Enviromental Due Diligence In The Cannabis Industry: Why A Phase I Is The Best Money You Can Spend

By Doug Brown, ASTI Environmental.

So you’re looking at buying property to build a grow facility or a dispensary, perhaps it’s your first foray into real estate, you hear the word Brownfield, and your attorney or colleague tells you to get a Phase I... Now what?

Engaging an Environmental Professional to conduct a Phase I Environmental Site Assessment (Phase I) is the first step to obtain liability protection both federally and with the State should the property you intend to purchase have recognized environmental conditions (RECs).  An ASTM E1527-13 Phase I is the only environmental screening product that affords liability protection and includes:

• A review of prior environmental reports (if available)

• Freedom of Information Act (FOIA) requests are submitted to the State and the Municipality where the property is located

• The purchase of an environmental database

• An Environmental questionnaire being sent to the buyer and seller

• Aerial and Sanborn Map review

• Site reconnaissance  

We publish a 600-700 page report and a key paragraph confirms whether or not there are RECs. If RECs are not identified in the Phase I, then the Phase I report would be finalized and the process would be complete. 

OK, so what’s a REC ??

The presence, or likely presence, of hazardous substances or petroleum products on a property under conditions that indicate an existing release, a past release, or the material threat of a release into existing structures on a property or into the ground, groundwater or surface water is known as a REC and properties with RECs are often generically referred to as Brownfields.

Examples of RECs include, but are not limited to, vent pipes, paint booths, aboveground/underground storage tanks, unmarked drums, trench drains, chemicals and solvents, transformers and capacitors, hazardous waste containers, stained soil or pavement, fill material of unknown origin, waste storage areas, construction debris, stressed vegetation etc.  RECs are not intended to include de minimis conditions (i.e. insignificant amounts) that generally do not present a material threat of harm to public health or the environment, and that generally would not be subject to enforcement action if brought to the attention of regulators. 

The final determination of what is or isn’t a REC rests with your Environmental Professional, and some are more conservative than others. 

If RECs are identified in Phase I, then a Phase II ESA will be completed to address said RECs and classify soils for compatibility with proposed future uses and/or for off-site disposal.  Phase II begins with a review of analytical data in prior Phase II or other environmental reports (if available) and sampling of soil, groundwater, soil-gas, and/or indoor air for contamination.  The lab results from the sampling are then compared to the State Agency’s cleanup criteria to determine if there are exceedances and dictates the future course of action.  Each state has its own specific requirements, but generally speaking:

• If there are no chemical compounds that exceed the cleanup criteria associated with future use, then no further investigation will be recommended, and the final Phase II report will be published to complete the process. 

• If there are impacts above the cleanup criteria, then engineering controls could be implemented, or with more problematic sites, remediation could be recommended.  

Once a buyer purchases environmentally impacted property, they will be required to prevent unacceptable risk to human health and the environment, notify third parties that may come in contact with the soil, groundwater, soil-gas, and/or indoor air contamination, and to not exacerbate the contamination.  

Depending on the State agency’s risk tolerance, engineering controls can be implemented, such as literally fencing off the most contaminated areas of your property to prevent human exposure, using the building envelope to encapsulate contamination, berming or placing contaminated soils under roadbeds.  For larger and more severely contaminated properties, waste characterization, source evaluation and removal may be required, or on-site remediation, including but not limited to soil stabilization and encapsulation, product recovery and source removal and design, installation, operation, monitoring of sub-slab depressurization systems to remedy soil-gas infiltration.

Before we get ahead of ourselves, let’s simply do a Phase I and ensure the property you’re interested in is a silk purse and not a sow’s ear.

Doug Brown, ASTI Environmental can be reached at dbrown@asti-env.com.

Encuentra nuestro contenido en Español en El Planteo:

• Impacto Ambiental: Crean el Primer Observatorio de Residuos de Argentina
• Básicos del Cannabis: Todo sobre el CBN
• Snow Tha Product x BZRP: Explicación de la Letra y Traducción al Español