EPA Endorses New ASTM Phase I Standard

by Allen Matkins

The ASTM standard for Phase I Environmental Site Assessments was recently revised by ASTM International and, on August 15, 2013, in a direct final rulemaking likely to become effective this November, the new standard was endorsed by the U.S. Environmental Protection Agency (EPA).

While the revision does not entail major changes to the current standard, the revised standard contains several important new provisions that in some cases may make it more likely that a Phase I report will identify environmental conditions at a property. This should help parties to better assess and allocate risk, but may increase the cost and time associated with environmental due diligence. In addition, in order to avail themselves of important liability protections, real estate purchasers will need to ensure that Phase I reports prepared following the effective date of EPA's approval are compliant with the new ASTM standard.

Phase I Reports, the ASTM Standard, and All Appropriate Inquiries

A Phase I Environmental Site Assessment is a report, often prepared for a real estate transaction, that identifies potential or existing environmental conditions at a subject property, based on historic uses and known environmental issues at the property and in the vicinity. A Phase I report serves several important purposes: 

  • It educates the parties to a real estate transaction about the environmental condition and historic uses of the subject property and vicinity; 
  • It helps the parties to evaluate risk, and plan and negotiate accordingly; and 
  • It establishes that the purchaser of a contaminated property conducted "all appropriate inquiries," as discussed below.

ASTM International, formerly known as the American Society for Testing and Materials (ASTM), is an international standards organization that develops and publishes voluntary consensus technical standards. ASTM publishes a standard for Phase I reports, the current version of which was released in 2005, ASTM E1527-05.

“All appropriate inquiries,” or AAI, is the process of evaluating a property’s environmental conditions, and is a prerequisite to asserting defenses to liability under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), including the exemptions for a Bona Fide Prospective Purchaser or an Innocent Landowner. In 2005, EPA adopted the All Appropriate Inquiries Final Rule at 40 CFR Part 312. The All Appropriate Inquiries Final Rule provides that the ASTM E1527-05 standard is consistent with the requirements of the Rule and may be used to comply with the provisions of the Rule.

The New ASTM Phase I Standard

ASTM has recently updated the Phase I standard, resulting in the new, updated ASTM Standard: “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process,” or ASTM E1527-13 (the "New ASTM Phase I Standard"). On August 15, 2013, EPA issued a notice in the Federal Register that it intends to endorse the New ASTM Phase I Standard, through a Final Rule amending 40 CFR Part 312, see 78 FR 49714 (Aug. 15, 2013). If there are no adverse comments, the Final Rule will go into effect without further notice in 90 days, on November 13, 2013. The comment period for the Final Rule closes on September 16, 2013. The EPA Federal Register notice is available here.

The key provisions of the New ASTM Phase I Standard: 

  • Revise and clarifiy a number of defined terms for various categories of Recognized Environmental Conditions (RECs); 
  • Create a new category for Controlled Recognized Environmental Conditions (CRECs), specifically to apply to risk-based closures of contaminated sites where no further remediation is required, but residual contamination still exists; 
  • Emphasize assessing soil vapor intrusion; and 
  • Contain a stronger recommendation to conduct regulatory file reviews or explain why one was not performed.

A detailed summary published by the EPA of the updates and revisions reflected in the New ASTM Phase I Standard is available here

Assessment of the Revisions

The net effect of these changes is not likely to be dramatic. Perhaps the most important substantive change lies in the New ASTM Phase I Standard that vapor intrusion is an important contaminant migration pathway, potentially as significant as migration through soil, groundwater and surface water. Additionally, the recognition of “controlled” RECs (“CRECs”) reflects the prevalence of risk-based site closures, and may enable transacting parties or lenders/investors to assign a lower risk to a site by qualifying what otherwise might be a potentially damaging designation of a condition as simply a “REC.” While increased identification and disclosure of environmental conditions should help parties to assess and allocate risk, it may also increase the cost and time associated with environmental due diligence.


As noted above, the New ASTM Phase I Standard may increase the cost and time needed to conduct Phase I reviews, particularly where regulatory file reviews and vapor migration assessment may be required. Importantly, in order to avail themselves of the CERCLA liability protections, real estate purchasers should ensure that Phase I reports prepared following the effective date of EPA's approval – November 13, 2013, unless there are adverse comments – are compliant with the new ASTM standard.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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