Phase I Environmental Site Assessments are not a commodity, although many hiring decisions are based solely on price. Consulting is critical to the due diligence process. An innocent land owner defense based on a thorough Phase I ESA is necessary for defending liability for the borrower/investor, and when issues arise, expert consulting is often required to save a transaction. A rare but more important issue is the potential health impact that exists when human beings are unknowingly exposed to chemicals because an environmental assessment was not considered necessary due to the financial concerns of a competitive market place.
Cash purchasers of real estate has become more common in the last decade. Environmental assessments are not always required. Low cost assessments may miss critical evidence. Improper diligence may ultimately lead to regulatory enforcement, or if a lender is involved, to foreclosures if the borrower can’t pay for contamination that may exist on the property. Lenders are concerned about risk if the borrower cannot afford to pay remedial expenses. Foreclosures occur in such cases and the bank is left with an impacted property that may not cover the balance on the loan.
Finding the balance between economic objectives and environmental protection has always been the issue surrounding environmental concerns in land development projects. It costs money to properly dispose of waste. It costs money to properly manage environmental risks. In a competitive society that is prone to occasional economic recession, the pressure to cut corners and costs can be strong enough to prevent appropriate environmental risk management strategies.
Well balanced consulting with a cost-effective strategy is the best answer.