January 1, 2017

Phase 1 ESA Killing Your Deal? What Can You Do?

Phase 1 ESA’s are treated with some serious eye rolling and their providers aren’t treated with much better. Typically, one of the most common ways for deals to fall apart are when a “Recognized Environmental Condition” is identified with the property.  

The Phase 1 ESA is the preliminary study on a potential purchase to ensure any issues associated with the due diligence is identified ahead of time before the close of the purchase. The phase 1 esa is performed so that the buyer can institute a innocent landowner defense – in case there is pollution found under the property.  To jump to FAQs about Phase 1 ESAs or ask our expert engineers a question – join us here. 

By definition – here is what constitutes a REC: …is one of the terms used to identify environmental liability within the context of a Phase I Environmental Site Assessment. ASTM defines the recognized environmental condition in the E1527-13 standard as “the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property: (1) due to release to the environment; (2) under conditions indicative of a release to the environment; or (3) under conditions that pose a material threat of a future release to the environment. de minimis conditions conditions are not recognized environmental conditions. A Recognized Environmental condition is “the presence or likely presence of any hazardous substances or petroleum products on a property under conditions that indicate an existing release, a past release, or a material threat of a release of any hazardous substances or petroleum products into structures on a property or into the ground, groundwater or surface water of the property.” That means that any evidence of a significant potential that a hazardous substance has been released from its operation into the surface and may be subject to regulatory action.

De minimus condition: De minimus condition means the “presence or likely presence of any hazardous substances or petroleum products on a property under conditions that did not indicate an existing release, past release or a material threat of any hazardous substances or petroleum products into structures on a property or into the ground, groundwater, or surface water of the property.”

By following some simple guidelines, here is how you can manage your expectations during the DD period:

1. If your property is located on a corner plot and has an entrance on each side, it was probably a service station at some point. Make sure your consultant knows that!

2. If there is staining on concrete or asphalt beyond typical “wear & tear” – that may need to be investigated further about usage.

3. Take a look at the asphalt or blacktop – do you see any difference in shades in certain areas? Are there darker rectangles or lighter rectangles in certain areas? These can be indicative of underground storage tank removals or installations.

4. Are there any historical uses of automobiles or service station type activities? Even if it’s long gone, if hydraulic lifts were used that could be cause for concern.

5. Sometimes, certain adjacent properties will be able to provide some critical intel about the historical use of the property or whether there any issues with the land. Sometimes, neighboring properties can go through some of the same issues during the DD period.

Essel Environmental is a leader in the Phase 1 Environmental business & Phase 1 ESA bay area industry.  We are experienced with the ESA Environmental issues on projects to save your deals.

Our Phase 1 ESA page answers many Frequently Asked Questions and you can send us your questions as well.

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