Engineering Due Diligence:
If you are in the process of purchasing or refinancing a property, you must be hearing the term Phase I Environmental Site Assessment being thrown around. A Phase I ESA is often the first round of the environmental due diligence process and is completed before the end of a real estate transaction. It describes the current and historical use of a property and presents suggestions for next rounds if Recognized Environmental Conditions (RECs) are identified. Phase I Environmental Site Assessments are used for all types of real estate transactions including new acquisitions, property advancement, bank financing, refinancing, and foreclosures.
The main objective of conducting a Phase I ESA is to obtain innocent landowner protections. The environmental due diligence method is needed by law under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). A Phase I ESA is the most well-known way to satisfy the requirements of CERCLA’s innocent landowner defense under All Appropriate Inquiries (AAI), known as landowner liability protections (LLPs).
If the due diligence method is not correctly completed and LLPs are not satisfied, the property owner would be financially and constitutionally responsible for environmental liabilities on the property.
LLPs cover three categories, which do not significantly apply to all purchasers:
- Innocent Landowner
- Contiguous Property Owner
- Bona Fide Prospective Purchasers (BFPPs)
BFPPs are prospective landowners who buy a property with knowledge of pollution and obtain assurance from liability, provided they meet certain acquisition requirements like the Contiguous Property Owner.
ASTM International has published a set of rules that are recognized as Standard E1527 for environmental specialists to handle a Phase I ESA accurately and to set a uniform measure for Phase I ESA’s. These models are periodically updated to include additional dangerous materials, as it was made recently. However, moneylenders may demand further investigations that are not involved in the list of ASTM standards.
Review of Records
The environmental specialists will inspect records that show past transfers of ownerships of the estate and what the premises were used for. Any heavy industrial projects might raise some red flags and approve further inspection or testing in a Phase II ESA. Aerial photographs will also be analyzed to show any historical changes or developments done on the property or surrounding properties.
What steps are involved in a Phase I ESA?
Site Survey:
A site reconnaissance includes an optical investigation of the property and the neighboring properties. Photographs may be taken of the property and some measures may be conducted, but testing for environmentally dangerous materials is not conducted in a Phase I ESA.
Interviews
Conferences may be attended with anyone or any organizations that can help present additional data on the property or surrounding properties. The environmental cleanup contractors and experts may meet with local health departments, fire departments, water departments, and petroleum tank management associations.
Report:
A printed report will be sent by the environmental experts that will describe the findings from the Phase I ESA and any results that can be made regarding the property. If environmental contamination may be present, a Phase II Environmental Site Assessment may be suggested.
Conclusion:
Fulcrum Resources Environmental is one of the best environmental engineering consulting firms that have extensive experience completing Environmental Site Assessments and Engineering Reports. We operate under the parent company Fulcrum Resources, Inc, is a full-service engineering due diligence and engineering consulting firm. At Fulcrum environmental, we value client relations and business goals needed to achieve top quality and timely delivery of services.
Our environmental cleanup contractors are working in nationwide locations in US and Canada and we can guarantee dedicated and qualified specialists will evaluate present environmental due diligence requirements for your commercial property, make suggestions for enhancements, and help to grow your enterprise.
