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A Better Partnership


Aug 2013
August 28, 2013

EPA Throws a Curveball:
New ASTM Standard Practice for Phase I Assessments

The U.S. Environmental Protection Agency has issued a direct final rule approving a new standard practice from ASTM International for Phase I Environmental Site Assessments. In the absence of any adverse public comment, as of November 13 the new standard can be used to meet the requirements of “all appropriate inquiry” (AAI) for purposes of the federal Superfund law. However, in launching the new standard, the EPA included a twist that was not expected by many in the regulated community.

The EPA surprised many observers when it approved the new standard practice, known as E1527-13, without saying anything about the fate of the current Phase I standard, which has been around since 2005. Rather than replacing the 2005 standard with the newer version, the EPA chose simply to add the 2013 standard to its AAI regulation (40 CFR Part 312) as an additional option for satisfying AAI. Under EPA’s final rule, the old version and the new version are on equal legal footing – even though there are significant differences between them. This decision is likely to cause confusion, at least in the short term. 

Historical Context

The Phase I site assessment is the cornerstone of environmental due diligence in most deals. Since 2005, the commercial real estate and lending communities have looked primarily to the 2005 ASTM standard practice for purposes of establishing AAI. A Phase I assessment is the initial step in qualifying for “innocent purchaser” status under both federal and state law, and for bona fide prospective purchaser status and other liability defenses under Superfund. In Michigan, a proper Phase I assessment is also a required component of a Baseline Environmental Assessment.

Expected Changes in the New Phase I Standard 

The 2013 Phase I standard is not radically different from the 2005 standard. But it does add new requirements that have the potential to increase the time and expense of a Phase I assessment. Among other changes, the new standard requires the “Environmental Professional” (an environmental consultant meeting certain qualifications) to provide specific justification to forego reviewing government agency files. It requires consideration of vapor migration. The new standard also contains a variety of clarifications and “tweaks” intended by ASTM to improve the consistency and quality of Phase I assessments. The EPA is accepting public comments on the rule until September 16.

An Unexpected Development

If the new standard practice goes into effect as scheduled, the old 2005 standard and the new 2013 standard will be legally equivalent alternatives. The EPA is leaving it up to the prospective purchaser, lessee or lender to choose between the old standard and the new one, notwithstanding the differences between the two. The EPA believes the environmental consulting industry will naturally gravitate, of its own accord, toward use of the new 2013 standard and away from the current 2005 standard. In a commercial environment characterized by fierce competition and unrelenting demands for cost-cutting, it remains to be seen whether the EPA is correct that the issue will simply resolve itself.  

The Environmental Law Group of Warner Norcross & Judd will continue to monitor the situation and keep you informed of developments. If you have questions or would like further information about this or other EPA rulemaking, please contact Chair Scott D. Hubbard (616.752.2157 or or another member of the group.

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