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ENVIRONMENTAL DUE DILIGENCE

What is Environmental Due Diligence (EDD)?

Environmental Due Diligence is both a legal and technical exercise – an action of analysing your organisation’s site or a site your organisation is looking to acquire. It is often demonstrated by a formal assessment of the organisation and land to identify any existing or previous environmental conditions and/or contamination and quantify financial and legal risks.

Environmental due diligence assessments allow opportunities and constraints to be identified across in

iFluids Engineering Environmental Due Diligence Services include:

  • Phase I & II Environmental Site Assessments
  • Environmental Transaction Screens
  • Asset Owner/Purchaser Consultations
  • Baseline Environmental Assessments
  • Recommendation & Management Plans
  • Site-specific Risk Assessments
  • Investigation & Remediation Plans

Purpose of ESA I

The purpose of the Phase I ESA was to identify, to the extent feasible, recognized environmental concerns in-connection with the property. This assessment included a site reconnaissance as well as research and interviews with representatives of the public, property management, and regulatory agencies.

The main purpose of this practice is to define good commercial and customary practice 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). As such, this practice is intended to permit a user to satisfy one of the requirements to qualify for the innocent landowner, defence to CERCLA Liability. 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” as defined in the ASTM Standard Practices.

Why is it Important?

There are a number of reasons why a proactive approach to environmental management is important. These include (but are not limited to):

  • Avoidance of legal prosecution;
  • Top Management support and involvement in environmental attitude and performance;
  • Positive public relations;
  • Long-term capital gain;
  • Improved environmental performance.

Environmental due diligence can take many forms, and will be dependent upon the transaction type, environmental risk of the property. Types of due diligence can include Environmental Questionnaires, Transaction Screens, Internal Environmental Screens, Phase I ESAs and Phase II ESAs.

  • All Appropriate Inquiry (AAI) is the formal process of assessing properties for the presence or potential presence of environmental contamination. It involves evaluating the current and historical uses of the subject property in an effort to identify recognized environmental conditions (RECs) and historical recognized environmental conditions (HRECs) in connection with the subject property.
  • AAI is obtained by completing a Phase I Environmental Site Assessment in accordance with the ASTM Standard E-1527-2005

What is a PHASE I ESA & Why it is needed?

  • A Phase I Environmental Site Assessment (ESA) is a tool to determine whether a property may be contaminated. Prior to the purchase or occupancy of a property, the purchaser or future tenant has the option to complete a Phase I ESA to investigate the current and historical use of that property.
  • The Phase I ESA utilizes a variety of historical resources, including local, state, and federal records, to identify past uses and/or occupants of the property that may present an environmental risk.

Methodology- EDD- Phase- 1:

  1. A detailed walk-through inspection of the site
  2. An interview  with Project Management and Plant Manager and others
  3. A Review of files / documents maintained by Plant Manager and its Management
  4. Review of historical site details, legal documents,
  5. Identification of surrounding property use
  6. Review of all environmental attributes (air, water, soil, noise, etc.,)
  7. Collection of available Certifications / monitoring results / site Layout Maps, etc.,
  8. Identification of potential Environmental Hazards
  9. Identification of surrounding site environmental features.
  10. Collection of Photographs
  11. Summarizing the findings
Methodology- EDD- Phase- 1

What NEXT after Phase-1 EDD & Phase-II Necessary?

When a Phase I Environmental Site Assessment (ESA) identifies a recognized environmental condition (REC) or the potential for impacts to the subsurface at a site, most clients request to evaluate the potential impacts by performing Phase II Environmental Testing.

The presence of a REC or an environmentally-impacted property can greatly reduce its value. Stakeholders want to reduce liability and future cleanup expenses on their investment by conducting a Phase II ESA, in which a subsurface investigation tests soil, soil gas and/or groundwater to identify sources of environmental impacts.

Purpose of Phase-II EDD & ESA?

The purpose of a Phase II Environmental Site Assessment Report is to evaluate the presence, or absence of, petroleum products or hazardous substances in the subsurface of the site. A trained, licensed, experienced staff of geologists and engineers that possesses expertise in Phase II Environmental project design performs these assessments per the ASTM E1903-11 Standard Guide.

When Do I Need a Limited Phase II ESA?

There are circumstances in the due diligence process when a potential property owner does not want to invest in a full Phase II ESA. They may instead opt for a limited Phase II sampling, which is conducted to confirm the presence of a pollutant and may be limited by locations sampled, number of samples, media sampled or a combination. A buyer may conduct a limited Phase II ESA to evaluate the following scenarios to inform their transaction decisions:

  • The identified REC from a Phase I ESA is minor or limited in scope
  • To confirm a REC that presents more of a risk than the buyer is willing to accept
  • To identify a REC that requires more discovery (a full-scale Phase II ESA) to confirm the extent of contamination

Phase III Site Assessment

A Phase III Site Assessment is called for only when contamination has been identified. A Phase III Assessment determines the extent of the contamination, both horizontally and vertically, and forms the basis for preparing a remediation plan, and estimation of the cost for remediation. Phase III reports detail the steps needed to minimize human or ecological risk, to perform site cleanup, and conduct follow-up monitoring for residual concomitants Supervising Removal of contaminated soil and replace with fresh soil.

Standards for EDD: ESA

ASTM Standards E1527-13 “Standard Practice for Environmental Site Assessment”

ASTM Standards E1903-19 “Standard Practice for Environmental Site Assessments: Phase II Environmental Site Assessment Process”

Standard of due diligence defined by USEPA regulations 40 CFR Part 312

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