New Phase I ESA Standard Coming Soon

Highly anticipated changes are coming to the standard practice for conducting Phase I Environmental Site Assessments (“ESAs”).  ASTM E1527-13, originally approved on November 6th, 2013, is fast approaching eight years of approval.  According to ASTM International, if a standard has not received a new approval date by December 31 of the eighth year since the last approval date, the standard will be withdrawn. 

ASTM E50.02 Task Group, the subcommittee tasked with re-evaluating the existing Phase I ESA standard, has been reviewing ASTM E1527-13 and preparing revisions for more than a year.  While no final decisions have been made, real estate clients and others relying on Phase I ESAs should be aware of the most impactful proposed changes.

Below is a brief overview of the most important proposed changes that could be seen in the new ASTM E1527 standard for conducting Phase I ESAs:

  1. New Multi-Step Process for Determining a Controlled Recognized Environmental Condition (“CREC”)

One change that could be coming to the ASTM Phase I ESA standard is implementation of a specific process that environmental professionals will have to follow when analyzing a potential CREC.  This process could include (1) review of reasonably ascertainable documentation showing satisfactory dealings with hazardous substances or petroleum products, and (2) review of new conditions to determine if a previously identified CREC no longer constitutes a CREC. 

Environmental professionals would be responsible for outlining this process in the report’s Findings and Opinions sections.  The outline would have to include the environmental professional’s rationale for concluding a finding is a CREC.

  • Slight Alteration to the Definition of a Recognized Environmental Condition (“REC”)

The definition of a REC could be slightly altered be the new ASTM standard.  This change would reduce the amount of variability in REC opinions and result in more consistent interpretations.  The new definition would be:

Recognized Environmental Condition means (1) the presence of hazardous substances or petroleum products in, on, or at the subject property due to a release to the environment; (2) the likely presence of hazardous substances or petroleum products in, on, or at the subject property due to a release or likely release to the environment; or (3) the presence of hazardous substances or petroleum products in, on, or at the subject property under conditions that pose a material threat of a future release to the environment.  A de minimis condition is not a recognized environmental condition.

The new ASTM standard would include an appendix (Appendix X4) with examples of each of the three REC phrases to further bolster consistent interpretations.

  • Indirectly Addressing Emerging Contaminants

The new ASTM standard could indirectly address emerging contaminants such as per- and poly-fluoroalkyl substances (“PFAS”).  These emerging contaminants are not currently defined as hazardous substances by the EPA under CERCLA 42 USC § 9601(14), making them Non-Scope Considerations.

Varying state laws regarding the classification of these emerging contaminants may require companies to add PFAS as a non-scope item to their consultant’s scope of work.

If the EPA were to determine that these emerging contaminants were hazardous under CERCLA 42 USC § 9601(14), they would have to be evaluated within the scope of the ASTM standard.

  • Expanded Historical Records Review for Adjoining Properties

The objective of historical research could be expanded to include compiling and analyzing historical property information for adjoining properties.  When evaluating information for adjoining properties, environmental professionals may have to compile and consider aerial photographs, fire insurance maps, local street directories, and topographic maps.

  • Additional Date Information Required to Satisfy 180-Day Viability

The ASTM standard presumes a Phase I ESA is viable if the report was completed no more than 180 days prior to the date of acquisition, or up to one year if certain components of the report have been updated.  These components include (1) interviews, (2) the environmental lien search, (3) review of governmental records, (4) visual inspection, and (5) the environmental professional declaration.  The updated standard may require the date each component occurred to be identified in the report.  The 180-day clock begins to run when the first of these components occur.

  • Conducting Activity and Use Limitations/Environmental Lien Title Reports Back to 1980

The new standard may provide additional guidance to companies running Activity and Use Limitations/Environmental Lien Title Reports.  The new standard could require searches going back to 1980 as opposed to the last change in title.

Please note that none of these changes are final and they are subject to alteration by ASTM E50.02 Task Group.  KMCL attorneys are closely tracking these proposed changes and welcome questions and concerns.