Phase I ESAs are typically performed as part of property transactions (acquisitions and divestitures) to assess environmental risk and identity the presence of hazardous substances or petroleum products (also known as Recognized Environmental Conditions (RECs)). Phase I ESAs typically follow a standard practice developed by the American Society for Testing and Materials (ASTM). The current ASTM standard for Phase I ESAs is known as ASTM E1527-13; however, an updated version has recently been developed by ASTM (ASTM E1527-21). This updated standard became effective on February 13, 2023, upon final acceptance by the United States Environmental Protection Agency (USEPA).
During the public comment period, adverse feedback caused the authorities to withdraw the initial proposed rule to assess critiques. The majority of the adverse comments were associated with the continued allowance of the use of ASTM E1527-13 after ASTM E1527-21 was adopted. Upon EPA’s acceptance of the ASTM standard, it became compliant with the federal All Appropriate Inquiries (AAI) regulations concerning landowner liability defenses and qualification for Brownsfield grants. In addition, since the updated standard has heightened levels of environmental due diligence, it is anticipated to be beneficial in identifying environmental issues associated with a property.
Primary Modifications to ASTM E1527
Viability Period of Phase I Reports
ASTM E1527-21 provides essential clarifications on the shelf life of Phase I reports. The standard indicates that the Phase I Report will remain viable if it was completed no more than 180 days prior to the date of acquisition (or, for transactions not involving an acquisition such as a lease or refinance, the date of the intended transaction), or up to one year if five specific components of the Report have been updated. In addition, the new E1527-21 Standard requires that the dates on which each of the components were completed be identified in the Phase I Report and that the 180-day to 1-year time period begins with the date upon which the earliest of these components was completed.
User Responsibility Clarification
Users who want to qualify for CERCLA defenses to liability must satisfy certain user obligations, such as research of title records to identify environmental liens and Activity and Use Limitations (AULs). Under ASTM 1527-21, as was already the case under the previous standard, environmental consultants are not responsible for doing this unless specifically requested by the user to engage in the title search on their behalf.
Expansion of Historical Research
ASTM 1527-21 now requires an expanded scope of historical research of adjoining properties. The EP will need to review the four main historical resources (aerial photographs, topographic maps, city directories, and Sanborn Fire Insurance maps) that have been reviewed for the subject property for all the adjoining properties or explain why the review was not completed. The research of additional resources (building department records, property tax files, interviews, and zoning/land use records, etc.) may also be needed when the EP is unable to adequately identify the historical use of adjoining properties based on the review of the four main historical research sources.
Addressing Significant Data Gaps
ASTM E1527-21 now includes a definition of what constitutes a “significant data gap,” defining it as, “a data gap that affects the ability of the environmental professional to identify a recognized environmental condition.” In addition, the new E1527-21 Standard requires a discussion of how significant data gaps affected the EP’s ability to make conclusions regarding RECs.
Inclusion of Maps and Photographs
ASTM E1527-21 makes it clear that photographs and a subject property map illustrating the boundaries of the subject property shall be included in all Phase I ESA Reports.
Optional Emerging Contaminant Review
New contaminants of concern, such as per- and polyfluoroalkyl substances (PFAS), have been under scrutiny for possible regulations as hazardous substances by the USEPA and some state agencies for the past several years. While some states have adopted regulatory standards for PFAS, the USEPA has not yet listed PFAS as a federally regulated hazardous substance under CERCLA. The new E1527-21 Standard provides guidance regarding whether the environmental consultants are to include emerging contaminants, such as PFAS, in their scope of work when conducting Phase I ESAs, by providing that until an emerging contaminant is regulated as a federal CERCLE hazardous substance, such substances are not required to be included in the scope of an ASTM E1527-21 Phase I ESA.
Broader Standards for RECs
ASTM E1527-21’s definition of REC further broadens the vague concept of “likely presence.” Under ASTM 1527-13, RECs were defined to include the likely presence of hazardous substances due to a release or under “conditions indicative of a release.” Conditions indicative of a release may include staining, stressed vegetation, or other conditions capable of delineation. In ASTM 1527-21, the language referencing conditions indicative of a release has been removed from the definition of a REC, “likely release.” The term “likely” is defined in ASTM 1527-21 as that 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 existence, as stated in the report to support the opinion given therein.”
Additional Modifications to ASTM E1527
The new ASTM E1527-21 also includes the following significant changes:
- Changes to the definition of Controlled REC (CREC) to provide clarification as to the treatment of regulatory closure letters and satisfaction of current unrestricted use criteria — the standard now provides greater specificity and examples of CRECs;
- Changes to the definition of “de minimis condition”, which is now defined in terms of a condition related to a release — the new standard also provides various examples of de minimis conditions, and;
- Changes to the definition of Historical REC (HREC) to clarify that a site must meet current unrestricted use criteria without any property controls — the new standard provides various examples of HRECs.
Now that the EPA has approved the updated ASTM E1527-21 standard, you will want to use and cite the new standard for Phase I ESAs moving forward. Here are a few ways to revise your process to fit the updated standard.
Engage Qualified Environmental Professionals (QEPs)
New standards stress the importance of having a QEP conduct Phase I ESAs.
Update Recognized Environmental Conditions (RECs) Definition
Adopt the new definition for RECs throughout our company, then ensure that Phase I ESA reports identify environmental concerns that meet this revised criteria.
Expand Historical Research
The revision emphasizes the importance of historical data and takes the time to identify potential sources of contamination within the expanded timeframe.
The revised ASTM E1527-2 standard contains several requirements and considerations beyond the items previously listed. To ensure full compliance, review the updated regulations in their entirety and consult with a professional who has experience with environmental site assessments. NGE has experts with significant experience in completing Phase I ESAs and has been completing them for 20 years. We use only senior staff to complete Phase I ESAs, and our approach is comprehensive and methodic. We understand the importance of identifying environmental risks as part of any property transaction. As such, many of the noted modifications to the standard are practices that NGE already includes as part of their Phase I ESA process.
We also have experience in completing Phase II efforts if Phase I identifies RECs and a Phase II is deemed necessary.
Contact NGE for your environmental due diligence needs!