Two Months In With the New 2021 ASTM Phase I ESA Standard

In late December 2021, after two years of pandemic-related delays, the American Society for Testing and Materials (ASTM) released its much-awaited update of its Standard Practice for Phase I Environmental Site Assessments.  Known familiarly as ASTM Standard E1527-21, the Standard represents the next generation of methodology for environmental due diligence across the fields of lending, valuation, insurance underwriting and liability assessment.

Matt Adukaitis, Liberty’s Project Manager and leader of its due diligence practice, has overseen well over 1,200 ESAs and related projects over the last nine years alone, since the previous update to the ASTM Standard was issued in 2013.  In typical fashion, Adukaitis had already adapted Liberty’s reporting format and scope on the day the new version was issued in December 2021, and has produced several ESA reports conforming to the new Standard, just two months after its release.  “The adoption has been a seamless one for our clients, mostly because of our attention to detail,” says Adukaitis. “A key distinction, that not all consultants understand, is that we’re still very much in a transition period between the old and new versions, until the USEPA acknowledges the 2021 ASTM Standard within its definition of ‘All Appropriate Inquiry’ later this spring.

What Adukaitis refers to is the fact that, while ESAs are primarily used as a decision-making tool for private due diligence, the USEPA offers statutory liability protection under CERCLA regulations for ‘innocent landowners’ and ‘bona-fide prospective purchasers’ if a Phase I ESA is performed in accordance with the ASTM Standard.  The USEPA plans to formally acknowledge the 2021 ASTM Standard as ‘All Appropriate Inquiry’ in mid-May, assuming that it receives no adverse comments to its proposed rule. For that reason, a properly-scoped Phase I ESA completed before that time should make the distinction that it conforms to both the 2013 ASTM Standard for federal liability protection, and the 2021 Standard for adherence to current industry expectations.

Despite the need for specificity on this issue, Matt reports that this hasn’t hindered the performance or usefulness of ESAs conforming to the new Standard. “There are quite a few elements that are new, and many are focused on clarified terminology.  These include the terms that define recognized environmental conditions or RECs, controlled RECs, and historical RECs, which are the key objective of ESAs. The ASTM working group discussions leading up to the finalization of the new Standard included lengthy debates of wording such as likely, or material threat,” says Adukaitis. “ASTM certainly takes its job seriously to make sure that the best due diligence methods are incorporated into its Standards.”

In addition, the new Standard recognizes emerging contaminants, such as PFAS compounds, which are rapidly changing what actually constitutes an REC, in the context of due diligence.  While these and other emerging contaminants such as pharmaceutical wastes remain outside of the definition of an REC, the new ASTM Standard sets a stage for further consideration of these contaminants now that federal and state regulatory agencies are beginning to publish regulatory action levels and reporting requirements.

The new Standard also recognizes that technological trends are rapidly changing the way that consultants gather their data, in an environment that increasingly relies on remote digital access. “For two years during the COVID pandemic, it wasn’t possible to visit a regulatory agency’s office or a local municipal office building to perform a file review, and the agencies were forced to modernize – with varying degrees of success,” says Adukaitis. “And while the COVID restrictions have since eased, the long-overdue transition to remote digital search-and-delivery for agency records is improving.”

Another significant change in the new ASTM Standard is a renewed emphasis on communications between the consultant and the client, or more specifically, the ‘User’ of the report.   Many legal issues related to environmental due diligence have to do with data gaps – that is, information that for any number of reasons was not available to the consultant during the ESA.  Too often, a consultant’s failure to collect this data or a User’s failure or unwillingness to provide this data has resulted in mistakes and misinterpretations in ESAs, which can later manifest themselves as project delays, unanticipated costs, or even lawsuits.  “Thankfully, our internal system of report QA/QC is designed to reduce or eliminate those issues”, says Adukaitis,But industry-wide, they’ve been a problem for many others.  The new ASTM Standard sets very clear requirements and reporting responsibilities on what information was, or was not available, during the completion of the project. The ESA must state in very clear terms what, if any, data gaps were encountered during the project and what significance those data gaps have on the conclusions of the report.”

Other elements of the 2021 ASTM Standard include a renewed emphasis on identifying the current and former uses of adjoining and surrounding properties, which ASTM has found that some consultants have not been adequately performing as part of the historical research obligations.  Acknowledging the degree of cross-property migration of groundwater or vapor risks in settings such as urban areas, the new ASTM Standard provides clarification that the standard historical resources should be reviewed to provide a more thorough review of the history of neighboring and nearby sites.  “This is a significant improvement that will force consultants to look more critically into past operational uses of nearby properties.  A neighboring property labeled on a historical map as ‘industrial’ but without any description or agency files could be missed as an REC, even though its prior uses might have posed the potential for contamination that could extend onto the subject site,” Adukaitis explains. “The 2021 ASTM Standard clarifies that consultants must look into what those adjacent or nearby operations were, and evaluate independently – even in the absence of regulatory records – what off-site risks those activities may pose.”

Perhaps the most important thing to note regarding the new 2021 ASTM Standard is that, in capable consulting hands, the continued evolution of Phase I ESAs need not pose additional headaches for lenders and investors.  “As we have for the past 18 years, we continue to make due diligence a high priority here at Liberty and we practice at a very high level,”, says Adukaitis. “As the Standard Practice changes now and again in the future, we’ll always be ready to adapt and inform for the benefit of our clients.”

For any project needs related to real estate due diligence, please reach out to Matt Adukaitis ( or Dave Coyne, Principal ( or by phone to Liberty’s Reading, Pennsylvania Office at 610-375-9301.