One of the first steps in a property transaction is often a Phase I Environmental Site Assessment (Phase I ESA), which is a non-invasive evaluation of a developed or undeveloped piece of land of any size that is intended to identify recognized environmental conditions (RECs). These assessments are usually conducted during the due diligence phase of a purchase when findings of the assessment can provide meaningful input to decision making regarding the purchase. In addition, the Phase I ESA is intended to permit the client to satisfy one of the requirements to qualify for the innocent landowner, contiguous property owner, or bona fide prospective purchaser limitations on liability pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), collectively referred to as landowner liability protections (LLPs). The assessment is conducted in accordance with the scope and limitations of the American Society for Testing and Materials’ (ASTM) Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process (ASTM E1527-13).
A Phase I ESA is usually commissioned by a prospective buyer or the entity financing the purchase who seeks to determine if there is the potential for an environmental liability associated with the property. A
Phase I ESA includes a historical Property use review, agency records review, and a site reconnaissance including interviews with knowledgeable personnel. Peachtree utilizes experienced personnel to perform such assessments as they require an understanding of the operations as well as the potential environmental impacts which could result from certain operations or conditions.
A Phase I ESA does not include any environmental sampling of soil, groundwater, indoor air, soil vapor or on site structures to determine specifically if and what contamination may be present. If the Phase I indicates that there is a likelihood of contamination on the site emanating from site operations, or even from adjoining or nearby properties, the assessment may conclude that additional assessment of the site should be conducted before a decision is made regarding purchasing the property.
In these cases the client may choose to do a Phase II ESA. This assessment usually involves more intrusive sampling of soil, groundwater, indoor air, soil vapor or on site structures to identify if contamination is present and to determine the level of contamination. Then decisions can be made relative to the proposed purchase and the safeguards that should be put in place prior to any purchase. Peachtree performs both Phase I and Phase II ESAs to assist its clients in making property transaction decisions.
One of the protections afforded to buyers of a property, particularly a property which has a demonstrated contamination problem or a high potential for one, is the limitation of liability afforded by the Georgia Brownfields Program. The State of Georgia has a particularly robust and popular Brownfields Program which allows not only liability protections from prior soil contamination activities, but also provides for cost recovery over time through tax abatements for dollars spent on the front end to correct soil contamination problems which may exist at a potential purchase site. Peachtree provides guidance for when a particular property should be purchased through the Brownfields Program, and also can prepare the various plans required to meet program requirements.
It was mentioned earlier that a Phase I ESA, and sometimes a Phase II ESA, are performed in the due diligence period of a potential transaction. Another audit, called a due diligence audit, is often performed at an ongoing concern and can be focused on regulatory compliance, as described in Section 1, or on determining the status of other activities which contribute in different ways to the bottom line of a company’s operations. These audits can be focused on sustainability, which includes recycling, waste minimization, energy conservation et al and are dealt with in more detail in Section 3.
In the case where soil contamination is identified and must be treated or removed, Peachtree can provide pre-construction environmental oversight for excavation or building demolition activities where contaminated materials may be encountered and must be properly managed and disposed.