Many of you are familiar with the term “Phase I.” Do you also know (your attorneys do) that the standard (I tend to call it a procedure) we use to develop Phase I’s was first written in 1996, rewritten in 2000, and as of November 1 there is a new “standard” in place. So what?
Well, lawyers and consultants have gotten bent out of shape over it. We are spending enormous amounts of time discussing how or whether to implement this standard into our usual practice. You would think it is the environmental industry’s equivalent of Sarbanes Oxley.
The new ASTM standard is great for what it was intended for – the identification of the potential for the presence of contaminants on a property based on prior ownership and use, so that a purchaser can satisfy one of the limited liability protection provisions under CERCLA (Superfund to most of us) or, for conducting an assessment as part of an EPA Brownfields Assessment and Characterization Grant. I do not know about you, but in 20 years in this business, I have not seen any of the properties I assessed become part of a CERCLIS investigation or a funded Brownfields development. So what is the fuss about?
It is about banks and lawyers. Just like what happened 1996 and 2000, we expect that commercial banks will require ASTM compliance for documents that they receive. If you look to commercial banks for funding, that already is or will be an important issue for you. Attorneys, on the other hand, are concerned that they will be accused of being negligent if they do not recommend to their clients that they use the most recent requirements. Finally, we are concerned that if we get sued, the case will hinge on how closely we followed the Standard.
Why do I tell you this? In today’s market, you are evaluating more deals and spending more money to do so than you did previously. Therefore, you are trying to control due diligence costs more closely.
I guarantee that, for some of you, your outside environmental advisors are spending money to ensure that the environmental due diligence work product meets this standard. What have you gained? Nothing, but it has cost you more money. Be sure that your approach is tailored to your needs, not that of a Standard.
To quote another, much funnier Dennis, “That’s just my opinion, I could be wrong”.