Though ASTM E1527 Phase I Environmental Site Assessments (ESAs) are commonly performed at the request of financial institutions for financing purposes, they are designed to satisfy one of the requirements to qualify for the innocent landowner, contiguous property owner, or bona fide prospective purchaser limitations on CERCLA liability (1), and the Environmental Protection Agency (EPA) All Appropriate Inquiry (AAI) Rule (2).
However, did you know that, contrary to most states, New Jersey has not adopted the federal All Appropriate Inquiries rule but instead has its own unique definition for satisfying "all appropriate inquiry"?
In New Jersey, "all appropriate inquiry" is defined as the performance of a preliminary assessment, and site investigation if the preliminary assessment indicates that a site investigation is necessary (3).
Therefore, if you're performing commercial real estate due diligence in New Jersey, and want to qualify for both federal and state innocent purchaser liability protections, you need to perform both an ASTM Phase I ESA and [at least] a NJDEP Preliminary Assessment (*).
The FalconRE Group offers both reports, of course, as well as a hybrid PA/Phase I report that satisfies both federal and state innocent purchaser liability protections (*).
(1) - Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. §9601)
(2) - Subsection 312.10 of 40 Code of Federal Regulations 312 (40 CFR §312)
(3) - N.J.S.A. 58:10-23.11g(d)(2)
(*) In some instances, a site investigation would also be necessary to meet New Jersey requirements for all appropriate inquiry.
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Chemmie Sokolic is Principal at the FalconRE Group. Chemmie Sokolic is the Principal of the Falcon Real Estate Group, and is an industry leader in the commercial and industrial real estate due diligence field, with more than 23 years’ experience. He has conducted over 1,000 due diligence assessments, inspections, and reviews at a diverse array of properties, from multi-family residences, retail complexes, and real estate portfolios, to larger and more extensive industrial, commercial, and manufacturing facilities.
Chemmie provides his clients with expert real estate due diligence services by evaluating current and past property uses and conditions, and identifying potential risks, liabilities, and constraints associated with the property’s current and potential future uses. Chemmie is also a NJ-Licensed Real Estate Salesperson, and is the Due Diligence and Development Consultant at Wolf Commercial Real Estate.
Chemmie holds a B.S. in Environmental Science, a M.S. in Environmental Management & Water Resources, and a Master of Business Administration degree with a Real Estate concentration. Chemmie is an active member of the ASTM Committee E50 on Environmental Assessment, Risk Management, and Corrective Action, and participates in several ASTM Task Groups including the E1527 Phase I Task Group where he was the final editor of the E1527-21 Phase I ESA standard, and is also an ASTM International-certified instructor. csokolic@TheFalconREGroup.com | 973.363.9500 To access a printer-friendly PDF version, click here.
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