I’ve been involved in environmental due diligence for 25 years now. During that time, I’ve seen The Good, The Bad, and The Ugly. Opening up a Phase I ESA report from the early nineties, I hold my breath, with low expectations. At the time, there was no ASTM standard, and every engineer that could prepare an erosion control plan fancied himself an environmental expert. As time went on, industry practice matured as due diligence standards were established, lenders became more educated, and states’ cleanup programs evolved. Unfortunately, even to this day, with the exception of a few states where certified remediation professionals exist, there is no licensing or certification required to perform environmental due diligence. What this means is that even though the industry has had over 25 years to mature, we still occasionally see The Bad and The Ugly.
In addition to the absence of a certification program, price pressures and lack of awareness of some lenders results in inexperienced and unskilled people performing ESAs. Sure, the report covers are attractive; the report formatting is clean and professional, and the standard ASTM language is all there. So to the naked eye, it appears to be a good work product. Upon reading the content and conclusions, however, it all goes downhill as fast as a DNAPL in groundwater. I’ve seen reports calling a sewer vent a tank fill port. I’ve seen recommendations for soil testing around a storm inlet because there’s a sheen on the standing water within it, and reports that miss an orchard on an aerial photo or a gas tank on a Sanborn map. The list goes on.
I understand the difficulty that lenders or attorneys may have in determining whether or not an environmental consultant is indeed an expert in due diligence. But I also think that many lenders could be more proactive in ensuring initial and continued competence of the professionals they retain. In addition, cost pressures for Phase I ESAs continue to affect the industry. Saving a couple hundred dollars to possibly expose a lender to a million-dollar liability seems short-sighted to me. Even if it’s not an error that results in a large future loss, errors that lead to spending several thousand dollars on an unnecessary Phase II and causing a several week delay, can be an unfortunate result of sacrificing quality for price.
I decided to start this blog to share some war stories, not just for sheer amusement among my peers, but for educational purposes as well. I hope that in sharing these stories, consultants, lenders, and all in the real estate industry who have interest in the environmental condition of a property will gain both technical knowledge and awareness of the importance of selecting an environmental professional with the experience and skills to properly perform environmental due diligence. – James P. “Jim” Cinelli, P.E., BCEE, Principal at Liberty Environmental, Inc.