Your Business’ Role in Environmental Protection

April 22 marks Earth Day - an annual event to promote environmental awareness and protection. As a business owner, it is important to understand the legal implications of environmental protection and your business's role. 

In 1980, CERCLA, the Comprehensive Environmental Response Compensation and Liability Act, was passed. Its purpose was to address contamination and the resulting health consequences across the United States.

Under CERCLA, owners and operators of any facility are responsible for performing or paying for remedial actions. This responsibility applies even if previous owners or operators caused the contamination. Because of the potential liability under CERCLA, real estate buyers are advised to conduct environmental due diligence.  

Environmental Site Assessments (ESAs) are conducted to identify contamination concerns that might impact a real estate purchase or development project. ESAs evaluate the real estate for current and past environmental issues. The scope of the ESA is affected by various factors. These include the type and use of the real estate, as well as if there are any suspected hazardous substances.

A real estate purchaser, developer, or lender will engage an environmental consultant to perform a Phase I ESA. Depending upon the Phase I ESA results, a Phase II ESA may be required. Each phase serves a different function in assessing potential contamination liability.

A Phase I ESA determines if a property's current or past activities have contaminated the soil or groundwater underneath. These contaminants could be dangerous to the environment or human health. 

A Phase I ESA should be done before closing a real estate transaction. This is part of the buyer's due diligence. All types of real estate can be evaluated under a Phase I ESA.

The assessment includes several steps. 

1. A site visit will be conducted.

2. Regulatory databases will be reviewed. 

3. Historical records such as photos, insurance maps, city directories, and topographic maps will be examined. 

4. Agency records will be looked at. 

5. Interviews will be conducted with past and present owners of the real estate.

The research is evaluated to identify any environmental risks to the real estate. Recommendations are made about what actions should be taken to address those concerns. A Phase I ESA may uncover a recognized environmental condition or potential impacts on the subsurface at a site. If so, a Phase II ESA may be conducted.

A Phase II ESA is used to detect whether hazardous substances exist in the real estate subsurface. Geologists and engineers perform these assessments.

Phase II ESA includes basic considerations, such as drilling. However, professional judgment is a major component of the final report. A Phase II ESA considers various factors in order to interpret geological and chemical data accurately. These factors include areas of concern, local geology, and regulations.

Environmental Site Assessments (ESAs) are important in real estate transactions. They are sometimes mandatory. ESAs ensure environmental hazards are detected and addressed before purchasing or financing a property.

Learn more about the environmental specializations and services provided by Woods Fuller.