ASTM E1527-21: Phase I Environmental Site Assessment

A commercial property may appear move-in ready, but its environmental history can say otherwise. Beneath a newly renovated office, retail center, or development site could be traces of a former factory, an old underground storage tank, or contamination left behind by decades of industrial activity. These environmental conditions can turn a promising real estate investment into an unexpected environmental challenge. ASTM E1527-21, Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process provides a standardized approach for conducting a Phase I Environmental Site Assessment (ESA) in the United States.

Importance of Environmental Site Assessments (ESAs)

The environmental history of a property can influence whether it is suitable for purchase, redevelopment, financing, or other commercial purposes. Environmental site assessments (ESAs) uncover hidden soil, water, and chemical liabilities on a property before a purchase, lease, or redevelopment occurs. ESAs help buyers understand the potential for pollutants and toxins in commercial properties.

ESAs are conducted in two phases.

Phase 1 ESA vs. Phase 2 ESA

A Phase I ESA is a non-invasive research review that focuses on reviewing a property’s history, records, regulatory information, and current conditions to identify potential recognized environmental conditions (RECs). If the Phase I identifies concerns that require further investigation, a Phase II ESA may be appropriate. A Phase II ESA is an intrusive physical testing process that typically involves collecting and analyzing samples of soil, groundwater, or other environmental media to confirm if contamination is actually present.

In short, Phase I identifies potential environmental concerns, while Phase II investigates and helps confirm them.

A Phase I Environmental Site Assessment (ESA)

A Phase I Environmental Site Assessment (ESA) is specified by ASTM E1527-21 and is widely relied upon to support risk‑informed development decisions, real estate transactions and regulatory compliance.

What Is ASTM E1527-21?

ASTM E1527-21 is the official industry standard practice for conducting Phase I Environmental Site Assessments (ESAs) in real estate transactions. It defines good commercial practice for identifying Recognized Environmental Conditions (RECs) and satisfies the All Appropriate Inquiries (AAI) rule for federal liability protection under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) (42 U.S.C. § 9601) and petroleum products.

What Is CERCLA?

CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act) is a federal law that establishes liability rules for contaminated properties. Enacted in 1980. CERCLA addresses sites contaminated by hazardous substances and gives the U.S. Environmental Protection Agency (EPA) authority to find potentially responsible parties (PRP) for environmental contamination and compel them to perform adequate cleanup or pay damages for the cleanup of contaminated sites.

Additionally, Congress created the Hazardous Substance Superfund to give the EPA funds to clean up contaminated sites where there is no viable responsible party. As a result, CERCLA is commonly called “Superfund.”

Objectives of ASTM E1527-21

Objectives of ASTM E1527-21 include the following:

Synthesizing and putting in writing good commercial and customary practice for environmental site assessments for commercial real estate
Facilitating high quality, standardized environmental site assessments
Providing a practical and reasonable standard practice for conducting all appropriate inquiries
Clarifying an industry standard for all appropriate inquiries to guide legal interpretation of the limited liability partnerships (LLPs).

Ultimately, ASTM E1527-21 provides environmental professionals and property users with a standardized framework for investigating environmental history and identifying potential environmental conditions in commercial real estate and brownstone redevelopment.