H2M has been following the progression of the formal adoption of the revised Phase I Environmental Site Assessment (ESA) standard by the United States Environmental Protection Agency (USEPA). The American Society for Testing and Materials (ASTM) revised and approved the new standard for conducting Phase I ESAs known as E1527-21 (the Standard). The document was published in November 2021 and makes significant modifications to the previous ASTM Phase I Standard Practice (E1527-13). The Standard has been submitted to the USEPA and is expected to be adopted after the public comment period concludes as part of the All Appropriate Inquiries (AAI) rule as early as May 13, 2022.
The goal of the processes established by the Phase I ESA standards is to identify recognized environmental conditions (RECs) which have impacted a parcel, and present an imminent risk to or are “likely” to impact a subject property. Compliance with the new E1527-21 Standard by environmental professionals (EPs) and users alike, coupled with the upcoming adoption by the USEPA is a critical path in property due diligence for satisfying the requirements for “landowner liability protections” or “LLPs.”
There are changes to the Standard, when compared to historic revisions that will go into effect in the coming weeks. H2M has identified the more significant upcoming changes as follows:
Shelf Life
Perhaps the most significant change to the standard will be the “shelf life” or viability of an ASTM E1527-21 Phase I ESA report. An ASTM- and AAI-compliant Phase I ESA report has historically had a 180-day shelf life, and although the new E1527-21 Standard does maintain this period of time, there have been clarifications and modifications to the criteria in order to meet this requirement. There are five (5) 180-day time-sensitive components when preparing a Phase I ESA report:
- Interviews with owners, operators and occupants;
- Searches for recorded environmental cleanup liens (a user responsibility);
- Reviews of federal, tribal, state and local government records;
- Visual inspections of the subject property and of adjoining properties; and
- The declaration by the environmental professional responsible for the assessment or update.
To qualify for LLPs under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), each of the five (5) AAI components listed above must be conducted or updated within 180 days of and prior to the date of acquisition of the subject property, and all other components of AAI must be conducted within one year prior to the date of acquisition of the subject property. The date of the report generally does not represent the date the individual components of AAI were completed and should not be used when evaluating compliance with the 180-day or 1-year AAI requirements. The 180-day or 1-year time period begins with the date upon which the first of these components was completed.
RECs and HRECs
The addition of the word “likely” can be applied to the existing definition of a REC. The Standard will allow the EP to indicate a REC based upon “the likely presence of contamination.”
The current USEPA-adopted standard identifies an historical recognized environmental condition (HREC) as a previous release of hazardous substances or petroleum products that has been addressed to meet the unrestricted use criteria established by a regulatory authority. The new E1527-21 Standard requires that the EP evaluate the past closure of a contaminated site and the environmental assessment data associated with the closure to confirm that the assessment meets current standards for unrestricted use in order to qualify as an HREC. To aid with the identification of RECs, CRECs and HRECs, examples and a decision matrix are provided within the appendices.
Subject Property
The Standard definitively refers the property being evaluated in the Phase I ESA as the “subject property.” This distinction should provide continuity in future Phase I ESAs provided by EPs when referring to the subject property, as opposed to the “property”, the “site”, the “parcel,” etc.
Significant Data Gap
The term significant data gap exists in the current standard, but is not clearly defined. The Standard defines this term as “a data gap that affects the ability of the environmental professional to identify a recognized environmental condition.” There are implications associated with significant data gaps when preparing Phase I ESAs. Most notably, “If the data failure represents a significant data gap, the report shall comment on the impact of the data gap on the ability of the environmental professional to identify recognized environmental conditions.”
Standard Historical Resources
The Standard identifies the term “developed use” as including agricultural uses and placement of fill dirt, and other uses that may not involve structures. The Standard also requires the Phase I ESA report to describe all identified uses, justify the earliest date identified for the subject property’s first developed use (for example, “records showed no development of the subject property prior to the specific date”), and explain the reason for any gaps in the history of use (for example, “data failure”). The following standard historical resources must be reviewed if, based on the judgment of the EP, they are reasonably ascertainable, likely to be useful, and applicable to the subject property: (1) aerial photographs, (2) fire insurance maps, (3) local street directories, and (4) historical topographic maps. In cases in which any of the preceding four standard historical resources are not reviewed, the EP must indicate in the report why such a review was not conducted. Additional standard historical resources must be reviewed if, in the opinion of the EP, such additional review is warranted to achieve the objective.
Maps and Photographs
The Standard specifies that a site plan showing the approximate location of features, activities, uses and conditions of the subject property, as deemed relevant by the EP, must also be included. In addition, photographs of features, activities, uses and conditions indicative of RECs and de minimis conditions must be included.
Emerging Contaminants
The new E1527-21 Standard indicates EPs are not required to include emerging contaminants, such as per- and polyfluoroalkyl substances (PFAS), in Phase I ESAs until these substances are defined as hazardous under CERCLA. However, the new E1527-21 Standard also indicates that inclusion of such substances may be added to the Phase I ESA as a “Non-Scope Consideration” if requested by the user, or the state where the subject property is located has already adopted regulatory standards for such substances, or the adoption of regulatory standards are anticipated in the near future.
As most readers likely know, PFAS is already under significant regulatory scrutiny. Since the new Standard was published and submitted to the USEPA, the USEPA has already proposed rules designating PFAS as a hazardous substance. H2M has been following the regulatory progression of emerging contaminants on the federal and local levels and will continue to discuss emerging contaminants in Phase I ESAs based upon applicable regulatory guidance and factors.
What Should the User Expect to See From these Revisions?
H2M’s clients should not expect to see any drastic changes to Phase I ESAs being issued since H2M has already included maps and photographs, identified emerging contaminants when appropriate for a subject property, reviewed and included the standard historical resources, and evaluated the current standards for unrestricted use before classifying HRECs. In general, users should expect to see more consistency in Phase I ESAs prepared by EPs through the usage of the term “subject property” and the mandatory inclusions of resources and documentation. Users can also expect to see RECs cited due to the likely presence of contamination and significant data gaps identified in reports. Perhaps most importantly, the users should remain aware of the shelf lives of the Phase I ESA reports and be cognizant of anticipated property closing dates prior to requesting Phase I ESAs and updates to these reports.
