The Comprehensive Environmental Response Compensation and Liability Act (CERCLA) describe a Phase I Environmental Site Assessment (ESA). Under United States law this is now the prerequisite standard that is necessary to meet the due diligence requirements that are required to establish an “innocent landowner” in a property transaction.
The Phase I Assessment is the standard way that potential property buyers, lenders, investors, owners and managers environmental liability is protected and controlled. An ESA essentially establishes that they have performed their due diligence.
When a Phase I Assessment has been completed the bank or the buyer will qualify for the Comprehensive Environmental Response Compensation and Liability Act Innocent Landowners Defense. This defense is designed so that the property owner can defend himself or herself against the liability of hazardous substances that are on the property because of the action of a third party.
A Phase I Assessment is designed to be able to identify various hazardous environmental products or conditions such as the likely presence or actual presence of petroleum or petroleum products that either have been or could be released onto the property.
If hazardous materials are found then the future use and development of the property could be constrained, or the liability and responsibility of the cleanup costs could be transferred to the prospective lender or purchaser who intends to take title to the property.
The Phase I Environmental Site Assessment includes a data review of the geologic, topographic, hydrologic, land use, land ownership, and historic development of the property. The data is accrued through reviewing regulatory records, aerial photographs and local agency files. It is augmented by a visual survey of all of the adjoining properties as well as a physical inspection of the property being assessed.
A Transaction Screen is similar to an ESA in that it’s a screening tool that is performed on “small loan” properties. It is part of the real estate transaction procedure and is used to identify the presence or the probable presence of petroleum products or any hazardous substances on a parcel of property.
Transaction Screens include physical inspections of the property along with limited regulatory and historical investigations. They also include interviews of knowledgeable people so that any environmental issues that could have a liability or a financial impact on the property could be evaluated.
Although individual clients could have specific requirements, the industry standards for the methodology involved in a viable transaction screen has been determined by the American Society for Testing and Materials (ASTM) and is commonly referred to as an ASTM Phase I.
If you need to have a Phase I Assessment you should hire an experienced and respected company to perform it for you. To find out more about a Phase I Assessment go to http://www.edrnet.com/environmental-services/value-packages