New Phase I ESA rules (ASTM E1527-21) will replace the previous standard (ASTM E1527-13) in the first quarter of 2022, introducing a raft of changes that will impact pre-acquisition environmental due diligence for commercial properties. Follow this blog series as EnviroPhase’s Senior Environmental Scientist, David Reynolds, breaks it all down, including the change drivers, major rule changes, and how EnviroPhase can help your team navigate the new Phase I ESA heading into 2022.
As the industry standard for pre-acquisition due diligence, the Phase I Environmental Site Assessment investigates and reports the environmental risks associated with real property by determining if a release or likely release of hazardous materials or petroleum products has impacted a property based on visual observation, current use, and historical use of the property and nearby properties. This “first step” report informs the buyer and buyer’s financial institution, where required, if any environmental risks or likely risks were identified. These risks are referred to as Recognized Environmental Conditions or “RECs”. If RECs are identified, the buyer can seek consultation on the next steps to mitigate environmental liabilities associated with purchasing the property.
Environmental site assessment standards and due diligence scopes must continue to meet the challenges that continue to evolve from ever progressing industry trends. This is why the standard is required to be reevaluated, updated, and republished every 8 years.
Much has happened to our industry since the All Appropriate Inquiries (AAI) law and Phase I ESA rules were first adopted back in 1993 . We need rules that better match the modern commercial real estate industry, which has expanded into new sectors and property types over the past few decades. Within the same timeframe, new contaminants and chemicals of concern have emerged, such as per- and polyfluoroalkyl substances (PFAS).
Difficult to imagine now, but the web, Amazon, and the digital economy was nonexistent in the early 90’s. Industrial warehousing has become a market necessity as e-commerce has transformed into a retail cornerstone, especially in urban and suburban areas. Older industrial buildings with high ceilings and refrigeration capabilities as well as real estate previously used for completely different sectors have been converted to serve last mile logistics and provide flexible warehousing further and further afield.
Technology is another change driver for Phase I ESA standards. Real time access to historical and current property data, widespread availability of aerial photography, and advancements in instrumentation have all raised expectations of what can be achieved through the environmental due diligence process.
Now that I’ve explored some of the change drivers influencing Phase I ESA rule changes, my next blog post will provide an overview of the major and minor changes that are on the way pending approval from the EPA. After that, I’ll share how EnviroPhase can keep your projects running like clockwork in 2022, leveraging the latest environmental site assessment standards.