Environmental Site Assessment (ESA) / Environmental Due Diligence (EDD)
ESA or EDD is the process of inquiring into environmental characteristics or other relevant conditions of a parcel of commercial real estate, usually in connection with a commercial estate transaction. The degree and kind of ESA / EDD may vary for different properties and differing purposes.
PHASE I ESA PROCESS
The purpose of the Phase I ESA is:
• To identify, to the extent feasible, recognized environmental conditions in connection to the property.
• Identify and assess any major environmental risks associated with the previous and current use of the site.
• Determine those aspects of the previous use or current operation of the site where there may be impending or potential liabilities associated with environmental issues, providing estimates of the associated costs where possible.
• Recommend further studies where the extent of liability need to be clarified.
Phase I ESA has four components:
• Records review.
• Site reconnaissance.
• Interviews.
• Reports.
PHASE II ESA PROCESS
The objective the Phase II ESA is:
• To evaluate the recognized environmental condition identified in the Phase I ESA or Transaction Screen Process.
• Develop sufficient information from which the environmental professional can reasonably render a professional opinion that with respect to recognised environmental conditions, recognized hazardous substances have not been disposed or released at the property.
• Develop sufficient information about the presence of a recognised environmental condition at a site to meet the business objectives of the user and to provide sufficient data to assist the user in making informed business decisions or both.
The Phase II ESA has five components:
• Identifying which component of the environment (air, water, soil etc.) needs to be tested.
• Identifying locations and number of samples to be collected.
• Testing the samples for identified contaminants.
• Interpreting the test results and recommending characterisation of contamination where necessary.
• Reports.
PHASE III ESA PROCESS
A Phase III ESA is necessary when contamination has been confirmed by the Phase II ESA. The purpose of Phase III is:
• To fully characterize and assess the nature (i.e. types) and extent (i.e. magnitude or distribution) of site contamination.
• To identify appropriate clean-up technologies based on the nature and extent of contamination, potential clean-up goals, technology application, and cost.
Typically phase III activities include:
• Evaluating prior ESA reports to develop a site characterization – sampling strategy.
• Performing more extensive sampling to assess the full extent of contamination.
• Evaluating the contamination risk in relation to future site use.
• Evaluating the technological viability and cost of clean-up alternatives.
• Reports.