Jan 11, 2023
The U.S. Environmental Protection Agency (EPA) has formally endorsed the ASTM E1527-21 standard as the new benchmark for conducting Phase I Environmental Site Assessments (ESAs). This standard, which became the sole recognized method under the All Appropriate Inquiry (AAI) rule as of February 13, 2024, is a critical component in protecting property buyers, lessees, and lenders from liability under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for pre-existing contamination on a site.
ASTM E1527-21 introduces several important updates aimed at improving the consistency, clarity, and legal defensibility of environmental due diligence. Notably, it expands the definition of Recognized Environmental Conditions (RECs) to include not only known contamination but also the likely presence of hazardous substances. It also encourages—but does not require—the consideration of emerging contaminants such as PFAS (per- and polyfluoroalkyl substances), which are increasingly regulated at the state level and may soon be federally listed under CERCLA.
Other key changes include more rigorous requirements for reviewing historical uses of both the subject property and adjoining properties, clearer guidance on evaluating environmental liens and activity/use limitations, and stricter timing rules to ensure that assessments remain current (typically within 180 days of the property transaction). These enhancements are designed to reduce ambiguity, improve legal protection, and align environmental assessments with evolving regulatory and market expectations.
While the new standard may increase the cost and complexity of Phase I ESAs, it also offers greater protection and transparency for stakeholders involved in real estate and commercial transactions. Legal and environmental professionals are encouraged to familiarize themselves with the new requirements to ensure compliance and maximize liability protections.