Posts Tagged ‘Environmental Site assessment’

Just what is meant by the term “Eco-friendly” and “Sustainability”?  We’ve all heard of them and in fact, have probably all seen them or even used them at one time or another.  However, what do they really mean?  Keep reading to find out.


The term “eco-friendly” literally means earth-friendly or not harmful to the environment. This term most commonly refers to products that contribute to green living or practices that help conserve resources like water and energy. Eco-friendly products also prevent contributions to air, water and land pollution.

Making a truly eco-friendly product keeps both environmental and human safety in mind. At a minimum, the product is non-toxic. Other eco-friendly attributes include the use of sustainably grown or raised ingredients, produced in ways that do not deplete the ecosystem. Organic ingredients or materials are grown without toxic pesticides or herbicides. Products with “made from recycled materials” contain glass, wood, metal or plastic reclaimed from waste products and made into something new. Biodegradable products break down through natural decomposition, which is less taxing on landfills and the ecosystem as a whole.


Sustainability is based on a simple principle: Everything that we need for our survival and well-being depends, either directly or indirectly, on our natural environment. Sustainability creates and maintains the conditions under which humans and nature can exist in productive harmony, that permit fulfilling the social, economic and other requirements of present and future generations.

Sustainability is important to making sure that we have and will continue to have, the water, materials, and resources to protect human health and our environment.

All definitions of sustainable development require that we see the world as a system—a system that connects space; and a system that connects time. world in hands

When you think of the world as a system over space, you grow to understand that air pollution from North America affects air quality in Asia, and that pesticides sprayed in Argentina could harm fish stocks off the coast of Australia.

And when you think of the world as a system over time, you start to realize that the decisions our grandparents made about how to farm the land continue to affect agricultural practice today; and the economic policies we endorse today will have an impact on urban poverty when our children are adults.

Kind of gives you goose bumps when you consider it doesn’t it?  And I hope it makes you more aware of how we hold the fate of the world in our hands.


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A while ago, in fact in December of 2009 I discussed Hazardous Waste – it’s definition, who regulates issues related to it, and how having a hazardous waste problem on a property can affect the real estate value of that property.  However, I did not get into a lot of details regarding how you would determine whether a property has hazardous waste concerns.  So this blog covers that topic. 

There are basically three levels of assessment that may be taken when dealing with a property that may have hazardous waste issues associated with it.  Only one may have to be done or all three. 

Phase I Environmental Assessment:

A Phase I identifies potential environmental liabilities associated with current and past uses of property with respect to the range of contaminants within the scope of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and petroleum products.  In other words it is looking to see if any “Recognized Environmental Conditions” are present.  A Phase I Environmental Assessment is an initial environmental investigation that is limited to a historical records search to determine ownership of a site, past uses of the site, and to identify the kinds of chemical processes that were carried out at the site.   Phase I investigation tasks include (1) review of physical setting sources, historical aerial photographs and other historical record documents, and regulatory agency records; (2) site and vicinity reconnaissance for recognized environmental conditions; (3) interviews with the present property owner and others familiar with the site when possible, as well as local regulatory agency personnel; and (4) preparation of a report to document and assess any potential Recognized Environmental Conditions.  A Phase I assessment includes a site visit, but does not include any sampling. If such an assessment identifies no significant concerns, Phase II and III audits are not necessary. 

The most recent Phase I standard (ASTM – American Society for Testing and Materials E1527-2005) meets Federally-mandated “All Appropriate Inquiries” (AAI) for Phase I due diligence established in 2005 and protects potential property owners from liability for cleanup, even if they buy the property knowing that there is a likelihood of environmental contamination (this is known as the “Bona-fide Purchaser” defense).  This is a great insurance policy for Buyers, as long as the study and report are done according to the standard.

The newest buzz-word in the Phase I industry is Vapor Intrusion (VI) which, basically are any gases or vapors that have the potential to come up from the ground and impede the air quality within overlying structures.  This type of study is not currently required for most Phase Is, but it is required by HUD for proposed federally-funded multi-family housing projects.

Phase II Environmental Assessment:

A Phase II investigation includes tests performed at the site to confirm the location and identity of environmental hazards.  The investigation could include physical sampling such as soil and water collection and analyses to determine the nature and extent of contamination.  This assessment includes preparation of a report that, if indicated, includes recommendations for cleanup alternatives and a description of the recommended remediation method.

Phase III Audit:

A Phase III includes the comprehensive characterization, evaluation, and removal of contaminated materials from a site, and their legal disposal.  Sometimes the costs of cleanup are covered under a government approved program such as PLIRP (Petroleum Liability Restoration Insurance Program) or EDI (Early Detection Incentive Program).  It is important to note that in order for a “user”, usually the Buyer, to qualify for protection of AAI they have to comply with “continuing obligations” requirements, which in essence means that they must do whatever is necessary to allow assessment and cleanup operations to proceed on the property, if warranted.  If the “continuing obligations” requirements are not met, the use could risk losing liability protection from the federal government.

Hazardous Waste Studies and Real Estate:

So how does this apply to buying or selling real estate?  The single most important thing to remember for both buyers and sellers when dealing with a site that may contain hazardous waste is to make sure that you conduct sufficient research to determine if there is a problem and if yes, who the responsible party is.  Typically, the responsible party is the person who currently owns the property.  However if prior to the completion of the sale the new owner hired someone to make “All Appropriate Inquiries” using the federally-mandated ASTM Phase I Environmental Assessment guidelines, and learned of a problem before closing, they will most likely be protected from liability for cleanup even if they purchase the property knowing that there is the likelihood of environmental contamination.  This is a great insurance policy for any Buyer, as long as the studies and report are done according to the standard.  In addition, as long as all of this occurs prior to closing the current owner is still the responsible party and can be encouraged to address the issue prior to closing.  Also keep in mind, if a buyer learns of an issue during their due diligence period they can do the necessary research to ensure that the site is already covered under a cleanup program and can evaluate whether the incident will affect the desired use of the property.   Because….KNOWLEDGE IS POWER!  And knowing about the property will allow both buyers and sellers to better negotiate on the price of the property.

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So now we are on to the third part of my mini-series about Environmental Concerns.  This one is about Hazardous Waste or as an old boss used to say the “ooey gooey” stuff.  This one is also the most complicated to discuss.  If you start getting bogged down in all of the definitions and terms while reading this blog, feel free to skip down to the most important part “Hazardous Waste and Real Estate”.

What is hazardous Waste?

As soon as the topic of hazardous waste comes up many people ask if that means a toxic dump site or a Superfund site.  Generally, in fact the majority of the time, the answer to that question is an unequivocal “No”.  A Superfund site is also the common name for the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), a Unites States Federal Law designed to clean up abandoned hazardous waste sites.   The law authorized the Environmental Protection Agency (EPA) to identify parties responsible for contamination of sites and compel the parties to clean up the sites.  Where responsible parties cannot be found, the EPA is authorized to clean up sites itself, using a special trust fund.  These are the REALLY bad sites. 

In our more immediate world, typically hazardous waste would refer to such things as petroleum leaks from underground storage tanks at a gas station; used oil storage, for example in an auto repair store; or by products of dry cleaning establishments.  These fall under the American Society for Testing and Materials (ASTM) definition of Recognized Environmental Conditions (REC).  Specifically, ASTM defines REC as “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…The term is not intended to include de minimis conditions that generally do not present a threat to human health or the environmental and that generally would not be the subject of an enforcement action.”  “De minimis conditions can include derelict vehicles that might leak fluids, improperly stored oil-based point cans, old appliances, empty oil or gas containers, etc.”

Who regulates issues relating to Hazardous Waste?

Of course at the Federal level the agency responsible for addressing hazardous waste is the Environmental Protection Agency.  However, at state and more local levels it may vary depending on who the responsibility has been delegated to.  In Florida the applicable agency is the Florida Department of Environmental Protection, who in turn has delegated some of its authority to the various counties.  This delegation predominantly has included addressing issues related to underground storage tanks.

Why is it necessary to be aware of potential Hazardous Waste issues?

Based on Federal and State law, hazardous waste is the responsibility of the owner of the property.  If you own a property that has, for example, an underground storage tank leak you will be required to report the incident to the appropriate agency.  In addition, you will have to have a qualified individual or company evaluate the seriousness of the incident and prepare a report indicating how extensive the incident may have been.  The next step is to apply to an applicable clean-up program.  At that time the appropriate agency will review the reports and score the site as to the seriousness of the incident and where it might fall on the list of sites needed for cleanup.  If there is an issue on the site and the owner does not report it, it is possible that they will be held liable for it and may face serious fines or even jail time. 

Hazardous Waste and Real Estate 

In relation to property, the things to ask yourself, regardless of whether you are the Buyer or the Seller are:

  • Does the property have a past use that would suggest potential hazardous waste issues or is the current use one that could generate hazardous waste (e.g., was it ever a gas station, auto repair shop,  or dry cleaners, etc.)?
  •  Are there any adjacent or nearby properties that have a past or current use that could have affected or still could affect the target property (e.g., did the gas station next door have a leak in the past that got into the groundwater, which had a flow in the direction of the property)?
  • What kind of information is already available regarding potential hazardous waste issues on the property or adjacent/nearby properties?  Have studies been done on the site?
  • Will the presence of hazardous waste issues on the site affect the ability to use the property  for its intended use and are there any issues that could affect the health of staff and customers?
  • What kind of testing should be done to determine if there is hazardous waste on the property or adjacent/nearby properties, how much will it cost, and who will pay for it?  In other words do Phase I and/or Phase II Environmental Site Assessments need to be completed?
  • Does cleanup need to be completed and how much will it cost (Phase III) or is the property already in a program that covers some or all of the cost of clean up (e.g., PLIRP [Petroleum Liability Restoration Insurance Program] or EDI [Early Detection Incentive Program], etc.)?

Be aware that knowing what all of these initials stand for and understanding the different clean-up programs out there is not as important as asking the right questions and hiring a qualified environmental specialist (and a Realtor with an understanding of environmental concerns) to complete studies on the property and to interpret the results for you.  This environmental concern, even in comparison to wetlands and threatened and endangered species, is far more complicated to deal with and requires very specialized knowledge and experience to address.

From a Seller’s perspective, whether or not there is a hazardous waste issue and whether there is a need for testing and/or cleanup will affect the value of the property if you want to sell it.  In addition, in order to cover your liability it will be important to know the history of your property and if a historical hazardous waste issue is already covered under a cleanup program.  If there has been a reported issue in the past and it is covered through some type of clean-up program, typically that coverage will move with the property and any new owners can be reassured that they will be covered for the problem that occurred prior to their ownership. 

From a Buyer’s perspective, it is absolutely necessary, if you think that the property you want to buy has a current or past use that might have caused an environmental concern to occur on the property, to build time into your due diligence to complete the necessary research and determine whether it will affect your proposed use of the property.  If you do not do your due diligence prior to closing on the property and there is an issue found after the sale is complete, you as the new owner become the responsible party.  However, if you hire someone to make “All Appropriate Inquiries” using the federally-mandated ASTM Phase I Environmental Assessment guidelines, and learn of a problem before closing, it will most likely protect you, the potential property owner, from liability for cleanup even if you purchase the property knowing that there is the likelihood of environmental contamination.   This is a great insurance policy, as long as the studies and report are done according to the standard.  As long as all of this occurs prior to closing the current owner is still the responsible party and can be encouraged to address the issue prior to closing.  In addition, if the buyer learns of an issue during their due diligence period they can do the necessary research to ensure that the site is already covered under a cleanup program and can evaluate whether the incident will affect the desired use of the property.  As with other environmental concerns, the presence or potential presence of hazardous waste issues on the property may affect the price you are willing to pay and could be used in negotiations.

As I have repeated in all of my previous posts, remember that commercial real estate is sold as “Buyer Beware”.  It is up to the Buyer to know what they are buying!  Remember, KNOWLEDGE IS POWER!!

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