Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

ASTM Approves New Standard for Environmental Site Assessments

Author: Scarinci Hollenbeck, LLC

Date: January 7, 2022

Key Contacts

Back
ASTM Approves New Standard for Environmental Site Assessments

The ASTM Committee on Environmental Assessment, Risk Management and Corrective Action (E-50) revised its standard for conducting Phase I Environmental Site Assessments (ESAs)...

On November 1, 2021, the American Society for Testing and Materials (ASTM) Committee on Environmental Assessment, Risk Management and Corrective Action (E-50) revised its standard for conducting Phase I Environmental Site Assessments (ESAs). Phase I ESA’s facilitate commercial property transfers that satisfy the U.S. Environmental Protection Agency (EPA) All Appropriate Inquiries Rule (AAI Rule), as defined by the federal Superfund law (CERCLA), and 40 C.F.R. § 312.11. They also aid in the underwriting of mortgage loans and inform prudent risk management and decision-making. 

Understanding the AAI Process

The AAI process evaluates a property’s environmental conditions and assesses potential liability for any contamination. The 2002 Brownfields Amendments to CERCLA required the EPA to promulgate regulations establishing standards and practices for conducting AAI. The AAI final rule provides that the current versions of ASTM International Standard E1527 “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process” and E2247 “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process for Forestland or Rural Property” are consistent with the requirements of the final rule and can be used to satisfy the statutory requirements for conducting AAI.

CERCLA provides liability protections for certain landowners and potential property owners who did not cause or contribute to contamination at the property and can demonstrate compliance with specific provisions outlined in the statute, including conducting AAI into present and past uses of the project. AAI requirements specifically apply to any party who may seek to claim protection from CERCLA liability as an innocent landowner, contiguous property owner or bona fide prospective purchaser. Additionally, parties who receive grants under EPA’s Brownfields Program must comply with the AAI rule when using grant funds to assess or characterize properties.

Key Changes to ASTM’s ESA Standard

ASTM’s Phase I Standard was first published in 1993 to define “good commercial and customary practice” for conducting ESAs. The prior version of the standard was incorporated by reference into the EPA’s AAI Rule. Its latest update, known as “E1527-21 – Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process,” represents more than three years of ongoing collaboration by more than 150 industry professionals, according to ASTM.

Like its predecessor, the ASTM E1527-21 Standard outlines what constitutes “good commercial and customary practice for conducting an environmental site assessment of a parcel of commercial real estate in the United States of America with respect to the range of contaminants within the scope of the Comprehensive Environmental Response, Compensation & Liability (CERCLA) Act (42 U.S.C. 9601) and petroleum products.” Below is a brief summary of the substantive changes in the updated version:

  • Key terminology revisions: The terms “Recognized Environmental Condition” (REC); “Controlled Recognized Environmental Condition” (CREC); and “Historical Recognized Environmental Condition (HREC) have been strengthened to reduce misclassifications of known or likely hazardous material and petroleum product releases affecting subject properties. The revisions are further supported by a new appendix that provides guidance on the REC/HREC/CREC decision process, a flow chart, and representative examples of each.
  • New definitions: The terms “Property Use Limitation” (PUL); and “Significant data gap” have been formally defined to provide important clarification of existing concepts. 
  • The historical records review section has been restructured and updated to reflect good commercial and customary practice. The revisions clarify subject and adjoining property identification, use, and research objectives; and new parameters have been established for the use of standard historical sources. 
  • Detailed site reconnaissance requirements have been added to reinforce existing good commercial and customary practice.
  • Revised report requirements have been added to strengthen the deliverable, including consistent use of the term “subject property”; identification of RECs, CRECs, and significant data gaps in the Conclusion section; photos of site reconnaissance items; and a site map.
  • Updated appendices: Including an extensively revised legal appendix; new REC/HREC/CREC guidance; revised report outline; and updated discussion of business environmental risks including emerging contaminants.

Implementing the New ASTM E1527-21 Standard

Now that ASTM has approved the ASTM E1527-21 Standard, the EPA must revise the AAI Rule to incorporate the changes. The EPA’s rulemaking process can take up to one year to conclude, which can raise questions about what standard to use in the interim.

The first option is to continue using and citing the ASTM E1527-13 Standard, which is currently incorporated into the AAI. However, buyers, environmental professionals, and others may elect to use the more modern standard, which will likely become compulsory sometime in 2022 in order to satisfy the requirements of the AAI Rule and qualify for the applicable CERCLA defenses. Finally, it is also possible to use a hybrid approach by citing the ASTM E1527-13 Standard, while also stating that the Phase I ESA includes procedures set forth in the new ASTM E1527-21 Standard.

Key Takeaway

The changes reflected in the ASTM E1527-21 Standard will impact how commercial property purchasers and environmental professionals conduct environmental due diligence. We encourage impacted entities to thoroughly review the updated standard and contact a member of the Scarinci Hollenbeck Environmental Law Group with any questions.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Monica Schroeck, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide post image

How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide

Closing your business can be a difficult and challenging task. For corporations, the process includes formal approval of the dissolution, winding up operations, resolving tax liabilities, and filing all required paperwork. Whether you need to understand how to dissolve a corporation in New York or New Jersey, it’s imperative to take all of the proper […]

Author: Christopher D. Warren

Link to post with title - "How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide"
Gross Lease vs. Net Lease: Understanding the Key Differences post image

Gross Lease vs. Net Lease: Understanding the Key Differences

Commercial leases can take a variety of forms, which is often confusing for both landlords and tenants. Understanding the different types, especially the gross lease structure, is important when selecting the lease that best suits your needs. One key distinction between lease types is how rent is calculated and paid. This article addresses the two […]

Author: Robert L. Baker, Jr.

Link to post with title - "Gross Lease vs. Net Lease: Understanding the Key Differences"
What to Do If You Are Impacted by a Retailer Bankruptcy Part 2 post image

What to Do If You Are Impacted by a Retailer Bankruptcy Part 2

Over the past year, brick-and-mortar stores have closed their doors at a record pace. Fluctuating consumer preferences, the rise of online shopping platforms, and ongoing economic uncertainty continue to put pressure on the retail industry. When a retailer seeks bankruptcy protection, a myriad of other businesses are often impacted. Whether you are a supplier, customer, […]

Author: Brian D. Spector

Link to post with title - "What to Do If You Are Impacted by a Retailer Bankruptcy Part 2"
The Current Administration's Proposals for the Financial Services and Banking Industries Will Affect Your Business post image

The Current Administration's Proposals for the Financial Services and Banking Industries Will Affect Your Business

Since his inauguration two months ago, Donald Trump’s administration and the Congress it controls have indicated important upcoming policy changes. These changes will impact financial services policies and priorities. The changes will particularly affect cryptocurrency, as well as banking rules and regulations. Key Regulatory Changes in Cryptocurrency For example, in the burgeoning cryptocurrency business environment, […]

Author: Dan Brecher

Link to post with title - "The Current Administration's Proposals for the Financial Services and Banking Industries Will Affect Your Business"
Tips for Commercial Landlords Impacted by Wave of Retailer Bankruptcies Part 1 post image

Tips for Commercial Landlords Impacted by Wave of Retailer Bankruptcies Part 1

The retail sector has experienced a wave of bankruptcy filings over the last year. Brick-and-mortar businesses in financial distress include big-name brands like Big Lots, Party City, The Container Store, and Vitamin Shoppe. When large retailers seek bankruptcy protection, they are not the only businesses impacted. Landlords can be particularly hard hit. While commercial landlords […]

Author: Brian D. Spector

Link to post with title - "Tips for Commercial Landlords Impacted by Wave of Retailer Bankruptcies Part 1"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!

Please select a category(s) below: