Updated Environmental Due Diligence Standards

Friday, April 18th, 2014

Two of the ASTM standards frequently referenced when conducting environmental due diligence have recently been updated; those for both Phase I ESAs and for Environmental Transaction Screens. The Phase I ESA process and the Transaction Screen process are markedly different. It is important to understand how they differ. The two standards are compared in the table below.

**Phase I ESA vs. Transaction Screen**
Consideration	Phase I ESA	Transaction Screen
Constitutes “All Appropriate Inquiry”	Yes	No
Conclusions	“the presence or *likely* presence” of oil or hazardous materials. (Recognized Environmental Condition)	“the *possible* presence” of oil or hazardous materials. (Potential Environmental Concern)
Level of expertise	Environmental Professional	Anyone who can “satisfy themselves that they are qualified”.
Scope of work	Public records review, detailed evaluation.	Cursory evaluation

Transaction Screens are generally reserved for low risk properties only. Phase I ESAs are conducted on moderate to high risk properties and for transactions where CERCLA Landowner Liability Protections are desired.

Environmental Transaction Screen

ASTM E1528-14, “Standard Practice for Limited Environmental Due Diligence: Transaction Screen Process”, was just published in February. (I was grateful for the opportunity to contribute to this revision process as a member of the ASTM task group. It was an exciting opportunity!) Like the updated Phase I standard, the updated Transaction Screen standard will result in a better product for the client. One key change is the inclusion of aerial photographs as a historical research source.

The previous Transaction Screen Process listed only fire insurance maps and local street directories as historic sources to be reviewed. Aerial photographs have been added to that list. Aerial photographs are generally available where other sources are not and are available at no cost in Rhode Island. In addition, the criteria for reviewing more than one source has been improved. Previously preparers were only required to review one source if it provided any information. The new standard requires the review of additional sources until sufficient information is found.

Phase I Environmental Site Assessments

E1527-13, “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process”, was published last November and formally incorporated into the USEPA’s All Appropriate Inquiry (AAI) rule in December. The new standard includes several key changes such as:

An emphasis on vapor encroachment and regulatory file reviews;
Revised definitions of Historical Recognized Environmental Conditions (HREC) and Recognized Environmental Conditions (REC);
The introduction of a new term – the Controlled Recognized Environmental Condition (CREC).

I summarized these changes in an earlier blog.

Blog post by Jason Gold, P.E.