COVID-19 has affected our world in so many ways, including how environmental assessments are completed. The Phase I Environmental Site Assessment (ESA) process, as described in the American Society for Testing and Materials (ASTM) E 1527 Standard Practice for Phase I ESAs, involves the collection of historical, regulatory and property information from various sources that may include visits to state regulatory agencies, municipal offices, and/or libraries. A site reconnaissance is also a required part of the Phase I process. Under the current climate, restrictions to public areas, alternative working arrangements, and general concern for the health and well-being of all populations, these normal Phase I activities have also been impacted.
Phase I consultants are reaching out to banks to determine how these limitations should be handled and whether or not projects should be placed on hold. At times, the absence of regulatory agency records or even access to portions of the subject property during a site inspection may not be an issue; however, other times these limitations may be significant and may impact the ability to identify and determine the environmental risks associated with the collateral property. Any limitations associated with the Phase I assessment should be addressed in the Phase I report.
With these challenges comes innovation and new approaches, such as site inspections conducted via video chat software, in-depth interviews with knowledgeable site contacts, and photographs provided by those site contacts.
When limitations and data gaps are identified, the review of the Phase I ESA report should involve consideration of the property use, planned future use, significance of inaccessible regulatory files or absence of a site inspection, the Bank’s risk tolerance, and identification of the potential for additional environmental risk as a result of any limitations. ERI has been assisting lending institutions with identifying and evaluating these limitations relating to the COVID-19 pandemic.
About Environmental Risk Innovations Inc.
ERI is the nation’s largest environmental risk consulting firm, specializing in the management of environmental risk for commercial lenders. ERI’s clients include a broad base of commercial lenders, from regional banks to banks with national footprints. ERI provides third-party review of environmental assessment reports and conducts Records Search with Risk Assessments (RSRAs)/desktop reviews on commercial properties. ERI’s third party reviews of environmental assessments and property regulatory/historical data are accompanied by free “day to day” technical support to commercial loan officers and bank risk managers, as well as complimentary assistance in developing/amending environmental risk management policy based on our client banks’ specific risk tolerance.
ERI is not a traditional environmental consulting firm that performs Phase I or Phase II Environmental Site Assessments. As a result, ERI’s recommendations represent a truly independent, third party opinion that conforms to the client bank’s specific risk tolerance. The key to our success is the collaboration of all of ERI’s permanent environmental risk management professionals working together in a single office location in Charlotte, North Carolina.