As Dick Cheney’s former quail hunting partner can attest, order of operations matters. Ready, Aim, Fire is good standard practice. Whereas Ready, Fire, Aim results in plucking unrequested buckshot from your skin.
The Phases of Environmental Investigations
The same holds true for environmental consulting – without the buckshot collateral damage (well, most of the time!). Thorough evaluation of environmental conditions at a property during the due diligence period has a definitive starting point, known as the Phase I Environmental Site Assessment. Standardized by ASTM International, the Phase I ESA is designed to identify potential environmental concerns (known as recognized environmental conditions [RECs]). The Phase I ESA does not generate any new data, but rather, is an exercise in historical research, interviews, and visual site reconnaissance.
However, a better way to think of the Phase I Environmental Site Assessment is not as the cardinal number one, but rather with ordinal nomenclature – the Phase I is really the first step in an environmental investigation. It may very well be the first and last steps if the process does not identify any RECs. But practically speaking, identification of a REC means moving on to the second phase.
The Second Phase: Determining Impact
For example, through historical research and interviews, maybe the Phase I (first phase) identifies the property as historical Vice-Presidential small game hunting grounds. Alerted by a baffling lack of quail and a statistically anomalous number of shotgun wounds at the adjacent hospital, the Phase I ESA assessor deems the area a REC due to possible lead contamination and recommends a Phase II Environmental Assessment.
During the Phase II ESA, or the second phase, the assessor evaluates whether the trigger-happy former VP’s pastime caused subsurface impact. Specifically, the assessor may collect soil and groundwater samples for lead analysis. He or she may conduct a geophysical investigation to look for buried bunkers or the remains of unfortunate sportsmen. Basically a pass/fail screening test, once the entirety of the dataset is assembled, the assessor either recommends additional action or no additional action.
The Third Stage: Defining the Issue
If the former, it’s time to move on to the third phase. Sometimes known as site characterization or a remedial investigation, the Phase III is designed to define the extents and receptors, of impact. For example, how vast and deep is the lead-laden area? Did lead-impacted groundwater migrate to the bedrock aquifer or is it confined to the overburden? Are the owls that eat the moles, which eat the earthworms, which eat the decaying plants, which extract the lead from soil bio-magnifying the issue? Do we need a constitutional amendment barring elected high office officials from hunting on public lands?
The Fourth Stage: Cleaning Up
Once the remedial investigation is complete, and we have a solid understanding of the entire site and associated contaminant pathways, we move to the fourth phase of the environmental investigation – remedial action, site mitigation or Phase IV. Finally, a decade later, it’s time to clean up Cheney’s legacy. Remedies can include active endeavors, like excavating the impacted material. Or, it may involve an engineering control to control human contact with the soil (e.g. a concrete cap). If the future use may include continued hunting by the trigger-challenged subset of the population, the remedy may include conspicuously placed first aid kiosks.
So, even during environmental investigations, you have to put on your underwear before your pants. Order of operations matters. In due diligence, make sure to plan ahead because the Phase I ESA might not be the end-all-be-all. Think of your Phase I ESA as the first phase, and if all is well, the last. But know there could be a second phase, and possibly a third and a fourth – all of which consume precious time (and money). It will serve you to have contingency plans in place should the Phase I reveal RECs and the Phase II reveal impact. Can you extend the due-diligence period? Will you escrow for future environmental costs? Will you secure an environmental insurance policy? Or will you walk away? There are ways to cover your risks during the environmental investigation.
But please, always remember where your hunting partner is before you fire!
NB – we are currently asking GlobeSt readers about their perception of environmental risk. How often do Recognized Environmental Conditions impact your deal? When do you walk away? The survey closes on Friday September 2. Please share your thoughts now (and as an added bonus, you can add yourself to be entered into the drawing for a hundred dollar American Express gift card!)
Read the original article here.