How an Environmental Site Assessment Will Protect You
Environmental Site Assessment Protections
As mentioned in an earlier blog, completing a Phase I Environmental Site Assessment is for protection. It is one of the environmental due diligence requirements to establish protection from potential liability under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) passed by Congress in 1980. CERCLA liability defenses are very valuable, especially since a purchaser or lessee of contaminated property can be liable for environmental cleanup costs even if the leak, spill or release happened decades earlier, without regard to fault or negligence.
In order to be used for CERCLA protection, a Phase I ESA must meet the requirements of the federal rule entitled “Standards and Practices for All Appropriate Inquiries” (40 CFR Part 312) or ASTM’s Phase I environmental site assessment standard (ASTM E 1527-13). A completed Phase I ESA can also be a useful tool for evaluating the potential for legal claims and/or contamination clean-up costs.
Environmental Site Assessment – Case Study
TKEC recently conducted a Phase I Environmental Site Assessment (ESA) for a client who wanted to purchase a vacant light industrial property. He wasn’t planning to take out a loan to purchase the property, so the bank wasn’t requiring that he complete a Phase I ESA. He knew that it was a wise business decision to have an ESA conducted to make sure he didn’t end up owning a contaminated property.
TKEC’s research determined that the property had been used for wood pallet assembly for the past 25 years, which does not represent an environmental impact concern. However, it was determined that the property had been used as a farm implement dealership prior to that, dating back to the 1940s. At first thought, one may not consider this past usage to be of environmental concern; it doesn’t immediately conjure up images of hazardous waste or buried tanks.
However, consider that for nearly 30 years, used oil would have been generated from servicing/repair operations prior to the establishment of regulations requiring its proper storage and disposal. Years ago, it was common practice for waste oil to have been used for dust and weed control on unpaved surfaces, or it was just dumped “down the drain” because the environmental impacts were not well known. This property was not connected to the sanitary sewer system, so anything discharged to sinks or drains would have discharged to a septic system located on the property.
Environmental Site Assessment Influences Buying Decision
While the likelihood of contamination at this property is less than if it had been a dry cleaner or gas station, it still exists. Based on this information, our client may decide that the risk is too great and not buy the property. The client may use the information from the ESA during negotiations with the seller or the client may decide to conduct a Phase II ESA (sampling of soil, groundwater) to determine if the suspected contamination exists and to what the extent of any contamination may be.