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What to Do If Your Phase I ESA Has Environmental Concerns: Alternative Approaches

new methods to understand and quantify risk

For most commercial real estate transactions, environmental due diligence, in the form of a Phase I Environmental Site Assessment (ESA), helps to determine whether the site of interest may have contamination concerns, due to past or current activities, that could present liability concerns for the property stakeholders. Under ideal circumstances, your environmental consultant will provide a report without any potential concerns. But what happens when the Phase I ESA report finds a potential problem or a “Recognized Environmental Condition”? For many clients, finding a REC is the most dreaded conclusion, because it can pose a roadblock to their deal or require spending more money than they had allocated to assess and/or mitigate the situation.

There is a common assumption that if a Phase 1 ESA finds a REC, the next step automatically has to mean conducting a Phase II ESA subsurface investigation. Sometimes that is the case, but not always. There are several options beyond the Phase 1 ESA or in lieu of a Phase II that can help mitigate environmental risk.

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