Content area
Full Text
When conducting due diligence Phase I site assessments or compliance audits, knowing the differences between them matters. Performing the wrong one can matter even more.
The two most commonly used tools for the evaluation, and valuation, of environmental liabilities associated with property transactions are the Phase I site assessment and the compliance audit. It is important for those involved in a property or financial transaction to note the differences between each, as well as their respective strengths and shortcomings.
From a regulatory perspective, a Phase I site assessment, if conducted in accordance with the federal requirements of 40 CFR Part 312 - best known as the All Appropriate Inquiry (AAI) guidelines[1] - can aid in die establishment of a variety of useful and important liability shields. These include the innocent landowner defense, the contiguous property owner and the bona fide prospective purchaser exemptions to Superfund liability.
Additionally, AAI equivalent Phase I site assessments are needed to qualify for most federal and state brownfield site characterization and assessment grant programs. ASTM International (formerly the American Society for Testing and Materials) has more conveniently compiled AAI requirements in its E1527-05 standard. Environmental compliance audits also have regulatory benefits. Incentives established under the EPA's audit policy[2] allow facilities mat discover, voluntarily disclose and quickly correct certain non-compliance issues to...