Phase I Environmental Site Assessments
Partner ranked Number 1 Nationally, by volume, in ESAs by EDR Scorekeeper for 2011.
Environmental Due Diligence
Phase I Environmental Site Assessments (Phase I ESA) are the central product in Partner's Environmental Due Diligence practice. Phase I's are our core environmental expertise. Partner fully understands how the Phase I Environmental Site Assessment is used in the commercial and multi-family real estate industry.
Phase I Environmental Site Assessment
A Phase I Environmental Site Assessment is the gold standard for evaluating the environmental liability associated with a real estate asset. Partner is truly an expert at the implementation of the ASTM 1527-2005 Standard. Our Phase I's are done by Environmental Professionals who meet the requirements of the EPA's AAI Standard.
Our experience in Phase I's dates back to before the creation of the ASTM Standards. Having performed Phase I's on hundreds of thousands of properties, we offer our clients a perspective on every property type.
All Appropriate Inquiries Rule
The EPA's All Appropriate Inquiries Rule governing the scope of Phase I Environmental Site Assessments went into effect on November 1, 2006 and provided specific scope requirements for a Phase I ESA to meet the requirements of CERCLA's innocent land owner defense.
In Partner's environmental risk practice, we help buyers meet the legal requirements for the CERCLA innocent landowner defense and we provide practical business advice on environmental liablity to our clients.
Phase I Scope:
Site Visit
- Inspection of the Site by an Experienced Inspector
- Catalog the Presence of Hazardous Materials or Petroleum Products
Historical Research
- Historical Aerial Photographs
- Reverse Street Directories
- Building Permits
- Planning Records
- Topographical Maps
- Sanborn Fire Insurance Maps
- Department of Oil and Gas Maps
- Title Information
Geology and Hydrogeology
- Soil Type
- Geological Setting
- Groundwater Depth
Regulatory Research
- Fire Departments
- State Environmental Agencies
- Federal Environmental Agencies
Interviews and Document Review
- Interview Tenants and Owners
- Interview State and Local Regulators
- Review Provided Reports
2011 Changes to Environmental Due Diligence- Phase I Environmental Site Assessment
The standards for Environmental Due Diligence and Phase I Environmental Site Assessment continue to develop. Below we discuss changes to the environmental due diligence standards that occurred in 2011:
- Freddie Mac's Environmental Due Diligence Standards;
- SBA 50 10 Environmental Due Diligence Standard;
- ASTM E1527;
Freddie Mac's Environmental Due Diligence
In May of 20011, Freddie Mac released environmental requirements for the Freddie Mac Multifamily Seller/Servicer Guide. The new requirements amounted to one of the most significant standard changes in the practice of Phase I Environmental Site Assessment and three significant changes are discussed below.
Freddie Mac clarified how and when asbestos testing should be done, as well as when an asbestos Operations and Maintenance (O&M) Plan is acceptable in lieu of asbestos testing. More asbestos work will likely be required as the environmental professional's opinion on whether asbestos testing is necessary cannot be based solely on construction date.
The new Freddie Mac standard requires the environmental consultant to declare whether or not there is a State Super Lien Law in the state of the subject site. A State Super Lien, while uncommon, allows the state to put a first priority lien on the real estate asset in response to environmental contamination.
The new Freddie Mac guidance also included more specific inspection requirements (for example, number of units required to be inspected). Freddie Mac Form 1103 was also changed as part of the in 2011 updates.
SBA Environmental Due Diligence
In October of 2011, the SBA updated its Environmental Investigation requirements for Lender Development Company loans (the 50 10 5(D) Standard Operating Procedures). The updates clarify terminology and definitions, and amend certain environmental due diligence requirements. Some of the more significant changes alter the environmental investigation requirements for two facility types:
"Car Wash Only" facilities are now required to have at least an Environmental Transaction Screen. This loosens the environmental investigation requirements a bit from previously having to start at a Phase I Environmental Site Assessment, due to the generally lower-risk type of these properties (as long as there are not other automotive care operations at the site such as oil changing or fueling).
Gas Stations / Commercial Fueling Facilities: During the required Phase I ESA for gas stations, environmental consultants are now required to determine the compliance of the gas station with state tank and equipment tightness testing requirements, rather than requiring that equipment testing was done within 12 months prior to the environmental investigation. This change was made because not all states require equipment testing every year. The SBA also expanded the Gas Station environmental investigation requirements to include "commercial fueling facilities", to eliminate any uncertainty.
The remainder of the changes do not significantly alter the environmental due diligence requirements, but include clarifications on the definition of "multi-unit building", what constitutes a special use facility, the Environmental Questionnaire, who may conduct an SBA Phase I Environmental Site Assessment, and who can indemnify.
ASTM E1527
ASTM E1527 - 05 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process is the primary standard used for Phase I ESAs and the standard was last updated in 2005. In 2011, the ASTM working group E50 met to discuss potential changes to the E1527 standard. No hard deadline is set yet for the next official revision.
