Property Transaction Assessments identify recognized environmental conditions (RECs) on a property that may be a health hazard and/or a financial risk to a property owner, prospective buyer or lender. The term recognized environmental condition means the presence or likely presence of any hazardous substances 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, groundwater, or surface water of the property. RECs may have an impact on the ability of a property owner to obtain financing and insurance for a property, and in many cases the assessment and remediation of a REC may be the responsibility of the property owner or buyer. By definition, a property transaction assessment is a non-invasive study that does not involve any sampling of media such as soil or groundwater, but may provide recommendations to conduct sampling to further evaluate potential concerns. The scope and purpose of the property transaction assessment may vary with property type, loan amount and specific lender requirements. The two primary types of property transaction assessments are the Phase I Environmental Site Assessment and the Transaction Screen.
The Phase I Environmental Site Assessment (ASTM Practice E 1527) is the more comprehensive of the two types of non-invasive Property Transaction Assessments. The Phase I ESA includes comprehensive research into the current conditions, historical conditions and regulatory status of a property and nearby sites to determine if environmental conditions at a site have been impacted by on-site or off-site sources. The practice is designed 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) and petroleum products. The Phase I ESA permits a user to satisfy one of the requirements to qualify for the innocent landowner defense to CERCLA liability: that is, the practices that constitute "all appropriate inquiry into the previous ownership and uses of the property consistent with good commercial or customary practice" as defined by federal law. The Practice also complies with the "all appropriate inquiry" standards established under the Brownfields Law (assessments conducted by entities with the use of Brownfields grants awarded under CERCLA).
The Transaction Screen (ASTM Practice E 1528) also includes research into the current conditions, historical conditions and regulatory status of a property and nearby sites to determine if environmental conditions at a site have been impacted by on-site or off-site sources. The Transaction Screen investigation is less comprehensive than a Phase I ESA and is often used by lenders as a screening tool for environmental issues on properties that involve a lower level of security interest. By definition, the Transaction Screen practice is not intended to permit a user to satisfy any of the requirements to qualify for the innocent landowner defense to CERCLA liability and does not comply with the "all appropriate inquiry" standards established under the Brownfields Law.
A Phase II Environmental Site Assessment (ASTM Practice E 1903) may be non-invasive and involve investigation for subsurface concerns such as buried tanks and drums using electromagnetic surveys, magnetometer surveys and ground-penetrating radar. A Phase II ESA may also involve physical sampling of surface and subsurface media to include air, soil, sediment, surface water and groundwater. The samples are often field screened and then subjected to laboratory analytical testing for various compounds. The Phase II ESA includes development of a work plan in which the specific sampling plan, chemical testing plan, and quality assessment/quality control procedures are defined. Field and laboratory analytical techniques for petroleum and hazardous materials are usually defined by existing EPA and ASTM standards. A Phase II ESA may be cursory in nature to provide a screening for suspect concerns or it may involve a comprehensive geological investigation that incorporates well installation, sampling and laboratory analysis with modeling and analysis of groundwater flow characteristics, contaminant distribution, contaminant fate and transport and risk analysis.