The recently released 2016 ASTM Environmental Site Assessment (ESA) Standard Update affects Forestland or Rural Property transactions through changes to the ASTM Standard Guide and Practice E2247 for Forestland or Rural Property. The property need not be contiguous and may contain isolated areas of non-forestland and non-rural property. This practice is intended to provide a more practical approach to assess rural property and forestland properties that are generally uniform in use.
While the new standard replaces the old, many lending institutions, wind and solar developers, and other investors may have Scopes of Work that reference the old standard. Adoption of the new standard will likely occur over the next several months, with the renewable energy industry likely representing the early adopters.
The major differences are outlined below:
- There is no longer a “greater than 120 acres” size restriction on properties assessed using this standard. The removal of this arbitrary limitation allows the standard to be applied to a wider range of sites (e.g., communications towers, utility corridors, substation and switch yard parcels, small mines, etc.) that are often situated in rural settings.
- Definitions of Recognized Environmental Condition, Controlled Recognized Environmental Condition, Historical Recognized Environmental Condition, and Business Environmental Risk have been updated with descriptions that are consistent with the Phase I ESA standard ASTM E1527-13.
- Consistent with existing industry standard, a general description of the structures or other improvements on the property is acceptable. There’s no need to get into specific number of buildings, floors, basements, each building’s construction date, etc.
- Standard historical sources reviewed are only aerials and topographic maps and do not necessarily include Sanborn maps, tax files, building records, planning/zoning records, or city directories. The latter are considered “other historical sources” and are only used to fill in the data gaps as necessary. This reduces time by bypassing unnecessary (and often unanswered) records requests to the city or county, and reduces costs by eliminating the need for “no coverage” receipts from Sanborn maps and city directories.
- In addition to evaluating the property via accessible paths or roads (including aerial flyover, as necessary), the site reconnaissance only requires inspections of areas of environmental interest (e.g., maintenance garages, fuel stations, farm dumps, oil/gas wells, stressed vegetation, etc.) that have been identified during the standard records review and interview process. Interior access to all other structures is not required as part of this assessment.
What about the transaction I am working on right now?
Make sure you are asking the right questions up front:
- Is a lender involved in the transaction? If so, does the current Scope of Work reference a specific ASTM standard? Does it reference “most current standard” or does it specify “ASTM E2447-08” or “ASTM E2447-16”?
- Ensure your consultant’s proposal references the current scope. If the scope requirement references “most current ASTM standard”, recognize that pricing may differ than that of previous assessments.
- Or consider if the old standard may be used until the institution has evaluated their policy and Scope of Work.
Contact AEI Consultants today to discuss the specifics of the new standard and considerations for your property transaction.