About forty years ago, property buyers in the United States began conducting surveys that resemble today’s Phase II site evaluations. The purpose of their studies was to assess any potential risk of owning commercial property if it was located at a site where toxic chemicals were used and/or disposed of.
These studies were often used to determine the nature of the costs associated with property cleanup, especially if the property in question was to be redeveloped or land use changed.
Then, in 1980, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) was passed. As a result, the demand for this type of research increased dramatically.
This is because US courts have now ruled that a landlord, buyer, or lender could be held liable for hazardous substance waste remediation, even if the contamination was caused by a previous owner.
Consequently, when a potential buyer now has a Phase I Environmental Site Assessment completed, he, she or the corporate entity creates a safe harbor. This has come to be known as the “Innocent Owner Defense” and, in the eyes of the court, will help protect new buyers and/or their lenders.
In 1988, a hydrogeologist working for the HTS Environmental Group of Columbia, Maryland, filed a “Due Diligence Inquiry Checklist” and other information with the US Copyright and Trademark Office. The checklist it was designed to address all that would be required to satisfy the court’s interpretation of the “innocent buyer defense.”
This work apparently became the basis for the modern ASTM E1527 Standard Practice for Environmental Site Assessments: Phase I ESA.
A decade later, the Superfund Cleanup Acceleration Act of 1998 was passed. With this act, Congress stressed the need to conduct a Phase I Environmental Site Assessment prior to the purchase of any commercial property. To satisfy the “Innocent Owner Defense”, the Phase I1 study would have to meet the specific ASTM E1527 Process standard.
Newer legislation requires it to be known as EPA’s “All Appropriate Inquiries” (AAI). This rule, called “Standards and Practices for All Appropriate Inquiries,” 40 Code of Federal Regulations Section 312, was based on ASTM E1527-05.
While anyone considering buying commercial property should have a Phase I site assessment performed by a qualified professional, there are also certain “user responsibilities” that the person who commissioned Phase I must adhere to, including performing a search for environmental liens. and provide the professional with any specialized knowledge you have about the site.
