Are Environmental Site Assessments Needed?

Before investing in commercial real estate, you should do a proper environmental site assessment. Environmental site assessments review past and present use of the property to determine if any potential environmental or regulatory problems exist. Undetected environmental hazards in commercial real property can lead to health issues for employees, customers and/or tenants for which you, as owner, may be liable.

Testing Standards - ASTM-1527

Most environmental site assessments are based on evaluation standards offered by the American Society for Testing Materials (now the American Society for Testing Materials International), a voluntary standards development organization that provides international technical standards for materials, products, systems and services.

ASTM International standards fall under six categories:

• Standard Specification - defines the standard requirements that must be satisfied by the subject
• Standard Test Method - defines the way a test should be performed as well as the precision of the result
• Standard Practice - defines a sequence of operations that does not produce a result
• Standard Guide - provides an organized collection of information or options but does not recommend any specified course of action
• Standard Classification - provides a group classification of materials, products, services or systems based on similar characteristics such as origin, composition, use, or properties.
• Terminology Standard - provides agreed upon terminology used in the other standards

Types of Assessments

Phase I

A Phase I Environment Assessment is the first step in environmental due diligence required by commercial real estate owners. A Phase I report identifies potential or existing environmental contamination. A Phase I Assessment scrutinizes the surrounding and underlying land to test for soil, groundwater, surface water and air quality. This particular assessment does not include any collection of physical samples or any chemical analysis. Phase I also checks for residual chemical hazards and identifies hazardous building material, such as materials that contain asbestos, mold or mildew.

Phase II

A Phase II Environmental Assesment may include the Phase I portion but will also include actual soil ground water and surface water sampling in areas that may be hazardous. If there is pre-existing knowledge about a known hazard, a Phase II assessment will evaluate past usage to identify suspect areas on the property. Samples are collected, preserved and then forwarded to a lab as required by industry standards.

Federal Environmental Law - Superfund

A number of liabilities exist if a person is harmed due to an environmental hazard on a commercial site. Two controlling statute under which liability may accrue is the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). CERCLA, commonly referred to as Superfund, authorizes the EPA to identify and compel guilty parties to clean up hazardous materials. CERCLA also created the Agency for Toxic Substances and Disease Registry.

CERCLA authorizes two kinds of response actions:

• Removal actions are short-term response actions and are classified as: (1) emergency; (2) time-critical; and (3) non-time critical and are used to handle localized situations like drums containing hazardous materials.
• Remedial actions are long-term response actions that are used to permanently and significantly address the possible release of serious hazardous substances that lack the critical time element of a removal action. These actions may include steps to prevent pollutants migrating offsite. Remedial actions can be conducted only at sites that are listed on the EPA National Priorities List.

The Superfund issues liability to either the current site owner or operator as well as the owner and operator of the site at the time any hazardous material was disposed of.

Find an Attorney

Before you purchase commercial real estate, it is prudent to request an environmental site assessment. You should also consult with an environmental attorney to ensure that you do not unintentionally violate any state and/or federal environmental laws.