Environmental Site Assessments

The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), passed in 1980, provides authority to State and Federal governments to respond to the release of hazardous substances into the environment. Under CERCLA, liability for an investigation and remediation associated with a release of a hazardous substance falls under all parties that have disposed of a hazardous substance at a common location. Also, prospective property owners could potentially be liable for unforeseen liabilities associated with the cleanup of past hazardous substance releases if due diligence is not exercised prior to a property transaction. Due diligence is defined as, “at the time of land acquisition, all appropriate inquiry was made into the previous ownership and use of the property was consistent with good commercial or customary practice.” Appropriate inquiry is made by conducting an environmental site assessment (ESA) in accordance with the American Society for Testing and Materials (ASTM) practices.

Environmental Site Assessment (ESA) Transaction Screen

An ESA Transaction Screen Process is a limited inquiry, and less expensive than a Phase I ESA, that may be used when both the buyer and seller agree that the potential of identifying a recognized environmental condition is unlikely. The Transaction Screen Process involves interviewing the owners/occupants of the property, visiting the site, and a brief inquiry into government records. The Transaction Screen Process will conclude that either: (1) no further inquiry into recognized environmental conditions of the property is needed for purposes of appropriate inquiry, or (2) further inquiry is needed to appropriately assess recognized environmental conditions to satisfy due diligence. If the second conclusion is determined, a Phase I ESA is recommended.

Phase I Environmental Site Assessment (ESA)

A Phase I ESA is a continuation of the Transaction Screen Process and is the most frequently used and comprehensive of the two when performing due diligence of property transactions. Phase I ESAs are typically requested by lending institutions, industries, real estate professionals, government agencies, business owners, attorneys, insurance companies, and developers.

Four major components are involved in a Phase I ESA:

• a comprehensive records review
• a site reconnaissance
• interviews with current and past owners/occupants of the site and local government officials
• a final detailed evaluation report

BAY will provide a statement, as required in ASTM Practice E1527-06, with the Phase I ESA report identifying that: (1) no evidence of recognized environmental conditions in connection with the property were found, or (2) a list and interpretation of recognized environmental conditions.

Phase II Environmental Site Assessment (ESA)

Phase II ESAs are performed if a potential environmental concern is known to exist or was identified while performing a Phase I ESA. Typical properties with known potential concerns include gas stations, industrial properties, and former landfills. “Phase II” is a somewhat common phrase in the industry for performing a limited subsurface identification of property conditions and can be performed without the inquiry of a Phase I ESA.

Phase II ESAs generally consist of collecting soil and groundwater data. Laboratory or field analysis is used to determine if there are environmental impacts.