In November 2021, the ASTM International released a new standard entitled ASTM E1527-21 to govern how environmental professionals prepare Phase I environmental assessments of real estate property. The new standard will replace current ASTM Standard E1527-13. Environmental professionals must comply with ASTM E1527 requirements for a Phase I to convey bona fide prospective purchaser (BFPP) protection to a property buyer. A Phase I that does not cover all of the ASTM standard requirements may not survive a challenge in court. Ultimately, BFPP protection is at risk if a Phase I does not comply with the ASTM standard, with a potentially high cleanup price tag for the innocent purchaser.
ASTM E1527-21 contains the same basic framework that environmental professionals currently follow in ASTM E1527-13. A Phase I still must include the components of User Responsibilities, Records Review, Site Reconnaissance, Interviews, and Conclusions. ASTM E1527-21 restructures certain areas, which can be most easily identified by the redline available through ASTM. There are changes in the detailed Phase I requirements, such as historic research sources, property identification, physical setting review, historic research on adjoining properties, and the addition of emerging contaminants, e.g. PFAS. This article discusses in more detail the most sweeping change: revisions to the definition of a “recognized environmental condition” or REC.
The fundamental goal of a Phase I is to identify conditions that are RECs. ASTM Standard E1527-21 modifies the definition as follows. New 2021 language is underlined, while deleted language from ASTM E1527-13 is struck-through:
1.1.1 Recognized Environmental Conditions—In defining a standard of good commercial and customary practice for conducting an The environmental site assessment of a parcel of property, The goal of the processes established by this practice is to identify recognized environmental conditions. The term recognized environmental conditions 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 any hazardous substances or petroleum products in, on, or at a the subject property: ( due to a 1release) due to any or likely release to the environment; (or 2(3)) under conditions indicative of a the presence of releasehazardous substances toor the petroleum environment products; or (in, on, or at the 3subject property) under conditions that pose a material threat of a future release to the environment. A Dede minimis condition conditions are is not a recognized environmental conditions.condition.
The reorganized definition has two key clarifications. First, the definition states that the REC analysis must focus on the “subject” property and not just a “property.” In other words, the environmental professional’s analysis should not concentrate on the presence of hazardous substances or petroleum at adjacent or other properties. Second, the new REC definition adds a new explanatory note with respect to “likely” contamination. “Likely” contamination “is neither certain nor proved,” but an environmental professional must find that “a reasonable observer” would expect or believe “based on the logic and/or experience and/or available evidence.” Therefore, the Phase I should include the logic behind a “likely presence” of contamination but does not have to provide proof. This clarification is a helpful attempt to standardize subjectivity in identifying a REC. Perhaps this revision will reduce the number of Phase Is with a historic use-based REC that lack explanation and are not substantiated by any aspect of the Phase I review process.
ASTM E1527-21 also revised the designations for controlled recognized environmental conditions (CRECs) and historical recognized environmental conditions (HRECs). Designation of a CREC versus a HREC hinges on the level of environmental contamination present. If hazardous substances or petroleum have been addressed to the satisfaction of the regulatory authority to achieve unrestricted use criteria, then a HREC designation is appropriate. Otherwise, properties with hazardous substances or petroleum products addressed to the satisfaction of the regulatory authority subject to required controls are CRECs. A CREC exists when contamination is allowed to stay in place, as indicated by no further action letters or other documentation by the regulatory authority. ASTM E1527-21 adds the definition of “property use limitation,” which is used in both the CREC and HREC definitions to set a trigger based on the limitations or restrictions of the applicable regulatory authority.
The new ASTM Standard has not been formally adopted by EPA. ASTM expects EPA approval in 2022. In the interim, ASTM E1527-13 remains in place. Environmental professionals may continue using ASTM E1527-13. However, clients may prefer Phase Is conducted in compliance with both standards.