Environmental assessments for informed business decisions regarding property transactions at all sites in the USA


This page contains responses to Frequently-Asked-Questions (FAQs) or at least questions that we believe should be
"frequently" asked by prospective clients of consulting firms under consideration for contracted project work.

Though a section like this is typically not contained in Statement of Qualifications (SOQs), we believe that this section
provides answers to many of the questions that may have brought you to this page.

Are there any requirements to have an environmental site assessment?

Depending on the lending institution that you are dealing with, an ESA may be a requirement for financing, typically based
on company-specific guidelines and risk tolerance.  In general, the Federal National Mortgage Association (Fannie Mae),
Department of Housing and Urban Development (HUD), major commercial banks (typically), Small Business
Administration Commercial Loans, and others all require a Phase I ESA or comparable investigation prior to granting new
mortgages.

If I am not required to have one, why should I have an ESA on the property I am purchasing?

Simply stated, for your protection.  Most purchases of real estate are for one of two reasons--as a residence or as capital
investment.  One wants to be reasonably certain that they purchase an asset and not a liability--and certainly not a health
hazard.  This is true for residences and investment real estate, either residential, commercial or industrial.  Remember that a
properly executed ESA can be a another tool when you come to the bargaining table.  A seller also benefits by being able to
offer an inspected property to the market, particularly where corrective action has been implemented.  Just as important,
lenders can confidently make a loan on property where they know that their clients will not be saddled with fines or
clean-up costs that may inhibit their ability to repay the loan.  Further, if foreclosure is a possibility, then the lender must
know whether past activities have resulted in problems that could be inherited.

What is a Phase I Environmental Site Assessment?

The purpose of a complete Phase I Environmental Site Assessment (ESA) is to determine the likelihood of hazardous
substances or petroleum products being present that could result in a future liability.  It may involve an existing release, a
past release or the possibility of a future release that could have an impact on soil, groundwater, surface water, or structures
on the property.  Although a standard Phase I ESA (per ASTM standards [discussed below]) typically only addresses
CERCLA liability, other environmental issues (e.g., asbestos, lead, radon, and wetlands) can also be included within the
scope of the assessment.

A Phase I ESA in the U.S. consist of five basic components:

(1)  A review and evaluation of state and Federal (i.e., U.S. EPA) environmental databases that list sites of  potential impact
within specified search distances;

(2)  A review and evaluation of historical use information, including aerial photographs and maps (e.g., USGS, fire insurance,
etc.), land title records, city directories, etc.;

(3)  Interviews with owners and occupants of the property and with government officials, as appropriate;

(4)  Site reconnaissance to determine current and past uses and conditions of both the property and adjoining properties; and

(5)  Preparation of a report detailing conclusions and findings generated from components (1) through (4) and presenting
appropriate recommendations for corrective action and/or further assessment (e.g., Phase II).

PERKINS CONSULTING GROUP follows the standard practice for conducting Phase I ESAs as specified by the
American Society for Testing and Materials (ASTM) E-1527-05 (latest edition).  We also follow special Phase I protocols
developed by banks and other lending institutions, law firms, insurance companies, developers, franchisers, government, or
other institutions.  Also, we adhere to the U.S. EPA requirements as promulgated in 40 CFR regarding All Appropriate
Inquiries (AAI).

Each site assessment concludes with a report that discusses all activities, findings and information collected during the
assessment with appropriate recommendations for corrective action or further investigation.

When further action is warranted, PERKINS CONSULTING GROUP can provide a scope of work and cost estimate, as
well as any further sampling, remediation or other necessary investigation, or solicit and manage such projects on behalf of
the client.

Are there other assessment methods?

Yes.  In some cases, the use of a Transaction Screen is appropriate, though we do not recommend this assessment, except in
special instances.  This less comprehensive assessment is faster and less expensive than a Phase I ESA.  It involves a more
limited records review, a site reconnaissance, and the use of a standardized interview questionnaire.  It typically does not
involve a historical records review and the site visit is limited to verifying responses to the interview questionnaire.

The Transaction Screen will indicate whether a more thorough investigation (such as a Phase I or Phase II ESA) is
appropriate.  PERKINS CONSULTING GROUP follows the latest edition of ASTM E-1528 standard for Transaction
Screens.

The quickest, least expensive and least comprehensive method to evaluate a property is through a site inspection that
consists of a visual inspection of the subject property and adjacent properties.  Typical observations may include
identification of underground storage tanks (e.g., vent and fill pipes, pump islands, sink areas, etc.), stressed vegetation,
wetland areas, suspect asbestos-containing materials (ACMs), equipment potentially containing PCBs, and stored
hazardous materials and wastes.  A site inspection does not involve a records review or interviews.

These other options can be performed to suit specific client scope and budget needs.  Our position is to follow the
guidelines established by the client, with our advice, and to price the service accordingly.

What happens after these assessments?

Often, at the conclusion of the environmental site assessment there are no reported recommendations for corrective action or
further investigation (and the transaction may proceed unimpeded in regard to investigating or addressing environmental
conditions).

Probably just as often, there may be the need for some type of corrective action ("routine" or "technical") that may include
wastewater discharge permitting, removal of hazardous wastes, UST closure, etc.

Also, subsequent assessment may be warranted, including:

Phase II ESA-This involves site sampling and analysis with a site-specific scope.  PERKINS CONSULTING GROUP has
the resources and experience to conduct sampling of soil, groundwater, surface waters, sediments, and other types of solid
and liquid materials (e.g., ACMs, drummed wastes, etc.).  We follow U.S. EPA and ASTM sampling and analysis protocols.
 Our capabilities include Geoprobe direct push sub-surface sampling systems and field laboratory screening.

Phase III ESA-This consists of a definition of the extent of contamination, site characterization and a remedial design.  This
may be succeeded by site remediation.  We offer the most current remedial technologies that are applicable to many types of
contamination and varying site conditions.  Our remedial projects are designed to meet applicable environmental regulations
and program goals cost-effectively.

You have a Phase I ESA report and it indicates possible contamination.  What's next?

It depends on the situation.  Is the intended use of the subject property residential or commercial where "sensitive
receptors" may be present (e.g., children, elderly or infirm) or commercial or industrial?  Are you the buyer or seller?  There
are differences in clean-up regulations and site "closure" standards for different types and uses of sites.  For instance, the
standards for a pre-school playground are more stringent than a paved-over industrial site.  Working with a qualified and
experienced consultant can answer these questions and help solve the problems for you.

Another answer to "What's next?" depends on the type and degree of the environmental impact on the property, the value
and amount of equity one has in it and the intended use for the property by the targeted buyer.  In most states, the buyer
and seller can come to an agreement and the buyer can purchase an "impacted" property.  In other states, the property
transfer is "locked" until the clean-up is complete.

Also, the findings in an assessment report will provide information allowing lending institutions to continue the loan
approval process, require additional information or even, in rare cases, pass on the loan.

What are my options if I get a Phase I ESA that indicates that there are "environmental conditions"?

It is important to understand that, depending on historical and current local land use, environmental site assessments
typically are not "deal killers".  If assessment findings indicate regulatory deficiencies or environmental conditions, often
some type of routine or straightforward corrective action is all that is necessary.  The discussion below addresses more
serious findings of environmental conditions.

If you are a potential buyer, there are several options if you receive a "negative" assessment, including:

Walk away.  This option is open to anyone who has not entered into an unconditional contractual obligation to buy.  To
keep this option open, you must make any offer conditional upon receipt of an ESA report with no adverse findings.

Have a Phase II ESA performed.  This option offers the buyer much more leverage.  Once can confidently make an offer
factoring in the cost of site remediation.

Buy the property.  If you are satisfied with the ESA report provided by the seller and convinced that the property is worth
the asking price (including the environmental issues reported), you can go with this option.  Extreme caution should be
exercised in this case.  Consultation with environmental professionals is strongly advised before any action is taken.

If you are a potential seller, you must deal with a negative assessment with several options, including:

Do nothing.  Although Federal and state laws require you to disclose known environmental problems with your site to
prospective buyers, you may decide not to offer the property for sale in its present condition.  However, you may be
contacted by a buyer willing to purchase the site "as is".  Do not proceed without the advice of counsel, as you may be
legally required to take further action.  The other side of the "do nothing" option simply is to do nothing at all.  This may
inevitably lead to escalating costs and serious future problems.  This option is the primary reason for the existence of
"brownfields"; defined by the U.S. EPA as "abandoned, idled or under-used industrial and commercial facilities where
expansion or redevelopment is complicated by real or perceived environmental contamination."

Have a full Phase II ESA performed.  Depending on the extent of the indicated liability, it may be prudent to go forward
with a full Phase II investigation.  With the results of the Phase II in hand, you can make a more confident estimate of the
net value of the property.

Have both a full Phase II ESA and Phase III Investigation and Remediation performed.  Depending on the value of the
property in contaminated condition versus its remediated value, this option may make sound business sense.
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PERKINS Environmental Assessment Group
3517 Millbrook Drive
Baton Rouge, Louisiana 70816
tel 225.756.8675
fax 225.368.2275
PERKINS
ENVIRONMENTAL
ASSESSMENT GROUP
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Frequently Asked Questions
THE ENVIRONMENTAL SITE ASSESSMENT SPECIALISTS