June 15, 2020
A guide to your next Environmental Due Diligence checklist
Even in 2020, far too many buyers are still unaware of just how many risks lie in wait as a result of environmental contamination and incomplete paperwork.
The simple truth is that nothing should be taken at face value when purchasing commercial real estate— thorough investigation and environmental due diligence are integral to the processes of buying and selling commercial properties, even before any paperwork is drawn up.
Phase I ESA
A Phase I Environmental Site Assessment (ESA) is often scheduled by buyers who aren’t certain whether a property has experienced any contamination. It is also often required by lenders and banks as part of the loan process. This initial site assessment is critical, as it determines whether other due diligence options will need to be considered.
Phase I ESAs don’t require any sampling, but do require general observations of the site, inquiring present property owners, observing adjacent properties, and the reviewing of historical documents.
Besides meeting legal requirements, opting to conduct a Phase I ESA before the start of a project can save money long term. If contamination is found after a building is built, it’s expensive, time consuming and difficult to remove the contamination.
For information on what a Phase I ESA costs, check out our blog post here.
Phase II ESA
A Phase II Environmental Subsurface Investigation (also known as a Phase II ESA) occurs after a Phase I ESA identifies a “recognized environmental condition”, which indicates a potential risk for contamination, or if the property owner is certain that the property has experienced contamination.
The Phase II ESA may involve the drilling of boreholes for the collection of soil, groundwater, and/or soil vapor samples for laboratory analyses. More often than not, present and former gas stations and dry cleaners will require at least a Phase II ESA.
For more information on when and if you might need a Phase II, check out our blog posts.
Following a Phase I ESA and Phase II ESA, soil remediation may need to be performed in order to remove any found contamination. This service will restore the ground to a state of health and legal acceptability.
A common example of soil remediation is after the removal of a leaking underground storage tank (UST), the contents of the UST are assumed to have spilled into the surrounding soil, which requires the removal and disposal of contaminated soil following state and federal guidelines.
Some of the most important potential groundwater concerns to be aware of include infiltration from contaminants associated with USTs and hazardous chemicals associated with nearby businesses. One of the most common examples of these would be dry cleaners. Identifying contaminant transport can be difficult without the assistance of groundwater hydrologist services.
If you uncover a need to collect precise data on the hydraulic properties on your potential land acquisition and the contaminants that may be present, it’s vital to schedule this service.
Summary and Conclusion
Following your due diligence checklist will not only ensure that your property has been assessed in compliance with all local state regulations and laws, but also guarantee that you know exactly what you’re getting into before a transaction is complete.
For help developing your own up-to-date environmental due diligence checklist, contact Essel Environmental Engineering and Consulting!