As you are likely aware, the current Phase I Environmental Site Assessment (ESA) ASTM E1527-21 standard is anticipated to be replaced with an updated version in November 2021. Once this standard is approved by ASTM and adopted by the United States Environmental Protection Agency (USEPA), it will become the new industry standard to show compliance with All Appropriate Inquiry (AAI). As a reminder, all liability protections established under federal law (CERCLA, specifically) require that the prospective purchaser conduct AAI.
From what we currently know, several changes are being made to the Phase I ESA standard. While many of these changes relate to clarifying existing requirements or definitions, one of the more substantive changes involves re-evaluating the historic records review and discussion for the property as well as the nearby and adjoining properties. In order to comply with this new standard, it is anticipated by the market that the overall cost of an ASTM-compliant Phase I Phase I ESA will increase. Through discussions at various national stakeholder’s meetings, it is anticipated that the average cost of a Phase I ESA will increase by somewhere between $300-$500 per report to accommodate these changes.
As stated above, after the revised ASTM standard is adopted by USEPA, conformance with this new standard will be necessary to comply with AAI. Please keep in mind that if the cost of a Phase I ESA report does not increase after the adoption of the revised standard, there is the potential that the cost simply has not been adjusted to reflect the increase in time and effort to prepare a Phase I ESA report. However, beware there is a potential that no increase in cost means the extra time and effort required to prepare the Phase I ESA is not occurring. This would result in a report that may not be sufficient to meet AAI in good faith.
Remember, conducting good quality environmental due diligence up-front, prior to purchasing a property can provide significant negotiating power to the prospective purchaser in the event that concerns are identified. With the upcoming changes to the ASTM standard, it is likely that the cost of Phase I ESAs will increase to accommodate those changes and continue to provide the client with the highest quality of environmental due diligence.
Please contact Nichole Mason, EP at BLDI (616) 459-3737 for more information.