What are Phase I ESAs?
Phase I Environmental Site Assessments (ESAs) provide due diligence protection to buyers and sellers of land, and developers. The ASTM standard for Phase I ESAs is set for an update in late 2021. WithersRavenel environmental professionals have been following updates on the process.
Why are Phase I ESAs important?
For property developers, Phase I ESAs are vital. Cleanup costs and liability for a contaminated site can be high. Therefore, knowing everything about a property is smart business.
David Vail, Environmental Staff Professional at WithersRavenel, said the changes likely coming are expected to remove ambiguity from parts of the process. It should also allow a fuller understanding of properties to clients seeking ESAs.
The ASTM E1527 standard has been generally updated every eight years. The most recent revision was 2013 – the one coming out later this year will be the 2021 standard. Over 200 professionals are part of a task group for the update. This group includes environmental consultants, commercial real estate leaders, and others.
Will ASTM updates affect the Phase I ESA process?
Based on what we know so far, the ASTM E1527-21 updates should not significantly change our current Phase I ESA process.
“It will offer guidance on how to handle complex sites and issues within the real property assessment industry,” said Lindsey Woolridge, WithersRavenel’s Due Diligence Manager. “We are excited to dig into the new standard to ensure that we are giving our clients the best possible product so they are fully protected under the US EPA CERCLA – All Appropriate Inquiry (AAI) requirements.”
While changes have not been officially released yet, Vail said information shared thus far provides a glimpse at what the key changes could include.
What are the ASTM Changes for Phase I ESAs?
Raising the review standard:
Vail said that in the current standard, consultants are not explicitly required to look at four sources:
- Historical aerials
- Historical topographic maps
- City directories
- Sanborn fire insurance maps
He expects the new standard will put more emphasis on this, or have the consultant explain why they didn’t examine a source. Additionally, within the historical review, Vail said the current standard lets the consultant decide what to review.
WithersRavenel and some other consultants often check nearby properties. They believe this is a good practice. However, he thinks you may also need to review the historical records for your property. This includes looking at nearby properties too. Doing this can help reduce risk and give you a better overall view.
More emphasis on identification and analysis:
Another expected change in the standard is to take pictures of all observations. This includes a site map of observations and an analysis of individual items. An observed item that is a not a problem may be identified as de minimis, or not posing a threat to human health or the environment.
Meanwhile, troubling on-site observations may be classified as a Recognized Environmental Condition (REC) or a Business Environmental Risk (BER). Vail said that sometimes consultants will simply identify items in a Phase I ESA without taking the step of analyzing the potential for risk – which can impact buyers and mortgage holders, such as lending institutions.
Additionally, the standard is expected to create a flow chart. The goal of the flowchart is to help consultants reach a uniform conclusion. This will happen when they identify and analyze Phase I ESA site items in the field.
Vail said that many current decisions depend on the environmental professional. This can lead to different conclusions based on their observations. Vail said this change should help create consistency in Phase I ESA analysis. This will benefit companies and the industry as a whole.
“Some companies have a general, less intense Phase I process, and I think the standard is being geared to bring a lot of those companies up to the same playing field, get everyone on the same level,” Vail said.
Who performs the ESA:
Under the old standard, the person doing the ESA site visit had to be an environmental professional. They could also be someone directly supervised by an environmental professional. The standard might be relaxed a little. The change may just need the report to be checked by an environmental expert.
How long the ESA will be usable:
Under the new standard, the ESA will only be valid for 180 days from the start of the assessment (i.e., when the first piece of historical research data is ordered). Clients may need updates to their existing ESAs, new ESAs, or reliance letters. This is necessary if they do not close on the property within 180 days from the start date of the assessment.
PFAs:
The task force group updating the standard is also looking at PFAs. PFAs is a group of artificial chemicals manufactured and used in various industries since the 1940s. The chemicals don’t break down in the human body and the environment, and there’s evidence that PFAs are harmful.
In recent years, incidences of PFAs in the water in North Carolina have raised health concerns among residents, public officials and environmental groups. As of now, Vail said the standard will likely include greater guidance on PFAs. That will be an important consideration for consultants.
New ASTM should create consistency
Overall, Vail expects the new ASTM standard to increase consistency and analysis within ESAs, providing overall benefits for buyers, sellers and developers. Vail said many of the expected changes to the standard reflect work that WithersRavenel environmental professionals already perform in the field and on reports.
In reality, I think the changes aren’t going to require a super extensive overhaul to the Phase I process that we’re doing right now. I think turnaround time and budget should stay on track, Vail said. We can tell our clients you’re in good hands. We’re following along with the changes that are coming, we’re checking and keeping up with all the updates that are being put out by the task force and getting ready to revise our process as soon as they publish the final document.”
Do you need a Phase I ESA? Put WithersRavenel’s environmental professionals to work for you. Contact Due Diligence Manager Lindsey Woolridge at (919) 535-5210 or lwoolridge@withersravenel.com.