Phase I Environmental Site Assessments (All Appropriate Inquiry) and Phase II Environmental Site Assessments

For commercial and industrial property, the first step in the environmental due diligence process is the performance of a “Phase I Environmental Site Assessment” (Phase I ESA).    This assessment follows standard practices published in ASTM 1527-13 Standard Practice for Environmental Site Assessments:  The Phase I Environmental Site Assessment Process, and the EPA’s All Appropriate Inquiry (AAI) rule found at 40 CFR 312.  To meet these standards, the assessment must be conducted by a qualified environmental professional.  The environmental professional will, among other things, interview past and present owners and personnel, research public records, physically inspect the property, and provide a recommendation regarding the need for further investigation.  The goal of a Phase I ESA is to identify “recognized environmental conditions” or RECs.  This term refers to the presence (or likely presence) of hazardous substances or petroleum products at a property under conditions that indicate a past or existing release or a material threat of a release.

If the environmental professional finds no RECs associated with the property, the new owner/operator has a defense to statutory cleanup liability on the basis that he or she is an “innocent purchaser” (the purchase or occupancy of the property was undertaken without knowledge of existing contamination).  Keep in mind, however, that the Phase I ESA/AAI does not address every conceivable environmental or health and safety risk at the property.  We can help you evaluate other such risks related to your purchase of the property and any business located on the property.

If RECs are found during a Phase I ESA, then a “Phase II Environmental Site Assessment” (Phase II ESA) should usually be performed.  In a Phase II ESA, the environmental professional will conduct specific tests on soil and/or groundwater at the property to determine if the property is contaminated with hazardous substances in excess of the state’s published cleanup criteria. In Michigan, if the EGLE’s generic residential cleanup criteria are exceeded, a Baseline Environmental Assessment (BEA) should be conducted.

We have assisted numerous clients in developing cost-effective and complete environmental due diligence evaluations.  We work with reputable consultants to ensure that technically sound Phase I ESA/AAI and Phase II ESA reports are provided within a budget approved by our clients.

Links of Interest:

Michigan EGLE Cleanup Criteria

EPA’s AAI website

ASTM Phase I ESA Standard