Due Diligence
Every property has a story —
Environmental Due Diligence requires an understanding of the history of a property, identifying and evaluating environmental concerns, and documenting the steps to establish environmental liability protection and facilitate safe future property use. A tiered approach, as outlined below, helps to ensure compliance with applicable federal and state requirements.
Phase I Environmental Site Assessment
Phase I Environmental Site Assessments (ESA) are the typical starting point. The Scope of Work generally includes a site visit, interviews, and a desktop review of historic resources and regulatory databases. Throughout, evidence of environmental concerns (i.e., Recognized Environmental Conditions) is evaluated to understand whether past or present activities may have impacted the site or surrounding area.
Phase I ESAs are non-intrusive; there is no sampling of environmental media. All reports are prepared by an Environmental Professional in accordance with the current American Society for Testing and Materials Standards for Phase I ESAs (ASTM E1527-21).
Typical Turnaround: 2-3 weeks
Potential outcomes:
If no Recognized Environmental Conditions are identified, the Phase I ESA report concludes the Due Diligence process.
If Recognized Environmental Conditions are identified, a Phase II ESA will be recommended to further assess site conditions.
Phase II Environmental Site Assessment
The Scope of Work for a Phase II ESA is variable, depending on the findings of the Phase I ESA, and is structured to address each of the Recognized Environmental Conditions in accordance with ASTM E1903-19. Soil, groundwater, and in some cases, soil gas samples are collected and submitted to a laboratory for analysis. Depending on site conditions, ground penetrating radar or subsurface drilling equipment may be required.
Laboratory analytical results are compared to relevant cleanup criteria, including Michigan Natural Resources and Environmental Protection Act (NREPA) Part 201/Part 213 cleanup criteria.
Typical Turnaround: 3-4 weeks, depending on contractor availability and laboratory turnaround.
Outcome:
If sample results are below applicable criteria, no further work is warranted.
If sample results exceed cleanup criteria, the subject property is considered a “Facility” or a “Site”, and the purchaser should file a Baseline Environmental Assessment to limit liability associated with the cost of cleanup.
Baseline Environmental Assessment
In the State of Michigan, an individual/entity can purchase, lease, or foreclose on a contaminated property and remain protected from cleanup responsibility for existing contamination—provided they take the right steps:
Conduct a Baseline Environmental Assessment (BEA) within 45 days of acquisition, and
Disclose the BEA to the Michigan Department of Environment, Great Lakes and Energy (EGLE) within 6-months and all subsequent purchasers of the property.
A BEA summarizes the results of the purchasers All Appropriate Inquiry (AAI) into the property, which includes the Phase I ESA and Phase II ESA. Additional information is available from EGLE:
Typical Turnaround: 2-3 weeks
Outcome: Evaluate current/intended property use to determine if Due Care actions are necessary:
If property conditions do not require additional evaluation to operate safely considering the current/intended use, a BEA concludes the Due Diligence process.
If property conditions warrant additional Response Activities or documentation, Documentation of Due Care Compliance (DDCC) should be prepared.
Documentation of Due Care Compliance
While a BEA provides liability protection for existing contamination, owners and operators still have ongoing “Due Care” obligations to ensure safe use of the property. Due Care obligations relate, generally, to the safe operation of the property, and include the following:
Prevent exacerbation (worsening) of contamination.
Take reasonable precautions against reasonably foreseeable acts or omissions of a third party.
Prevent unacceptable human exposure and mitigate fire/explosion hazards.
Provide notification to EGLE and other affected parties.
Provide reasonable cooperation, assistance, and access to the persons that are authorized to conduct response activities at the property.
Comply with any land use or resource use restrictions established or relied on in connection with the response activities.
Not impede the effectiveness or integrity of any land use or resource use restriction.
The Due Care evaluation, including details of response actions, are summarized in a deliverable referred to as Documentation of Due Care Compliance (DDCC). Detailed guidance is provided by EGLE:
Typical Turnaround & Outcomes: Variable, site-specific