Phase I Site Assessments

The purpose of a Phase I site assessment is to review the current and historical use of a property or building, and to make a preliminary determination as to the extent or potential for contamination of buildings, surfaces, soils, and groundwater. A Phase I assessment is generally “non-invasive”; that is, there are no subsurface samples or other disturbance of a building or property.

A Phase I assessment is of critical importance during property transactions and when acquiring a new facility, because it helps determine the risks and liabilities that a person or business may be assuming as a result of past or current practices. Current environmental laws and regulations provide NO RELIEF for a person or business that unknowingly acquires contaminated property. With cleanups potentially costing millions of dollars and putting the future use or resale value of property at great risk, the cost of a Phase I assessment pales in comparison.

While the scope of a particular site assessment may vary, generally they include:

· Following ASTM E1527-00: Standard Practice for Environmental Site Assessments

· Search of Federal and State regulatory lists for target properties and surrounding sites

· Search historical tax records, and review chain-of-title information

· Search Sanborn Maps®, city directories, and historical site use photographs

· Locate possible hazards, such as Underground Storage Tanks (USTs) and Asbestos Containing Materials (ACM)

· Interview property owners

· Take current site photographs

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Phase II Site Remedial Investigations

The purpose of a Phase II remedial investigation is to take the information gathered in a Phase I assessment, and begin to characterize the nature and extent of known or unknown contamination on-site. This typically involves surface sampling, soil samples at varying depths, and/or groundwater sampling. The extent of sampling can vary greatly, depending on a wide array of variables, including the types of structures on a site, surface features (e.g., paving, topography), groundwater depth, soil composition, and the type and extent of contamination.

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Phase III Site Remediation & CLeanup

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WHY ENVIRONMENTAL SITE ASSESSMENTS?

Toxic Waste, Heavy Metals, Underground Storage Tanks (USTs), Superfund Sites. These all have to do with industrial sites, old mines and abandoned factories, right? Not necessarily. When you buy property for your business, it’s a sure bet that someone else has owned it before you, and someone else before that. Maybe it was a dry cleaner that routinely poured used solvent down the drain and into an underground drain field. Maybe it was a farmer who disposed of almost – but not quite – empty pesticide barrels by tossing them into a ravine. Maybe it was an auto repair business, and the shop mechanics routinely dumped motor oil, anti-freeze and cleaning solvents out back.

When your property turns out to be contaminated, it’s your legal responsibility to pay for the cleanup even if your business had nothing to do with creating the problem. That’s because of the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), or better known as the Superfund Law. This 20-year-old law holds property owners responsible for the cost of cleaning up environmental contamination found on their property. Typically, the state or federal agency discovering the problem seeks to recover the cost of cleanup from the party who’s easiest to find: you, the current owner. Then it is up to that owner to track down whoever was responsible for the contamination, and sue for compensation.

Given the thousands of convoluted Superfund Laws mired in the courts, it’s obvious the ones “cleaning up” are the lawyers. The legal principle involved here is “joint and several liability”. It means that any one of the parties involved can be held responsible for the entire cost. In the case of contaminated property, that could be the individual or business that created the problem in the first place, the property owner at the time of contamination, the current owner or even the lender (Bank) who helped finance the purchase of the property. It’s convenient for government agencies, but hardly fair to innocent landowners who are just trying to run their businesses.

So why don’t property owners just grit their teeth, pay the cost and get on with life? Because environmental cleanup is extremely expensive. Coping with a contaminated water well, for instance, might involve removing all the contaminated soil and paying to dispose of it, which could cost hundreds of thousands of dollars. Dealing with a major industrial dumpsite is even more costly. Accordingly, while industrial Brownfields and toxic-waste sites must be cleaned up ‘for the good of society”, nobody wants to be the one who has to pay for it.

Property Transaction Audits & Assessments

Until Congress changes the law, small businesses are subject to the same liability rules for contaminated property as major corporations. Even if the site was contaminated years before by some other owner, government agencies can still force you to pay the entire cost of remediation. As a result, if the land you buy is contaminated, it’s important for you to be aware so that you’ll be able to walk away from the deal.

It’s not always easy to tell if a site is contaminated. In some cases, there is an oil slick on a nearby creek, or patches on a vacant lot where nothing will grow. Maybe the site has an underground storage tank that has been leaking. People drinking water from a well near the property might become ill and start asking why. Typically, the city or county health department investigates such problems and reports its suspicions to the state environmental regulators, which then orders the property owners to hire consultants and remediation crews. If the case is severe, the agency may hire their own remediation company to clean up the contamination, then sue the owners for the cost of clean up. It’s often a battle of egos to decide the most suitable remedy.

Under current law, the only way for a property owner to get off the hook is the “innocent landowner defense”. CERCLA excuses landowners who obtained the land after it was contaminated, but only if they inherited the land or did not know about, or even suspect, the contamination. It’s not good enough just to have just bought the property “blind”. In order to prove you didn’t know about the problem, you must have undertaken “all appropriate inquiry” into prior owners and uses of the property. That means you need to have an environmental site audit before buying any commercial property. A Phase I environmental site assessment is a preliminary assessment by an environmental engineer or consultant, which involves looking over the property for evidence of contamination and examining the records of previous owners. A consultant who suspects problems would then recommend a Phase II assessment, which involves digging, drilling and testing soil and groundwater samples. For a small retail site, a Phase I assessment may cost $1,000 to $2,000. For an industrial factory site, it could run $10,000 or more.

Ask the seller if there’s been an environmental audit on his property, ask to see the report. If not – or if you think you’d better have your own audit – look for a well-qualified consultant or engineer. Check references and ask to be put in touch with a previous client they have worked for. Don’t assume you can simply put a clause in the purchase contract stating that the seller assumes all responsibility for environmental contamination should it appear.

Federal law does not allow buyers to escape liability that way. If you’re the one selling the commercial property and you suspect it may be contaminated, don’t ignore it! The old rule was “buyer beware”, which meant it was the buyer’s responsibility to discover any problems. In recent years, however, courts have ruled that sellers have to disclose information about contamination if they new about it or should have known about it. So investigate and clean it up or at least inform the buyer. It can be difficult to sell property with environmental problems, but hiding them could be worse.

If there’s a minor problem on your property, check with your state’s environmental agency to see if there’s a fund to help with the cost of clean up. Most states have one, supported by a fuel shipment tax.

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