New Phase I ESA Standard Will Affect Environmental Due Diligence

The terms used in Phase I ESA to indicate the presence, likely presence, or past presence of contamination at the subject property are Recognized Environmental Condition (REC), Controlled Recognized Environmental Condition (CREC), and Historical Recognized Environmental Condition (HREC). The definitions of these terms have been updated for clarification with no material changes to the bases of these conditions. A supplemental appendix has been added explaining the definition of a REC and a flow diagram to assist in the determination of a REC.

The updated definitions exclude off-site issues that do not have the potential to impact the subject property from being a REC; CRECs and HRECs must include the rationale for identifying these conditions; and it must be confirmed that each HREC is still an HREC.

The new Phase I ESA standard includes revisions to the historical research section that mostly clarifies the efforts an environmental professional should take when reviewing historical research resources. These resources include aerial photographs, topographic maps, fire insurance maps and city directories, assuming they are applicable to, and useful in the evaluation of, the subject property and are reasonably ascertainable. In addition, the environmental professional must use the same resources to evaluate adjoining properties and take into consideration previous changes in property use, address or layout.
Although the changes imply an increase in effort related to the historical research, no additional effort will likely be needed for consultants with established quality management programs.

The new ASTM E1527 Phase I ESA standard updated the typical components of the Phase I ESA reports. Photographs and a site plan of the subject property should be included in all reports. The site plan and photographs should present the layout, features, and uses, and conditions indicative of RECs, de minimis conditions, and other relevant items.

• The date for each Phase I ESA component (interviews, environmental lien search, site reconnaissance, review of records, and environmental professional statement) must be included, and the “shelf-life” begins at the earliest of those dates, and
• For consistency, the standard encourages the use of “subject property” when referring to the property that is the subject of the Phase I ESA.