Understanding Environmental Due Diligence

Posted: October 28th, 2009 | Author: | Filed under: Phase I ESA | Tags: , | Comments Off on Understanding Environmental Due Diligence

Environmental due diligence seems to be a byword in today’s real estate industry. But what is it really and how does it impact the way business is conducted?

To further understand this, we need to first define due diligence in relation to the industry. When we hear the term “to exercise due diligence”, it simply means being extra cautious in the way we conduct the business. Everything needs to be further scrutinized to ensure that nothing is out of place and that all is in proper order.

Environmental due diligence is simply making sure that the land being purchased does not pose any potential risks or environmental hazards that may affect the area’s development or its future occupants.

This procedure, although commonly done today, was not really practiced before the 1980s. During that time, there were already concerns regarding the non-disclosure of property developers of potential risks to their buyers. A well known case was about the residents of Love Canal in Niagra, New York during the late 70s. They were not properly informed that they built their houses on an environmental time bomb of hazardous materials that eventually found its way to their water sources.

However, in spite of such news, and the dramatic increase in the awareness of an existing law on this, it still did not gain much popularity and was utilized mostly by large corporations with businesses in Europe. It was only during the early 1990s that EDD started to be widely used when proper implementation guidelines were determined.

The growing worldwide awareness regarding the environment and widespread concern on the impact of past land usage on current properties served as catalysts that made environmental due diligence a necessity. Property owners, developers, sellers and buyers understood the need to protect themselves from future liabilities.

The environmental site assessment is conducted in different phases depending on the requirements and the extent of information needed regarding the property. Phase 1 ESA is primarily based on data collected from researching the history of ownership of the land and how it was used. Usually, a property condition assessment is also done at this phase to create a more comprehensive report for the use of buyers and sellers.

Should anyone need a more thorough investigation of the site where actual samples will be collected and processed, then there is a need to go to the next levels or phases.

The nature of the work involved requires a specialized team. Companies providing environmental engineering services and industrial hygiene consultants are called upon to implement this. They should not just be Baccalaureate degree or Professional licensee holders in the fields of science or engineering, but more importantly, must possess the necessary experience in such field of work.

Environmental due diligence is a matter taken very seriously by people in the industry. It is not limited to determining the hazardous nature of a property. It goes beyond that. EDD help safeguard the environment. It is therefore important to hire competent consultants who will maintain a sense of impartiality so as to submit credible reports.

Environmental Due Diligence By ESA

Posted: October 27th, 2009 | Author: | Filed under: Phase I ESA | Tags: , | Comments Off on Environmental Due Diligence By ESA

Doing Environmental Due Diligence is a win-win situation for our environment and for the property owner. That’s why in United States the government is highly recommending every site property to undergo ESA before anything else. It must be the responsibility of the property owner to do this. They need to remember that money isn’t everything and that they need to think of their site’s health and what would be its effect to the environment if they let it be contaminated. So what is ESA?

An Environmental Site Assessment (ESA) is a report prepared for a real estate holding which identifies potential or existing environmental contamination liabilities. It typically addresses both the underlying land as well as physical improvements to the property. When conducting ESA, it is the phase 1 ESA that you need to undergo first.

Phase 1 ESA tells people what lies beneath. Beneath the surface of the subject property as Phase 1 inspect the land. Scrutiny of the land includes examination of potential soil contamination, groundwater quality, surface water quality and sometimes issues related to hazardous substance uptake by biota.

Phase I Environmental Site Assessment reports are normally performed for commercial properties, residential developments, agricultural properties and industrial properties. They are usually required by banks for real estate purchase loans or refinancing. Even if a lender is not involved in the real estate transaction, a Phase I report is recommended as protection from any future environmentally-related liability after taking title to the property.

A property condition assessment also includes a review of local governmental documents regarding the site to determine what the past usage of the site was, along with extensive document review of the surrounding area. It also entails a very involved and detailed site visit by a qualified professional. In addition there is data base information that is gathered and reviewed of the surrounding vicinity to determine if there is a potential risk from an environmental stand point in the immediate area.

These potential risks can be anything from a past gas station on or near the site that might have contaminated the ground water to there having been a dry cleaner on the site that might have spilled chemicals into the ground. There could have been past dumping on the site or an auto repair that did not handle the oils properly, lead in the paint, asbestos, and on and on. Industrial hygiene consultants can detect all of that.

The Phase I ESA is generally considered the first step in the process of environmental due diligence. Standards for performing a Phase I site assessment have been promulgated by the US EPA and are based in part on ASTM in Standard E1527-05. If a site is considered contaminated base on results of Phase 1 ESA, A Phase II Environmental Site Assessment may be conducted, ASTM test E1903, a more detailed investigation involving chemical analysis for hazardous substances and/or petroleum hydrocarbons. If contaminants are already found and that require removal, A Phase 3 ESA will soon be conducted. This includes remediation of the site.

In the United States of America demand increased dramatically for this type of study.
Mainly because property holders already realized how important it is for their property to undergo ESA before anything else.

In looking for an environmental engineering service to conduct ESA in to your site, remember that you need to find professionals that have the expertise and experience on handling it. Environmental Consultants should have a thorough understanding of environmental laws and practices so that they can quickly provide turnaround on Phase I & Phase II Environmental Site Assessments.