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Environmental Risk to Buyers Focus of Revised Commercial Property Assessment Standards

Over a thousand real-estate industry stakeholders in ASTM Committee E50 on Environmental Assessment have approved substantial revisions to the following environmental site assessment standards for commercial real estate:

--E 1527, Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process; and
--
E 1528, Standard Practice for Environmental Site Assessments; Transaction Screen Process.

After four years of discussion, Committee E50 approved 74 revisions in April 2000. Major changes include:
--Introduction of the concept of business environmental risk;
--Addition of historical recognized environmental condition (HREC) terminology;
--Identification of supporting documentation for Phase I reports;
--Revised Phase I formats to parallel the standard practice; and
--Guidance for the selection of a Phase I environmental professional.

The standards were revised by a 60-member task group of ASTM Subcommittee E50.02 on Commercial Real Estate Transactions, comprising commercial real estate owners, insurance specialists, bankers, environmental consultants, attorneys, portfolio managers, architects, engineers, and others.

Anthony Buonicore, chief executive officer, Environmental Data Resources, Inc., Southport, Conn., is task group chair. “The people who buy property such as insurance companies, corporations, and real estate investors, were the ones who drove the changes to the standards,” he says. “Buyers of commercial real estate today are concerned about all environmental issues that can materially impact the property, not just the environmental issues which can result in the property becoming a Superfund site.”

According to Buonicore, buyers wanted E 1527/28 revised to define business environmental risk, instead of their present focus on “innocent landowner” defense for property due diligence driven by CERCLA (Comprehensive Environmental Response, Compensation and Liability Act), often called “Superfund.” “While the revisions introduce the concept of business environmental risk, the standards are still innocent landowner defense-driven,” he explains. “However, the opportunity is presented to modify the scope of services to reflect the specific business needs and concerns of users, many of which are now included in an expanded non-scope considerations section. We expanded Section 5, User Responsibilities, to facilitate discussion between the user and the environmental professional on exactly what is needed and why. By having such discussion, the whole issue of business environmental risk should surface.

“That’s the concept. We’re essentially re-focusing on the business aspects of the deal. This is what the marketplace wants.” Buonicore expects the E50.02 task group to further revise Standards E 1527 and E 1528 to be completely business environmental risk-driven.

For technical information, contact Anthony Buonicore, Environmental Data Resources, 3530 Post Rd., Southport, CT 06490 (203/255-6606). Committee E50 meets Oct. 24-27 in Orlando, Fla. For meeting or membership details, contact manager Dan Smith, ASTM (610/832-9727). //

Copyright 2000, ASTM