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Assessing Property During Acquisition

April 6, 2022

When a prospective buyer is purchasing a property or an existing owner is managing their assets, understanding the property’s past use history and existing environmental conditions is critical as they may represent potential liability. Under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), regulators can fine property owners and require removal of hazardous materials at the owner’s expense — even if the owner didn t cause the contamination. Conducting environmental due diligence provides new owners and operators with the information necessary to determine if a site is contaminated and, if pre-existing contamination is identified, with liability protection for cleanup.

Most due diligence efforts begin with a Phase I Environmental Site Assessment (ESA), which assesses the current and historical uses of a property and identifies the potential for recognized environmental conditions (i.e., conditions indicating the potential for contamination on a property). Phase I ESAs satisfying liability protection requirements must be performed in accordance with a nationally recognized standard developed by the American Society for Testing and Materials (ASTM) and/or the U.S. EPA requirements for All Appropriate Inquiry.

While the completion of Phase I ESAs can be relatively formulaic for straightforward projects, more complex project sites with extensive site use histories require a more focused investigation. With over 30 years under our belts, Envirologic excels at uncomplicating these complicated projects. Further, for many of these projects, completing a Phase I ESA is only the first step. If the potential for contamination is identified, Phase II ESA sampling is conducted to determine the presence of contamination. If contamination is confirmed at concentrations above EGLE cleanup criteria, a Baseline Environmental Assessment (BEA) is prepared to eliminate risk by providing remedial liability protection, and an evaluation of an owner’s future due care obligations is completed – sometimes through the preparation of a Documentation of Due Care Compliance (DDCC).

With such stringent requirements and the checklist-like standardization of Phase I ESAs, what sets Envirologic apart from other environmental consultants completing due diligence work? The answer is simple: our approach.

From our very first interaction with clients, we position ourselves as not just another vendor, but a project partner. Envirologic therefore strives to approach all of our projects from the client’s perspective — What is the client’s vision? What are their end goals for the project? With the end in mind, our project managers anticipate outcomes and next steps in the early stages of multi-phase projects to maximize efficiency.

One method we employ when applicable is integrating activities not included in the standard Phase I ESA (e.g., asbestos-containing materials, wetlands, regulatory compliance, demolition, etc.) into earlier site visits, thereby saving time and money. Our Due Diligence Team has extensive depth — from accredited Asbestos Inspectors and certified Lead Inspectors/Risk Assessors to certified Wetland Delineators. By deploying our certified Project Scientists to assess clients’ properties, combining separate site visits is a simple task.

Lending institutions often have additional requirements beyond the traditional ASTM Phase I ESA, and Envirologic is experienced in satisfying these requirements. The Michigan State Housing Development Authority (MSHDA) has approved Envirologic as a Qualified Consultant, which ensures we have the demonstrated knowledge of MSHDA’s Environmental Review Requirements and that our team is able to provide all the necessary reports and documentation needed to meet their strict requirements. We also have experience navigating the Small Business Administration’s (SBA’s) environmental due diligence process, which guaranty 7(a) and 504 loans, as well as the requirements of numerous other lending institutions across the state.

With over 30 years of experience in Michigan and the surrounding region, Envirologic’s due diligence services provide the level of comfort and security needed to ensure liability protection and risk management. Below is a testimonial from one of longstanding due diligence clients.

“Envirologic has been a long-time trusted partner of Alro Steel Corporation from an environmental risk management standpoint. Alro has utilized Envirologic’s services (limited environmental reviews, Phase I Environmental Site Assessments, Phase II Environmental Site Assessments, Baseline Environmental Assessments, Wetland Delineation, etc.) when evaluating real estate purchase/lease opportunities in Michigan, Indiana, Ohio, Wisconsin, Pennsylvania, Missouri, Kentucky, North Carolina, Florida, and other states for 20+ years. We have found Envirologic to be very knowledgeable regarding environmental concerns and Dave Stegink and his team have been very responsive to our needs.”

John Rumler
Vice President-Administration
Alro Steel Corporation

Find out more about our Due Diligence Services at this link or contact our Manager of Due Diligence Services Erik Peterson.

Posted in Blog, Due Diligence

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