We conduct Environmental Site Assessments (ESAs) to determine the liability for buyers or sellers during property transactions, mergers and acquisitions, refinancing of commercial real estate, and other situations in order to identify the environmental risks present at a site.
Our ESA Services include:
Phase I ESA
Phase I Environmental Reports are prepared for real estate and business transactions, such as land purchases, building purchases, leases, business purchases, new residential developments, and bank loans. Our Phase I ESA Reports adhere to American Society for Testing and Materials (ASTM) Standard E-1527-13. This ASTM standard complies with the Environmental Protection Agency (EPA) All Appropriate Inquiries Rule, codified into the federal regulations by the EPA (40 CFR Part 312). This type of Phase I Environmental Report is required by lenders and is highly recommended prior to purchasing commercial or industrial real estate, or prior to starting new residential developments.
Why do a Phase I ESA?
Federal, state, and local laws make the current and prior property owners liable for the cost of cleaning up contaminated soils, groundwater, and surface water. If you are buying or financing a property, you would want to know before the transaction if any contamination or hazardous conditions exist on the property, since you may be paying the cost of clean-up. Clean-up may be not only on your property, but may include surrounding property and any contaminated surface or groundwater that may have originated on your property.
Benefits for the Buyer
Performing an ESA gives the potential property owner protection against liability created by the Federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 1980. Otherwise, such liability may be fully transferable with the property to the new owner and indirectly to the lien-holder, if any. Potential environmental concerns may affect the value of the property, since remediation projects can be very costly and possibly exceed the purchase price of the property.
Benefits for the Seller
Performing an ESA will establish a benchmark regarding property condition up to the time of transfer, thereby offering protection to the seller against post-transfer contamination responsibility.
Types of Environmental Reports
Environmental Questionnaire (EQ)
An EQ is used by the U.S. Small Business Administration (SBA) as a preliminary screening tool for smaller loans or low risk properties. EQ covers many of the same items as ASTM Phase I, but must be completed or reviewed by a lender that has made at least one site visit to the property and a good faith effort to interview the current owner or operator of the property. Even so, many lenders are not trained in what to look for while on-site and do not have the same experience of an environmental professional. If the possibility of contamination is identified by the EQ, then a Record Search with Risk Assessment may be required.
Records Search with Risk Assessment (RSRA)
An RSRA is another screening tool used by the SBA to evaluate whether a property is a “high risk” or “low risk” for contamination. An RSRA includes a review of government and historical records, a review of the property’s NAICS code, and an EQ, if environmentally sensitive operations are conducted on-site or on nearby properties. This information is reviewed by an Environmental Professional who then determines the property’s level of risk for contamination. While an RSRA may be required by the SBA on certain loans they fund or insure, other lenders also use RSRAs on non-SBA loans as part of their internal environmental risk procedures.
Phase I ESA
Phase II ESA
The primary objective of a Phase II ESA is to evaluate suspected areas of contamination to determine the presence of, or absence of contamination. Sampling and testing is conducted for the purpose of providing information regarding the nature and extent of any contamination including areas of concern, chemicals of concern, and local geology.
ESA Phase III (Remediation)
A Phase III ESA is performed when a Phase II ESA positively identifies the presence of contamination on a property. A Phase III ESA involves further investigation of the contamination, establishment and implementation of a remediation plan, and the implementation of a monitoring plan. The Phase III ESA must be coordinated with the appropriate regulatory agencies and properly documented in order to obtain agency approval for meeting clean-up objectives.