What Buyers and Lessees Need to Know About the New ASTM Standards for Phase I Site Assessments
American Society for Testing and Materials (ASTM) International issued updated standards for Phase I environmental site assessments (ESAs) on Nov. 1, 2021. The ASTM E1527 standard meets the All Appropriate Inquiries (AAI) requirements under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for certain environmental liability defenses for real estate purchasers and lessees.
We expect EPA to adopt the revised standards, ASTM E1527-21, in the coming months and replace the current standards, ASTM E1527-13. While there will likely be a transition period between the two standards, those conducting ESAs for prospective land purchases should be aware of the updates and begin to incorporate the new standards to ease the transition. Below, we outline some of the key updates to the revised standards.
Updated Definitions and New Appendix
The new standards update the definitions for Recognized Environmental Conditions (RECs), Historical Recognized Environmental Conditions (HRECs) and Controlled Recognized Environmental Conditions (CRECs). The new standards define a REC as:
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- The presence of hazardous substances or petroleum products in, on or at the subject property due to a release to the environment
- 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
- 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
The revision attempts to clarify when a REC should be identified by defining “likely” to mean “which is neither certain nor proved, but can be expected or believed by a reasonable observer based on the logic and/or experience of the environmental professional, and/or available evidence, as stated in the report to support the opinions given.”
“Property Use Limitation” and “Significant Data Gap” are also now defined. The new standards also include an appendix that provides examples of RECs and a chart to help environmental consultants determine whether the facts warrant a REC designation.
Emerging Contaminants and PFAS
Per- or poly- fluoroalkyl substances (PFAS) are directly addressed by the ASTM standards for the first time. EPA recently announced that it intends to add two types of PFAS - perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS) - to the list of “hazardous substances” in CERCLA. The updated standards provide guidance for environmental professionals on when to include emerging contaminants within the scope of the ESA. The standards clarify that until an emerging contaminant is regulated as a federal hazardous substance, professionals do not have to include it in the scope of the ESA. However, the new standard adds PFAS and other emerging contaminants to the list of non-scope issues that a user may want to consider.
In all ESAs, we strongly recommend that the consultant include a discussion of the common risk factors for PFAS contamination and a finding on whether PFAS are likely to impact the property. This is similar to what is commonly done for other non-scope items like asbestos, lead paint and wetlands.
Higher Standards for Historical Research, Particularly for Adjoining Properties
Under the prior standards, an environmental consultant only needed to review as many historical sources for the property as they believed necessary to meet the ESA’s objectives. Going forward, the consultant must review at least the four key historical sources (aerial photographs, topographic maps, fire insurance maps, and city directories) for the subject property unless they are the not obtainable. Most consultants already do this, so this change is likely to have minimal impact.
The more significant revision pertains to adjoining properties. Under the prior standards, consultants were only required to evaluate the history of adjoining properties by looking at the history of the subject property itself. The new standards require the consultant to review the key four resources to determine the property’s history or explain why this analysis was not performed. The consultant may also need to assess additional resources if they can’t find the historical use of the property from the key four resources. This change is meant to promote consistency across Phase I reports in determining whether historic uses of neighboring properties (such as drycleaners) pose contamination risks to the subject property. This change may require significant additional research for properties in dense areas with a high number of adjoining businesses.
Environmental Liens and Activity and Use Limitations (AULs)
Both the ASTM standards and federal regulations require that the purchaser search for environmental liens and AULs as part of the “all appropriate inquiries” process. Previously, it was unclear how far back these searches should go. Environmental professionals would often only review records back to the previous change in title. The new standards expand and clarify this requirement to include a review of the land records dating back to 1980.
Timing of a Phase I Report
As with the prior ASTM standards, the ESA will remain viable if it was completed within 180 days prior to the acquisition. Alternatively, if the interviews, searches for recorded environmental cleanup liens, review of government records, site reconnaissance of such property and the Environmental Professional Declaration have been updated, the report is valid for up to one year. The new standards require that certain dates be specified in the ESA so that the user may more easily discern whether the report is timely.
Please reach out to David Topping, Madison Guerinot or another member of the Phelps environmental team with any questions or for advice and guidance.
