Do your Due Diligence on Due Diligence Regulations: ASTM E1527-21 Now Applies

Effective February 14, 2024, environmental professionals working with clients who are selling or purchasing property have an important, updated regulation to consider during the due diligence phase of the transaction. The American Society of Testing and Materials (ASTM) E1527-21 “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process” (Phase I ESA) replaces the earlier version (E1527-13). This updated standard for conducting All Appropriate Inquiry (AAI) is now required to provide innocent purchaser protections under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). 

What’s new in the E1527-21 standard?

• PFAS is not included…yet…unless you are in New Jersey.  While it is known that the United States Environmental Protection Agency (EPA) intends to rule for numerous individual PFAS, they will not be added to the RCRA hazardous substances list until a PFAS-related rule is adopted.  Including emerging contaminants as a non-scope consideration continues to be at the discretion of the Environmental Professional for now, much like asbestos, lead-based paint, and radon. However, New Jersey regulations already require that a combined Phase I ESA/Preliminary Assessment report include the evaluation of emerging contaminants.
• The clock starts ticking earlier.  The findings of the Phase I ESA Report will now be applicable for 180 days from the date of the first action completed (i.e., site visit, review of environmental databases, interview, etc.) rather than from the date of the report.
• A picture tells a thousand words.  Review the ASTM flowchart, available in the standard, for a visual explanation of the difference between a recognized environmental condition (REC), a controlled recognized condition (CREC), or a de minimis condition.

This new standard has important implications during due diligence—non-compliance puts buyers at great risk—and will surely be closely reviewed and readily adopted by environmental professionals in the best interest of their clients.