The Environmental Site Assessment is a process of evaluating the environmental liability of a real estate asset. Specifically, Environmental Site Assessment or “ESA” is the process of conducting “all appropriate inquiry” into the past or present uses of a property to determine whether the property is impacted by a “recognized environmental condition” (REC). The ESA process includes a site inspection, a review of historical records of the property and research of records available at government agencies. This information is detailed and evaluated in the Phase I Environmental Site Assessment Report, and an opinion is made as to whether past or present activities may have caused a release of hazardous substances or petroleum products at the property. The ESA is the primary tool used to qualify a user for the Landowner Liability Protections under CERCLA. Learn more about ESAs here.
The ASTM E1527-05 Standard is the industry standard used for Phase I Environmental Site Assessments. Fully named “ASTM E1527-05 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process,” the Standard outlines the purpose and use of the Phase I ESA as well as the scope of work to be conducted, including: records review (historical and governmental records); site reconnaissance (inspection of the property and adjacent sites); interviews (with owners and occupants and local government officials); evaluation and report preparation.
The ASTM E1527-05 Standard was formed by the American Society for Testing and Materials (now ASTM International), and is designed to meet the EPA’s condition for All Appropriate Inquiry for environmental due diligence. The E1527 Standard for Phase I ESAs has gone through many versions, the latest being finalized in 2005. The standard is reviewed and revised by the ASTM Committee E50 on Environmental Risk Assessment, Risk Management and Corrective Action.
All Appropriate Inquiry or “AAI” is defined by ASTM and EPA (through CERCLA) as the process of conducting inquiry “into the previous ownership and uses of the property consistent with good commercial or customary practice…that will qualify a party to a commercial real estate transaction for one of the threshold criteria for satisfying the LLPs to CERCLA liability.” Essentially, conducting all appropriate inquiry consists of environmental due diligence conducted prior to a property transaction to determine whether a property may have been contaminated by past or current activities, in order for a user (for example, the prospective purchaser) to be exempt from liability for contamination that existed on a property prior to the property transaction.
The AAI requirement began with the CERCLA or “Superfund” law of 1980, and was refined by several later laws: the Superfund Amendment and Reauthorization Act (SARA) in 1986; the Asset Conservation, Lender Liability and Deposit Insurance Protection Act in 1996; and the Small Business Liability Relief and Brownfields Revitalization Act (“Brownfields Amendments”) in 2002. The most recent ruling regarding what composes AAI was decided in 2005 by the EPA’s Final Rule on All Appropriate Inquiries.