Environmental Assessments / Audits

Environmental Site Assessment

In the United States, an Environmental Site Assessment is a report prepared in support of a real estate transaction and identifies potential or existing” recognized environmental conditions” or liabilities.

Sampling of soil, air, groundwater and/or building materials is not conducted during a Phase I ESA typically. The Phase I ESA is considered the first step in the process of environmental due diligence. Standards for performing a Phase I site assessment have been promulgated by the USEPA and are based in part on the American Society of Testing and Materials (ASTM) Standard Designation E1527-13.

If a site is found to have recognized environmental conditions, a Phase II environmental site assessment should be conducted following, ASTM E1903-11. This is a far more detailed investigation involving sampling and analysis to determine if hazardous substances and / or petroleum hydrocarbons are present in concentrations above regulatory levels; which could trigger remediation or site mitigation.

Demand for these types of studies increased dramatically in the 1980s following judicial decisions hanging liability on new property owners to effect site cleanup. U.S. courts have held a buyer, lessor, or lender may be held responsible for remediation of hazardous substance residues, even if a prior owner caused the contamination. Performance of a Phase I Environmental Site Assessment, according to the courts’ reasoning, creates a safe harbor, known as the ‘Innocent Landowner Defense’.

Triggering Actions: A variety of actions can prompt a Phase I study to be performed for a commercial property, the most common being:

• Purchase of real property by a person or entity not on title,
• Contemplation of a new loan on the subject real estate,
• Partnership buyout or principal redistribution of ownership,
• Application to a public agency for change of land use or other discretionary ok permit,
• A desire by the existing property to understand toxic history of the property,
• A regulatory agency suspects toxic conditions on the site,
• Divestiture of target property.

EHI performs:

• Phase I ESA’s (40 CFR § 312 & ASTM E-1527-13 compliant) & Updates
• Phase II ESA’s (Subsurface Investigations ASTM E-1903-II compliant)
• Transaction Screens (ASTM E-1528 compliant)

EHI also performs or coordinates Asbestos Building Inspections (ABI) and  Lead – Based Paint surveys to determine if the potential for exposure to asbestos or lead exists for workers (or the environment) during renovation, demolition and disposal of structures (a concern when built before 1980).

There are at least two different types of environmental audits: compliance audits and management systems audits. Compliance audits or auditing for environmental compliance was developed to improve an organization’s compliance position, control and manage risk, improve internal controls, support environmental management systems, and identify pollution prevention opportunities.

In the US, permits for air emissions, wastewater discharges and other operational aspects, many times establish the primary legal compliance standards for companies. In these cases, auditing only to the regulations is inadequate. However, as these permits are site specific, standard protocols are not available which can reflect every permit condition for every company or site. Permit holders and the auditors they hire must identify the permit requirements and determine the most effective way to audit against those requirements.

To provide a meaningful outcome requires an effective audit approach, an understanding of proven audit techniques and industry audit standards, plus a clear and understandable communication of the audit results; a set of skills demonstrated time and again by EHI.