The American Society for Testing and Materials (ASTM), the organization that writes many of the standard used in the engineering field, recently published Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process (ASTM Standard E1527-13).
This standard updates one published in 2005 which guides consultants and lenders as to how to complete environmental site assessments during due diligence. The 2013 version of the standard provides additional clarity and some improvements but do not presume that it replaces the 2005 standard.
Q: What are some of the big differences between the 2005 and 2013 versions of the Standard?
Among other changes the new standard clarifies the definition of Recognized Environmental Conditions (RECs) – environmental conditions that one should pay close attention to – as well as the definition of Historical Recognized Environmental Conditions (HRECs) - releases to the environment that have been addressed to the satisfaction of the applicable regulators. The new standard also introduces the term Controlled Recognized Environmental Condition (CRECs) to address releases to the environment that have been addressed to the satisfaction of the applicable regulator but which require some sort of control to assure that residual contamination does not pose a future risk. An example of such a control might be an Activity and Use Limitation (AUL) such as have been placed on properties across the Commonwealth.
The new standard also offers clarity on how users should address potential vapor intrusion concerns and “user responsibilities” among other changes. Q: Does the 2013 Standard simply replace the 2005 Standard?
A: Not yet. In August the Federal Environmental Protection Agency issued a Direct Final Rule indicating that the 2013 Standard would replace the 2005 Standard but then in late October, after significant criticism, EPA withdrew the rule. This might not be significant except that those seeking to demonstrate that their site assessment meets the All Appropriate Inquiry standard (and thus significant liability protection) need to know which standard provides such protection.
Q: How does this change in the standard affect my transaction?
A: The change in the standard may not significantly affect your transaction. In Massachusetts, the owner of a property on which a release of oil or hazardous material has occurred can be responsible for assessing and cleaning up the contamination regardless of fault. As a result, prospective purchasers and the lenders associated with those purchasers are very interested in knowing the environmental conditions associated with a property prior to becoming an owner or operator. The ASTM E-1527-05 standard has become the standard that lenders expect when reviewing environmental site assessments. Though the 2013 revisions to the standard do make some changes to how things are done these changes do not significantly change the scope of work or level of effort associated with the environmental assessment process. In many respects, the activities conducted to meet the 2005 standard are the same as those associated with the 2013 standard. However, you should probably ask your lender which standard they prefer so that the report can be written in a format with the terminology that the lenders expect.
*Samuel Butcher is a Licensed Site Professional and Vice President at Loureiro Engineering Associates with office in Rockland Massachusetts.*