What to Expect when Buying a Brownfield
A brownfield is only sometimes brown. More often, it is the pebbled gray of worn and neglected concrete or the rusty-metal orange of abandoned warehouses. Sometimes a brownfield is more deceptive – it is the smooth black of an asphalt parking lot, or the sharp green of a park’s ball field.
The United States Environmental Protection Agency (US EPA) defines a brownfield as, “a property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant.” In other words, how the property was used in the past is creating hurdles to its use now and in the future due to the presence, or perceived presence, of environmental contaminants.
Prior to purchase, a prudent investor (or, the prudent investor’s lending institution) will obtain a Phase I environmental site assessment (ESA) from a qualified environmental consulting firm. The Phase I ESA provides basic historic and current property information, which is used to determine the likelihood of potential environmental concerns. This is the sleuthing stage – the review of records and maps, the inspection of the property, and discussions with knowledgeable persons.
What is a prospective purchaser to do if they want to proceed with the acquisition, but the Phase I ESA identifies potential environmental issues (called recognized environmental conditions, or “RECs” in the biz)? Does the property require further investigation and possibly remediation? Costs for these activities can add up quickly, but at the same time, that prudent investor is going to want to protect themselves from liability.
The typical next step is a Phase II ESA, which is when a qualified environmental consultant obtains environmental samples to look for contaminants. Depending on the findings of the Phase I, this stage could entail test pits, soil borings, monitoring wells, or other sampling means. Sampling can get more complex if the site has surface water or the possibility of vapors from volatile chemicals entering an occupied building. This is where that prudent purchaser leans heavily on their environmental professional to establish a Scope-of-Work that will meet the objectives of the investigation, the financial constraints of the parties involved, and the requirements of regulatory agencies.
Not all properties require expensive cleanups where all contamination is removed from the site. Many states have programs to encourage private investment in brownfield sites to promote their productive use that are based on understanding site conditions, evaluating potential human health and environmental risks, and developing cost-effective remediation plans that can include limiting sites to particular uses or including engineering controls in site redevelopment plans. In Pennsylvania, one would hear of the “Act 2” or Land Recycling program, and West Virginia and Virginia each have a Voluntary Remediation Program. New Jersey has the Brownfields and Contaminated Site Remediation Program, Ohio has the Voluntary Action Program … and so on. Each of these programs is designed to be a step-by-step process to move a property through assessment and remediation and to protect the prudent purchaser. The path will vary depending on contaminants present, conditions at the site, and the property’s proposed future uses. These programs are roadmaps, and your qualified environmental professional knows the rules of the road and can guide the prudent purchaser successfully through the system and to a productive and viable property out of what was once just an unwanted brownfield.
Environmental Standards has over 25 years of award-winning history with its successful Brownfield Redevelopment Services, and our professionals are associated with some of the most successful brownfields projects as recognized by the US EPA. Reach out when you are ready to become a prudent purchaser!
