By Ross Simmons, Senior Project Manager with GRS Group, an NV5 Company
A revision to the E1528 Standard Practice for Limited Environmental Due Diligence: Transaction Screen Process was published by ASTM (formerly known as American Society for Testing and Materials) in August 2022 following months of discussion by a committee of ASTM members representing the commercial real estate and lending industries. The Transaction Screen Assessment (TSA) practice is intended to identify Potential Environmental Concerns associated with the subject property, defined as the “possible presence of any chemicals of concern on a subject property under conditions that indicate the possibility of an existing release, a past release, or a threat of a future release.”
Although many TSAs are completed by Environmental Professionals, the E1528 Standard Practice was intentionally designed to be a process that could be completed by lay persons without professional training or experience, such as potential purchasers or lessees of relatively low-priced real estate assets, or employees of government agencies or utility companies acquiring property for limited purposes such as road or utility corridors. In addition, a number of prominent US lenders routinely use the TSA process to complete a limited, low-cost environmental investigation at properties with lower loan values or lower perceived environmental risks.
The TSA Standard has always utilized a questionnaire as its principal data gathering vehicle. Although intended for use by untrained parties, the questionnaire has sometimes been perceived as confusing, unwieldy, and confusing to Users without environmental professional backgrounds. In the 2022 update of the TSA standard, the Transaction Screen questionnaire has been divided into two parts in an effort to overcome the confusion caused in the past by the questionnaire and the sometimes unwillingness by property owners and occupants to use the questionnaire to provide valuable information about the property.
Part A of the 2022 questionnaire is directed specifically toward information that may be commonly known by property owners and occupants, with an effort to avoid the confusion of acronyms and consultant-speak often associated with environmental investigations. Part A may be provided by the TSA Preparer to be completed and returned by the owner and occupants/operators. Or Part A of the questionnaire may be completed through interviews with the owner, occupants and operators conducted by the TSA Preparer.
Part B of the questionnaire is to be completed by the TSA Preparer, and is focused on site visit observations, interviews with the owner/occupant/operator, and limited research of government records and certain standard historical resource information.
As in earlier versions of the document, the TSA Standard is intended for Users wishing to conduct limited environmental due diligence (that is, less than a Phase I ESA). The TSA practice will not satisfy the requirement to conduct all appropriate inquiries into the previous ownership and use of the subject property, and does not allow the User to qualify for CERCLA liability protections. The User should be cautious in applying this practice to properties with known current or historical handling of chemicals of concern. In general, a transaction screen assessment is not suitable for evaluating environmental conditions of a property having activities that use, handle, store or dispose of large volumes of chemicals, either currently or in the past. Such activities include, but are not limited to, manufacturing, vehicle fueling, dry cleaning, metal plating and finishing, circuit board manufacturing, junkyards, and landfill activities which would prompt the need for further inquiry. The TSA practice may be especially appropriate for properties in rural, non-industrial, or undeveloped locations or, subject to the criteria of a lending institution, in connection with a financing of properties that are expected to have few environmental concerns.