Environmental due diligence is an important aspect of commercial real estate property transactions. Lenders, potential purchasers, developers, and business owners request environmental site assessments to avoid unpleasant surprises, protect themselves from financial liability, and manage risks. Environmental due diligence reflects more than just a desire to appease regulators. Lenders are particularly aware of the business risk environmental contamination presents. For lenders, environmental risk is a credit risk. For published articles regarding environmental due dilligence click here.
Under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), the current owner of a property, at whatever time environmental contamination is found, is responsible for site investigation and cleanup. A part of the Act provides legal protection to the property owner and lender if a quality Phase I environmental site assessment is performed prior to the purchase. This protection is known as the innocent landowner defense.
The first phase of environmental assessment is designed to provide assurance that “due diligence” has been performed for protection of purchasers and lenders. RRC offers a three-tiered approach to the first phase of environmental assessment. The options vary in scope and cost and include:
- Database Records Screen Assessment (DRS);
- Transaction Screen Assessment (TSA); and
- Phase I Environmental Site Assessment (ESA).
RRC typically performs Phase II and Phase III ESAs to address issues raised in the Phase I ESA. The Phase II ESA involves invasive sampling and analysis of the soil, groundwater or other media on site. Phase III ESAs are designed to actually mitigate environmental concerns identified in the Phase I ESA and subsequent Phase II subsurface investigation.
The staff at Rock River Consulting (RRC) have decades of experience with environmental site assessments for properties that range from small undeveloped commercial lots, to large manufacturing, commercial and industrial sites that encompass hundreds of acres. Site inspections are performed by a qualified Environmental Professional with experience in soil and groundwater site investigations, environmental compliance issues and knowledge of industrial processes.