Environmental site assessments (ESAs)

Basics

What ESAs are and when are they used

An environmental site assessment (also known as ESA, environmental due diligence and all appropriate inquiry) is commonly done prior to commercial or industrial property transactions to assess the likelihood of contamination and the liability for cleanup if contamination is found. Environmental site assessments are divided into two phases.

• Phase I includes an examination of relevant records, interviews with owners, past owners and neighbors and an inspection of the property in order to identify recognized environmental conditions. Based on the findings of a Phase I assessment, a property owner or other interested party may follow with a Phase II assessment.
• Phase II uses the information in the Phase I assessment to select locations for environmental sampling in areas of concern, in order to confirm suspected contamination. Often, initial sampling is completed as part of the Phase II assessment.

An ESA is not a site investigation that evaluates the full extent of contamination, as defined in ch. NR 716, Wis. Adm. Code. Rather, a Phase I assessment identifies likely areas of contamination and a Phase II assessment helps to verify whether or not there is any contamination in these areas.

Wisconsin state law does not require that an ESA be performed prior to a property transaction. However, if contamination is confirmed by sampling, state law (s. 292.11, Wis. Stats.) requires that the responsible party report it to the DNR immediately. The DNR will evaluate the sampling results and will usually require more detailed sampling and analysis of the contaminated area, called a site investigation. Please see Hazardous substance spills for more information about reporting contamination. For more information about full site investigations, please see An introduction to cleaning up contamination.

Environmental site assessments are used in many situations, most commonly during property transactions such as these:

• a seller wants to reassure potential purchasers about the environmental condition of a property, or a purchaser requests this type of information;
• a potential purchaser wants to qualify for the federal Superfund liability defense as a "bona fide prospective purchaser" (Note: there is no equivalent defense under Wisconsin law. However, local governments and others may have a statutory exemption from environmental liability under certain circumstances. Please see our environmental liability page for more information);
• a local government plans to purchase a brownfield property and needs to conduct All appropriate inquiry in order to qualify for a federal brownfields cleanup grant or DNR ready for reuse grant or loan; or
• a local government has received an EPA brownfield assessment grant and needs to comply with the terms and conditions for all appropriate inquiry when assessing various properties.

For the situations described above, no DNR review of the Phase I and Phase II reports is required. However, the person who owns the property or who caused the contamination (both are liable) must immediately report any contamination that is identified to the DNR. A spill notification should be made immediately if contamination is discovered; do not wait for the completion of the Phase II EA report in order to notify the state. In addition, a person who is interested in purchasing a property may elect to have the DNR review a Phase I, Phase II or both in order to determine whether additional environmental work will be required. An interested purchaser may submit Phase I and Phase II reports to the DNR and request a general liability clarification letter, which requires a $700 review fee. For more information about these letters, please see the General Liability Clarification Letter Fact Sheet (RR-619) [PDF].

State standards

State standards

Professional qualifications

State law requires that Phase I and Phase II ESAs must be prepared by or under the supervision of a professional engineer, hydrogeologist or scientist, and all field work must be conducted by persons meeting certain qualification standards in certain cases. These professional qualifications are required when ESAs are:

• submitted to the DNR for review and approval under a DNR program or for liability clarification;
• prepared for reliance upon for regulatory/statutory purposes;
• offsite liability exemptions for persons who can demonstrate that their property has been contaminated by substances that originated on a different property;
• prepared for or used as part of a ch. NR 708, Wis. Adm. Code immediate action; or
• used as part of a ch. NR 716, Wis. Adm. Code site investigation.

All personnel qualification standards can be found in ch. NR 712, Wis. Adm. Code.

Additional professional qualifications and certifications apply when all appropriate inquiry standards are used/required.

ESA standards

Wisconsin has no state standards for ESAs. However, the DNR strongly recommends that Phase I and Phase II ESAs comply with current ASTM and all appropriate inquiry requirements. Requirements for what information is submitted with Phase I and Phase II ESAs may vary by program or site.

Phase I and Phase II ESAs are defined in ch. NR 700, Wis. Adm. Code:

• "Phase I environmental assessment" means an assessment of a site to identify potential or known areas of environmental contamination. This assessment may include reviewing records, interviewing persons and conducting physical inspections of the site.

• "Phase II environmental assessment" means an assessment of a site to physically confirm that contamination exists in potential or known areas of environmental contamination identified in the Phase I environmental assessment, but not to determine the nature, degree and extent of contamination. This assessment may include field sampling of media, laboratory analysis of samples and visual confirmation of environmental contamination at the site.

Those who are seeking liability protections under CERCLA or are conducting ESAs using federal funding should follow EPA’s requirements for All appropriate inquiry, as well as the ASTM standards.

Lenders who wish to qualify for the Lender liability exemption are required to follow the requirements laid out under s. 292.21, Wis. Stats., which are different than ASTM Phase I standards.

When ESAs are required

Situations when ESAs are required

Wisconsin has no requirements to complete an ESA unless someone has elected to pursue one of the three state programs listed below.

1. Voluntary party liability exemption (VPLE) program

This option is for those who want a DNR certificate of completion that limits future liability for a completed cleanup and applies to subsequent property owners. Phase I and II ESAs are required for the VPLE program.

2. Applications for ready for reuse grants and loans

The DNR requires that applicants for federally funded Ready for reuse grants and loans have completed Phase I and II ESAs.

• Additional standards for this ESA

• ASTM standards and federal All appropriate inquiry requirements apply to ESAs conducted to qualify for ready for reuse.

3. Lender liability exemption

Lender liability exemptions for normal lending, acquiring property through foreclosure, inspecting property, enforcing a security interest in personal property and fixtures and acting as a representative, are available under s. 292.21, Wis. Stats.

Lenders who wish to qualify under s. 292.21, Wis. Stats., must complete ESAs that meet the requirements of s. 292.21(1)(c)2m, Wis. Stats. Note that completing a Phase I or Phase II ESA to ASTM or all appropriate inquiry standards may result in the DNR determining the lender’s ESA is "incomplete" or "denying" the exemption request. Please see s. 292.21(a)(c)2m, Wis. Stats., or the Lender liability webpage for more information on requirements.

4. Bona fide prospective purchaser

Anyone seeking a Bona fide prospective purchaser liability defense under Superfund must complete an ESA that meets the federal All appropriate inquiry requirements, which must be completed or updated within one year prior to the date of purchase. Certain activities required under the all appropriate inquiry requirements have more stringent updating timelines prior to acquisition. Professional qualifications are also outlined in these requirements.

When ESAs are helpful

Situations when ESAs are beneficial

In the situations listed below, ESAs are not required but are generally beneficial for clarifying the environmental situation. The DNR suggests that most people conducting ESAs in Wisconsin follow the current ASTM standards and federal AAI standard. This ensures a comprehensive assessment, and lenders and potential purchasers may prefer or require this.

• Liability clarification letters [PDF] with DNR’s opinion regarding a person’s liability for investigation and cleanup of environmental contamination.
• Lease liability clarification letters [PDF] that clarify for lessees whether the DNR would consider them liable for existing contamination on a leased property.
• Offsite liability exemptions for persons who can demonstrate that their property has been contaminated by substances that originated on a different property.
• Property tax cancellation or reassignment of foreclosure judgment for situations where counties (and the city of Milwaukee) and interested private parties ask the DNR to approve a cleanup agreement. In exchange the county changes the tax liability or ownership of a tax-delinquent property.

If a Phase II ESA identifies contamination and the DNR then requires a full investigation of the type and extent of contamination, ch. NR 712, Wis. Adm. Code [PDF exit DNR] establishes qualifications for environmental professionals undertaking the full site investigation.