Due Diligence Presentation (Preview)
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Environmental Due Diligence Overview © 2011 GLE Associates, Inc.
Transcript of Due Diligence Presentation (Preview)
Environmental Due Diligence Overview
© 2011 GLE Associates, Inc.
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Environmental Due Diligence Overview
Why complete Environmental Due Diligence? Types of Due Diligence Phase I, Phase II, and Phase III ESA Process SBA Guidance – Environmental Risk
Management Sources of Error on Phase I ESA Process Vapor Intrusion Questions
Why Complete Environmental Due Diligence?
Formal Environmental Policy Regulatory Pressure Loan Risk Management - New loan origination
- Facility\property acquisition- Foreclosure- Loan extension or refinance- Monitoring over Life of Loan
Why Complete Environmental Due Diligence?
EDR 2010 Annual Survey of Financial Institutions
Reviewed Lender Environmental Policy requiring EDD
Why Complete Environmental Due Diligence?
Types of Environmental Due Diligence
Phase I ESA Process ASTM E 1527-05 Phase II ESA Process ASTM E1903-97 Phase III ESA Process Remediation Action Plan
Definition:“The purpose of this practice is to define good commercial and customary practice in the United States of America for conducting an environmental site assessment of a parcel of commercial real estate with respect to the range of contaminants within the scope of Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) (42 U.S.C. §9601) and petroleum products. As such, this practice is intended to permit a user to satisfy one of the requirements to qualify for the innocent landowner, contiguous property owner, or bona fide prospective purchaser limitations on CERCLA liability (hereinafter, the “landowner liability protections,” or “LLPs”): that is, the practice that constitutes “all appropriate inquiry into the previous ownership and uses of the property consistent with good commercial or customary practice.”
Phase I ESA ProcessASTM 1527-05
Goal of a Phase I ESA: CERCLA Liability Protection Determination of “Recognized Environmental
Concern” Determination of “Business Environmental Risk”
Phase I ESA ProcessASTM 1527-05
Definitions (con’t):Recognized Environmental Conditions “the presence or likely presence of any hazardous substances (HS) or petroleum products on a property under conditions that indicate an existing release, a past release, or a material threat of a release of any hazardous substances or petroleum products into structures on the property or into the ground, ground water, or surface water of the property. The term includes hazardous substances or petroleum products even under conditions in compliance with laws.”
Phase I ESA ProcessASTM 1527-05
Definitions:Business environmental risk “a risk which can have a material environmental or environmentally-driven impact on the business associated with the current or planned use of a parcel of commercial real estate, not necessarily limited to those environmental issues required to be investigated in this practice.Consideration of business environmental risk issues may involveaddressing one or more non-scope considerations.”
Phase I ESA ProcessASTM 1527-05
What is included in a Phase I ESA Report: Records Review
– Regulatory database search– Regulatory agency file review
Historical Use– Aerial Photographs– Sanborn Maps – City Directory Review– Land Title Records– Building\Property Tax Records – Zoning Land Use Records
Phase I ESA ProcessASTM 1527-05
What is included in a Phase I ESA Report: Site Visit
– Visually and physically observe the property – Current\past use of property and adjoining properties– Color Photographs – Site Plan
Interviews – Current Property Owners\Operators\Occupants– Local Government Officials
Phase I ESA ProcessASTM 1527-05
Limitations of a Phase I ESA Report: Out of Scope Items
– Sampling – Asbestos, Lead, Mold, Radon– Cultural or Historical Resources – Wetlands, Ecological Resources, or Endangered Species – Health, Safety, or Regulatory Compliance– Checking Title Records for Environmental Liens or Land Use Restrictions– Property Appraisal or Review of Purchase Price
Phase I ESA ProcessASTM 1527-05
Limitations of a Phase I ESA Report (con’t): Phase I ESA report, per the standard,
− Is only good for 180 days, − At which point an update will need to be
performed
Phase I ESA ProcessASTM 1527-05
Phase II ESA ProcessASTM E1903-97
Follow-up investigation based on the results of the Phase I ESA
Scope is determined by Environmental Professional to properly address “Recognized Environmental Conditions” and “Potential Environmental Concerns”
Typically includes soil and groundwater sampling on the subject property for laboratory analysis
Results of laboratory analysis compared to local, state and federal regulatory guidelines
Phase III ESA Process
Goal – to determine the horizontal and vertical extent of
contaminations impacts in order to estimate the method and
cost of cleanup Typically includes additional soil and groundwater
sampling and laboratory analysis Results of laboratory analysis compared to local,
state and federal regulatory guidelines Development of a Remedial Action Plan
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