With the many laws and requirements that must be followed, environmental reporting can be confusing. It is often asked: “who is responsible to report the findings of the Phase I and Phase II reports?”
In this blog post, we will explain the current responsibilities for reporting and discuss upcoming legislation that may clarify the confusion.
What is an Environmental Report?
A Phase I Environmental Site Assessment (ESA) is the most common due diligence requirement in a commercial real estate transaction. This ESA can identify if any Recognized Environmental Conditions (RECs) are present on the property. If the presence of REC is confirmed, a Phase II Subsurface investigation is usually needed in order to gain information on the subsurface condition of the area. It’s possible that the conclusions of the Phase II Subsurface investigation could include results over the acceptable reporting limits, which would give those involved in the transaction, including the potential purchaser, vital information relating to ownership of the property.
Who Is Responsible to Report the Findings?
Unfortunately, there is no national standard and current legislation is unclear as to who, if anyone, is responsible for disclosing an impact above reporting limits. The legal responsibility varies among states. Pending legislation is being discussed that may eliminate this inconsistency and clarify the chain of reporting.
What Should Be Done Until the New Legislation is in Place?
Until the new legislation is decided upon, it is common practice that when exceedance(s) are found when conducting a Phase II investigation, the responsibility to notify the interested parties falls to the current owner of the property, once a receipt of the knowledge has been provided. Owners sometimes, however, insulate themselves from the requirement by engaging counsel representation (attorney-client privilege). If this action is taken by the owner, the only way that reporting could be required by the consultant would be if the findings are considered an imminent danger to life, safety or health. For example, a discovery of a potential explosive plume would need to be reported according to the professional codes of ethics.
We anticipate that future legislation will address the state-by-state variance in reporting practices and eliminate the current confusion on the matter.
At Bock & Clark, we are dedicated to performing quality Phase I and Phase II Environmental Site Assessments for sites of all sizes. For more information on how we can assist you with your environmental reporting needs, request a quote today or contact us.