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United States Environmental Protection Agency (USEPA) Adopts ASTM E1527-21 Standard as Meeting All Appropriate Inquiries

The Phase I ESA (Environmental Site Assessment) plays a crucial role for lenders, buyers, investors, and other stakeholders by assessing environmental risks associated with commercial real estate and providing landowner liability protections. Certainly such an important document needs a consistent process, one which is established in the Phase I ESA ASTM Standard Practice, a document updated every seven years.

On December 15, 2022, the USEPA issued its final rule amending the All Appropriate Inquiries (AAI) Rule under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and approving the use of the ASTM International E1527-21 Standard Practice for Phase I Environmental Site Assessments. In the USEPA’s final rule, which takes effect on February 13, 2023, the USEPA additionally indicated that ASTM E1527-13, which was issued in 2013, would be sunset on February 13, 2024. This marks a significant change from the USEPA’s March 14, 2022, draft ruling recognizing both Standards as meeting AAI. This initial ruling was subsequently withdrawn on May 2, 2022, following adverse comments, including comments from LaBella.

As one of only 14 commenters, LaBella argued that the continued use of the dated E1527-13 Standard would create market confusion among users. Specifically, as the updated standard continued to build upon the best practices consultants should be following when completing a Phase I ESA, LaBella contended that the use of both standards could be detrimental to users in assessing the overall environmental risk associated with a piece of real estate. The primary issue was that while the updated Standard identified specific levels of research to be completed for both the Subject Property and adjacent properties, the dated standard left some aspects of research to the opinion of the Environmental Professional. This discrepancy would have created the potential for environmental concerns to go unidentified in the Phase I ESA meeting the out-of-date Standard. Furthermore, LaBella noted in its comment to the USEPA that key definition changes and the inclusion of significant data gaps within the 2021 standard would allow for inconsistencies in overall report findings when compared to the 2013 standard.

LaBella was an early adopter of the updated standard and has completed Phase I ESAs satisfying both the dated ASTM E1527-13 Standard and the updated E1527-21 Standard since February 2022. We have extensive experience with the updated Standard and anticipate a seamless change in service in February 2023, at which time Phase I ESAs completed by LaBella will be in accordance strictly with the E1527-21 Standard and remove references to the dated 2013 Standard.

The landowner liability protections afforded by a Phase I ESA under CERCLA should be paramount to prospective purchasers, developers, lenders, and other parties associated with such transactions. The USEPA’s final ruling approving ASTM E1527-21 as meeting AAI reflects a step forward in quantifying the steps that should be taken to assess environmental risk prior to taking ownership of a property. While the final ruling approves the continued use of the dated E1527-13 standard until early 2024, LaBella strongly recommends that parties begin relying on Phase I ESAs completed to the recently released E1527-21 Standard as of February 13, 2023, to ensure that the level of research completed and classification/discussion of environmental concerns is commensurate with current customary practices as outlined in the updated standard.

For a detailed review of the changes in the new Standard, please click here.

 

 

Key Takeaways

The USEPA’s final rule regarding new ASTM E1527-21 goes into effect February 13, 2023.

The old ASTM E1527-13 will sunset on February 13, 2024.

This is a welcome change from the USEPA’s March 2022 draft ruling indicating either standard would provide liability protection. Using only one standard will increase consistency and reduce confusion among users.

Our Due Diligence Services

Register for our webinar to learn more about the new standard.

Join us Thursday, February 9th at 10 AM EST for a 30 minute summary of the new standard.

 

Registrants will also receive access to the recorded webinar following the live program.

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About the Author
Dave Crandall, PG
Phase I ESA Program Manager

Dave is LaBella’s Phase I Program Manager and is responsible for oversight, training, and professional development of Analysts and Senior Reviewer staff; overall quality assurance/quality control of Phase I Environment Site Assessment, Transactions Screen, and Records Search with Risk Assessment (RSRA) due diligence reports; and assisting project managers with client interactions and business development activities. Dave has been involved in over 10,000 due diligence projects ranging from undeveloped land and commercial properties to automotive repair facilities, gasoline stations, and large-scale industrial facilities. He has performed environmental due diligence services for attorneys, private entities/developers, municipalities, and various commercial lenders. In addition, Dave is experienced in environmental investigation and remediation techniques and offers his experience in these areas to assist clients in determining the best way to address potential environmental risks encountered through due diligence activities.