Environmental risks are substances, phenomena, or activities in the natural or built environment threatening human well-being and nature. These hazards can be natural or artificial, ranging from water, groundwater, soil, and air pollution.
This article will underscore the significance of environmental due diligence, describing the top 10 most common risks uncovered in Phase 1 Assessments.
Phase 1 Environmental Site Assessments (ESA) are a standard practice in real estate transactions, identifying potential environmental risks and liabilities associated with a property. These assessments ensure that a property is safe for its intended use, helping buyers, sellers, and lenders make informed decisions about the property.
The most common environmental risks that Phase 1 Assessment can detect include standard and non-scope considerations. The clients’ preferences and their budgets determine the scope of the assessment.
The United States Environmental Protection Agency (EPA) uses the ASTM E1527-13, and more recently ASTM E1527-21, Standard Practice for Environmental Site Assessments, which excludes some of these risks (asbestos, mold, led paint, asbestos-containing materials, radon, wetlands, and similar indoor air quality hazards) as non-scope considerations. However, clients can request their assessment at an additional cost.
Here is the list of the ten most common risks:
Asbestos is a common business environmental risk typical for older buildings, especially those built before the 1980s. Asbestos is a mineral fiber occurring in rock and soil, used in construction materials such as insulation, flooring, roofing, and fire retardant. Asbestos exposure occurs during building and demolition work and home maintenance and repair. Disturbance of asbestos-containing materials causes the release of asbestos fibers and particles into the air. Exposure to this mineral fiber can cause mesothelioma, lung cancer, asbestosis, and other respiratory diseases.
Mold is another environmental risk in buildings with water damage or high humidity. Mold can cause respiratory problems (such as asthma) and allergic reactions while damaging building materials and reducing indoor air quality. Getting rid of mold requires detailed cleanup and moisture sources elimination. Reducing indoor humidity (30-60%) is one way to prevent mold development.
Lead-based paint is a typical environmental risk remaining in buildings built before 1978. People regularly applied lead-based paint in homes and commercial properties for decades. The regulatory bodies banned it because it can cause lead poisoning, especially in children. The EPA issued Hazard Standards for Lead in Paint (TSCA, Sections 402 and 403), providing the basis for risk assessors during assessments in pre-1978 homes and childcare facilities.
Improper storage or handling leads to petroleum products (such as gasoline and diesel fuel) contaminating soil and groundwater. Oil spills spread horizontally into a slippery surface on top of the water. Depending on its specific gravity, viscosity, and surface tension, petroleum can move more or less faster. In addition to being a serious environmental risk, petroleum contamination requires expensive remediation.
Radon is a natural radioactive gas in rock, soil, and water. Because of its aggregate state, it can enter buildings through cracks in the foundation and accumulate to dangerous levels. Radon exposure can cause lung cancer, presenting the leading cause of cancer among non-smokers in the United States. Exposure to radon causes about 21,000 lung cancer deaths annually.
People have used pesticides in agriculture and landscaping for years. However, improper usage or storage can cause soil and groundwater contamination. Exposure to high concentrations of pesticides causes various health problems, including cancer, reproductive issues, and neurological disorders.
Producers of electrical equipment and other industrial applications used polychlorinated biphenyls (PCBs) until three decades ago. Because of their hazardous effects, the authorities banned them in 1979. PCBs can persist in the environment for decades, and exposure to PCBs can cause serious health problems, such as cancer, reproductive complications, and neurological issues.
Hazardous waste is any material potentially harmful to human health or the environment. Hazardous waste can include chemicals, solvents, and other industrial materials. Improper disposal of hazardous waste can lead to soil and groundwater contamination, posing health risks to people who come into contact with the waste.
Asbestos-containing materials (ACMs) contain asbestos as their key ingredient. The most common are paint, walls, floors around stoves, vinyl floor tiles, hot water pipes covered with asbestos tape, oil and coal furnaces, heat-resistant fabrics, etc. ACMs can pose a grave health risk in case of improper handling (dispersion, dissemination) because asbestos fibers become airborne. To prevent health risks caused by exposure to asbestos, those working with ACMs must ensure proper handling and removal.
Mercury is a toxic metal present in soil, water, and air. Thermometers, fluorescent light bulbs, and other similar products contain mercury. Because it is present in everyday products, mercury poses risks to everyone, especially to children and pregnant women. Mercury exposure can cause neurological issues.
Environmental risks can pose grave health and financial risks to property owners, buyers, and lenders. Without timely detection and proper remediation, environmental hazards threaten future generations while compromising existing businesses.
One can never overstate the health risks caused by hazardous materials. Ground, water, and air pollutants have immediate and long-term harmful effects. Sometimes health issues occur decades after improper disposal of hazardous waste.
On the other hand, businesses operating on contaminated land suffer immediate consequences. Regulatory bodies can impose harsh financial and other sanctions on business owners who fail to comply with environmental codes and regulations.
The answer to these problems is environmental due diligence. As an integral part of the due diligence process, Phase 1 Environmental Site Assessments are vital for identifying potential environmental risks and liabilities associated with a property. By understanding the most common risks uncovered in Phase 1 Assessments, property owners, buyers, and lenders can make informed decisions about the properties they own or are considering purchasing.
Hanis Consulting is an Illinois-based environmental consulting company specializing in environmental due diligence, site investigation (including hydrogeological investigation), soil and groundwater remediation, litigation support, and fractional management.
At Hanis Consulting, we are dedicated to ensuring the property you purchase, lease, or leave to your children is pollutant-free and safe for everyone.
We value every dollar you put into the real estate transaction. That is why we want to make it worth it. Our Phase I Assessments will leave you risk-free and compliant with applicable federal and state environmental rules and regulations.
Apart from ensuring regulatory compliance, our environmental due diligence represents an investment into a brighter future for the next generations. Why not take part in building a better world for our children, grandchildren, and humanity as a whole?