Environmental due diligence is an essential responsibility of property ownership. Environmental due diligence is guided by standards developed and maintained by the American Society for Testing Materials (ASTM). The standard guiding the environmental due diligence process, ASTM E1527, is currently being reviewed and revised. The previous revision, ASTM E1527-13, was completed in 2013.

Here, we walk through the review process, what’s changing in the standard (now ASTM E1527-21), and why it matters.

What does the standard do, and why is an update needed?

Federal regulations are designed to provide property owners with liability protection for past environmental contamination if they have met the criteria for All Appropriate Inquiry (AAI). AAI is achieved by completing a Phase I Environmental Site Assessment (ESA). The ASTM standard defines how to complete a Phase I ESA that satisfies the AAI criteria.

AAI guidelines state that the standard be “consistent with good customary commercial practice.” In order to reflect the latest science and practice, the guidelines specify that a review be conducted at least once every 8 years.

Who does the review, and what’s involved?

Unless a majority of ASTM members vote to renew the standard as is (which to date has never happened), a task group is convened to study potential revisions. The task group is made up of approximately 300 ASTM members such as commercial clients, lenders, attorneys, and environmental professionals. The 2021 task force includes two representatives from PM Environmental. A subset of this group drafts revision language to place in front of ASTM membership for ballot votes (usually more than one round).

The process includes reviewing emerging science and best practices, and studying recent environmental compliance litigation and insurance claims to identify problems.

What changes to the standard are proposed?

The focus of this year’s overhaul is to clarify language that may have been vague or ambiguous, in order to strengthen the reliability of the conclusions made in Phase I ESA reports. Changes are concentrated in four areas:

1. The definition of a Recognized Environmental Condition (REC)

The current standard (section 3.2.78) defines a REC as “the presence or likely presence of any hazardous substances or petroleum…” Not surprisingly, the word “likely” can be problematic. Language in the new standard is intended to close this potential loophole so users won’t be tempted to overlook or underestimate a REC.

2. The use of the Historical Recognized Environmental Condition (HREC) and Controlled Recognized Environmental Condition (CREC) designations

The HREC designation has always been part of the standard; CREC was added in 2013. Some in the industry have had trouble interpreting when HRECs and CRECs exist. Language in the 2021 revision explains when each of these designations applies, and provides more detailed examples.

3. The records review process

Researching a property’s environmental history is an essential part of every Phase I ESA, and the process of reviewing government environmental records is covered in the standard. But until now, the standard was somewhat imprecise as to the number of information sources required.

Environmental history is primarily traced through four publicly available sources (referred to as “the Big 4”) – city directories, aerial photography, topographical maps, and Sanborn maps (developed by the fire insurance industry to flag potentially flammable sources like gas stations and underground fuel storage tanks). Prior versions of the standard could have been interpreted as requiring only one of these sources; the new standard specifies that all four must be reviewed.

Clarification has also been added to the sometimes confusing topic of records review for adjoining properties. First, some interpreted “adjoining” as only contiguous properties, those whose property lines touch. In fact, two properties separated by only a street or road are also considered adjoining. The previous standard failed to specify that the Phase I ESA must document that the same review was conducted on all adjoining properties.

4. Dealing with a significant data gap

Despite best efforts, it is not always possible to access all of the records needed for a complete picture of a property’s past. Records may no longer be available, or cannot be accessed, resulting in a lack of information described in the standard as a “significant data gap.”

The new standard provides more detail and guidance on how best to generate a Phase I ESA report when faced with a significant data gap. The revision requires the environmental professional (EP) to describe all significant data gaps, and discuss how these gaps effect the report’s conclusions about whether a REC, CREC or HREC exists, and whether additional research or investigation is needed to resolve concerns.

Does the revised standard address PFAS?

Yes and no. The standard does include a discussion of emergent contaminants such as perfluoroalkyl and polyfluoroalkyl substances (PFAS), but these substances are not yet federally regulated. Instead, the standard advises EPs to be guided by regulations enacted by individual states for PFAS and other contaminants that go beyond the current federally-determined hazardous substances.

Michigan is a prime example. While not yet officially qualifying the presence of PFAS as a REC, the state is attempting to regulate PFAS. Responding to the state’s evolving PFAS regulations is arguably the most challenging part of due diligence in Michigan.

Where does the current review stand?

The 2021 process is nearly complete with the revisions going through the final review process. Once the task group review is finalized, the revised standard will be reviewed by the U.S. Environmental Protection Agency (EPA). This review ensures that the standard complies with EPA regulations.

Considering that the standard has already undergone several rounds of review ballots, and that the task group includes EPA representatives, these final steps are not anticipated to generate any significant changes.

The standard is expected to be published in the fall. After a phase-in period (when either the new standard or its predecessor can be used), final adoption of ASTM E1527-21 is targeted for early 2022.

The bottom line: integrity.

The goal of the standard, and every subsequent revision to it, is to protect the integrity of the environmental compliance process, guarding safety and minimizing environmental risks for all stakeholders.

A site assessment is only as reliable as the expert who completes it. Past and current versions of ASTM E1527 stipulate that the Phase I ESA must be conducted by a qualified environmental professional (EP), and sets out the required qualifications of an EP.

The challenge is to make the standard as clear and unambiguous as possible, while leaving room for professional judgement. It is intended to be a structure to inform and guide professional opinion, not a checklist or a multiple choice form. The stronger the standard, the less likely that less experienced or less scrupulous providers will generate poor quality assessments that threaten the integrity of the process.

PM Environmental’s EPs are among the most highly credentialed and experienced in the industry. The proposed revisions to ASTM E1527 won’t change how PM does business – it merely brings the standard closer to the level of quality we deliver every day.

Kristin Gable, PM Environmental’s National Manager of Due Diligence, contributed to this article.