Learn what protections a Phase I Environmental Site Assessment can provide.
Many people know that getting a Phase I Environmental site assessment when dealing with any sort of property transaction is a good idea. However, many people don't know why, and what kind of protection is offered through a Phase I ESA. Here we discuss some things you could expect to be protected from by getting a Phase I from an environmental professional.
I love wrapping up a Phase I, and presenting the information to our clients. They always have great questions after the job's wrapped up, and they start digging into their information. One particular question we get a lot is: What kind of protection do Phase I Environmental Site Assessments provide?
It's a great questions, so let's dive into it and find out.
Protection Provided by a Phase I ESA
Let's get one thing straight right away - we're not lawyers. We're not providing legal advice here or anywhere on this site, so don't take this information as such.
Way back in the 1980's, Congress passed the Comprehensive Environmental Response, Compensation, and Liability Act. This is shortened to CERCLA, and commonly known as "Superfund." A prime component of this, and I'm going to extremely over simplify it here, is that if you contaminate a site, you're on the hook for cleaning it up. Fair enough, right?
Here's the kicker though...
Let's suppose you bought a site, and later find out it's contaminated. First off, that means you didn't get a Phase I ESA done, shame on you. Second though, who becomes responsible for cleaning up the contamination?
Surprise, it's you!
That's right, if you didn't go through the very detailed, specific process of investigating the present and past uses of the property, and the potential presence of environmental contamination of the property, then YOU are responsible for the cleanup!
Just to make sure this is crystal clear, if you don't get a Phase I, and then find contamination at your property, it's your responsibility to clean it up.
And just an FYI, for anyone who's never had to pay for remediation of a contaminated site, the costs can be insane. I'm talking anywhere between $5,000 and $50,000,000. The costs honestly have been known to bankrupt businesses before.
But hey, at least they saved a few bucks by skipping the Phase I, right...?
Phase I Environmental Site Assessment Protections
So how can you avoid this? According to the law, it's called "All Appropriate Inquiries", and this process needs to follow specific steps outlined by the USEPA. An "All Appropriate Inquiries" investigation is what would commonly be called a Phase I Environmental Site Assessment.
Again, without giving away legal advice, or getting in too deep into regulations, if your Phase I ESA was conducted in accordance with AAI standards, then you might not be responsible for clean-up costs. For instance, a current property owner can potentially qualify for the "innocent landowner defense", a landowner adjacent to a contaminated property can potentially qualify for the "contiguous property exemption", or other various liability protections.
Bottom line is: if you have a Phase I investigation done according to the AAI standards before you buy that property, and no evidence of past releases or contamination is found from past or present uses at the property, then you won't be held liable for that past contamination after the property is yours.
Meaning, you probably won't be liable for the cleanup. And that right there, is single handily the best protection provided from a Phase I.
Not every Phase I ESA is going to protect you.
First off, the Phase I investigation has to be done in accordance with every AAI standard. Every. One. And there's a lot. There's a fair amount of criteria that has to be met, and the standards do change. You have to hire someone who knows what they're doing.
We often find people who go with the low bidder get burned later down the road. Whether people hire us or not, we always advise to avoid a cheap Phase I Environmental Site Assessment. Low bidders, from our experience, tend to cut corners, rush the jobs, don't meet the criteria for an 'environmental professional' and neglect certain standards. If that's the case (and we've seen it before), your Phase I report won't help you at all.
So for all those who think it's just a requirement by the bank, think again. It can provide great information, and effective protection. They're well worth every penny!
The real protection from a Phase I investigation is this: to protect you from making a bad investment or becoming liable for the actions of others. Do it right, and you'll get a good measure of protection. Fail to conduct the Phase I ESA correctly, or not at all, and you're playing with fire. To learn more, click here to contact us, or give us a call at 609-693-8301 to discuss your needs today.
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