1528Environmental Due Diligence

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REFRESHER: ASTM Revised the Transaction Screen Standard

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July 14, 2014 4 mins

Author: Kathy Satterfield

ASTM E 1528-14 Standard: A Refresher on Key Areas of Change

ASTM issued a revised version of the Transaction Screen standard earlier this year. In case you missed it, here’s our primer on the new ASTM E1528 Standard Practice for Limited Environmental Due Diligence: Transaction Screen Process (E 1528-14), which replaces the previous -06 version.


Under ASTM guidelines, each standard must undergo a review process by the Task Group and be reissued or retired every eight years. The Transaction Screen is part of the environmental due diligence policies of many lenders and investors with many treating it as a first-cut to identify any potential environmental concerns which could trigger a more in-depth Phase I environmental site assessment. In addition, the U.S. Small Business Administration’s environmental guidelines (SOP 50 10 5(F) also include a carve-out for Transaction Screens in instances where a signed questionnaire from the current owner/operator is not available.

The Task Group was strongly in favor of retaining the Transaction Screen for low risk environmental due diligence where seeking CERCLA liability protection is not a goal and where, in the absence of the Transaction Screens, users would likely forego performing any type of environmental due diligence. Balloting conducted by the ASTM Task Group last year supported the position that Transaction Screens fill a unique need on the spectrum of environmental due diligence—specifically for low-risk properties, and as a result, the group made the decision to reissue the standard with several important revisions, rather than retire it.


The updated Transaction Screen Process provides increased guidance in a number of areas. Modifications worth mentioning include:
1.  Emphasis on the applicability of the Transaction Screen process in cases where the user “wishes to conduct limited environmental due diligence (that is, less than a Phase I Environmental Site Assessment)” and is not seeking to qualify for CERCLA liability protection (Section 1.1).
2.  Clarification that the Transaction Screen does not contemplate the level of site assessment provided by a Phase I environmental site assessment (E 1527-13) that seeks to identify “recognized environmental conditions” (Section 4.2.2).
3.  Inclusion of historical aerial photographs as one of three sources of data for determining the historic uses of the property (along with fire insurance maps and local city directories), using an iterative process as follows:

“If reasonably ascertainable, one of three sources of historical data must be examined: fire insurance maps, local street directories or historical aerial photographs. If the first source examined yields insufficient information from the present back to 1940, then the second source, if reasonably ascertainable, must be selected and examined. If this source also yields insufficient information, the then the third source, if reasonably ascertainable, must be examined. If all three sources yield insufficient information or are not reasonably ascertainable, lack of historical information is presumed to be a potential environmental concern subject to 5.6 through 5.7.” (Section 10.2.1) 

4.  Removal of language from the previous E 1528-06 that required explanation of any disparity between the fair market value and a lower purchase price (on the assumption that a below-market price may be indicative of the presence of contamination on the property).  There was a consensus among E50 members that those conducting the Transaction Screen were not likely to possess the qualifications necessary for performing this comparison.


Here are several high-level highlights from the Task Group meetings:
•    There were discussions about who was qualified to perform a Transaction Screen, and whether to limit the field only to environmental professionals. The lenders on the Task Group believe that most Transaction Screens for lenders are done by Environmental Professionals in order to meet both their internal as well as SBA’s requirements.  Instead, the Task Group agreed to include some options in E 1528 that can only be implemented by EPs and then leave it up to the users to contract with professionals to go beyond the Transaction Screen based on the property, its location and the risk tolerance of the lender financing the acquisition. New language clarifies that purchasers are free to contract with environmental professionals on a mutually acceptable basis to go beyond the requirements in E 1528-14:

“If an environmental professional is contracted to prepare a transaction screen questionnaire, nothing in this practice requires the professional to develop opinions and conclusions. Nothing in this practice precludes a user from contracting with any person identified herein for mutually agreed upon additional services” (Section 4.3).

•    To avoid any confusion, the revised standard strengthens the distinction between a Phase I ESA and a Transaction Screen. E1528 now states unequivocally that a Transaction Screen is not sufficient to identify RECs.

A Transaction Screen is meant to identify a “potential environmental concern” only, as opposed to “recognized environmental conditions,” which are identified by an E1527 Phase I. But, the finding of a “potential environmental concern” could be an impetus for additional investigation by an environmental professional, to include an E1527 Phase I Site Assessment.


Access the revised E 1528-14 on ASTM’s website.

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