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New Standard for Environmental Due Diligence

Last updated in 2005, the ASTM E 1527 Standard for Phase I Environmental Site Assessment (“ESA”) is due for renewal under the eight-year ASTM cycle, and is on schedule to be finalized in the next few months. The new ASTM E 1527 Standard is said to better correlate with the EPA’s All Appropriate Inquiry Rule published in 2006. Complying with EPA’s All Appropriate Inquiry Standard is critical to one’s ability to assert the innocent landowner defense and/or to establish oneself as bona fide prospective purchaser for purposes of Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) as provided for in the Brownfields Amendments.

Controlled Recognized Environmental Condition Classification

One of the key updates to ASTM E 1527 Standard is the addition of a new classification, a “Controlled Recognized Environmental Condition (CREC),” to address sites where there has been a past release or clean-up that requires restrictions on the property usage to remain in place.  In contrast, a “Historical Recognized Environmental Condition (HREC)” is a past site release which has been remediated to a level where no use restrictions are necessary at the property, and as such, the HREC is perceived as more favorable than the CREC for purposes of property development.

Vapor Mitigation Potential Assessment

The requirement of the new ASTM E 1527 Standard to assess vapor migration potential may have the most far-reaching impact on property transactions.  Under the old standard, indoor air quality and vapor migration potential was not clearly addressed for purposes of the Phase I ESA .  However, the new ASTM E 1527 Standard specifically indicates that the potential for vapor migration must be assessed as part of the Phase I ESA.  This assessment process may involve the need to obtain site access agreements to test indoor air quality at neighboring properties.  Negotiation of neighboring property access agreements, if deemed necessary as part of the Phase I ESA, could potentially delay the transaction schedule, and increase the cost of the Phase I ESA.

Assess Before You Proceed

Prior to proceeding with any property purchase, sale or lease, a Phase I ESA needs to be performed to be able to seek the protections afforded by the Brownfields Amendments, and it is imperative that the environmental professional performing the Phase I ESA be familiar with the new ASTM E 1527 Standard.

If you have questions about environmental due diligence or any other environmental matter, contact Monica Edwards at (812) 423-3183 or MEdwards@KDDK.com; or contact any member of the KDDK Environmental Law Practice Team.  Our experienced environmental attorneys take pride in professionally and cost-effectively steering our clients through environmental due diligence, site investigations and the remediation process.

About the Author

Monica Edwards

Monica E. Edwards, a Partner at Kahn, Dees, Donovan & Kahn, LLP, in Evansville, Indiana, is a member of the KDDK business, environmental, intellectual property, and real estate law practice teams.  Monica draws upon her scientific experience as a technical services chemist and prior environmental consultant in her practice of environmental law. Her background helps her assist clients in performing environmental due diligence, negotiating environmental settlement agreements, coordinating site clean-ups, prosecuting historical environmental insurance claims, and recovering environmental defense and indemnity costs.

Monica’s intellectual property experience includes the registration, assignment and renewal of trademarks and copyrights. She is also frequently involved with the licensing and defense of intellectual property and the negotiation of confidentiality agreements on clients’ behalf.