental
Cost
(
Labor
costs
and
ODCs)
Affected
Properties
Commercial
Collect
3
surface
soil
samples,
install
3
new
monitoring
wells,
and
sample
3
new
monitoring
wells
$
22,803
10%

Industrial
Collect
6
surface
soil
samples,
install
3
new
monitoring
wells,
sample
3
new
monitoring
wells,
and
sample
3
existing
wells
$
26,928
5%

Note:
Detailed
cost
estimates
are
presented
in
Appendix
III.
Source:
ICF
Analysis.

7.3.5
Estimates
of
Hourly
Labor
Costs
7.3.5.1
Estimates
of
Hourly
Labor
Costs
by
Labor
Category
The
unit
labor
cost
by
occupation
was
calculated
using
the
median
national
wage
rate
from
the
Bureau
of
Labor
Statistics
(
BLS)
2002
national
employment
and
wage
estimates.
The
BLS
estimates
are
based
on
the
Occupational
Employment
Statistics
Survey
by
Occupation.
35
The
rates
are
inflated
to
2003
dollars
based
on
the
BLS
employment
cost
index
for
wages
and
salaries
in
services,
loaded
with
fringe
at
39
percent
(
BLS
average
national
fringe
estimate)
and
overhead
at
59
percent
of
total
compensation.

Exhibit
7­
10:
Unit
Labor
Cost,
by
Labor
Category
Labor
Category
Loaded
Hourly
Rate
Environmental
Engineers
$
67.0
Environmental
Scientists
and
Specialists,
Including
Health
$
51.9
Environmental
Engineering
Technicians
$
40.2
Administrative
Assistant
$
27.6
Source:
BLS,
ICF
Analysis.

7.3.5.2
Weighted
Average
Labor
Rate
The
labor
costs
in
the
model
were
calculated
using
a
weighted
average
labor
rate.
To
model
the
labor
costs
under
the
base
case,
the
proposed
AAI
regulation,
and
the
considered
regulatory
option
2,
we
derived
the
weighted
average
labor
rate
using
the
labor
distribution
presented
in
35
The
Bureau
of
Labor
Statistics
(
BLS)
2002
national
employment
and
wage
data
from
the
Occupational
Employment
Statistics
Survey
by
Occupation
are
available
at
http://
www.
bls.
gov/
news.
release/
ocwage.
t01.
htm.
EIA
for
the
AAI
Regulation
7­
11
Exhibit
5­
1
and
hourly
labor
rates
presented
in
Exhibit
7­
10.36
The
calculations
are
presented
in
the
following
equation:

(
$
67
*
15%
)
+
(
$
51.9
*
65%
)
+
(
$
40.2
*
15%
)
+
(
$
27.6
*
5%
)
=
$
51.2
To
model
the
labor
cost
under
the
considered
option
1,
the
weighted
average
labor
rate
was
calculated
using
the
labor
distribution
presented
in
Exhibit
5­
4
and
hourly
labor
rates
presented
in
Exhibit
7­
10.
The
weighted
average
labor
rate
was
calculated
as
follows:

(
$
67
*
95%
)
+
(
$
27.6
*
5%
)
=
$
65.0
36
The
calculation
of
the
weighted
average
wage
rate
for
the
considered
regulatory
option
3
is
more
complex
as
it
is
driven
by
the
type
of
sampling
performed
(
e.
g.,
surface
soil
sampling
versus
groundwater
sampling).
Therefore,
the
procedure
used
to
derive
the
weighted
average
labor
cost
is
not
explicitly
presented
in
this
EIA
(
the
unit
labor
costs
and
labor
distribution
associate
with
sampling
activities
are
presented
in
Appendix
II).
EIA
for
the
AAI
Regulation
8­
1
CHAPTER
8:
Estimates
of
Costs
8.1
Base
Case
Estimates
8.1.1
Phase
I
ESA
To
derive
the
total
cost
of
a
Phase
I
ESA
for
a
specific
property
category
(
e.
g.,
small
industrial
property),
we
first
calculated
the
total
labor
cost
associated
with
performing
a
Phase
I
ESA.
The
labor
costs
were
calculated
by
multiplying
the
estimated
total
labor
hours
for
performing
a
Phase
I
ESA
by
the
weighted
average
labor
rate.
The
total
cost
was
then
calculated
as
a
sum
of
the
total
labor
cost
and
the
estimated
total
direct
costs.
As
an
example
of
the
calculations,
using
the
total
hour
burden
presented
in
the
fifth
row
of
Exhibit
7­
3
and
ODCs
presented
in
the
fifth
row
of
Exhibit
7­
6,
the
total
cost
of
a
Phase
I
ESA
performed
on
a
small
industrial
property
was
estimated
as
follows:

(
46
hours
*
$
51.2
)
+
$
375
=
$
2,730
Using
the
same
methodology,
we
estimated
the
total
cost
of
a
Phase
I
ESA
for
each
of
the
property
categories
included
in
the
analysis.
Such
estimated
cost
of
a
Phase
I
ESA
ranges
from
$
1,446
for
small
undeveloped
properties
to
$
3,754
for
large
industrial
properties.
The
unit
costs
by
property
type
and
size
are
presented
in
Exhibit
8­
1.

To
estimate
the
average
total
cost
of
a
Phase
I
ESA,
we
first
derived
a
distribution
of
properties
by
property
type
and
size.
The
property
distribution
was
derived
using
the
EDR
data
on
the
type
of
properties
on
which
Phase
I
ESAs
were
performed
in
2002
and
the
US
Conference
of
Mayors
data
on
the
size
of
brownfields
properties.
This
derived
distribution
of
properties
is
presented
in
Exhibit
8­
1,
third
column.
Using
the
property
distribution
and
the
estimated
total
Phase
I
ESA
cost
by
property
type
and
size,
we
then
calculated
the
average
cost
of
a
Phase
I
ESA.
The
estimated
average
cost
of
a
Phase
I
ESA
is
approximately
$
2,132.
Our
estimate
is
very
close
to
the
2002
average
price
reported
by
EDR
of
$
2,050.37
37
The
EDR
data
show
that
the
price
of
a
Phase
I
ESA
exhibits
regional
variability.
The
results
of
the
EDR
poll,
conducted
in
the
fall
of
2002
and
the
spring
of
2003,
of
Phase
I
ESA
providers
in
20
metropolitan
areas
show
that
the
average
price
of
a
Phase
I
ESA
ranged
from
approximately
$
1,800
in
Houston,
TX
and
Cincinnati,
OH
to
$
2,300
in
Seattle,
WA.
ICF
estimates
are
not
adjusted
for
location
because
data
on
the
distribution
of
properties
by
location
were
not
available.
EIA
for
the
AAI
Regulation
8­
2
Exhibit
8­
1:
ASTM
E1527­
2000
(
Base
Case)
­
Estimated
Unit
Cost
Size
Type
Assumed
Distribution1
Total
Hours
Total
Labor
Cost
Total
Direct
Cost
Total
Cost
Small
Undeveloped/
Agricultural
12.8%
22
$
1,126
$
320
$
1,446
Residential
9.2%
24
$
1,229
$
320
$
1,549
Commercial
37.6%
36
$
1,843
$
375
$
2,218
Industrial
11.4%
46
$
2,355
$
375
$
2,730
Medium
Undeveloped/
Agricultural
5%
22
$
1,126
$
320
$
1,446
Residential
3.6%
28
$
1,433
$
320
$
1,753
Commercial
14.8%
40
$
2,048
$
375
$
2,423
Industrial
4.5%
52
$
2,662
$
375
$
3,037
Large
Undeveloped/
Agricultural
0.2%
24
$
1,229
$
320
$
1,549
Residential
0.1%
32
$
1,638
$
320
$
1,958
Commercial
0.5%
52
$
2,662
$
375
$
3,037
Industrial
0.2%
66
$
3,379
$
375
$
3,754
Average
ASTM
E1527­
2000
Phase
I
ESA
Cost
$
2,132
1)
The
assumed
property
distribution
was
derived
by
multiplying
the
property
size
distribution
by
the
property
type
distribution
for
each
of
the
property
categories.
For
example,
EDR
estimates
that
16
percent
of
the
properties
on
which
a
Phase
I
ESA
was
performed
in
2002
were
industrial
properties.
Using
the
US
Conference
of
Mayors
data,
we
estimated
that
71
percent
of
brownfields
properties
are
small
properties
(
i.
e.,
less
than
5
acres).
As
explained
in
Chapter
6,
we
assumed
that
the
size
distribution
of
properties
on
which
Phase
I
ESAs
are
performed
mirrors
the
size
distribution
of
brownfields.
Multiplying
16
percent
by
71
percent,
we
estimated
that
11.4
percent
of
properties
on
which
Phase
I
ESAs
are
performed
are
small
industrial
properties.
Source:
ICF
Analysis.

8.1.2
Transaction
Screen
As
stated
in
Section
5.1,
the
ASTM
E1527­
2000
Phase
I
ESA
standard
was
established
as
a
base
case
for
this
analysis.
Transaction
screens,
thus,
were
not
considered
a
part
of
the
base
case.
It
is,
however,
expected
that
a
fraction
of
the
property
owners
who,
absent
the
AAI
regulation,
would
opt
for
a
transaction
screen
would
find
the
incremental
cost
of
the
AAI
Phase
I
ESA
worth
the
liability
protection.
To
properly
account
for
the
total
incremental
costs
under
the
AAI
regulation,
it
was
necessary
to
derive
unit
costs
for
transaction
screens
performed
under
the
base
case.

Based
on
the
estimated
labor
hour
burden
presented
in
Exhibit
7­
5
and
ODCs
presented
in
Section
7.3.2,
we
estimated
the
average
cost
of
a
transaction
screen
to
be
approximately
$
726.38
38
EDR
estimates
that
the
average
price
for
a
transaction
screen
was
$
700
in
2002.
EIA
for
the
AAI
Regulation
8­
3
Exhibit
8­
2:
Transaction
Screen
(
Base
Case)
­
Estimated
Unit
Cost
Transaction
Screen
Cost
Size
Type
Property
Distribution1
Loaded
Hourly
Labor
Rate2
Total
Labor
Cost
Total
Direct
Cost
Total
Cost
Undeveloped/
Agricultural
12.8%
$
51.9
$
208
$
250
$
458
Residential
9.2%
$
51.9
$
311
$
250
$
561
Commercial
37.6%
$
51.9
$
519
$
250
$
769
Small
Industrial
11.4%
$
51.9
$
623
$
250
$
873
Undeveloped/
Agricultural
5
%
$
51.9
$
208
$
250
$
458
Residential
3.6%
$
51.9
$
363
$
250
$
613
Commercial
14.8%
$
51.9
$
623
$
250
$
873
Medium
Industrial
4.5%
$
51.9
$
727
$
250
$
977
Undeveloped/
Agricultural
0.2%
$
51.9
$
311
$
250
$
561
Residential
0.1%
$
51.9
$
415
$
250
$
665
Commercial
0.5%
$
51.9
$
623
$
250
$
873
Large
Industrial
0.2%
$
51.9
$
727
$
250
$
977
Average
Transaction
Screen
Cost
$
726
1)
We
assumed
the
same
property
distribution
as
for
Phase
I
ESAs.
2)
We
assumed
that
all
activities
are
performed
by
an
environmental
scientist/
specialist.
Note:
The
total
labor
costs
were
derived
by
multiplying
the
labor
rate
by
the
total
hours
presented
in
Exhibit
7­
5.
Source:
ICF
Analysis.

8.1.3
Total
Cost
The
total
10­
year
cost
and
the
annual
cost
for
conducting
ASTM
E1527­
2000
Phase
I
ESAs
and
transaction
screens
under
the
base
case
are
presented
in
Exhibit
8­
3.
The
total
and
annual
costs
were
estimated
as
follows.
Based
on
the
historical
Phase
I
ESA
data,
we
estimated
that
Phase
I
ESAs
would
continue
to
grow
at
an
annual
rate
of
three
percent.
This
growth
rate
is
reflected
in
the
annual
volume
of
Phase
I
ESAs
presented
in
Exhibit
8­
3,
second
column.
The
total
annual
cost
of
Phase
I
ESAs,
presented
in
column
four,
was
calculated
by
multiplying
the
estimated
annual
volume
of
Phase
I
ESAs
by
the
estimated
average
cost
of
a
Phase
I
ESA
of
$
2,132.
The
total
annual
cost
of
transaction
screens,
presented
in
the
fifth
column,
was
calculated
by
multiplying
the
annual
volume
of
transaction
screens,
presented
in
the
third
column,
by
the
estimated
average
cost
of
a
transaction
screen
of
$
726.
The
sum
of
the
annual
Phase
I
ESA
and
transaction
screen
costs
is
presented
in
the
sixth
column.

To
estimate
the
annual
cost
under
the
base
case,
we
first
calculated
the
present
value
of
the
total
10­
year
cost
and
then
annualized
the
total
cost
over
the
modeling
period.
We
estimated
the
total
cost
and
the
annual
cost
using
both
the
three
and
seven
percent
discount
rate.
The
present
value
of
the
total
10­
year
cost,
using
a
discount
rate
of
three
percent,
was
estimated
at
$
5.7
billion.
EIA
for
the
AAI
Regulation
8­
4
The
total
annual
cost,
amortized
over
10
years
at
a
three
percent
discount
rate,
was
estimated
at
$
664
million.
Using
a
discount
rate
of
seven
percent,
we
estimated
the
total
10­
year
cost
at
$
4.8
billion
and
the
total
annual
cost
at
$
684
million.

It
should
be
noted
that
we
overestimated
the
present
value
of
the
total
10­
year
cost
under
the
base
case
by
including
the
total
annual
costs
for
transaction
screens.

Exhibit
8­
3:
ASTM
E1527­
2000
(
Base
Case)
­
Estimated
Total
Cost
Annual
Volume
Total
Annual
Cost
(
in
millions)
Year
Phase
I
ESAs
Transaction
Screens1
Phase
I
ESAs
Transaction
Screens
Sum
of
Phase
I
ESAs
and
Transaction
Screens
Total
Cost
Discounted
at
3%
Total
Cost
Discounted
at
7%

2004
256,000
32,000
$
545.9
$
23.2
$
569.1
$
569.1
$
569.1
2005
263,680
32,000
$
562.2
$
23.2
$
585.5
$
568.4
$
547.2
2006
271,590
32,000
$
579.1
$
23.2
$
602.3
$
567.8
$
526.1
2007
279,738
32,000
$
596.5
$
23.2
$
619.7
$
567.1
$
505.9
2008
288,130
32,000
$
614.4
$
23.2
$
637.6
$
566.5
$
486.4
2009
296,774
32,000
$
632.8
$
23.2
$
656.0
$
565.9
$
467.7
2010
305,677
32,000
$
651.8
$
23.2
$
675.0
$
565.3
$
449.8
2011
314,848
32,000
$
671.4
$
23.2
$
694.6
$
564.7
$
432.5
2012
324,293
32,000
$
691.5
$
23.2
$
714.7
$
564.2
$
416.0
2013
334,022
32,000
$
712.2
$
23.2
$
735.5
$
563.7
$
400.0
Present
Value
of
Total
10­
year
Cost
$
5,662.7
$
4,800.7
Annual
Cost
$
663.8
$
683.5
1)
As
explained
in
Chapter
5,
a
fraction
of
prospective
property
purchasers
will
opt
for
a
Phase
I
ESA
instead
of
a
transaction
screen
under
the
AAI
regulation.
This
transitioning
to
Phase
I
ESAs
will
result
in
a
downward
shift
in
the
annual
number
of
transaction
screens.
Based
on
the
available
industry
data,
however,
it
appears
that
the
volume
of
transaction
screens
has
been
decreasing
at
approximately
eight
percent
per
year
in
the
period
1997­
2001.
Therefore,
in
addition
to
the
downward
shift
in
the
annual
number
of
transaction
screens
that
can
be
attributed
solely
to
the
AAI
regulation,
we
would
expect
the
downward
trend
in
the
annual
number
of
transaction
screens
to
continue
over
the
modeling
period.
The
rate
of
decline
would
likely
be
lower
than
the
rate
of
decline
prior
to
the
passing
of
the
Brownfields
Amendments.
The
rate
of
decline,
however,
would
be
difficult
to
estimate
because
we
do
not
have
sufficient
data
for
the
analysis.
To
avoid
speculation,
we
treated
the
annual
volume
of
transaction
screens
as
constant
over
the
modeling
period.
Due
to
our
conservative
approach
in
modeling
annual
volume
of
transaction
screens,
the
estimated
total
annual
cost
is
an
overestimate.
Source:
ICF
Analysis.

8.2
Estimates
under
the
Proposed
AAI
Regulation
Due
to
uncertainties
surrounding
the
number
of
abandoned
properties
subject
to
the
AAI
requirements,
we
estimated
the
distribution
of
abandoned
and
non­
abandoned
properties
as
a
range.
As
a
result,
the
estimated
weighted
average
cost
of
a
Phase
I
ESA
under
the
proposed
rule
also
is
presented
as
a
range.
To
derive
an
upper
bound
estimate
of
the
weighted
average
cost
of
a
Phase
I
ESA,
we
assumed
that
15
percent
of
all
commercial
properties
subject
to
the
AAI
requirements
are
abandoned.
For
a
lower
bound
estimate,
we
assumed
that
28
percent
of
all
commercial
properties
subject
to
the
AAI
requirements
are
abandoned.
EIA
for
the
AAI
Regulation
8­
5
8.2.1
Hour
Burden
for
Conducting
Interviews
at
Abandoned
Sites
As
explained
in
Section
5.6,
the
proposed
rule
modifies
the
interview
requirement
for
abandoned
properties
by
requiring
that
only
neighboring
property
owners/
occupants
be
interviewed.
We
estimated
that
the
AAI
interview
requirement
would
lead
to
a
decrease
in
the
total
hour
burden
for
conducting
interviews
at
abandoned
properties
relative
to
the
base
case.
The
interview
requirement
for
the
rest
of
the
properties
would
not
change
under
the
proposed
rule.
For
the
ease
of
understanding
how
a
decrease
in
the
hour
burden
for
conducting
interviews
at
abandoned
properties
was
modeled,
we
present
the
calculations
of
the
average
incremental
hour
burden
for
conducting
interviews
at
small
undeveloped
properties.

As
presented
in
Exhibit
7­
3,
we
estimated
that,
under
the
current
ASTM
standard,
the
hour
burden
for
conducting
interviews
with
the
subject
property
owner,
occupants,
and/
or
operators
is
two
hours
for
all
small
undeveloped
properties.
Under
the
proposed
rule,
the
hour
burden
for
conducting
interviews
at
non­
abandoned
small
undeveloped
properties
would
not
change.
For
abandoned
properties,
however,
the
estimated
hour
burden
for
conducting
interviews
with
owner/
occupants
of
neighboring
properties
would
be
one
hour
per
interview.
As
presented
in
Section
5.6.5.2,
we
assumed
that
more
than
one
interview
would
be
required
for
40
percent
of
abandoned
properties.
Specifically,
one
interview
would
be
required
for
60
percent
of
abandoned
properties,
two
interviews
would
be
required
for
30
percent
of
abandoned
properties,
and
three
interviews
for
the
remaining
ten
percent
of
abandoned
properties.
The
calculation
of
the
weighted
average
hour
burden
for
small
abandoned
undeveloped
properties
is
presented
in
the
following
equation:

(
1
hour
*
60%)
+
(
1
hour
*
2
interviews
*
30%)
+
(
1
hour
*
3
interviews*
10%)
=
=
1.5
hours.

Under
the
current
ASTM
standard,
the
average
hour
burden
for
small
abandoned
undeveloped
properties
is
two
hours.
Thus,
the
estimated
reduction
in
the
hour
burden
under
the
proposed
AAI
rule
for
small
abandoned
undeveloped
properties
would
be,
on
average,
0.5
hours
per
Phase
I
ESA
(
2
hours
 
1.5
hours
=
0.5
hours).
The
estimated
reduction
in
the
hour
burden
for
small
non­
abandoned
undeveloped
properties
would
be
zero
since
the
proposed
AAI
rule
imposes
the
same
interview
requirement
as
the
current
ASTM
standard.

It
is
important
to
note
that
the
EIA
estimates
the
hour
burden
per
Phase
I
ESA
as
a
weighted
average
hour
burden
(
i.
e.,
average
of
the
estimated
hour
burden
for
conducting
a
Phase
I
ESA
at
abandoned
properties
and
the
estimated
hour
burden
for
conducting
a
Phase
I
ESA
at
nonabandoned
properties
weighted
by
the
assumed
distribution
of
these
two
types
of
properties).
Assuming
15
percent
of
small
undeveloped
properties
are
abandoned,
we
can
calculate
a
weighted
average
decrease
in
the
hour
burden
for
conducting
interviews
at
small
undeveloped
properties
under
the
AAI
rule,
relative
to
the
base
case,
as
follows:

(
0
hours
*
85%)
+
(
0.5
hours
*
15%)
 
0.08
hours
EIA
for
the
AAI
Regulation
8­
6
Assuming
28
percent
of
small
undeveloped
properties
are
abandoned,
the
weighted
average
decrease
in
the
hour
burden
for
conducting
interviews
at
small
undeveloped
properties
is
calculated
as
follows:

(
0
hours
*
72%)
+
(
0.5
hours
*
28%)
=
0.14
hours
The
results
from
the
above
two
equations
show
how
the
distribution
of
abandoned
and
nonabandoned
properties
impacts
the
estimated
incremental
labor
hour
burden.
Since
a
Phase
I
ESA
cost
is
mainly
driven
by
labor
hour
burden,
we
can
then
conclude
that
the
lower
the
fraction
of
abandoned
properties
relative
to
non­
abandoned
properties,
when
modeling
Phase
I
ESA
costs
under
the
proposed
rule,
the
higher
the
estimated
weighted
average
cost
of
a
Phase
I
ESA.

8.2.2
Phase
I
ESA
Cost
Based
on
our
analysis,
the
cost
of
a
Phase
I
ESA
under
the
AAI
regulation
would
increase,
on
average,
between
$
41
and
$
47.
The
estimated
average
cost
for
a
Phase
I
ESA
thus
ranges
between
$
2,174
and
$
2,179.

The
parameters
used
in
calculating
the
average
incremental
cost
under
the
AAI
regulation
are
presented
in
Exhibits
8­
4
and
8­
5.

Exhibit
8­
4:
AAI
Regulation
­
Estimated
Unit
Cost
(
Upper
Bound)

Size
Type
Assumed
Distribution
Average
Incremental
Hours1
Average
Incremental
Labor
Cost
Average
Incremental
Direct
Cost
Average
Total
Incremental
Cost2
Small
Undeveloped/
Agricultural
12.8%
0.57
$
29.4
$
0
$
29.4
Residential
9.2%
0.57
$
29.4
$
0
$
29.4
Commercial
37.6%
1.08
$
55.0
$
0
$
55.0
Industrial
11.4%
1.08
$
55.0
$
0
$
55.0
Medium
Undeveloped/
Agricultural
5%
0.57
$
29.4
$
0
$
29.4
Residential
3.6%
0.57
$
29.4
$
0
$
29.4
Commercial
14.8%
1.08
$
55.0
$
0
$
55.0
Industrial
4.5%
1.08
$
55.0
$
0
$
55.0
Large
Undeveloped/
Agricultural
0.2%
0.57
$
29.4
$
0
$
29.4
Residential
0.1%
0.58
$
29.4
$
0
$
29.4
Commercial
0.5%
1.08
$
55.0
$
0
$
55.0
Industrial
0.2%
1.00
$
51.2
$
0
$
51.2
Average
Incremental
Cost
$
47
Average
ASTM
E1527­
2000
Phase
I
ESA
Cost
$
2,132
Average
AAI
Phase
I
ESA
Cost
$
2,179
EIA
for
the
AAI
Regulation
8­
7
1)
The
incremental
hour
burden
and
distribution
of
affected
properties
by
Phase
I
ESA
activity
are
discussed
in
Section
5.6.5
and
presented
in
Exhibit
7­
7.
For
the
ease
of
understanding
how
the
average
incremental
hour
burden
was
calculated,
we
present
here
the
calculations
of
the
average
incremental
hour
burden
for
small
undeveloped
properties.
In
Section
8.2.1,
we
calculated
savings
of
0.08
hours
per
Phase
I
ESA
under
the
proposed
rule.
The
proposed
rule,
however,
would
impose
the
following
hour
burden:
(
1)
100
percent
of
properties
would
incur
a
one­
half
hour
burden
for
documenting
the
results
of
the
search
for
environmental
liens
and
institutional
controls;
(
2)
15
percent
of
properties
would
incur
a
one­
half
hour
burden
to
document
the
relationship
of
the
purchase
price
to
the
value
of
the
property;
and
(
3)
15
percent
of
properties
would
incur
a
one­
half
hour
burden
to
document
the
degree
of
obviousness
of
the
presence
or
likely
presence
of
contamination.
Incremental
hour
burden
under
the
proposed
rule
is
then
calculated
as:
((
0.5
hours
*
100%)
+
(
0.5
hours
*
15%)
+
(
0.5
hours
*
15%))
 
0.08
hours
(
savings)
=
0.57
hours.
2)
Assuming
15
percent
of
all
commercial
properties
subject
to
the
AAI
requirements
are
abandoned.
Note:
Totals
do
not
add
due
to
rounding.
Source:
ICF
Analysis.

Exhibit
8­
5:
AAI
Regulation
­
Estimated
Unit
Cost
(
Lower
Bound)

Size
Type
Assumed
Distribution
Average
Incremental
Hours
Average
Incremental
Labor
Cost
Average
Incremental
Direct
Cost
Average
Total
Incremental
Cost1
Small
Undeveloped/
Agricultural
12.8%
0.51
$
26.1
$
0
$
26.1
Residential
9.2%
0.51
$
26.1
$
0
$
26.1
Commercial
37.6%
0.95
$
48.4
$
0
$
48.4
Industrial
11.4%
0.95
$
48.4
$
0
$
48.4
Medium
Undeveloped/
Agricultural
5%
0.51
$
26.1
$
0
$
26.1
Residential
3.6%
0.51
$
26.1
$
0
$
26.1
Commercial
14.8%
0.95
$
48.4
$
0
$
48.4
Industrial
4.5%
0.95
$
48.4
$
0
$
48.4
Large
Undeveloped/
Agricultural
0.2%
0.51
$
26.1
$
0
$
26.1
Residential
0.1%
0.51
$
26.1
$
0
$
26.1
Commercial
0.5%
0.95
$
48.4
$
0
$
48.4
Industrial
0.2%
0.80
$
41.2
$
0
$
41.2
Average
Incremental
Cost
$
41
Average
ASTM
E1527­
2000
Phase
I
ESA
Cost
$
2,132
Average
AAI
Phase
I
ESA
Cost
$
2,174
1)
Assuming
28
percent
of
all
commercial
properties
subject
to
the
AAI
requirements
are
abandoned.
Note:
Totals
do
not
add
due
to
rounding.
Source:
ICF
Analysis.

Under
the
AAI
regulation,
the
average
incremental
costs
for
the
users
transitioning
from
transaction
screens
to
Phase
I
ESAs
would
range
between
$
1,448
and
$
1,454
($
2,174
­
$
726
=
$
1,448,
and
$
2,179
­
$
726
 
$
1,454;
where
$
726
is
the
estimated
average
cost
of
a
transaction
screen).
Although
this
is
a
relatively
high
incremental
cost,
only
a
small
percent
of
the
users
would
be
affected
annually.
EIA
for
the
AAI
Regulation
8­
8
We
estimated
that
about
97
percent
of
property
transactions
would
bear
only
the
incremental
cost
of
the
proposed
rule
relative
to
the
ASTM
E1527­
2000
standard.
Therefore,
under
the
AAI
regulation,
the
weighted
average
incremental
cost
per
ESA
per
property
transaction
is
estimated
to
be
between
$
84
and
$
89
(
97%
*
$
41
+
3%
*
$
1,448
 
$
84
and
97%
*
$
47
+
3%
*
$
1,454
 

$
89).

8.2.3
Total
Cost
The
upper
and
lower
bound
of
the
total
10­
year
cost
and
the
total
annual
cost
for
conducting
Phase
I
ESAs
and
transaction
screens
under
the
AAI
regulation
are
presented
in
Exhibits
8­
6
and
8­
7,
respectively.
As
under
the
base
case,
we
assumed
that
the
volume
of
Phase
I
ESAs,
presented
in
the
second
column
of
both
exhibits,
would
grow
at
an
annual
rate
of
three
percent.
Multiplying
the
annual
volume
of
Phase
I
ESAs
by
the
average
cost
of
$
2,179
(
in
Exhibit
8­
6)
and
$
2,174
(
in
Exhibit
8­
7),
we
derived
the
range
estimate
of
the
annual
total
cost
of
conducting
Phase
I
ESAs.
To
estimate
the
total
annual
cost
of
transaction
screens,
we
multiplied
the
annual
volume
of
transaction
screens
by
the
estimated
average
cost
of
a
transaction
screen
of
$
726.
It
should
be
noted
that
the
annual
total
cost
of
Phase
I
ESAs
are
overestimated
since
the
EPA's
Brownfields
Grant
recipients
were
included
in
the
total
volume
of
Phase
I
ESAs.
The
discounted
total
annual
cost
for
Phase
I
ESAs
and
transaction
screens
are
presented
in
the
last
two
columns
of
Exhibits
8­
6
and
8­
7.
The
costs
are
estimated
using
a
three
and
seven
percent
discount
rate.

Based
on
our
analysis,
the
present
value
of
the
total
10­
year
cost
would
range
between
$
5.89
billion
and
$
5.90
billion,
assuming
a
three
percent
annual
growth
rate
in
Phase
I
ESAs
and
a
three
percent
discount
rate.
The
total
annual
cost,
amortized
over
10
years
at
a
three
percent
discount
rate,
would
range
between
$
690
million
and
$
692
million.
Using
a
discount
rate
of
seven
percent,
we
estimated
the
total
10­
year
cost
would
range
between
$
4.99
billion
and
$
5.0
billion
and
the
total
annual
cost
would
range
from
$
710.5
million
to
over
$
712
million.

Exhibit
8­
6:
AAI
Regulation
­
Estimated
Total
Cost
(
Upper
Bound)

Annual
Volume
Total
Annual
Cost
(
in
millions)
1
Year
Phase
I
ESAs
Transaction
Screens
Phase
I
ESAs
Transaction
Screens
Sum
of
Phase
I
ESAs
and
Transaction
Screens
Total
Cost
Discounted
at
3%
Total
Cost
Discounted
at
7%

2004
263,680
24,320
$
574.7
$
17.6
$
592.3
$
592.3
$
592.3
2005
271,590
24,320
$
591.9
$
17.6
$
609.5
$
591.8
$
569.7
2006
279,738
24,320
$
609.7
$
17.6
$
627.3
$
591.3
$
547.9
2007
288,130
24,320
$
628.0
$
17.6
$
645.6
$
590.8
$
527.0
2008
296,774
24,320
$
646.8
$
17.6
$
664.4
$
590.3
$
506.9
2009
305,677
24,320
$
666.2
$
17.6
$
683.8
$
589.9
$
487.6
2010
314,848
24,320
$
686.2
$
17.6
$
703.8
$
589.4
$
469.0
2011
324,293
24,320
$
706.8
$
17.6
$
724.4
$
589.0
$
451.1
2012
334,022
24,320
$
728.0
$
17.6
$
745.6
$
588.6
$
434.0
2013
344,043
24,320
$
749.8
$
17.6
$
767.5
$
588.2
$
417.4
Present
Value
of
Total
10­
year
Cost
$
5,901.7
$
5,002.9
EIA
for
the
AAI
Regulation
8­
9
Annual
Volume
Total
Annual
Cost
(
in
millions)
1
Year
Phase
I
ESAs
Transaction
Screens
Phase
I
ESAs
Transaction
Screens
Sum
of
Phase
I
ESAs
and
Transaction
Screens
Total
Cost
Discounted
at
3%
Total
Cost
Discounted
at
7%

Annual
Cost
$
691.9
$
712.3
1)
Assuming
15
percent
of
all
commercial
properties
subject
to
the
AAI
requirements
are
abandoned.
2)
Calculated
as
the
sum
of
the
annual
number
of
Phase
I
ESAs
absent
the
AAI
regulation
and
the
annual
number
of
users
switching
to
a
Phase
I
ESA
under
the
AAI
regulation.
In
2004,
the
annual
volume
of
Phase
I
ESAs
was
calculated
as:
256,000
+
7,680=
263,680.
3)
We
assumed
that
three
percent
of
annual
Phase
I
ESA
volume
under
the
AAI
regulation
would
be
attributable
to
the
users
switching
from
transaction
screens
to
the
AAI
Phase
I
ESA
standard.
The
annual
volume
of
transaction
screens
in
2004
was
derived
by
first
calculating
the
number
of
users
who
are
expected
to
switch
to
the
AAI
Phase
I
ESA
standard
in
2004,
and
then
subtracting
that
number
from
the
annual
volume
of
transaction
screens
under
the
base
case.
The
number
of
users
switching
to
the
AAI
Phase
I
ESA
was
calculated
as
256,000
*
0.03
=
7,680.
The
annual
volume
of
transaction
screens
under
the
AAI
regulation
was
calculated
as
32,000
 
7,680
=
24,320.
For
simplicity,
we
assumed
that
the
annual
volume
of
transaction
screens
would
stay
constant
over
the
modeling
period.
Source:
ICF
Analysis.

Exhibit
8­
7:
AAI
Regulation
­
Estimated
Total
Cost
(
Lower
Bound)

Annual
Volume
Total
Annual
Cost
(
in
millions)
1
Year
Phase
I
ESAs
Transaction
Screens
Phase
I
ESAs
Transaction
Screens
Sum
of
Phase
I
ESAs
and
Transaction
Screens
Total
Cost
Discounted
at
3%
Total
Cost
Discounted
at
7%

2004
263,680
24,320
$
573.2
$
17.6
$
590.8
$
590.8
$
590.8
2005
271,590
24,320
$
590.4
$
17.6
$
608.0
$
590.3
$
568.2
2006
279,738
24,320
$
608.1
$
17.6
$
625.7
$
589.8
$
546.5
2007
288,130
24,320
$
626.3
$
17.6
$
644.0
$
589.3
$
525.7
2008
296,774
24,320
$
645.1
$
17.6
$
662.8
$
588.9
$
505.6
2009
305,677
24,320
$
664.5
$
17.6
$
682.1
$
588.4
$
486.3
2010
314,848
24,320
$
684.4
$
17.6
$
702.1
$
588.0
$
467.8
2011
324,293
24,320
$
704.9
$
17.6
$
722.6
$
587.5
$
450.0
2012
334,022
24,320
$
726.1
$
17.6
$
743.7
$
587.1
$
432.9
2013
344,043
24,320
$
747.9
$
17.6
$
765.5
$
586.7
$
416.4
Present
Value
of
Total
10­
year
Cost
$
5,886.8
$
4,990.3
Annual
Cost
$
690.1
$
710.5
1)
Assuming
28
percent
of
all
commercial
properties
subject
to
the
AAI
requirements
are
abandoned.
Source:
ICF
Analysis.

8.3
Estimates
under
Considered
Option
1
 
Environmental
Professional
Under
this
AAI
regulatory
option,
all
major
activities
would
be
performed
by
an
environmental
professional,
as
defined
by
the
AAI
regulation
under
§
312.10.
This
option
was
modeled
by
changing
the
distribution
of
labor.
As
a
result
of
the
change
in
the
distribution
of
labor,
the
weighted
average
rate
increased
from
$
51.2
to
$
65
(
see
Section
7.3).
EIA
for
the
AAI
Regulation
8­
10
Under
this
AAI
regulatory
option,
the
average
incremental
cost
would
be
$
539.
The
average
cost
of
a
Phase
I
ESA
would
then
increase
to
$
2,671.

Exhibit
8­
8:
Considered
Option
1
­
Estimated
Unit
Cost
Size
Type
Assumed
Distribution
Average
Incremental
Hours
Average
Incremental
Wage
Rate
Average
Incremental
Labor
Cost
Average
Incremental
Direct
Cost
Average
Total
Incremental
Cost1
Small
Undeveloped/
Agricultural
12.8%
0.57
$
13.8
$
341.8
$
0
$
341.8
Residential
9.2%
0.57
$
13.8
$
369.4
$
0
$
369.4
Commercial
37.6%
1.08
$
13.8
$
568.0
$
0
$
568.0
Industrial
11.4%
1.08
$
13.8
$
706.3
$
0
$
706.3
Medium
Undeveloped/
Agricultural
5%
0.57
$
13.8
$
341.8
$
0
$
341.8
Residential
3.6%
0.57
$
13.8
$
424.8
$
0
$
424.8
Commercial
14.8%
1.08
$
13.8
$
623.3
$
0
$
623.3
Industrial
4.5%
1.08
$
13.8
$
789.3
$
0
$
789.3
Undeveloped/
Agricultural
0.2%
0.57
$
13.8
$
369.4
$
0
$
369.4
Residential
0.1%
0.58
$
13.8
$
480.1
$
0
$
480.1
Commercial
0.5%
1.08
$
13.8
$
789.3
$
0
$
789.3
Large
Industrial
0.2%
1.00
$
13.8
$
978.1
$
0
$
978.1
Average
Incremental
Cost
$
539
Average
ASTM
E1527­
2000
Phase
I
ESA
Cost
$
2,132
Average
Phase
I
ESA
Cost
for
AAI
Option
1
$
2,671
1)
Assuming
15
percent
of
all
commercial
properties
subject
to
the
AAI
requirements
are
abandoned.
Note:
Totals
do
not
add
due
to
rounding.
Source:
ICF
Analysis.

Under
this
regulatory
option,
the
average
incremental
costs
for
the
users
transitioning
from
transaction
screens
to
Phase
I
ESAs
would
be
$
1,946
($
2,671
­
$
726
 
$
1,946,
where
$
726
is
the
estimated
average
cost
of
a
transaction
screen).

Based
on
our
analysis,
the
present
value
of
the
total
10­
year
cost
would
be
approximately
$
7.2
billion,
assuming
a
three
percent
annual
growth
rate
in
Phase
I
ESAs
and
a
three
percent
discount
rate.
The
total
annual
cost,
amortized
over
10
years
at
a
three
percent
discount
rate,
was
estimated
at
$
844
million.
Using
a
discount
rate
of
seven
percent,
we
estimated
the
total
10­
year
cost
at
$
6.1
billion
and
the
total
annual
cost
at
$
869
million.
EIA
for
the
AAI
Regulation
8­
11
Exhibit
8­
9:
Considered
Option
1
­
Estimated
Total
Cost
Annual
Volume
Total
Annual
Cost
(
in
millions)
1
Year
Phase
I
ESAs
Transaction
Screens
Phase
I
ESAs
Transaction
Screens
Sum
of
Phase
I
ESAs
and
Transaction
Screens
Total
Cost
Discounted
at
3%
Total
Cost
Discounted
at
7%

2004
263,680
24,320
$
704.5
$
17.6
$
722.1
$
722.1
$
722.1
2005
271,590
24,320
$
725.6
$
17.6
$
743.2
$
721.6
$
694.6
2006
279,738
24,320
$
747.4
$
17.6
$
765.0
$
721.1
$
668.2
2007
288,130
24,320
$
769.8
$
17.6
$
787.4
$
720.6
$
642.8
2008
296,774
24,320
$
792.9
$
17.6
$
810.5
$
720.1
$
618.3
2009
305,677
24,320
$
816.7
$
17.6
$
834.3
$
719.7
$
594.8
2010
314,848
24,320
$
841.2
$
17.6
$
858.8
$
719.2
$
572.3
2011
324,293
24,320
$
866.4
$
17.6
$
884.0
$
718.8
$
550.5
2012
334,022
24,320
$
892.4
$
17.6
$
910.0
$
718.4
$
529.6
2013
344,043
24,320
$
919.2
$
17.6
$
936.8
$
718.0
$
509.6
Present
Value
of
Total
10­
year
Cost
$
7,199.6
$
6,102.8
Annual
Cost
$
844.0
$
868.9
1)
Assuming
15
percent
of
all
commercial
properties
subject
to
the
AAI
requirements
are
abandoned.
Source:
ICF
Analysis.

8.4
Estimates
under
Considered
Option
2
 
Interview
Requirement
Under
this
AAI
option,
the
interview
requirements
would
be
the
same
as
under
the
current
ASTM
standard.
The
proposed
all
appropriate
inquiries
would
include
interviews
with
current
owners
and
occupants.
Under
the
AAI
option
2,
in
the
cases
where
the
current
owners
cannot
be
identified,
the
environmental
scientist/
specialist
would
interview
past
owners,
occupants,
and/
or
operators.
Locating
past
owners,
occupants,
and/
or
operators
would
be
more
time
consuming
than
locating
owner/
occupants
of
neighboring
properties,
as
required
under
the
proposed
AAI
regulation.
As
a
result,
the
incremental
labor
hour
burden
under
this
AAI
option
would
be
higher
than
under
the
proposed
AAI
regulation.

The
average
incremental
cost
for
a
Phase
I
ESA
would
be
$
54
under
this
AAI
regulatory
option.
This
AAI
option
is
more
labor
intensive
than
the
proposed
regulation
and
therefore
would
result
in
a
higher
average
incremental
cost.
With
the
average
incremental
cost
of
$
54,
the
cost
of
a
Phase
I
ESA
would
increase,
on
average,
to
$
2,186.
The
incremental
costs
by
property
type
and
size
are
presented
in
Exhibit
8­
10.
EIA
for
the
AAI
Regulation
8­
12
Exhibit
8­
10:
Considered
Option
2
­
Estimated
Unit
Cost
Size
Type
Assumed
Distribution
Average
Incremental
Hours
Average
Incremental
Labor
Cost
Average
Incremental
Direct
Cost
Average
Total
Incremental
Cost1
Small
Undeveloped/
Agricultural
12.8%
0.6
$
33.3
$
0
$
33.3
Residential
9.2%
0.6
$
33.3
$
0
$
33.3
Commercial
37.6%
1.2
$
62.7
$
0
$
62.7
Industrial
11.4%
1.2
$
62.7
$
0
$
62.7
Medium
Undeveloped/
Agricultural
5%
0.6
$
33.3
$
0
$
33.3
Residential
3.6%
0.6
$
33.3
$
0
$
33.3
Commercial
14.8%
1.2
$
62.7
$
0
$
62.7
Industrial
4.5%
1.2
$
62.7
$
0
$
62.7
Large
Undeveloped/
Agricultural
0.2%
0.6
$
33.3
$
0
$
33.3
Residential
0.1%
0.6
$
33.3
$
0
$
33.3
Commercial
0.5%
1.2
$
62.7
$
0
$
62.7
Industrial
0.2%
1.2
$
62.7
$
0
$
62.7
Average
Incremental
Cost
$
54
Average
ASTM
E1527­
2000
Phase
I
ESA
Cost
$
2,132
Average
Phase
I
ESA
Cost
for
AAI
Option
2
$
2,186
1)
Assuming
15
percent
of
all
commercial
properties
subject
to
the
AAI
requirements
are
abandoned.
Note:
Totals
do
not
add
due
to
rounding.
Source:
ICF
Analysis.

Under
this
regulatory
option,
the
average
incremental
costs
for
the
users
transitioning
from
transaction
screens
to
Phase
I
ESAs
would
be
$
1,460
($
2,186
­
$
726
=
$
1,460,
where
$
726
is
the
estimated
average
cost
of
a
transaction
screen).

Based
on
our
analysis,
the
present
value
of
the
total
10­
year
cost
would
be
approximately
$
5.9
billion,
assuming
a
three
percent
annual
growth
rate
in
Phase
I
ESAs
and
a
three
percent
discount
rate.
The
total
annual
cost,
amortized
over
10
years
at
a
three
percent
discount
rate,
was
estimated
at
$
694
million.
Using
a
discount
rate
of
seven
percent,
we
estimated
the
total
10­
year
cost
at
$
5.0
billion
and
the
total
annual
cost
at
$
714
million.
EIA
for
the
AAI
Regulation
8­
13
Exhibit
8­
11:
Considered
Option
2
­
Estimated
Total
Cost
Annual
Volume
Total
Annual
Cost
(
in
millions)
1
Year
Phase
I
ESAs
Transaction
Screens
Phase
I
ESAs
Transaction
Screens
Sum
of
Phase
I
ESAs
and
Transaction
Screens
Total
Cost
Discounted
at
3%
Total
Cost
Discounted
at
7%

2004
263,680
24,320
$
576.4
$
17.6
$
594.0
$
594.0
$
594.0
2005
271,590
24,320
$
593.7
$
17.6
$
611.3
$
593.5
$
571.3
2006
279,738
24,320
$
611.5
$
17.6
$
629.1
$
593.0
$
549.5
2007
288,130
24,320
$
629.8
$
17.6
$
647.5
$
592.5
$
528.5
2008
296,774
24,320
$
648.7
$
17.6
$
666.4
$
592.1
$
508.4
2009
305,677
24,320
$
668.2
$
17.6
$
685.8
$
591.6
$
489.0
2010
314,848
24,320
$
688.2
$
17.6
$
705.9
$
591.2
$
470.4
2011
324,293
24,320
$
708.9
$
17.6
$
726.5
$
590.7
$
452.4
2012
334,022
24,320
$
730.1
$
17.6
$
747.8
$
590.3
$
435.2
2013
344,043
24,320
$
752.0
$
17.6
$
769.7
$
589.9
$
418.7
Present
Value
of
Total
10­
year
Cost
$
5,918.8
$
5,017.4
Annual
Cost
$
693.9
$
714.4
1)
Assuming
15
percent
of
all
commercial
properties
subject
to
the
AAI
requirements
are
abandoned.
Source:
ICF
Analysis.

8.5
Estimates
under
Considered
Option
3
 
Limited
Sampling
Under
this
AAI
option,
limited
sampling
would
be
required
for
properties
with
perceived
risk
of
contamination.
The
average
incremental
costs
were
calculated
using
the
estimated
incremental
hour
burden
and
the
distribution
of
affected
properties
presented
in
Exhibit
7­
7
and
the
estimated
incremental
costs
and
the
distribution
of
affected
properties
presented
in
Exhibit
7­
9.

With
the
limited
sampling
requirement,
the
cost
of
a
Phase
I
ESA
would
increase,
on
average,
by
$
1,439.
Thus,
the
average
cost
of
a
Phase
I
ESA
would
be
$
3,571.
The
incremental
costs
by
property
type
and
size
are
presented
in
Exhibit
8­
12.

Exhibit
8­
12:
Considered
Option
3
­
Estimated
Unit
Cost
Size
Type
Assumed
Distribution
Average
Incremental
Hours1
Average
Incremental
Labor
Cost
Average
Incremental
Direct
Cost
Average
Total
Incremental
Cost2
Small
Undeveloped/
Agricultural
12.8%
4.1
$
207.4
$
440.6
$
648.0
Residential
9.2%
4.1
$
207.4
$
440.6
$
648.0
Commercial
37.6%
7.4
$
368.3
$
1,554.4
$
1,922.7
Industrial
11.4%
5.4
$
270.9
$
924.1
$
1,195.0
Medium
Undeveloped/
Agricultural
5%
4.1
$
207.4
$
440.6
$
648.0
EIA
for
the
AAI
Regulation
8­
14
Size
Type
Assumed
Distribution
Average
Incremental
Hours1
Average
Incremental
Labor
Cost
Average
Incremental
Direct
Cost
Average
Total
Incremental
Cost2
Residential
3.6%
4.1
$
207.4
$
440.6
$
648.0
Commercial
14.8%
7.4
$
368.3
$
1,554.4
$
1,922.7
Industrial
4.5%
9.2
$
461.1
$
1,233.9
$
1,695.0
Large
Undeveloped/
Agricultural
0.2%
7.6
$
385.5
$
881.2
$
1,266.7
Residential
0.1%
7.6
$
385.5
$
881.2
$
1,266.7
Commercial
0.5%
9.7
$
487.0
$
1,848.1
$
2,335.1
Industrial
0.2%
9.2
$
457.1
$
1,233.9
$
1,691.0
Average
Incremental
Cost
$
1,439
Average
ASTM
E1527­
2000
Phase
I
ESA
Cost
$
2,132
Average
Phase
I
ESA
Cost
for
AAI
Option
3
$
3,571
1)
Average
incremental
hours
are
calculated
using
the
assumed
distribution
of
affected
properties
presented
in
Exhibits
7­
7
and
7­
9.
2)
Assuming
15
percent
of
all
commercial
properties
subject
to
the
AAI
requirements
are
abandoned.
Note:
Totals
do
not
add
due
to
rounding.
Source:
ICF
Analysis.

Under
this
regulatory
option,
the
average
incremental
cost
for
the
users
transitioning
from
transaction
screens
to
Phase
I
ESAs
would
be
$
2,845
($
3,571
­
$
726
=
$
2,845,
where
$
726
is
the
estimated
average
cost
of
a
transaction
screen).

Based
on
our
analysis,
the
present
value
of
the
total
10­
year
cost
would
be
approximately
$
9.6
billion,
assuming
a
three
percent
annual
growth
rate
in
Phase
I
ESAs
and
a
three
percent
discount
rate.
The
total
annual
cost,
amortized
over
10
years
at
a
three
percent
discount
rate,
was
estimated
at
$
1.12
billion.
Using
a
discount
rate
of
seven
percent,
we
estimated
the
total
10­
year
cost
at
$
8.1
billion
and
the
total
annual
cost
at
$
1.16
billion.
The
total
annual
cost
estimates
are
presented
in
Exhibit
8­
13.

Exhibit
8­
13:
Considered
Option
3
­
Estimated
Total
Cost
Annual
Volume
Total
Annual
Cost
(
in
millions)
1
Year
Phase
I
ESAs
Transaction
Screens1
Phase
I
ESAs
Transaction
Screens
Sum
of
Phase
I
ESAs
and
Transaction
Screens
Total
Cost
Discounted
at
3%
Total
Cost
Discounted
at
7%

2004
263,680
24,320
$
941.6
$
17.6
$
959.2
$
959.2
$
959.2
2005
271,590
24,320
$
969.8
$
17.6
$
987.5
$
958.7
$
922.9
2006
279,738
24,320
$
998.9
$
17.6
$
1,016.6
$
958.2
$
887.9
2007
288,130
24,320
$
1,028.9
$
17.6
$
1,046.5
$
957.7
$
854.3
2008
296,774
24,320
$
1,059.7
$
17.6
$
1,077.4
$
957.2
$
821.9
2009
305,677
24,320
$
1,091.5
$
17.6
$
1,109.2
$
956.8
$
790.8
2010
314,848
24,320
$
1,124.3
$
17.6
$
1,141.9
$
956.3
$
760.9
EIA
for
the
AAI
Regulation
8­
15
Annual
Volume
Total
Annual
Cost
(
in
millions)
1
Year
Phase
I
ESAs
Transaction
Screens1
Phase
I
ESAs
Transaction
Screens
Sum
of
Phase
I
ESAs
and
Transaction
Screens
Total
Cost
Discounted
at
3%
Total
Cost
Discounted
at
7%

2011
324,293
24,320
$
1,158.0
$
17.6
$
1,175.7
$
955.9
$
732.1
2012
334,022
24,320
$
1,192.8
$
17.6
$
1,210.4
$
955.5
$
704.5
2013
344,043
24,320
$
1,228.5
$
17.6
$
1,246.2
$
955.1
$
677.8
Present
Value
of
Total
10­
year
Cost
$
9,570.7
$
8,112.4
Annual
Cost
$
1,122.0
$
1,155.0
1)
Assuming
15
percent
of
all
commercial
properties
subject
to
the
AAI
requirements
are
abandoned.
Source:
ICF
Analysis.

8.6
Estimates
associated
with
the
use
of
the
ASTM
E1527­
2000
standard
Per
OMB's
Circular
A­
4
guidance
(
as
discussed
in
Section
4.2),
EPA
must,
in
this
EIA,
consider
a
less
stringent
option
than
the
Agency's
preferred
option.
Therefore,
EPA
is
presenting
the
costs
associated
with
the
alternative
of
using
the
current
ASTM
E1527­
2000
standard
as
a
regulatory
option
(
even
though
it
is
the
Agency's
finding
that
this
option
is
not
compliant
with
statutory
requirements).
Under
this
option,
the
average
cost
of
a
Phase
I
ESA
and
transaction
screen
would
be
the
same
as
under
the
base
case
($
2,132
and
$
726,
respectively).
The
average
cost
of
a
Phase
I
ESA
and
transaction
screen
are
presented
in
Exhibits
8­
1
and
8­
2,
respectively.

The
property
owners
who,
absent
the
AAI
regulation,
would
opt
for
the
ASTM
E1527­
2000
Phase
I
ESA
would
incur
$
0
incremental
cost
under
this
option.
The
same
is
true
for
users
who
would
opt
for
a
transaction
screen
under
the
base
case
and
under
the
AAI
regulation.
It
is,
however,
expected
that
a
fraction
of
the
property
owners
who,
absent
the
AAI
regulation,
would
opt
for
a
transaction
screen
would
find
the
incremental
cost
of
the
ASTM
E1527­
2000
Phase
I
ESA
worth
the
liability
protection.
Those
users
would
incur
the
incremental
cost
of,
on
average,
$
1,407
($
2,132
­
$
726
 
$
1,407).

Based
on
our
analysis,
the
present
value
of
the
total
10­
year
cost
would
be
approximately
$
5.8
billion
under
the
option
of
using
the
ASTM
E1527­
2000
standard,
assuming
a
three
percent
annual
growth
rate
in
Phase
I
ESAs
and
a
three
percent
discount
rate.
The
total
annual
cost,
amortized
over
10
years
at
a
three
percent
discount
rate,
was
estimated
at
$
677
million.
Using
a
discount
rate
of
seven
percent,
we
estimated
the
total
10­
year
cost
at
$
4.9
billion
and
the
total
annual
cost
at
$
697
million.
The
total
annual
cost
estimates
are
presented
in
Exhibit
8­
14.
EIA
for
the
AAI
Regulation
8­
16
Exhibit
8­
14:
Option
Using
ASTM
E1527­
2000­
Estimated
Total
Cost
Annual
Volume
Total
Annual
Cost
(
in
millions)
1
Year
Phase
I
ESAs
Transaction
Screens
Phase
I
ESAs
Transaction
Screens
Sum
of
Phase
I
ESAs
and
Transaction
Screens
Total
Cost
Discounted
at
3%
Total
Cost
Discounted
at
7%

2004
263,680
24,320
$
562.2
$
17.6
$
579.9
$
579.9
$
579.9
2005
271,590
24,320
$
579.1
$
17.6
$
596.8
$
579.4
$
557.7
2006
279,738
24,320
$
596.5
$
17.6
$
614.1
$
578.9
$
536.4
2007
288,130
24,320
$
614.4
$
17.6
$
632.0
$
578.4
$
515.9
2008
296,774
24,320
$
632.8
$
17.6
$
650.5
$
577.9
$
496.2
2009
305,677
24,320
$
651.8
$
17.6
$
669.4
$
577.5
$
477.3
2010
314,848
24,320
$
671.4
$
17.6
$
689.0
$
577.0
$
459.1
2011
324,293
24,320
$
691.5
$
17.6
$
709.1
$
576.6
$
441.6
2012
334,022
24,320
$
712.2
$
17.6
$
729.9
$
576.2
$
424.8
2013
344,043
24,320
$
733.6
$
17.6
$
751.2
$
575.8
$
408.6
Present
Value
of
Total
10­
year
Cost
$
5,777.5
$
4,897.6
Annual
Cost
$
677.3
$
697.3
1)
Assuming
15
percent
of
all
commercial
properties
subject
to
the
AAI
requirements
are
abandoned.
Source:
ICF
Analysis.

8.7
Summary
of
Annual
Cost
Estimates
Exhibits
8­
15
and
8­
16
summarize
the
total
annual
costs
for
the
base
case,
the
proposed
AAI
regulation,
and
the
AAI
regulatory
options
calculated
using
a
discount
rate
of
three
and
seven
percent,
respectively.
The
Exhibits
also
present
the
total
annual
incremental
costs
relative
to
the
base
case.

Exhibit
8­
15:
Summary
of
Annual
Cost
Estimates
(
in
millions),
Discounted
at
Three
Percent
Base
Case
Proposed
AAI
AAI
Option
1
AAI
Option
2
AAI
Option
3
ASTM
E1527­
2000
Total
Annual
Cost1
$
663.8
$
690.1
­
$
691.9
$
844.0
$
693.9
$
1,122.0
$
677.3
Incremental
Total
Annual
Cost
Relative
to
the
Base
Case
$
0
$
26.3
­
$
28
$
180.2
$
30.0
$
458.1
$
13.5
1)
Total
annual
cost
from
Exhibits
8­
3,
8­
6,
8­
7,
8­
9,
8­
11,
8­
13,
and
8­
14.
EIA
for
the
AAI
Regulation
8­
17
Exhibit
8­
16:
Summary
of
Annual
Cost
Estimates
(
in
millions),
Discounted
at
Seven
Percent
Base
Case
Proposed
AAI
AAI
Option
1
AAI
Option
2
AAI
Option
3
ASTM
E1527­
2000
Total
Annual
Cost1
$
683.5
$
710.5
­
$
712.3
$
868.9
$
714.4
$
1,155.0
$
697.3
Incremental
Total
Annual
Cost
Relative
to
the
Base
Case
$
0
$
27
­
$
28.8
$
185.4
$
30.8
$
471.5
$
13.8
1)
Total
annual
cost
from
Exhibits
8­
3,
8­
6,
8­
7,
8­
9,
8­
11,
8­
13,
and
8­
14.

Based
on
our
analysis,
the
incremental
total
annual
cost
of
the
proposed
regulation
is
expected
to
be
below
the
major
rule
threshold
of
$
100
million.
The
cost
estimates
presented
in
Exhibits
8­
15
and
8­
16
suggest
that
the
estimated
incremental
total
annual
cost
is
not
very
sensitive
to
the
discount
rate
used.

The
assumptions
that
most
affect
variability
in
the
estimated
total
and
incremental
costs
are
the
growth
rate
in
real
estate
transactions
and
the
fraction
of
properties
transitioning
from
transaction
screens
to
Phase
I
ESAs.
To
test
the
robustness
of
the
cost
estimates
to
these
model
assumptions,
we
conducted
three
sensitivity
analyses.
Our
results
indicate
that
the
total
annual
and
incremental
cost
estimates
are
not
very
sensitive
to
changes
in
the
volume
of
Phase
I
ESAs.
We
estimated
that
a
five
percent
increase
in
the
volume
of
Phase
I
ESAs
in
2004
would
cause
an
approximately
five
percent
increase
in
the
incremental
total
annual
cost
under
the
proposed
AAI
regulation,
relative
to
the
base
case.
A
complete
transition
from
transaction
screens
to
Phase
I
ESAs,
however,
would
have
a
significant
impact
on
the
estimated
cost
of
the
proposed
AAI
regulation
by
increasing
the
incremental
total
annual
cost
from
$
29
million
to
$
74
million.
Additionally,
we
conducted
an
analysis
of
the
sensitivity
of
our
cost
estimates
to
changes
in
the
total
number
of
property
transactions
and
the
annual
growth
rate
in
the
number
of
property
transactions
to
account
for
uncertainties
in
our
estimates
for
these
assumptions.
The
results
of
accounting
for
these
uncertainties
is
that
the
"
true"
values
of
the
total
annual
and
incremental
costs
under
the
proposed
AAI
regulation
are
within
+/­
35
percent
of
our
cost
estimates.
The
sensitivity
analyses
are
presented
in
the
next
chapter.
EIA
for
the
AAI
Regulation
9­
1
CHAPTER
9:
Sensitivity
Analyses
The
two
main
parameters
used
in
this
EIA
for
estimating
the
total
costs
of
conducting
ESAs
are
the
costs
per
ESA
and
number
of
ESAs
per
year.
The
costs
per
ESA
were
derived
based
on
the
experience
of
ICF
professionals
who
have
been
involved
in
large
numbers
of
ESAs.
The
cost
estimates
developed
by
ICF
were
compared
to
industry­
wide
estimates
of
the
average
cost
of
the
ASTM
Phase
I
ESA,
including
cost
estimates
provided
by
a
national
trade
association
whose
member
firms
conduct
site
assessments,
and
found
to
agree
quite
well.
Because
the
cost
estimates
from
two
independent
sources
are
relatively
the
same,
we
believe
our
cost
estimates
are
reliability
and
the
quality
of
data
is
high.

The
total
number
of
ESAs
performed
annually
was
estimated
using
data
collected
and
compiled
by
EDR
for
recent
years.
39
As
of
the
writing
of
this
analysis,
EDR
was
identified
as
the
only
firm
that
compiles
and
publishes
historical
data
on
the
number
of
ESAs
conducted
annually
in
the
U.
S.
Therefore,
we
cannot
compare
the
EDR
historical
estimates
of
the
number
of
ESAs
to
any
other
source
of
information
to
test
the
validity
of
the
data
or
assess
the
overall
quality
of
the
data.
Although
we
do
not
have
other
data
sources
to
help
us
to
assess
the
quality
of
EDR's
data
on
the
total
number
of
ESAs
performed,
we
did
ask
EDR
to
provide
us
with
an
explanation
of
how
it
collects
the
data.
A
detailed
explanation
of
EDR's
data
collection
methodology
is
provided
in
Appendix
IV.
We
believe
that
EDR's
data
collection
methodology
is
sound,
particularly
given
that
EDR
checks
its
data
with
trends
data
from
outside
sources
and
has
found
that
its
data
tracks
the
behavior
of
the
commercial
real
estate
markets
(
see
Appendix
IV).
Therefore,
we
believe
that
EDR's
data
collection
methodology
is
reliable
and
the
quality
of
the
data
is
relatively
high.

In
addition
to
being
the
only
data
available,
EDR
data
cover
a
relatively
short
period
of
time,
from
1997
through
2002.
As
a
result,
we
made
a
simplifying
assumption
that
the
recent
growth
rates
in
transactions
would
continue
over
the
10­
year
period
covered
by
the
EIA.

Because
the
total
10­
year
costs
are
proportional
to
the
number
of
ESAs
performed,
estimating
the
total
number
of
ESAs
over
the
modeling
period
with
a
reasonable
level
of
precision
is
important.
We,
however,
recognize
that
using
a
single
data
source
for
estimating
the
number
of
ESAs
over
time
represents
a
shortcoming
of
the
overall
approach
taken
in
this
EIA.
We
addressed
this
shortcoming
by
conducting
three
sensitivity
analyses.

39
The
EDR's
methodology
for
estimating
the
annual
number
of
ESAs
is
presented
in
Appendix
IV.
EIA
for
the
AAI
Regulation
9­
2
9.1
Sensitivity
Analysis
1
­
Volume
of
Phase
I
ESAs
To
project
the
annual
volume
of
Phase
I
ESAs
over
the
modeling
period,
we
used
the
EDR
data
on
the
volume
of
Phase
I
ESA.
40
The
EDR
data
cover
the
period
1997­
2002.
Assuming
that
the
volume
of
Phase
I
ESAs
would
continue
to
grow
at
an
annual
rate
of
three
percent,
we
estimated
that
the
volume
of
Phase
I
ESAs
in
2004
would
be
256,000.
EDR
estimates
the
volume
of
Phase
I
ESAs
with
a
five
percent
margin
of
error.
It
is
thus
possible
that
our
analysis
underestimated
the
annual
volume
of
Phase
I
ESAs,
and
consequently
the
total
annual
cost
under
the
base
case
and
the
proposed
AAI
regulation
and
regulatory
options.

With
a
five
percent
margin
of
error,
the
estimated
number
of
Phase
I
ESAs
would
be
in
the
range
of
243,200
to
268,800.
We
thus
re­
estimated
the
annual
costs
presented
in
Chapter
8
assuming
268,800
Phase
I
ESAs
under
the
base
case
in
2004.
Changing
the
volume
of
Phase
I
ESAs
under
the
base
case
also
affected
the
projected
volume
of
Phase
I
ESAs
under
the
AAI
regulation
and
the
regulatory
options.
As
explained
in
Chapter
5,
we
estimated
that
three
percent
of
the
users
who
would
conduct
a
Phase
I
ESAs
under
the
AAI
regulation
would
have
opted
for
a
transaction
screen
under
the
base
case.
Based
on
this
estimate,
we
projected
that
there
would
be
276,864
Phase
I
ESAs
conducted
under
the
AAI
regulation
in
2004
(
268,800
*
1.03
=
276,864).

The
results
of
the
sensitivity
analysis
are
presented
in
Exhibit
9­
1.

Exhibit
9­
1:
Annual
Cost
Estimates
(
in
millions)
 
Volume
of
Phase
I
ESAs
in
2004
Volume
of
Phase
I
ESAs
in
2004
under
the
Base
Case
Cost
Estimates
Base
Case
Proposed
AAI
AAI
Option
1
AAI
Option
2
AAI
Option
3
ASTM
E1527­
2000
Total
Annual
Cost1
$
683.5
$
712.3
$
868.9
$
714.4
$
1,155.0
$
697.3
256,000
Incremental
Total
Annual
Cost
Relative
to
the
Base
Case1
$
0
$
28.8
$
185.4
$
30.8
$
471.5
$
13.8
Total
Annual
Cost
$
716.4
$
746.7
$
911.1
$
748.8
$
1,211.5
$
730.9
268,800
Incremental
Total
Annual
Cost
Relative
to
the
Base
Case
$
0
$
30.2
$
194.7
$
32.4
$
495.1
$
14.5
Source:
ICF
Analysis
1)
The
cost
estimates
are
presented
in
Exhibit
8­
16.
Notes:
1.
We
assumed
that
Phase
I
ESAs
grow
at
an
annual
rate
of
three
percent.
2.
We
assumed
that
15
percent
of
all
commercial
properties
subject
to
AAI
requirements
are
abandoned.
3.
Costs
are
discounted
at
seven
percent.

40
See
Appendix
IV
for
a
discussion
of
EDR's
methodology
for
estimating
the
annual
volume
of
Phase
I
ESAs
performed.
EIA
for
the
AAI
Regulation
9­
3
The
results
of
the
sensitivity
analysis
indicate
that
a
five
percent
increase
in
the
annual
volume
of
Phase
I
ESAs
in
2004
would
cause
a
five
percent
increase
in
the
incremental
total
annual
cost
under
the
proposed
AAI
regulation,
relative
to
the
base
case.
Similarly,
a
five
percent
decrease
in
the
annual
volume
of
Phase
I
ESAs
in
2004
would
cause
a
five
percent
decrease
in
the
incremental
total
annual
cost
under
the
proposed
AAI
regulation,
relative
to
the
base
case.
Thus,
a
five
percent
margin
of
error
in
our
estimates
of
the
incremental
total
annual
cost
can
be
attributed
to
the
data
quality.

9.2
Sensitivity
Analysis
2
­
Volume
of
Transaction
Screens
Transitioning
to
Phase
I
ESAs
Using
the
EDR
data
on
the
ESA
industry,
we
have
estimated
that
one
to
three
percent
of
the
users
who
would
conduct
a
Phase
I
ESA
under
the
AAI
regulation
would
opt
for
a
transaction
screen
under
the
base
case.
We
have
used
the
upper
bound
of
the
range
to
estimate
the
total
10­
year
costs
presented
in
Chapter
8.

A
FACA
committee
member
suggested
that
the
AAI
regulation
would
result
in
every
transaction
screen
transitioning
to
a
Phase
I
ESA
to
qualify
for
the
CERCLA
liability
protections.
It
was
thus
suggested
that
the
ICF
estimate
of
the
annual
volume
of
properties
transitioning
to
Phase
I
ESAs
is
too
low,
and
consequently,
the
ICF
estimate
of
the
total
annual
incremental
cost
under
the
AAI
regulation
is
too
low.

The
EDR
data
indicate
that
32,000
transaction
screens
were
performed
in
2002.
For
simplicity,
we
assumed
that
the
number
of
transaction
screens
under
the
base
case
would
stay
constant
over
the
modeling
period
(
i.
e.,
the
volume
of
transaction
screens
in
2004
would
be
32,000
under
the
base
case).
Assuming
that
all
32,000
users
would
transition
to
Phase
I
ESAs
in
2004
to
qualify
for
the
CERCLA
liability
defense,
the
estimated
volume
of
Phase
I
ESAs
under
the
AAI
regulation
would
then
increase
to
288,000
(
256,000
+
32,000
=
288,000).

The
results
of
the
sensitivity
analysis
are
presented
in
Exhibit
9­
2.

Exhibit
9­
2:
Annual
Cost
Estimates
(
in
millions)
 
Volume
of
Transaction
Screens
Transitioning
to
Phase
I
ESAs
Volume
of
Phase
I
ESAs
in
2004
under
the
AAI
Regulation
Cost
Estimates
Base
Case
Proposed
AAI
AAI
Option
1
AAI
Option
2
AAI
Option
3
ASTM
E1527­
2000
Total
Annual
Cost1
$
683.5
$
712.3
$
868.9
$
714.4
$
1,155.0
$
697.3
263,680
Incremental
Total
Annual
Cost
Relative
to
the
Base
Case1
$
0
$
28.8
$
185.4
$
30.8
$
471.5
$
13.8
EIA
for
the
AAI
Regulation
9­
4
Volume
of
Phase
I
ESAs
in
2004
under
the
AAI
Regulation
Cost
Estimates
Base
Case
Proposed
AAI
AAI
Option
1
AAI
Option
2
AAI
Option
3
ASTM
E1527­
2000
Total
Annual
Cost
$
683.5
$
757.4
$
928.4
$
759.6
$
1,240.9
$
741.0
288,000
Incremental
Total
Annual
Cost
Relative
to
the
Base
Case
$
0
$
73.9
$
244.9
$
76.1
$
557.4
$
57.5
1)
The
cost
estimates
presented
in
Exhibit
8­
16.
Notes:
1.
We
assumed
that
Phase
I
ESAs
grow
at
an
annual
rate
of
three
percent.
2.
We
assumed
that
15
percent
of
all
commercial
properties
subject
to
AAI
requirements
are
abandoned.
3.
Costs
are
discounted
at
seven
percent.
Source:
ICF
Analysis.

The
sensitivity
analysis
results
indicate
that
a
complete
transition
from
transaction
screens
to
Phase
I
ESAs
could
increase
the
incremental
total
annual
cost
of
the
AAI
regulation
to
$
74
million.
It
should
be
noted,
however,
that
this
is
an
unlikely
scenario.
The
CERCLA
liability
protections
were
available
to
the
transaction
screen
users
during
the
past
two
years.
The
relatively
high
volume
of
transaction
screens
in
2002
indicates
that
the
users
did
not
find
the
cost
of
a
Phase
I
ESA
worth
the
liability
protection
during
the
interim
period.
Further,
our
estimates
of
the
incremental
total
annual
cost
are
overstated
as
we
have
assumed
that
the
volume
of
transaction
screens
would
stay
constant,
over
the
modeling
period,
rather
than
continue
its
downward
trend.

9.3
Sensitivity
Analysis
3
 
Variability
in
Property
Transactions
Based
on
the
historical
data
on
Phase
I
ESAs,
we
assumed
that
the
volume
of
Phase
I
ESAs
would
grow
annually
at
an
average
rate
of
three
percent
over
the
next
10
years.
The
annual
growth
rate
in
Phase
I
ESAs
is
driven
by
the
growth
rate
in
real
estate
transactions,
which
to
a
large
extent
is
driven
by
economic
conditions.
Due
to
uncertainty
surrounding
economic
condition
in
the
near
future
and
their
impact
on
the
real
estate
market,
the
annual
growth
rate
of
Phase
I
ESAs
could
be
higher
or
lower
than
the
assumed
growth
rate
of
three
percent
over
the
next
10­
years.

Because
forecasting
the
annual
growth
rates
in
Phase
I
ESAs
and/
or
real
estate
transactions
is
beyond
the
scope
of
this
analysis,
we
used
the
available
data
on
real
estate
sales
to
construct
a
95
percent
confidence
interval
for
the
total
cost
estimates.

In
their
2004
study
"
An
Analysis
of
the
Determinants
of
Transaction
Frequency
of
Institutional
Commercial
Real
Estate
Investment
Property,"
Fisher
et
al.,
estimated
the
percent
of
properties
EIA
for
the
AAI
Regulation
9­
5
sold
each
year
from
1982
through
2001.41
The
annual
percentage
of
properties
sold
varied
from
4.5
in
1992
to
17.5
in
1997.42
We
used
these
annual
real
estate
sales
data
as
a
proxy
for
real
estate
transactions.
Because
the
time­
series
data
cover
a
relatively
long
time
period,
encompassing
both
upturns
and
downturns
in
the
economy,
these
data
are
appropriate
to
use
for
constructing
a
confidence
interval.

To
construct
a
confidence
interval,
we
first
calculated
a
10­
year
moving
average
of
real
estate
sales
(
in
percentage
terms).
We
then
calculated
the
mean
and
standard
deviation
of
properties
sold
over
a
10­
year
period.
Our
results
show
that
the
average
rate
of
properties
sold
over
a
given
10­
year
period
has
a
mean
of
nine
percent
and
a
standard
deviation
of
approximately
1.6
percent.
This
means
that,
within
the
95
percent
confidence
interval,
the
average
rate
of
properties
sold
over
any
given
10­
year
period
would
be
+/­
35
percent
of
the
estimated
mean
(
or
between
5.9
and
12.2
percent).

Applying
this
margin
of
error
of
+/­
35
percent
to
the
total
10­
year
costs,
we
then
calculated
the
upper
and
lower
bound
of
the
cost
estimates.
The
results
are
presented
in
Exhibit
9­
3.

Exhibit
9­
3:
Annual
Cost
Estimates
(
in
millions)
 
Lower
and
Upper
Bound
Estimates
Cost
Estimates
Base
Case
Proposed
AAI
AAI
Option
1
AAI
Option
2
AAI
Option
3
ASTM
E1527­
2000
Total
Annual
Cost1
$
683.5
$
712.3
$
868.9
$
714.4
$
1,155.0
$
697.3
Point
Estimates
Incremental
Total
Annual
Cost
Relative
to
the
Base
Case1
$
0
$
28.8
$
185.4
$
30.8
$
471.5
$
13.8
Total
Annual
Cost
$
444.3
to
$
922.7
$
463.0
to
$
961.6
$
564.8
to
$
1,173.0
$
464.4
to
$
964.4
$
750.8
to
$
1,559.3
$
453.2
to
$
941.4
Lower
and
Upper
Bound
Estimates
Incremental
Total
Annual
Cost
Relative
to
the
Base
Case
$
0
$
18.7
to
$
38.9
$
120.5
to
$
250.3
$
20.0
to
$
41.6
$
306.5
to
$
636.5
$
9.0
to
$
18.6
Our
results
show
that,
although
there
is
possibly
a
relatively
wide
margin
of
error,
the
incremental
total
annual
costs
of
the
proposed
AAI
rule
would
not
exceed
$
100
million.

41
Jeffrey
Fisher,
Dean
Gatzlaff,
David
Geltner,
and
Donald
Haurin,
"
An
Analysis
of
the
Determinants
of
Transaction
Frequency
of
Institutional
Commercial
Real
Estate
Investment
Property,"
Real
Estate
Economics,
vol.
32
(
2),
Summer
2004,
pp.
239­
264.
42
The
real
estate
sales
data
are
presented
in
Appendix
V.
EIA
for
the
AAI
Regulation
10­
1
CHAPTER
10:
Small
Entity
Analysis
The
Regulatory
Flexibility
Act
of
1980,
as
amended
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act
(
SBREFA),
(
5
U.
S.
C.
601­
612)
requires
Federal
agencies
to
determine
whether
proposed
regulations
will
have
a
significant
economic
impact
on
a
substantial
number
of
small
entities,
and
if
so,
to
examine
effective
alternatives
that
could
reduce
the
impacts.
This
chapter
discusses
the
number
of
small
entities
potentially
affected
by
the
AAI
regulation
and
the
potential
impacts.
Our
analysis
concludes
that,
although
substantial
numbers
of
small
entities
are
likely
to
be
affected,
the
cost
impacts
on
them
are
very
unlikely
to
be
significant.

We
started
the
analysis
by
defining
the
universe
of
entities
that
could
be
affected
by
the
AAI
regulation.
Using
the
employee­
size
definition
of
a
small
firm,
we
then
estimated
the
number
of
small
entities
potentially
affected
by
the
regulation.
Finally,
we
estimated
the
potential
cost
impacts
on
small
entities
in
terms
of
their
total
annual
revenues.

10.1
Affected
Industries
As
stated
previously
in
this
EIA,
the
AAI
regulation
does
not
apply
only
to
brownfields
properties.
The
AAI
regulation
requirements
are
applicable
to
any
public
or
private
party,
who
purchase
property
and
intend
to
claim
protection
from
CERCLA
liability,
as
an
innocent
landowner,
bona
fide
prospective
purchaser,
or
contiguous
property
owner,
in
conjunction
with
the
property
purchase.
Therefore,
any
firm,
regardless
of
the
nature
of
its
operations,
involved
in
a
real
estate
transaction
and
wanting
to
avail
itself
of
protection
from
CERCLA
liability
will
be
affected
by
the
regulation.
As
a
result,
we
assumed
that
firms
across
all
industries,
as
defined
by
NAICS,
could
potentially
be
affected.

10.2
Definition
of
Small
Firms
The
Small
Business
Administration
(
SBA)
defines
a
small
business
in
terms
of
annual
revenues
or
employment
size.
The
threshold
tends
to
be
at
least
at
the
level
of
100
employees
or,
where
the
threshold
is
not
defined
in
terms
of
employment,
in
the
range
of
$
6
to
$
30
million
in
annual
revenues.
SBA
size
thresholds
by
industry
are
presented
in
Exhibit
10­
1.

Exhibit
10­
1:
Small
Business
Administration's
Size
Standard
for
Small
Businesses
by
NAICS
Industry
NAICS
Size
Standard
in
millions
of
dollars
Size
Standard
in
Number
of
Employees
Forestry,
fishing,
hunting,
and
agriculture
support
11
$
0.75
­
$
6
Mining
21
$
6
500
Utilities
22
$
6
­
$
10.5
500
Construction
23
$
6
­
$
28.5
Manufacturing
31
500­
1,000
EIA
for
the
AAI
Regulation
10­
2
Industry
NAICS
Size
Standard
in
millions
of
dollars
Size
Standard
in
Number
of
Employees
Wholesale
trade
42
100
Retail
trade
44
$
6
­
$
24.5
Transportation
and
warehousing
48
$
6
­
$
23.5
500­
1,500
Information
51
$
6
­
$
25
500­
750
Finance
and
insurance
52
$
6
($
150
in
assets)
1,500
Real
estate,
rental,
and
leasing
53
$
1.5
­
$
21.5
Professional,
scientific
and
technical
services
54
$
6
­
$
23
500­
1,500
Management
of
companies
and
enterprises
55
$
6
Administrative
and
support,
waste
management
and
remediation
services
56
$
3
­
$
23
500
Educational
services
61
$
6
­
$
30
Health
care
and
social
assistance
62
$
6
­
$
29
Arts,
entertainment,
and
recreation
71
$
6
Accommodation
and
food
services
72
$
6
­
$
17.5
Other
services
81
$
6
­
$
21
1)
SBA
does
not
define
the
threshold
for
auxiliaries
(
NAICS
95)
and
unclassified
establishments
(
NAICS
99).
Source:
SBA.

When
a
proposed
regulation
has
a
potential
of
affecting
all
industries,
a
common
practice
is
to
refer
to
those
industries
with
less
than
500
employees
as
"
small".
43
As
stated
in
the
previous
section,
the
AAI
regulation
could
affect
all
non­
residential
property
transactions
to
some
degree.
It
would
thus
be
reasonable
to
apply
the
500­
employee
threshold
when
estimating
the
number
of
small
firms
potentially
affected
by
the
AAI
regulation.
Our
methodology
is
presented
in
the
next
section.

10.3
Size
Distribution
and
Number
of
Small
Firms
As
of
the
writing
of
this
EIA,
we
were
not
able
to
identify
a
dataset
that
indicates
the
number
of
Phase
I
ESAs
currently
conducted
on
an
annual
basis
by
small
businesses.
Given
this
data
deficiency,
we
employed
the
following
methodology
to
estimate
the
number
of
potentially
affected
small
entities.
We
first
estimated
the
distribution
of
establishments
owned
by
small
firms
and
showed
how
the
distribution
varies
depending
on
the
definition
of
a
small
firm.
Using
the
derived
distribution
and
the
estimated
annual
volume
of
Phase
I
ESAs,
we
then
derived
the
number
of
potentially
affected
small
firms.

43
Communications
with
the
Office
of
Policy,
Economics,
and
Innovations
(
OPEI)
and
the
National
Center
for
Environmental
Economics
(
NCEE),
March
4,
2004.
EIA
for
the
AAI
Regulation
10­
3
The
RFA
and
SBREFA
require
Federal
agencies
to
measure
the
regulatory
impacts
of
the
rule
to
determine
whether
there
will
be
a
significant
impact
on
a
substantial
number
of
small
firms.
Firms,
however,
may
operate
at
multiple
physical
locations.
For
example,
most
family­
owned
restaurants
operate
at
a
single
location,
while
chain
restaurants
have
multiple
locations.
Thus,
the
annual
number
of
transactions
per
firm,
and
therefore
the
demand
for
Phase
I
ESAs,
is
a
function
of
the
number
of
establishments
a
firm
owns.
44
Using
the
US
Census
Bureau
data
on
employment
size
of
firms,
we
first
examined
the
distribution
of
firms
by
employee
size.
45
The
distribution
of
firms
is
presented
in
Exhibit
10­
2,
second
column.
The
exhibit
shows
that
over
99
percent
of
firms
have
less
than
500
employees.
The
last
column
of
the
exhibit
shows
the
average
number
of
establishments
per
firm.
Firms
with
less
than
100
employees,
approximately
98
percent
of
all
firms,
have,
on
average,
one
establishment.

Exhibit
10­
2:
Distribution
of
Firms
by
Size,
in
Year
2001
Employment
Size
Number
of
Firms
Number
of
Establishments
Average
Number
of
Establishments
per
Firm
Less
than
100
employees
5,555,103
5,764,137
1
100
to
499
employees
85,304
315,856
4
500
to
1,499
employees
11,426
161,680
14
1,500
employees
or
more
5,941
853,629
144
Total
5,657,774
7,095,302
Source:
US
Census
Bureau.

Using
the
Census
data,
we
then
derived
the
distribution
of
establishments
by
firm
size
where
size
is
defined
in
terms
of
the
number
of
employees.
The
distribution
of
establishments
by
parent
company
employee
size
is
presented
in
Exhibit
10­
3.

Exhibit
10­
3:
Disribution
of
Establishments
by
Firm
Size,
in
Year
2001
Employment
Size
Number
of
Establishments
Owned
Percent
of
Establishments
Owned
Less
than
100
employees
5,764,137
81%
100
to
499
employees
315,856
5%
500
to
1,499
employees
161,680
2%
1,500
employees
or
more
853,629
12%
Total
7,095,302
100%
Source:
US
Census
Bureau.

To
estimate
the
number
of
potentially
affected
small
firms,
we
first
had
to
calculate
the
percent
of
establishments
owned
by
small
firms.
It
is
clear,
however,
that
the
distribution
of
establishments
between
small
and
large
firms
depends
on
the
definition
of
a
small
firm.
As
44
The
US
Census
Bureau
defines
establishment
as
a
single
physical
location
at
which
business
is
conducted
or
services
or
industrial
operations
are
performed.
Establishment
is
not
necessarily
identical
with
a
company
or
enterprise,
which
may
consist
of
one
or
more
establishments.
Source:
County
Business
Patterns,
2001;
US
Census
Bureau,
available
at
http://
www.
census.
gov/
epcd/
cbp/
view/
cbpview.
html.
45
The
US
Census
Bureau,
available
at
http://
www.
census.
gov/
epcd/
www/
smallbus.
html.
EIA
for
the
AAI
Regulation
10­
4
stated
previously,
it
is
a
common
practice,
when
a
proposed
regulation
has
a
potential
of
affecting
all
industries,
to
consider
all
firms
with
less
than
500
employees
as
small.
We
have
shown,
however,
in
Exhibit
10­
1
that
the
SBA
defined
employee­
size
definition
of
a
small
firm
is
not
unique
across
industries.
It
ranges
from
100
employees
for
Wholesale
industry
to
1,500
employees
for
Transportation
and
Warehousing
industry.
We
therefore
estimated
the
distribution
of
establishments
by
firm
size
for
different
definitions
of
a
small
firm
using
the
data
presented
in
Exhibit
10­
3.
When
small
firms
are
defined
as
firms
with
less
than
100
employees,
small
firms
own
81
percent
of
all
establishments.
Similarly,
when
small
firms
are
defined
to
include
firms
with
less
than
500
or
1,500
employees,
small
firms
own
86
or
88
percent
of
all
establishments,
respectively.
We
have
thus
shown
that,
depending
on
the
definition
of
a
small
firm,
the
distribution
of
establishments
owned
by
small
firms
ranges
from
81
to
88
percent.

For
the
purpose
of
this
analysis,
we
have
assumed
that
small
entities
are
equally
likely
to
engage
in
commercial
property
transactions
as
large
ones.
46
Based
on
this
assumption
and
the
distribution
of
establishments
by
firm
size
presented
in
Exhibit
10­
3,
we
estimated
that
between
81
and
88
percent
of
all
commercial
property
transactions
completed
annually
involve
small
firms.
To
estimate
the
number
of
potentially
affected
small
entities,
we
then
applied
the
percentage
of
the
estimated
transactions
that
involve
small
entities
to
the
estimated
number
of
Phase
I
ESAs
performed
annually.
For
the
purpose
of
this
analysis,
we
adopted
a
conservative
approach
and
assumed
that
88
percent
of
all
commercial
property
transactions
involve
small
firms.
As
a
result,
the
estimated
number
of
affected
small
firms
is
likely
an
overestimate.

Using
this
methodology,
we
estimated
that
the
AAI
regulation
would
have
an
impact
on
approximately
232,000
small
establishments
in
2004
(
263,680
Phase
I
ESAs
*
0.88
 
232,038).
47
Based
on
the
projected
annual
growth
rate
of
the
number
of
Phase
I
ESAs,
the
number
of
potentially
affected
small
firms
is
expected
to
grow
annually,
on
average,
by
three
percent.
Therefore,
the
AAI
regulation
could
potentially
impact,
on
average,
266,000
small
firms
annually
over
the
modeling
period.
The
number
of
affected
small
firms,
however,
is
an
overestimate.
In
addition
to
the
argument
stated
in
the
preceding
section,
the
estimated
number
of
affected
small
firms
is
not
adjusted
downward
to
account
for
small
firms
operating
at
more
than
one
physical
location
and
therefore
likely
to
be
involved
in
more
than
one
commercial
property
transaction.
As
presented
in
Exhibit
10­
2,
small
firms
with
over
100
employees
have,
on
average,
more
than
one
establishment.
In
addition,
not
all
transactions
are
conducted
by
firms
 
governments
and
other
organizations
also
purchase
properties
(
as
discussed
in
sections
10.5
and
10.6,
below).
It
is
thus
clear
that
we
have
overstated
the
impacts.

46
This
is
a
simplifying
assumption.
Large
firms
probably
engage
in
relatively
more
property
transactions
than
small
firms.
Commercial
real
estate
data,
however,
are
not
readily
available
to
support
this
claim.
In
addition,
small
firms
may
have
a
higher
likelihood
of
failing,
as
they
are
more
vulnerable
to
unfavorable
economic
conditions.
As
a
result,
the
turnover
rate
among
small
firms,
and
consequently
the
number
of
transactions
involving
small
firms,
may
be
larger
than
the
turnover
rate
among
large
firms.
Given
data
limitations,
we
were
not
able
to
refine
the
assumption.
It
should
be
noted,
however,
that
our
approach
may
have
resulted
in
an
overestimation
of
the
number
of
potentially
affected
small
firms.
47
We
estimated
the
volume
of
Phase
I
ESAs
in
2004
to
be
263,680.
Refer
to
Section
4.4
for
the
methodology
on
estimating
the
annual
volume
of
Phase
I
ESAs.
Refer
to
Exhibit
8­
6
for
the
estimated
number
of
Phase
I
ESAs
by
year.
EIA
for
the
AAI
Regulation
10­
5
10.4
Cost
Impact
on
Small
Firms
Since
all
non­
residential
property
transactions
could
be
affected
by
the
AAI
regulation,
large
numbers
of
small
entities
could
be
affected
to
some
degree.
We
estimated,
however,
that
the
effects,
on
the
whole,
would
be
insignificant
for
small
entities.
Based
on
our
analysis,
for
the
majority
of
small
businesses,
the
cost
of
conducting
a
Phase
I
ESA
would
increase,
on
average,
between
$
41
and
$
47.
For
the
small
percentage
of
cases
for
which
a
transaction
screen
would
have
been
preferred
to
the
ASTM
E1527­
2000
in
the
baseline,
but
which
now
would
require
an
assessment
in
compliance
with
the
proposed
regulation,
the
cost
of
conducting
an
ESA
would
increase,
on
average,
between
$
1,448
and
$
1,454.
Annualizing
the
incremental
cost
per
ESA
over
10
years
­
the
average
life
of
a
firm
­
at
a
seven
percent
discount
rate,
we
estimated
that
for
the
majority
of
small
entities
the
average
annual
cost
increase
per
establishment
per
property
transaction
would
be
approximately
$
7.48
For
the
small
percentage
of
entities
transitioning
from
transaction
screens
to
Phase
I
ESAs,
the
average
annual
cost
increase
per
establishment
per
property
transaction
would
be
$
207.
Total
cost
impacts
per
firm
are
likely
to
be
roughly
proportional
to
the
number
of
establishments
per
firm.

The
increase
in
annual
costs
per
firm
is
likely
overestimated
given
that
a
substantial
number
of
firms
lease
business
space.
This
is
especially
the
case
in
urban
areas
where
real
estate
prices
tend
to
be
higher.
Depending
on
the
market
conditions,
some
of
the
Phase
I
ESA
costs
could
be
transferred
by
the
firm
that
owns
the
property
onto
the
firms
that
are
leasing
the
property.
The
more
lessees
per
property,
all
other
things
equal,
the
lower
would
be
the
average
cost
per
lessee
passed
through
by
the
property
owner.

We
also
estimated
the
cost
impacts
in
terms
of
annual
revenues.
Based
on
the
Census
Bureau
data,
the
smallest
annual
revenue
per
employee
for
a
firm
is
approximately
$
24,000.49
Therefore,
even
for
a
firm
with
annual
revenues
of
$
24,000,
the
average
annual
cost
impact
of
$
7
would
represent
less
than
a
tenth
of
one
percent
of
annual
revenues.
50
The
maximum
average
annual
impact
of
$
207
would
be
on
a
small
fraction
of
entities
transitioning
from
a
transaction
screen
to
a
Phase
I
ESA.
Even
an
impact
of
that
magnitude
on
firms
with
annual
revenues
of
48
SBA
estimates
that
in
2001
and
2002,
of
all
the
businesses
with
employees,
about
10
percent
were
new
and
10
percent
closed
(
See
The
Regulatory
Flexibility
Act,
An
Implementation
Guide
for
Federal
Agencies,
SBA,
2002
and
A
Guide
for
Government
Agencies
 
How
to
Comply
with
the
Regulatory
Flexibility
Act,
SBA,
2003).
Our
estimates
of
firm
birth
and
death
rates
in
2000,
derived
using
the
1999
and
2000
SBA
data,
are
very
close
to
SBA's
2001
estimates.
Thus,
using
the
birth/
death
rate
of
firms,
it
can
be
calculated
that
the
average
turnover
rate
for
firms
across
all
industries
is
10
years.
49
The
estimated
average
annual
revenue
per
employee
of
$
24,000
was
derived
using
the
Census
Bureau's
1997
Economic
Census
and
the
SBA's
2000
data
on
private
employer
firms,
establishments,
employment,
and
annual
payroll
by
firm
size.
The
annual
revenue
per
employee
is
in
2003
dollars.
The
SBA
data
are
available
at
http://
www.
sba.
gov/
advo/
stats/
us_
tot_
mi.
pdf.
50
The
estimated
annual
revenue
per
employee
represents
an
average.
Thus,
some
small
firms
may
have
annual
revenues
lower
than
the
estimated
average.
Firms
with
such
low
revenues,
however,
are
likely
to
lease
office
space
rather
than
purchase
it.
This
does
not
mean
that
such
firms
could
not
be
affected
to
some
extent.
Depending
on
the
market
conditions,
some
of
the
Phase
I
ESA
costs
could
be
transferred
by
the
firm
that
owns
the
property
onto
the
firms
that
are
leasing
the
property.
Considering
data
deficiency,
it
would
be
hard
to
estimate
the
impacts
on
small
firms
that
have
very
low
annual
revenues
and
are
leasing
office
space.
EIA
for
the
AAI
Regulation
10­
6
$
24,000
would
be
less
than
one
percent
of
annual
revenues.
51
Thus,
the
cost
impact
on
small
entities
would
be
insignificant.
52
As
a
sensitivity
analysis,
we
compared
the
estimated
incremental
cost
to
annual
revenues
without
annualizing
the
costs.
Using
this
method
for
presenting
cost
impacts,
we
estimated
that
an
annual
cost
of
$
47
for
a
firm
with
annual
revenues
of
$
24,000
would
represent
one­
fifth
of
one
percent
of
annual
revenues.
For
a
small
firm
with
the
same
annual
revenues,
an
annual
cost
of
$
1,454
would
represent
approximately
six
percent
of
annual
revenues.
The
impact
of
such
magnitude
is
clearly
significant.
Because
these
costs
would
be
very
unlikely
to
recur
in
succeeding
years,
however,
most
very
small
firms
would
be
able
to
recoup
these
costs
later.

10.5
Cost
Impact
on
Small
Governmental
Jurisdictions
10.5.1
Number
of
Small
Governmental
Jurisdictions
The
RFA,
as
amended
by
SBREFA,
requires
agencies
to
consider
the
impact
of
their
regulatory
proposals
on
small
governmental
jurisdictions.
Small
governmental
jurisdictions
are
defined
as
governments
of
cities,
counties,
towns,
school
districts,
or
special
districts
with
populations
of
less
than
50,000.53
To
estimate
the
number
of
potentially
affected
small
governmental
jurisdictions,
we
used
the
distribution
of
municipal
and
township
governments
by
population
size
from
the
US
Census
Bureau
1997
Census
of
Government,
Finance
of
Municipal
and
Township
Governments.
Census
Bureau
defines
eight
population­
size
groups
where
the
smallest
group
includes
municipal
and
township
governments
with
less
than
10,000
inhabitants.
Approximately
18,800
municipalities
(
i.
e.,
97
percent)
have
less
than
50,000
inhabitants.

51
Small
firms
with
annual
revenues
of
$
24,000
are
very
unlikely
to
own
office
space
and
thus
incur
an
annual
cost
of
$
207.
Owning
office
space
would
tie
up
their
capital
and
require
some
resources
to
be
allocated
to
managing
the
property.
It
is
also
not
certain
if
they
would
be
considered
too
risky
by
the
lending
community
to
qualify
for
a
loan
to
buy
a
property.
Nevertheless,
our
analysis
shows
that
even
for
a
small
firm
that
has
very
low
annual
revenues
and
owns
its
office
space
the
estimated
maximum
annual
impact
of
$
207
would
be
insignificant.
52
It
should
be
noted
that
for
some
small
firms
the
transfer
of
properties
would
be
more
frequent
than
every
ten
years,
and
for
some
small
entities
there
might
even
be
more
than
one
property
transfer
in
a
year.
In
the
usual
case
(
a
Phase
I
ESA
being
changed
so
as
to
comply
with
the
AAI
rule)
even
multiple
transactions
would
be
an
insignificant
percentage
of
revenues.
For
example,
a
$
47
cost
amortized
over
five
years
would
be
less
than
one
tenth
of
one
percent
of
annual
revenues
for
a
small
firm
with
annual
revenues
of
$
24,000.
For
a
firm
with
the
same
annual
revenues,
the
cost
of
two
Phase
I
ESAs
amortized
over
a
ten­
year
period
would
still
be
less
than
one
tenth
of
one
percent
of
annual
revenues.
Furthermore,
because
the
more
costly
shifts
from
transaction
screens
to
Phase
I
ESAs
are
rare,
the
chances
that
any
single
small
firm
would
need
two
in
a
single
year
are
extremely
small.
53
RFA
Section
601.
EIA
for
the
AAI
Regulation
10­
7
Exhibit
10­
4:
Distribution
of
Governmental
Jurisdictions,
by
Population­
Size
Group
(
1996)

Population­
Size
Group
(
Number
of
Inhabitants)
Number
of
Governmental
Jurisdictions
Population
In
1996
Population
Distribution
(
percent)

300,000
or
more
56
44,264,096
27.2
200,000
to
299,999
24
5,844,541
3.6
100,000
to
199,999
140
19,298,114
11.8
75,000
to
99,999
103
8,804,252
5.4
50,000
to
74,999
246
14,743,531
9
25,000
to
49,999
597
20,696,708
12.7
10,000
to
24,999
1,368
21,437,244
13.1
Less
than
10,000
16,838
28,518,430
17.4
All
Municipalities
19,372
163,606,916
100
Notes:
Totals
do
not
add
do
to
rounding.
Source:
US
Census
Bureau.

The
distribution
of
small
governmental
jurisdictions
by
population
size
is
not
available
for
jurisdictions
with
less
than
10,000
inhabitants.
The
data,
however,
indicate
that
governmental
jurisdictions
in
this
population­
size
group
have,
on
average,
1,700
inhabitants.

10.5.2
Number
of
Potentially
Affected
Small
Governmental
Jurisdictions
The
AAI
requirements
will
be
applicable
to
any
small
governmental
jurisdiction
that
may
potentially
claim
protection
from
CERCLA
liability
or
that
receives
a
Federal
brownfields
grant.
The
number
of
potentially
affected
small
governmental
jurisdictions
will
be
a
function
of
the
annual
volume
of
real
estate
transactions
conducted
by
small
governments.
Information
related
to
small
governments
real
estate
transactions,
however,
are
not
easily
available.
54
As
a
result,
the
total
number
of
small
governments
real
estate
transactions
was
approximated
using
the
available
data
on
the
transactions
of
brownfields
properties.

The
Environmental
Land
Use
Report,
published
annually
by
XL
Insurance,
contains
data
on
brownfields
redevelopment
activities
across
the
US.
55
The
data
are
obtained
through
a
review
of
newspaper
and
journal
articles.
The
report
indicates
that
eight
percent
of
brownfields
sites
redeveloped
in
2000
and
2001
were
designated
for
public
use.
In
2002,
however,
only
three
percent
of
redeveloped
brownfields
properties
were
designated
for
public
use.

54
The
US
Census
Bureau
compiles
the
data
on
small
governmental
jurisdictions
expenditures
by
various
public
service
and
activity
categories.
The
categories,
however,
are
too
general
to
reasonably
approximate
real
estate
expenditures.
55
XL
Insurance,
The
XL
Environmental
Land
Use
Report,
2002.
EIA
for
the
AAI
Regulation
10­
8
Based
on
our
estimate
of
the
volume
of
Phase
I
ESAs
under
the
AAI
regulation,
56
we
estimated
that
the
annual
number
of
real
estate
transactions
involving
municipal
and
township
governments
could
range
from
8,000
to
21,000
in
2004
(
263,680
*
3%
 
8,000
and
263,680
*
8%
 
21,000).
It
is
reasonable
to
assume,
however,
that
the
annual
volume
of
real
estate
transactions
is
a
function
of
the
population
size
and
economic
activity
in
a
jurisdiction.
Therefore,
using
the
Census
Bureau
data,
we
derived
total
annual
revenues
distribution
for
municipal
and
township
governments
by
population­
size
groups.
The
derived
revenues
distribution
is
presented
in
Exhibit
10­
5,
fourth
column.

Exhibit
10­
5:
Distribution
of
Municipal
and
Township
Annual
Revenues
by
Population­
Size
Group
(
1996)

Population­
Size
Group
(
Number
of
Inhabitants)
Number
of
Governmental
Jurisdictions
Total
Annual
Revenues
(
in
Millions)
Total
Revenues
Distribution
(
Percentage)
300,000
or
more
56
$
137,608.7
48.0
200,000
to
299,999
24
$
9,353.7
3.3
100,000
to
199,999
140
$
29,283.5
10.2
75,000
to
99,999
103
$
12,227.2
4.3
50,000
to
74,999
246
$
18,703.7
6.5
25,000
to
49,999
597
$
25,139.4
8.8
10,000
to
24,999
1,368
$
24,994.6
8.7
Less
than
10,000
16,838
$
29,332.0
10.2
All
Municipalities
19,372
$
186,642.7
100
Notes:
Totals
do
not
add
do
to
rounding.
Source:
US
Census
Bureau.

The
revenues
distribution
data
presented
in
Exhibit
10­
5
indicate
that
approximately
28
percent
of
total
annual
revenues
collected
by
municipal
and
township
governments
are
collected
by
governmental
jurisdictions
with
less
than
50,000
inhabitants.
Assuming
that
the
volume
of
real
estate
transactions
involving
small
governmental
jurisdictions
is
a
function
of
their
annual
revenues,
the
annual
number
of
potentially
affected
small
governmental
jurisdictions
would
not
exceed
6,000
(
21,000
*
28%
 
6,000).

10.5.3
Cost
Impact
on
Small
Governmental
Jurisdictions
As
presented
in
section
8.2,
we
estimated
that
the
cost
of
conducting
a
Phase
I
ESA
would
increase,
on
average,
between
$
41
and
$
47
per
transaction
for
cases
in
which
a
Phase
I
ESA
would
have
been
selected
in
the
base
case,
and
between
$
1,448
and
$
1,454
where
a
transaction
screen
would
have
been
used.
Annualizing
the
estimated
incremental
cost
of
$
47
over
10
years
at
a
seven
percent
discount
rate,
we
estimated
that
the
annual
cost
increase
per
Phase
I
ESA,
on
average,
would
be
approximately
$
7.
Since
$
47
represents
an
upper
bound
of
the
estimated
56
The
estimated
volume
of
Phase
I
ESAs
in
2004
under
the
AAI
regulation
is
presented
in
Exhibit
8­
6.
We
assumed
that
the
annual
number
of
applicable
property
transactions
approximates
the
annual
number
of
ESAs
performed.
EIA
for
the
AAI
Regulation
10­
9
average
annual
cost
range,
some
governmental
jurisdictions
would
have
lower
annual
cost
increase
per
Phase
I
ESA
than
$
7.
Annualizing
the
average
incremental
cost
of
$
1,454
over
10
years
at
a
seven
percent
discount
rate,
we
estimated
that
the
maximum
annual
cost
increase
per
ESA
would
be
approximately
$
207.

Based
on
the
Census
Bureau
data
on
small
governmental
jurisdictions
finances,
the
average
annual
revenue
per
inhabitant
for
small
governmental
jurisdictions
is
$
1,250.57
As
stated
previously,
we
estimated
that
the
governmental
jurisdictions
classified
by
Census
Bureau
as
having
less
than
10,000
people
have,
on
average,
1,700
inhabitants.
Thus,
even
such
small
governmental
jurisdictions
are
likely
to
have
annual
revenues
of
over
$
2
million.
Therefore,
the
maximum
cost
impact
of
$
207
on
small
governmental
jurisdictions
would
be
insignificant.
58
10.6
Cost
Impact
on
Small
Not­
for­
Profit
Organizations
The
RFA,
as
amended
by
SBREFA,
requires
agencies
to
consider
the
impact
of
their
regulatory
proposals
on
small
not­
for­
profit
organizations.
Small
not­
for­
profit
organizations
are
non­
profit
enterprises
independently
owned
and
operated
that
are
"
not
dominant"
in
their
fields.
59
The
National
Center
for
Charitable
Statistics
(
NCCS)
estimates
that
there
are
approximately
370,000
not­
for­
profit
organizations
that
include:
(
1)
public
charities;
(
2)
private
foundations;
and
(
3)
other
exempt
organizations.
60
The
NCCS
data
are
not
readily
available
at
the
level
that
would
enable
us
to
estimate
the
number
of
small
not­
for­
profit
organizations.
It
is
likely,
however,
that
a
substantial
number
of
such
entities
exists
and
could
be
affected
to
some
degree
by
the
AAI
regulation.
The
impact,
however,
is
not
expected
to
be
significant.
NCCS
estimates
that
approximately
two­
thirds
of
not­
for­
profit
organizations
do
not
file
a
Form
990
with
the
Internal
Revenue
Service
(
IRS)
in
any
given
year.
With
the
exception
of
congregations
and
other
religious
institutions,
not­
for­
profit
organizations
with
annual
gross
receipts
of
less
than
$
25,000
are
exempt
from
filing
with
the
IRS.

Small
not­
for­
profit
organizations
with
annual
revenues
of
$
25,000
or
less
are
likely
to
rent
office
space
rather
than
purchase
it.
As
explained
in
Section
10.4,
impact
on
entities
that
lease
their
office
space,
although
hard
to
estimate,
is
expected
to
be
minimal.
The
impact
on
small
not­
for­
profit
organizations
with
annual
revenues
of
$
25,000
or
more
would
be
insignificant
as
well.
The
maximum
annual
impact
of
$
207
would
be
on
a
small
fraction
of
not­
for­
profit
organizations
transitioning
from
a
transaction
screen
to
a
Phase
I
ESA.
Even
an
impact
of
that
57
Revenues
per
inhabitant
are
calculated
in
2003
dollars.
58
Some
governmental
jurisdictions
may
have
annual
revenues
lower
than
the
estimated
average
annual
revenues.
For
example,
in
Pennsylvania,
the
average
annual
revenues
for
townships
with
a
population
of
less
than
2,500
is
about
$
250,000
(
See
Finances
of
Municipal
and
Township
Governments,
US
Census
Bureau,
1997).
Nevertheless,
even
for
a
township
with
annual
revenues
of
$
250,000,
the
maximum
annual
cost
impact
of
$
207
would
represent
less
than
one
tenth
of
one
percent
of
annual
revenues.
There
is
a
possibility,
however,
that
a
township
of
that
size
conducts
more
than
one
Phase
I
ESA
per
year.
Although
the
possibility
of
that
happening
is
likely
very
small,
townships
that
want
to
conduct
brownfields
cleanup
and
redevelopment
have
the
option
of
applying
for
the
EPA
Brownfields
Grant.
59
RFA
Section
601.
60
The
National
Center
for
Charitable
Statistics,
available
at
http://
nccsdataweb.
urban.
org/
FAQ/
index.
php?
category=
90.
EIA
for
the
AAI
Regulation
10­
10
magnitude
on
small
not­
for­
profit
organizations
with
annual
revenues
of
$
25,000
would
be
less
than
one
percent
of
their
annual
revenues.
EIA
for
the
AAI
Regulation
i
BIBLIOGRAPHY
American
Society
for
Testing
and
Materials.
Standard
Practice
for
Environmental
Site
Assessments:
Phase
1
Environmental
Site
Assessment
Process.
2000.

Deason,
Jonathon
P.,
George
William
Sherk,
and
Gary
A.
Caroll,
The
George
Washington
University.
Public
Policies
and
Private
Decisions
Affecting
the
Redevelopment
of
Brownfields:
An
Analysis
of
Critical
Factors,
Relative
Weights
and
Areal
Differentials.
Submitted
to
US
EPA
Office
of
Solid
Waste
and
Emergency
Response,
Washington,
DC.
September
2001.

Environmental
Data
Resources,
Inc.
Benchmarking
Survey
of
Environmental
Professionals:
Nuts
and
Bolts
of
the
Phase
I
Process.
2002.

Environmental
Data
Resources,
Inc.
Environmental
Site
Assessment
Report,
various
issues.

Schroeer,
William.
The
Transportation
and
Environmental
Impacts
of
Infill
vs.
Greenfield
Development:
A
Comparative
Case
Study
Analysis.
Prepared
for
US
EPA
Urban
and
Economic
Development
Division.
October
1,
1999.

Schroeer,
William.
The
Water
Quality
Impacts
of
Density,"
paper
at
the
Congress
for
the
New
Urbanism
X,
Miami,
FL,
June
14,
2002.

The
Brookings
Institution,
Center
on
Urban
and
Metropolitan
Policy.
Vacant
Land
in
Cities:
An
Urban
Resource.
2000.

The
Office
of
Advocacy,
US
Small
Business
Administration.
The
Regulatory
Flexibility
Act:
An
Implementation
Guide
for
Federal
Agencies.
November
2002.

The
Office
of
Advocacy,
US
Small
Business
Administration.
A
Guide
for
Government
Agencies
 
How
to
Comply
with
the
Regulatory
Flexibility
Act.
May
2003.

US
Conference
of
Mayors.
Recycling
America's
Land:
A
National
Report
on
Brownfields
Redevelopment,
Volume
IV.
2003.

US
Department
of
Labor,
Bureau
of
Labor
Statistics.
2002
National
Industry­
Specific
Occupational
Employment
and
Wage
Estimates.
2003.

US
Department
of
Labor,
Bureau
of
Labor
Statistics.
Employer
Costs
for
Employee
Compensation.
2003.

US
Environmental
Protection
Agency.
All
Appropriate
Inquiries
Regulation
(
Draft).
2003.

US
Environmental
Protection
Agency.
Reusing
Land
Restoring
Hope:
A
Report
to
Stakeholders
from
the
US
EPA
Brownfields
Program.
September
2003.

XL
Insurance.
The
XL
Environmental
Land
Use
Report.
2002.
EIA
for
the
AAI
Regulation
Appendix
I:
Proposed
AAI
Regulation
EIA
for
the
AAI
Regulation
Appendix
II:
Summary
of
the
Main
Differences
between
the
All
Appropriate
Inquiries
Standard
and
the
ASTM
E1527­
2000
EIA
for
the
AAI
Regulation
II­
1
Appendix
II:
Summary
of
Main
Differences
between
the
AAI
Standard
and
ASTM
E1527­
2000
Major
Activities1
Proposed
AAI
Standard
ASTM
E1527­
2000
Definition
of
Environmental
Professional
(
§
312.21)
 
Specific
certification/
license,
education,
and
experience
requirements
 
Applies
only
to
individuals
overseeing
and
signing
AAI
 
Broad
description;
no
specific
education
and
experience
requirements;
self
"
qualify"
 
Applies
to
all
individuals
involved
in
conducting
AAI
Interview
with
the
Subject
Property
Current
Owner
and
Occupants
(
§
312.23)
Mandatory
The
environmental
professional
(
EP)
must
make
a
reasonable
attempt
to
conduct
interview(
s)
Interview
with
Past
Owner
and
Occupants
(
§
312.23)
Includes
provisions
for
interviewing
past
owners/
occupants,
but
at
the
discretion
of
the
EP
 
The
EP
must
inquire
about
past
uses
of
the
subject
property
when
interviewing
current
property
owner;
 
Interviews
w/
past
owners
a
source
of
information
for
historical
uses
Interview
with
Neighboring
or
Nearby
Property
Owners
or
Occupants
(
§
312.23)
Mandatory
at
abandoned
properties
At
the
discretion
of
the
EP
Review
of
Historical
Sources:
period
to
be
covered
(
§
312.24)
From
the
property's
obvious
first
developed
use
From
the
property's
obvious
first
developed
use,
or
1940,
whichever
is
earlier
Records
of
Activity
and
Use
Limitations
(
e.
g.,
Engineering
and
Institutional
Controls)
and
Environmental
Cleanup
Liens
(
§
312.25
and
§
312.26)
 
The
search
results
must
be
documented
in
the
written
report
 
No
requirement
as
to
who
is
responsible
for
the
search
 
The
search
results
must
be
reported
to
the
EP
 
User's
responsibility
Government
Records
Review
(
§
312.26)
Federal,
state,
tribal,
and
local
records
 
Federal
and
state
records
 
Local
records/
sources
at
the
discretion
of
the
EP
Site
Visit
(
§
312.27)
 
Required.
 
Limited
exemption
if
the
subject
property
cannot
be
visually
inspected
 
inspect
from
nearest
vantage
point
 
Required.
 
No
specific
requirements
if
the
subject
property
cannot
be
visually
inspected.
Contaminants
of
Concern
(
§
312.20)
 
Parties
seeking
CERCLA
defense
­
CERCLA
hazardous
substance
 
EPA
Brownfields
Grant
recipients
­
CERCLA
hazardous
substance
­
petroleum/
petroleum
products
­
controlled
substances
CERCLA
hazardous
substance
and
petroleum
products
Data
Gaps
(
§
312.20)
Must
identify
and
document
Must
identify
data
"
failures"
and
document
Shelf
Life
of
the
Written
Report
(
§
312.20)
One
year,
with
some
updates
required
after
180
days
for
certain
information
Not
specified,
some
updates
required
after
180
days
1)
Relevant
sections
of
the
proposed
AAI
rule
identified
in
parenthesis.
EIA
for
the
AAI
Regulation
Appendix
III:
Unit
Cost
Estimates
for
the
AAI
Regulatory
Option
3
EIA
for
the
AAI
Regulation
III­
1
Appendix
III:
Unit
Cost
Estimates
for
the
AAI
Regulatory
Option
3
This
section
presents
unit
costs
associated
with
sampling
under
the
AAI
regulatory
option
3.

Exhibit
III­
1:
Groundwater
Monitoring
Well
Installation
Cost
Estimate
Notes:
The
following
cost
assumptions
are
made:
(
1)
Well
depth
of
20
ft
at
$
13/
ft
(
2)
Installation
of
two
wells/
day
and
development
of
three
wells/
day
(
3)
One
drum/
well
solids
and
one
drum/
well
water.
Source:
ICF
Analysis.
Item
Units
Unit
Cost
Number
of
Total
Costs
Source
(
2003
$)
Units
Direct
Capital
Costs
Mobilization/
Demobilization
each
500
$
1
500
$
Vendor
Quote
2"
Monitoring
Well
(
1)
well
260
$
3
780
$
Vendor
Quote
Well
Box
&
Materials
well
600
$
3
1,800
$
Vendor
Quote
Drill
Rig
&
Crew
(
2)
day
1,000
$
2.50
2,500
$
Vendor
Quote
Disposal
of
cuttings
and
drums
400
$
6
2,400
$
ICF
Estimate
development
water
(
3)
Supervision/
Environmental
Scientist
day
520
$
2.50
1,300
$
ICF
Estimate
Direct
Capital
Cost
Subtotal
9,280
$

Indirect
Capital
Costs
External
Transaction
Cost
5%
of
Capital
Cost
Subtotal
464
$
ICF
Estimate
Engineering
10%
of
Capital
Cost
Subtotal
928
$
ICF
Estimate
Indirect
Capital
Cost
Subtotal
1,392
$

Capital
Cost
Subtotal
10,672
$

Contingency
20%
of
Capital
Cost
Subtotal
2,134
$
ICF
Estimate
Total
Capital
Cost
Well
Installation
12,806
$
EIA
for
the
AAI
Regulation
III­
2
Exhibit
III­
2:
Groundwater
Monitoring
Well
Sampling
Cost
Estimate
Notes:
The
following
cost
assumptions
are
made:
(
1)
Two
environmental
technicians,
three
hrs/
well
(
2)
Supervision
(
environmental
engineer)
is
ten
percent
of
environmental
technicians'
labor
hours
(
3)
Assumes
no
quality
control
(
QC)
samples
(
4)
One
environmental
scientist,
ten
hrs/
well.
Source:
ICF
Analysis.

Exhibit
III­
3:
Surface
Soil
Sampling
Cost
Estimate
Notes:
The
following
cost
assumptions
are
made:
(
1)
Two
environmental
technicians,
one
hr/
sample
(
2)
Supervision
(
environmental
engineer)
is
ten
percent
of
environmental
technicians'
labor
hours
(
3)
Assumes
no
quality
control
(
QC)
samples
(
4)
One
environmental
scientist,
five
hrs/
soil
sample.
Source:
ICF
Analysis.
Item
Units
Unit
Cost
Number
of
Total
Costs
Source
(
2003
$)
Units
Number
of
Surface
Soil
Samples
3
Sample
Collection
(
1)
hours
40
$
6
240
$
ICF
Estimate
Supervision
(
2)
hours
67
$
1
67
$
ICF
Estimate
Sample
Analysis
(
3)
sample
750
$
3
2,250
$
Laboratory
Estimate
for
VOC,
SVOC,
metals,
PCB/
pesticide
analyses
Data
Review
and
Reporting
(
4)
hours
52
$
15
780
$
ICF
Estimate
Supervision
for
Data
Rev/
Reporting
hours
67
$
2
101
$
ICF
Estimate
Surface
Soil
Sampling
Costs
3,438
$

Surface
Soil
Sampling
Costs
Contingency
20%
of
Operating
Costs
688
$
Total
Surface
Soil
Sampling
Cost
4,125
$
Item
Units
Unit
Cost
Number
of
Total
Costs
Source
(
2003
$)
Units
Number
of
Monitoring
Wells
3
Sample
Collection
(
1)
hours
40
$
18
724
$
ICF
Estimate
Supervision
(
2)
hours
67
$
2
134
$
ICF
Estimate
Sample
Analysis
(
3)
sample
750
$
3
2,250
$
Laboratory
Estimate
for
VOC,
SVOC,
metals,
PCB/
pesticide
analyses
Data
Review
and
Reporting
(
4)
hours
52
$
30
1,557
$
ICF
Estimate
Supervision
for
Data
Rev/
Reporting
hours
67
$
3
201
$
ICF
Estimate
Monitoring
Well
Sampling
Costs
4,866
$

Contingency
20%
of
Operating
Costs
1,010
$
Total
Monitoring
Well
Sampling
Cost
5,875
$
EIA
for
the
AAI
Regulation
Appendix
IV:
EDR's
Methodology
for
Estimating
the
Volume
of
ESAs
EIA
for
the
AAI
Regulation
IV­
1
Appendix
IV:
EDR's
Methodology
for
Estimating
the
Volume
of
ESAs
EDR's
methodology
for
estimating
the
number
of
Phase
I
environmental
site
assessments
(
ESAs)
conducted
annually
and
distribution
of
Phase
I
ESAs
by
property
type
is
documented
below.
61
1.
Distribution
of
Phase
I
ESAs
by
Property
Type
EDR
has
been
tracking
the
distribution
of
Phase
I
ESAs
by
the
following
property
types
since
March
2002:

 
Commercial/
Office
 
Undeveloped
 
Retail
 
Industrial
 
Multi­
family
 
Telecommunications
 
Hotel
(
added
December
2002)
 
Other.

The
data
are
reflective
of
all
orders
for
EDR's
Government
Record
Check
reports
placed
using
the
company's
online
system.
In
general,
EDR's
property
type
data
correlate
with
trends
data
from
outside
sources
that
track
the
behavior
of
commercial
real
estate
markets
(
see
below).

2.
Annual
Phase
I
Production
Estimates
 
Data
Inputs
EDR's
data
on
the
number
of
Phase
I
ESAs
conducted
annually
is
based
on
a
series
of
data
inputs,
including
the
number
of
Government
Record
Check
reports
sold
by
EDR
for
use
in
Phase
I
ESAs.
Quarterly
sales
data
are
extrapolated
to
the
industry
level
using
market
intelligence
from
internal
and
external
sources,
including:

 
Annual
EDR
surveys
of
environmental
professionals
conducting
Phase
I
ESAs
­
Production
and
forecast
data
from
Phase
I
providers
 
Annual
EDR
surveys
of
banks
that
loan
on
commercial
real
estate
­
Demand
and
forecast
data
from
major
user
sector
 
Property
&
Portfolio
Research
(
PPR)
 
Boston,
MA
61
Communications
with
Dianne
Crocker,
editor
of
EDR
ESA
Report,
July
2,
2004.
EIA
for
the
AAI
Regulation
IV­
2
­
PPR,
a
highly
respected
provider
of
independent
real
estate
research
and
portfolio
strategy
services,
tracks
commercial
real
estate
trends
in
54
US
areas
and
five
property
types
(
office,
retail,
warehouse,
apartment,
and
hotel)
 
Trepp,
LLC
­
New
York,
NY
­
A
leading
provider
of
CMBS
information
and
analytics
to
the
investment
management
community
 
Feedback
from
market
to
EDR's
national
sales
force
­
EDR's
clients
include:
national,
regional,
and
local
environmental
consulting
firms;
commercial
banks;
pension
funds;
Wall
Street
firms;
insurance
companies;
law
firms;
and
government
agencies
 
EDR's
affiliation
with
the
following
industry
associations
also
provides
information
on
market
trends
that
feeds
into
the
company's
predictions
about
the
Phase
I
marketplace:

A&
WMA
Air
and
Waste
Management
Association
ABA
American
Banker's
Association
AUDITING
ROUNDTABLE
(
formerly
Environmental
Auditing
Roundtable)
CORENET
Corporate
Real
Estate
Network
EBA
Environmental
Bankers
Association
ICBA
Independent
Community
Bankers
Association
MBA
Mortgage
Bankers
Association
RMA
Risk
Management
Association
NAGGL
National
Association
of
Government
Guaranteed
Lenders
NAEP
National
Association
of
Environmental
Professionals
 
2003
Phase
I
Production
Estimates
At
the
beginning
of
each
calendar
year,
EDR
releases
its
forecast
of
annual
Phase
I
activity.
EDR's
early
2003
forecast
predicted
that
245,000­
250,000
Phase
Is
would
be
conducted
in
2003,
and
by
year
end,
actual
production
data
was
in
line
with
these
projections:
approximately
249,000
Phase
I
ESAs
were
conducted.
EDR's
forecast
was
based
on
a
series
of
assumptions
about
continued
low
interest
rates
and
tight
lending
standards
coupled
with
a
gradual
easing
of
investors'
caution
in
2003,
all
of
which
held
true.
In
fact,
as
predicted,
economic
recovery
began
to
take
hold
in
earnest
by
the
second
half
of
the
year
when
capital
from
the
sidelines
began
moving
back
into
play.

 
2004
Forecast,
Model
Assumptions
EDR's
forecast
for
2004
activity
is
based
on
a
combination
of
the
company's
in­
house
data,
market
feedback
from
our
clients,
and
a
series
of
other
broad­
based
outside
data
sources
documented
above.
The
current
forecast
for
the
number
of
Phase
I
ESAs
conducted
in
2004
is
253,000­
255,000,
with
a
4
to
5%
percent
margin
of
error,
based
on
the
accuracy
of
last
year's
forecast
and
confidence
in
the
assumptions
built
into
the
model.
EDR's
latest
market
projection
is
sensitive
to
the
series
of
assumptions
identified
below:
EIA
for
the
AAI
Regulation
IV­
3
 
Growing
stream
of
funding
flowing
into
commercial
real
estate,
particularly
from
new
sources
of
equity
capital
(
e.
g.,
pension
funds,
endowments
and
foundations)
that
have
earmarked
record­
high
allocations
for
CRE
investment
in
2004
 
Growing
confidence
on
the
part
of
businesses,
which
will
drive
more
demand
for
new
office
space
and
apartments,
and
an
increase
in
dollars
spent
assessing
candidate
properties
for
acquisition
 
Moderate
to
strong
commercial
loan
demand
 
Recovery
in
three­
year
downturn
in
merger/
acquisition
activity
due
to
improved
economic
forecasts,
higher
business
confidence,
increased
availability
of
financing,
a
healthy
stock
market
and
a
renewed
focus
on
growth
 
Gradual
increase
in
interest
rates
that
could
affect
developers'
and
property
owners'
ready
access
to
capital
 
Beginning
of
recovery
in
commercial
real
estate
markets,
boosting
investment
in
the
four
core
property
types
(
i.
e.,
office,
retail,
apartment
and
industrial)
 
Transition
to
Phase
Is
over
Transaction
Screens
that
no
longer
provide
property
owner
with
CERCLA
liability
protection
under
the
2002
Small
Business
Liability
Relief
and
Revitalization
Act
(
Public
Law
107­
118)
 
Increased
activity
in
telecom
sector
as
recovering
tower
companies
seek
to
expand
networks
 
Passage
of
federal
transportation
law
that
will
release
funding
for
new
highway
and
railway
projects
 
Continued
strong
capital
flows
into
real
estate
investment
trusts
(
REITs)
from
broadening
array
of
institutions
and
individuals,
despite
recovering
stock
market
 
Increase
in
commercial
mortgage
backed
securities
(
CMBS)
after
record
year
in
2003
due
largely
to
continued
healthy
volume
coupled
with
the
trend
toward
now­
maturing
early
1990
bonds
being
repackaged
and
reinvested
through
the
CMBS
market
 
Greater
interest
in
brownfields
redevelopment
given
new
EPA
funding,
new
state
programs
and
additional
CERCLA
defenses
 
Much
stronger
optimism
on
part
of
Phase
I
providers
based
on
EDR
survey
data
(
early
2004),
which
showed
that
25%
of
consultants
predict
a
"
significant
increase"
in
Phase
I
work
in
2004
compared
to
only
16%
at
the
start
of
2003
 
Trend
in
banking
sector
toward
greater
environmental
scrutiny
of
low
cap
loans.
EIA
for
the
AAI
Regulation
Appendix
V:
Volatility
in
Property
Transactions
EIA
for
the
AAI
Regulation
V­
1
Appendix
V:
Volatility
in
Property
Transactions
We
used
the
data
presented
in
Exhibits
V­
1
and
V­
2
as
a
proxy
for
volatility
in
real
estate
transactions.

Exhibit
V­
1:
Percent
of
Properties
Sold,
by
Year
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
7.5
8.5
8.0
7.0
8.0
10.0
6.0
6.0
4.5
6.5
8.5
8.5
15.0
17.5
16.5
13.0
11.5
10.5
Exhibit
V­
2:
Percent
of
Properties
Sold,
10­
Year
Moving
Average
10­
Year
Period
Percent
Properties
Sold
1984­
1993
7.2
1985­
1994
7.3
1986­
1995
7.3
1987­
1996
8
1988­
1997
9.05
1989­
1998
9.9
1990­
1999
10.2
1991­
2000
10.75
1992­
2001
11.2
Mean
8.99
Standard
Deviation
(
SD)
1.59
