Environmental due diligence is a mandatory process of evaluating commercial or industrial properties to identify the presence of hazardous substances. Agencies like the Environmental Protection Agency have made it mandatory for commercial property owners to produce environmental assessments reports. Workplace injuries due to hazardous substances are a common concern for the USA government. As a result, it has become a basic requirement for all industrial facilities to conduct different phases of environmental assessment.
Industrial owners often fail to maintain their compliance with governmental environmental regulations. Thus, hiring certified industrial hygienists is the best way to keep your property protected and avoid regulatory hassles. The following section of the blog discusses different aspects of environmental due diligence and the different phases of it.
What is Environmental Due Diligence?
Environmental due diligence refers to observation and assessing an industrial or commercial property to understand different levels of environmental conditions. Commercial and industrial property owners, general contractors and financial property owners are generally required to produce due diligence certificates. They generally hire certified environmental hygienists to test air quality, water quality and many more. Moreover, it assesses whether the new industrial set up would pose any risk for the surrounding environment or not. The three main aspects that are tested in due diligence assessment are:
- Identification of sensitive habitats in the nearby vicinity of the industrial set up
- Accessing the nature of construction material disposed of by industries
- Groundwater and soil quality assessment.
There are two types of due diligence assessments. The traditional due diligence (TEDD) is concerned with the level of pollution and hazardous materials of a given industrial property. On the other hand, the modern natural resource environmental due diligence (NREDD) is more concerned with the identification of the potential risk implications for flora, fauna and historical sites.
The Significance of Environmental Due Diligence
Environmental due diligence allows industrial owners to keep pace with the regulatory requirements related to environmental protections. Systematic assessment enhances and facilitates their preparedness and allows them to take proactive measures to rectify their harmful environmental processes. The assessment process provides key guidance on the following factors.
- Guidance on material handling and proper disposal
- Smart management of legal liabilities
- Ensuring regulatory compliances
Different Phases of Due Diligence
There are multiple phases of due diligence. Different phases assess different aspects of environmental conditions. Here are the phases of environmental due diligence.
Phase 1 Environmental Site Assessment (ESA)
Before purchasing a real estate property it is mandatory to conduct Environmental Phase 1 Site Assessment. It helps the new owner to be sure about the potential liabilities of the land that they are purchasing. By getting an ESA done the new owner becomes an innocuous owner of the property according to CERCLA regulations. Additionally, it safeguard purchasers from liabilities of the presence of any hazardous substances on the property.
Phase 2 Environmental Site Assessments
Phase 2 is a follow up assessment after phase 1 ESA that unravels potential risk that requires further exploration. This assessment identifies the presence of toxic substances on the property. The American Society of Testing and Materials (ASTM) framework and guidelines are followed in Phase 2 ESA to ensure compliance with federal and state environmental laws.
Transaction Screen Assessment (TSA)
It is a short-cut assessment process of ESA and much less time consuming. It is governed by ASTM Standard Practices. However, even if it is cost-effective, it does not meet all the EPA requirements. Moreover, it does even offer protection against CERCLA.
Record Search with Risk Assessments (RSRA)
It is generally conducted by low risk commercial properties that do not require a full ESA. It does not even offer liability protection against CERCLA. The assessment is based on a governed database and historical records. They corroborate these existing databases to determine whether the property poses low or high risk for the environment.
Endnote
Environmental due diligence is a process of environmental assessment that protects industrial property owners from legal and regulatory liabilities. It is important to hire certified environmental hygienists who are experienced and competent to provide authentic assessment. Make sure that the assessments are conducted as per all the state and federal guidelines.