In 2006, the requirements for gaining landowner liability protections (LLPs) through "all appropriate inquiry" became more stringent. Although some of these new requirements involved the technical practice of conducting phase I environmental site assessments (ESA), many of these requirements were directed at the persons who order these assessments. These include prospective and current landowners, tenants and Lenders.
These new requirements left many parties wondering what changes they will need to implement to assure that they will have access to the various types of landowner liability protections, if needed. Some of these "new" requirements are not new at all. The changes made on the Federal level include some which simply strengthen and provide increased focus on requirements which had already been in place.
So what were the key changes that organizations ordering a Phase I ESA needed to be aware of?Increased scrutiny to age of the ESA documents.
In the past, ESA reports that were issued greater than 180-days before the date of the property transfer might be valid, although the Standard Practice recommended reviewing certain areas and updating the report. In some cases, prospective Buyers and Lenders used ESA reports that were quite old (i.e., years). The new requirements for ESA reports placed much more specific limits on how long an ESA report is valid. In summary,
- Within 180-days of report issuance - Valid
- Between 180-days and 1-year - Not valid without specific revisions
- After 1-year - No longer valid
The two key dates for organizations need to track are 1) date report was issued, and 2) date of property transfer (closing). If closing is delayed, and if the revised closing date extends beyond the 180-day limit, the ESA report will need to be revised before closing.Increased emphasis on documenting “User Responsibilities”.
Every ESA report must identify the “User(s)” of the report. Although Users have had responsibilities in the past, the revised Standard Practice provided much more specific responsibilities for Users. The Standard also made it clear that all Users
of the report must complete these responsibilities; failure of any User to complete the requirements may result in a determination for that User that “all appropriate inquiry” was not made, and therefore landowner liability protections may be denied. It is important to emphasize that the environmental professional who prepares the ESA report is not responsible for completing the User’s responsibilities.
Although the Standard makes the User requirements much more vital, it also makes it much easier for Users to document that they have met these requirements. The Standard provides a “User Questionnaire” which will guide Users though these requirements. The response to the new emphasis on User requirements can be fairly straight forward. First, each User needs to be identified. Second, each User should complete the User Questionnaire and provide all other documented evidence that they have met the requirements.
Of course, there were other new requirements, most of which need to be met by the environmental professional preparing the ESA report. For the party ordering the ESA, two items need to be verified –1) that the environmental professional meets the qualification requirements, and 2) that the new ASTM Standard, E1527-05, is used to complete the assessment.
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