DEEP: PREPARED Workbook Due Diligence

Due Diligence
(PREPARED Municipal Workbook)
 
 
 
 
 Collecting important environmental, real estate, and community impact information
 
Due diligence for brownfield properties is an essential step in evaluating property recovery actions.
The Connecticut Department of Energy and Environmental Protection (DEEP) has developed Connecticut-specific guidance for due diligence, which are similar, but not identical to the requirements for conducting due diligence under Federal law. These requirements are described in the Site Characterization Guidance Document, which should be followed in addition to the US Environmental Protection Agency requirements for All Appropriate Inquiry.
 
Environmental due diligence is conducted to identify the presence or potential presence of contaminants in environmental media (e.g., soil, groundwater, surface water) due to releases or spills on the property and in building materials. Environmental due diligence is also conducted to meet the requirements for All Appropriate Inquiry.
 
Due diligence is typically conducted by a number of different entities. For example:
  1. An environmental professional is utilized to conduct environmental due diligence.
  2. Real estate professionals or attorneys may be engaged to conduct title searches, property value assessments, and other real estate related issues.
  3. Engineers may be needed to evaluate buildings or physical conditions affecting reuse of the property.
  4. Municipal officials or non-profits may conduct community assessments.
See Section 4.1 of the PREPARED Workbook for an overview of due diligence and Section 4.2 through Section 4.6 of the PREPARED Workbook for additional information.

Worksheet #4 asks a series of questions to identify the information available and the information not available for a property.
 
 
 

See references in Chapter 4 of the PREPARED Workbook.

See references under Conducting Due Diligence in Appendix E of the PREPARED Workbook.
 
 
 
Identifying environmental conditions and related issues
Gathering specific information about the environmental condition of a property is one of the most critical steps in the evaluation process for brownfields reuse. Typical areas of investigation include the following:
  • The storage and handling of hazardous substances and petroleum products on the property;
  • Releases of hazardous substances and petroleum products to environmental media (e.g., soil, groundwater, surface water, sediment) from activities on the property;
  • The regulatory status of the property and activities on the property;
  • Parties responsible for investigating and conducting remedial action on the property (responsible parties);
  • Environmental investigation and remedial actions previously conducted or planned on the property; and
  • Restrictions resulting from the environmental condition and environmental restrictions associated with remedial action conducted on the property (institutional controls and engineering controls).
Environmental due diligence usually involves a Phase I Environmental Site Assessment (See Section 4.2 of the PREPARED Workbook for additional information) and possibly a Phase II or Phase III Environmental Site Assessment (See Section 4.3 of the PREPARED Workbook for additional information).
 
The Connecticut Department of Energy and Environmental Protection (DEEP) has developed Connecticut-specific guidance for due diligence described in the Site Characterization Guidance Document. This guidance should be followed in addition to the Federal requirements for All Appropriate Inquiry.
 
 
 All Appropriate Inquiry
 
Environmental due diligence is generally conducted to meet the requirements for All Appropriate Inquiry set out in USEPA regulations. These regulations outline specific requirements for a person or a municipality to qualify for protection from liability under CERCLA as an innocent landowner, bona fide prospective purchaser, or a contiguous property owner.

A Phase I Environmental Site Assessment can differ from an All Appropriate Inquiry. The content of a Phase I Environmental Site Assessment can vary; however, it is most often conducted in accordance with the ASTM E1527 - 13 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process. Following the process outlined in ASTM E1527 alone may not meet the Connecticut guidelines for due diligence. Guidance for conducting a Phase I Environmental Site Assessment outlined in the Connecticut Site Characterization Guidance Document should be considered in addition to ASTM E1527.
 
The All Appropriate Inquiry regulations recognize a Phase I Environmental Site Assessment conducted in accordance with the ASTM standard as compliant with the All Appropriate Inquiry requirements. Even if you are not anticipating liability under CERCLA, conducting environmental due diligence in accordance with the All Appropriate Inquiry requirements can offer some protection from other potential liabilities. For this reason, make sure to verify that the Phase I Environmental Site Assessment conducted for a property meets the requirements for the All Appropriate Inquiry. It is also important to note that the All Appropriate Inquiry must be conducted or updated within one year prior to the date of property acquisition. If the All Appropriate Inquiry is more than 180 days to the acquisition, certain aspects of the inquiries (i.e., interviews, recorded environmental lien searches, federal, tribal, state, and local government record reviews, visual inspections, and environmental professional declaration) must be updated prior to the acquisition.

Resources
See Section 4.7.1 of the PREPARED Workbook for additional information and the All Appropriate Inquiries Final Rule at 40 CFR Part 312
 
 
 
 
Content Last Updated January 11, 2019