Hey look, I still have a website!
I’ve been working a lot more this last year than I did the previous four years. It feels great. Lately, I’ve been more focused on smaller clients who need a lot of help getting through regulatory hoops than on big corporate clients who want their real estate transactions done RIGHT NOW. I enjoy my job a bit more than I used to because I get to help living, breathing people, not just big corporations in big cities “back east”.
Alas, this website has always been where I intended to post snippets of information to help me understand my profession a bit more, and help educate folks about my line of work. With the current political climate being more anti-science, and my line of work being especially contentious with folks on the right, I feel like I need to be a little bit more vocal about all things science. The more quality information I can get out to non-science folks, the better.
Today’s topic is “due diligence”. Due diligence is just a term for making sure you’ve done all of your environmental research on a property you’re either thinking of buying or selling; “due” refers to the timeliness and “diligence” refers to doing a very thorough job of researching. Those of us in the environmental consulting take this research very seriously. How seriously? There’s an ASTM standard for this research.
There’s an ASTM standard because the research is used as a legal document in real estate transactions. This is a big deal.
In general terms, due diligence refers to a property owner or potential property owner going to an environmental consultant (me) and commissioning a Phase I Environmental Site Assessment (ESA). An ESA is basically a big report that details the following items:
- The historical ownership and use of a property back to it’s earliest trackable date or to when it was clearly pristine, undeveloped land, making note of any owners or uses that could lead to soil or groundwater contamination.
- A site visit (reconnaissance) which is conducted by the consultant and focuses on things that could lead to soil or groundwater contamination.
- A search of federal, state, local, and tribal databases to look for violations of environmental law or things that could lead soil or groundwater contamination.
- Interviews with local and state resources to determine whether or not things have happened at the property that could lead to soil or groundwater contamination (fire department, public health agencies, city and county departments, etc.).
- Interviews with current and former property owners to determine if, again, anything has happened at the property that could lead to soil or groundwater contamination.
Notice any patterns? Over and over again, we’re just looking for red flags that point to soil and groundwater contamination. In the standard, we refer to these red flags as “recognized environmental conditions” or “RECs”. If you buy a property with soil and groundwater contamination that has been made by someone else, all of a sudden, it’s yours!
Many of my clients come to me because they didn’t do their due diligence and, as a result, have contaminated soil or groundwater that a previous property owner left behind. And because they didn’t do their due diligence, the contamination is their responsibility. (Caveat: The contamination would be their responsibility even if they had done their due diligence, but at least legally, the previous property owner would have been the “potentially liable person” in the eyes of the law.) It’s an expensive mistake.
A lot of smaller property owners cannot handle the cost of even a small environmental cleanup. Insurance sometimes covers these things, but not always. If you’re thinking of purchasing a commercial property, it’s always in your best interest to spend a little bit of money (okay, not exactly little, but small compared to a massive environmental cleanup) to hire a consultant to do some research.