As the old saying goes, “You get what you pay for.”
When it comes to a Phase I Environmental Site Assessment (ESA) conducted as part of due diligence prior to the purchase or sale of a facility (see previous article), it couldn’t be more true.
Although all Phase I ESAs should be conducted by an experienced environmental professional to industry standards (following ASTM Standard E1527-13), the level of quality you actually get can vary widely.
The purpose of the ESA is to help you identify and manage present and future risks from the environmental impact of a facility’s operations. Cutting corners on an ESA is like leaping over stacks of $100 bills to pick up three pennies. What’s the point?
A Phase I ESA is the starting point for most due diligence. If you kick things off on the wrong foot, it can negatively affect the whole due diligence process, leading to serious environmental issues and liabilities being addressed incorrectly or overlooked altogether.
This can impact the real estate transaction – a buyer may not move forward with the purchase or may even ask for a price reduction. In some cases, when problems missed in due diligence are discovered post-sale… it often leads to a dispute (with potential legal action) between buyer and seller to see who pays to address the overlooked issue.