Are you prepared for the transition? Upgrading to ASTM E1527-21 for Phase I Site Assessments

The rule, which took effect on Feb. 13, 2023, allowed the prior standard, E1527-13, to be used for one more year. But beginning Feb. 14, 2024, E1527-13 can no longer be used to satisfy AAI requirements under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). While the revised standard is not an EPA regulation and is not required for AAI compliance, it is now widely recognized as the industry standard for Phase I assessments, which are required for most CRE transactions.

All ASTM standards are revised at least once every eight years to reflect current market practices. While the new ESA standard is similar to the prior version, there are some notable differences, including revised and new definitions, increased scope of historical research, and new requirements related to environmental liens and activity and use restrictions, as described below.

Updated, New Definitions

The definitions of “Recognized Environmental Condition” (REC), “Controlled REC” (CREC), and “Historical REC” (HREC) have been updated to provide greater clarity. For example, a REC is defined as:

Notably, the updated REC definition now includes the word “likely,” which refers to a condition that “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.” The new appendix breaks down the anatomy of a REC, including a logic diagram (if this, then that) and hypothetical examples to help users understand how to apply the various terms. The new standard also clarifies the distinction between a REC and an HREC, emphasizing that an HREC is not a REC.

Additionally, there are new definitions to explain existing concepts, like “property use limitation” and “significant data gap,” to help EPs better understand what these terms mean. Specifically, ASTM replaced “property use restriction,” which was not previously defined, with “property use limitation,” which is defined as a “limitation or restriction on current or future use of a property in connection with a response to a release, in accordance with the applicable regulatory authority or authorities that allows hazardous substances or petroleum products to remain in place at concentrations exceeding unrestricted use criteria.” A “significant data gap” is “a data gap that affects the ability of the environmental professional to identify a REC.”

The “Big 4” for Historical Research

Under the 2013 standard, environmental consultants only had to review as many historical sources as needed to identify whether past uses could have led to a REC. The revised standard requires the review of at least four historical sources (aerial photographs, topographic maps, f ire insurance maps, and city directories) for both the subject property and adjoining properties. The historical sources must be reviewed if they are reasonably ascertainable, applicable to the subject property, and likely to be useful in determining whether activities were conducted that would be expected to result in a release.

The revised standard requires the review of AT LEAST FOUR HISTORICAL SOURCES for both the subject property and adjoining properties.

If the subject property was used for industrial, manufacturing, and now retail purposes, the environmental professional must review additional historical resources, such as building department records, interviews with persons knowledgeable about past uses, property tax files, and zoning/land use records if they are likely to identify a more specific use and are reasonably ascertainable. One primary goal behind these new requirements is to determine whether a property was previously used for dry cleaning, which is the leading source of environmental liability in CRE transactions.

Environmental Liens and Activity and Use Limitations

To qualify for CERCLA liability defenses, users must research title records to identify environmental liens and activity and use limitations (AULs). Previously, searches often stopped at the last change in title, which might not have identified active liens or AULs. The new standard clarifies that users must research title records back to 1980. Note that this is not the environmental professional’s responsibility. The standard clarifies that EPs only need to identify whether they received land title records from the user and that the user identified all AULs or environmental liens. Third-party vendors may provide the research service for users as long as the search meets the 2021 standard.

Emerging Contaminants

Although EPA has proposed a rule to designate certain per- and polyfluoroalkyl substances (PFAS) as CERLCA hazardous substances, the proposed regulations have not been finalized. Therefore, PFAS are not considered a REC under 1527-21. However, the revised standard adds emerging contaminants to the “non-scope issues” list that users may want to evaluate as a business risk. It also notes that “once the emerging contaminants are defined to be a hazardous substance under CERCLA, as interpreted by EPA regulations and the courts, these substances must be evaluated within the scope of E1527.” The most recent regulatory agenda indicates that the proposed rule will be finalized in March 2024, so PFAS is an issue that needs to be monitored closely as new regulations emerge.

Once the emerging contaminants are DEFINED TO BE A HAZARDOUS substance under CERCLA, as interpreted by EPA regulations and the courts, THESE SUBSTANCES MUST BE EVALUATED within the scope of E1527.

Additional Changes

Other noteworthy changes include:

• Significant Data Gaps – EPs must now identify significant data gaps (the definition is explained above) in the Findings section of the report, and they are encouraged to opine on what additional research is needed to resolve those gaps.
• Report Contents – all reports must contain site plans and color photographs with captions to improve reporting documentation and to make ESA reports more consistent throughout the industry (most consultants already do this). The conclusion must include RECs, CRECs, and significant data gaps. The revised standard also states that “Subject Property” is the appropriate term for describing the site of the assessment.
• Site Reconnaissance – the revised standard clarifies language about the scope and objectives of the site visit to make it easier to understand without substantively changing the scope of work.