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The following post appeared recently on GlobeSt.com and contains some great information regarding ESA’s. It can be a huge portion of the due diligence and one that should really always be done. Failure to obtain a Phase 1 can cost you millions down the road if you are not careful. However obtaining a clean environmental report doesn’t necessarily have to break the bank. Here Jenny Redlin explains:
By Jenny Redlin
As a nationwide provider of environmental and engineering due diligence reports, including Phase 1 ESAs, I often get asked the question from my clients “Do I really need a Phase 1?”. The answer may surprise you. Of course, the simple answer is YES, only a Phase 1 ESA to ASTM E1527-05 and the Environmental Protection Agency’s (EPA) All Appropriate Inquiry (AAI) standard can protect the User of the report against CERCLA liability. HOWEVER, there are many other limited environmental assessments that are used in the industry as a business decision tool for buying and/or lending on properties. These assessments, being limited in nature are generally faster and cheaper than a Phase 1 ESA. This is because these assessments are, for the most part, “pieces” of the Phase 1. For instance the Environmental Transaction Screen (ETS), which is so common it has its own ASTM standard (E1526-08), is a “mini” Phase 1 ESA of sorts. It includes a lot of the same elements, such as the database review, site reconnaissance and some limited historical review. Other assessments combine one or two of the Phase 1 Environmental scope items to tailor make the limited report. Prices range from $250 to $1400 depending on what is included, the site visit portion being the biggest driver of cost.
When deciding if you “need” a Phase 1 or not, consider a few key questions:
Of course, if any of these limited environmental assessments find something of concern that would need to be investigated further, a full Phase 1 Environmental Site Assessment or other step would be recommended which can add additional cost and time to the project.
Foreclosures are another matter however, nearly 100% of the time when a lender is considering taking back a property CERCLA liability coverage is of utmost concern and an AAI compliant PH 1 is conducted. In fact often additional non-ASTM scope items are also added to the scope of work as a “Phase 1 plus” so to speak.
Read the GlobeSt.com article here.