The Challenge of Meeting Environmental Due Diligence Requirements During the COVID-19 Crisis

by Erik Peterson
Apr 3, 2020
0

Due Diligence_COVID-19

Although the "Stay Home, Stay Safe" Executive Order has obviously impacted how we currently manage our business, Envirologic continues to provide evaluation and support for environmental due diligence on projects. Further, even though economic activity has slowed because of the uncertainty regarding COVID-19, there is a continued market need for environmental due diligence as interest rates are at a historic low.

Currently, the completion of field work and sampling activities is limited to critical public infrastructure projects. However, field work is only one component of environmental due diligence and the Phase I Environmental Site Assessment (ESA) process in particular. Much of the information evaluated in a Phase I ESA remains accessible online, we can still interview knowledgeable people using phone and email, and local and state governments are still responding to Freedom of Information Act requests.

When specific activities or components of the Phase I ESA process cannot be addressed, these items may be identified as a "data gap" in the Phase I ESA report. Envirologic utilizes multiple lines of evidence when evaluating a property, and we strive to limit the impacts that the lack of a given line of evidence may have on our ability to make conclusions. Ultimately, it is up to the judgment of the environmental professional to determine if a "data gap" has had a significant impact on the ability to identify Recognized Environmental Conditions and to conclude if further environmental assessment is warranted. For instance, a thorough review of historic aerial photographs and assessor records may provide more insight into previous operations and potential environmental concerns than a site inspection; what is currently a pizza shop may have been a gas station 50 years ago. The lack of a site inspection for a commercial/retail setting is generally much less of a concern than the lack of an inspection for an industrial facility. Additionally, interviews with persons familiar with current and historic site activities often represent a more significant data source for decision making. If desired, a site inspection could be completed after lifting of the Executive Order, and an addendum to the Phase I ESA could be issued.

Additional due diligence activities such as the preparation of Baseline Environmental Assessments (BEAs) and Due Care evaluations can also move forward for some projects under this Executive Order. It may be possible to complete or advance these projects by accessing and utilizing data from previous environmental investigations and BEAs available from property owners or through the State. Envirologic often uses this approach to reduce or eliminate Phase II ESA sampling to expedite timing and reduce project costs. Late last week, the Michigan Department of Environment, Great Lakes, and Energy (EGLE) issued a communication regarding BEAs and COVID-19-related delays to due diligence that may impact the BEA process. Envirologic will continue to communicate with EGLE and clients regarding this process to ensure that our clients remain in compliance with state regulations for remedial liability protection and that transactions can continue to proceed as planned.

For projects that may require a component of field activity, there are other evaluations, scoping, and logistical efforts that can be completed now that will allow us to turn this work quickly after the Executive Order lifts.

Envirologic understands there are opportunities to keep projects moving forward and provide meaningful environmental due diligence that will inform decision making and support the financing of projects. Our staff of environmental professionals and compliance personnel remain on the job and continue to utilize all available resources to support projects. The key during these challenging times will be to have open communication with clients about what limitations currently exist regarding due diligence and what can be done to address these limitations, so that all parties are better informed of outcomes.

Envirologic is available for a virtual meeting or conference call to talk about best practices for environmental due diligence and how to keep projects moving forward.

Please contact Erik Peterson, Envirologic's Manager of Due Diligence Services, with any questions you have understanding the current limitations to the due diligence process.
Cell Phone: (269) 615-1011
Email: peterson@envirologic.com

Download The Challenge of Meeting Environmental Due DiligenceRequirements During the COVID-19 Crisis PDF.


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