Making It Come Together

Due Diligence, Assuring Future Site Use and an LSRP’s Role in the Process.

By Paul D. Sakson, LSRP, Paul D. Sakson Associates, Inc.  On Feb 26, 2016

Prospective owners of strip malls, undeveloped parcels and Brownfield sites that may be used for certain purposes would benefit by hiring a Licensed Site Remediation Professional (LSRP) as early in the environmental due diligence process as possible.  

With New Jersey’s transition to the LSRP program, it’s more important than ever to re-examine standard due diligence in light of the LSRP regulations. Why? Because future site use will often dictate the need for an LSRP when historically none was needed. Any site that is regulated by the New Jersey Department of Environmental Protection (NJDEP), such as child care centers or educational facilities, properties with underground storage tanks, pesticide contaminated land, some industrial facilities and historic fill sites, may eventually require an LSRP to be retained. It stands to reason that an LSRP should be consulted in the early phases of a project to ensure compliance with the Site Remediation Program (SRP) requirements.

For purchasers of potentially regulated properties, environmental due diligence has long utilized a Phase I Environmental Site Assessment (“Phase I”) as the initial and primary process. A Phase I, completed correctly, will comply with the ASTM E1528-13 Standard and the Federal EPA’s “All Appropriate Inquiry.” For many purchasers, lenders and other interested parties involved in real estate transactions, the Phase I is usually adequate to evaluate recognized environmental conditions and lay the groundwork for “innocent purchaser” status.

However, the Phase I is routinely performed by an Environmental Professional, not an LSRP, and they may not understand SRP compliance issues. Some of the items that an LSRP will normally review, which may not be considered in a Phase I, include evaluating historic fill maps, researching industrial directories for Industrial Site Recovery Act (ISRA) applicability, determining historic agricultural use and the potential for pesticide presence, and evaluating the requirements or suitability for a child care center.

An alternative approach to performing a Phase I is retaining an LSRP to perform a Preliminary Assessment in accordance with New Jersey’s due diligence requirements. This provides the benefit of an LSRP completing the general due diligence requirements of a typical Phase I, in addition to identifying issues specific to SRP regulations. If site conditions warrant, the LSRP can issue a Response Action Outcome (RAO). With this approach, the due diligence process yields more certainty to future site development, as any restrictions and SRP compliance issues are identified early in the process.

This brings us to the importance of the Environmental Professional and LSRP working closely together in the due diligence phase. Often, the LSRP will have to rely on the Phase I work the Environmental Professional has done in addition to the results and procedures of any initial sampling work. If due diligence or sampling work cannot be relied upon by the LSRP, this may unnecessarily increase project costs and timing. Second, the LSRP may help ensure that the work performed is in a comprehensive manner and complies with current and anticipated NJDEP regulations.

The LSRP can readily identify potential restrictions (e.g., deed notices, engineering controls, and groundwater classification exception areas) that may restrict future use of the site, and have a negative effect on property values.

Other environmental considerations for prospective purchasers include indoor air quality concerns, especially for sites that may have child care center tenants or serve other sensitive populations. Asbestos, radon, lead paint, air contaminants and other items normally under the purview of the New Jersey Department of Health are typical indoor air quality concerns and should be evaluated in the due diligence phase.

What’s the upshot? Prospective property purchasers and owners wanting certainty for future site use with no restrictions should consider going beyond the standard Phase I due diligence requirements and consult with an LSRP in the earliest phases of the project to ensure that all investigative work can be relied upon and any potential environmental restrictions are identified.

Case Study:

A child care center developer identified a site in central New Jersey for his next project. A Phase I was performed by an Environmental Professional to satisfy bank lending requirements. The site may have had historic agricultural use and the adjacent property was a known leaking underground storage tank site. By consulting an LSRP, all play area and vapor intrusion related sampling was conducted to ensure SRP regulatory compliance prior to property acquisition.

Once the property was acquired, using the Phase I data, the required Preliminary Assessment and Site Investigation Reports were prepared by an LSRP to comply with SRP requirements. Given that no contaminants were identified prior to property acquisition, a RAO was readily issued to comply with New Jersey Department of Children and Families licensing requirements.

 

Related Articles: