Real Estate Services

Environmental Site Assessments

Environmental Site Assessments (ESA) are often required by financial lending institutions before backing a commercial loan. New environmental pollution laws created over the past twenty years can transfer costly liability to new owners for contamination done in the past.  Many lending institutions have established the policy of fulfilling the U.S. EPA’s ‘All Appropriate Inquiry’ Final Rule (40 C.F.R. Part 312) by performing a Phase I Environmental Site Assessment. 

ESA’s also help establish an ‘innocent landowner defense’ under the Superfund Amendments and Reauthorization Act of 1986 (SARA). As a result, this form of real estate due diligence has emerged to protect both the real estate purchaser and the lending institution from any future liability.

ALC Environmental can assess various types of properties including multi-family, healthcare, industrial, commercial/retail, public buildings, and undeveloped land.  Our environmental site assessments meet or exceed the standards set by the American Society of Testing and Materials (ASTM) Practice E1527-05.

Phase I Environmental Site Assessment - (standards established under ASTM E 1527-05) is crucial in establishing a SARA innocent landowner defense.  Our Phase I Environmental Site Assessments include, but are not limited to:

• Physical Inspection – Examining the site and contiguous properties to gauge the likeliness of contaminant releases and identify areas of concern.
• Environmental Database Search - Conduct research into the historic past uses of the site including state file reviews to ascertain the regulatory history of the site.
• Historical Review - Study historical maps and aerial photographs of the site.
• Geologic and Hydrologic Assessment - Review published data on the geology and hydrogeology of the site.
• Comprehensive Report - Prepare a comprehensive report which includes recommendations and a conclusion statement outlining tasks to be performed going forward (ESA II) or clearing the property of environmental liability.
• Quality Assurance and Quality Control

Phase II Environmental Site Assessment - If the results of the Phase I Environmental Site Assessment yields recognized environmental conditions, or as a preliminary response to evidence of a release of a hazardous substance or petroleum product, a Phase II Environmental Site Assessment is required.  A Phase II ESA investigates areas of concern identified in the Phase I ESA and functions as a risk management tool to allow for informed business decisions to be made.  This process includes:

• Soil and Groundwater Testing - Installing test borings and groundwater monitoring wells.  Collecting and analyze subsurface soil and water samples.
• Asbestos, Mold, Lead Based Paint and Dust Sampling and Tank Testing
• Laboratory analysis - by an independent Federal and State certified commercial laboratory.
• Ground Penetrating Radar Surveys
• Risk-Based Corrective Action (RBCA) Modeling
• Comprehensive Data Review and Reporting - Data evaluation and comparison of test results to regulatory standards.  Data reduction and QA/QC review.  Prepare a comprehensive report of results and recommended future actions.

Phase III Environmental Site Assessment - If the findings from the Phase II ESA indicate that contamination of a site is prevalent, ALC Environmental can offer the services of a Phase III Environmental Assessment which determines the nature and extent of contamination and the potential risk to human health, steps which are integral in developing a Remedial Action Plan (Phase IV ESA).  Our Phase III ESA includes:

• Classification and delineation of the detected materials in accordance with Local, State, and Federal codes, rules, and regulations for disposal.
• Calculate the volume of impacted soil and/or groundwater. 
• Investigate pathways of migration of contaminants through soil and groundwater.
• Notification of the appropriate regulatory body as required.
• Determine site specific remedial goals determined through a quantitative risk assessment model.
• Development of feasible remediation options that include time frames and costs.  These options will also consider physical/chemical limitations, construction requirements, environmental and health safety implications, regulatory approval, and public perception.
• Limited Environmental Due Diligence: Transaction Screen Process (standards established under ASTM E 1528-06)

The Superfund Amendments and Reauthorization Act of 1986 - SARA

The Superfund Amendments and Reauthorization Act of 1986 (SARA) has dramatically changed certain portions of the previous legislation under Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) in the area of real property transactions. SARA recognized the fact that a landowner who had no connection with the release of hazardous substances at a property would still be liable under CERCLA. To remedy this problem, SARA provided an important defense, known as the "innocent landowner defense", which is contingent upon a defendant having had no reason to know a property was contaminated prior to holding title (42 USC § 9607 (b)(3)(a) and (b).

• To establish an innocent landowner defense, SARA states that "the defendant must have undertaken at the time of acquisition an all appropriate inquiry into the previous ownership and uses of the property consistent with good commercial or customary practice in an effort to minimize liability". SARA further states that in construing the "all appropriate inquiry" provision, the courts will take the following into account:
• Any specialized knowledge or experience on the part of the defendant;
• The relationship of the purchase price to the value of a property if contaminated;
• Commonly know or reasonably ascertainable information about a property;
• The obviousness of the presence/likely presence of contamination at a property;
• The ability to detect such contamination by appropriate inspection

What are the minimum efforts required to conduct an "all appropriate inquiry" to establish the SARA innocent landowner defense requirement? 
Prudence suggests that most real estate transactions (especially commercial and industrial) be assessed for environmental impairment prior to consummation of a property transfer, to evaluate the risk of the transfer in light of potential environmental liabilities.