(By Fred Nichols; Featured in Evansville Business, February/March 2013 issue, p. 33)

Most loans for commercial property require a Phase I Environmental Site Assessment (ESA) to be approved. A revision of the Phase I ESA standard, E1 527-05, will be issued this year by the publisher, American Society for Testing and Materials (ASTM). The Environmental Protection Agency (EPA) recently announced the extension of Bona Fide Prospective Purchaser (BFPP) protections to prospective tenants. In combination, these changes present an opportunity to better meet the changing environment and better anticipate concerns as communities, private industry, and developers strive to enhance the reuse of impacted properties.

The changes to the Phase I ESA standard will provide clarity to the concept of Recognized Environmental Conditions (RECs). Historical RECs are exclusively those conditions which have been resolved. The new term Controlled REC will be introduced to identify those RECs which have been resolved through the use of institutional controls or similar deed restrictions. The revised standard requires that possible vapor intrusion must be evaluated as a possible REC. The changes in these terms make much clearer the issues that exist at a site.

The EPA’s extension of BFPP protections to prospective tenants serves as a significant change to the landscape. By meeting the requirements as a BFPP, both prospective purchasers and prospective tenants will be able to limit their potential liability from existing subsurface impacts at a site. Further, by working with the Indiana Brownfields Program, a comfort letter may be issued specifically defining the terms of the limited liability.