Frequently Asked Questions about ESAs, AAI and Due Diligence

This page lists answers to frequently asked questions regarding environmental site assessments (ESAs), All Appropriate Inquiry (AAI) and Due Diligence.

1. Am I required to conduct an environmental assessment before selling a property?

No. The State of Wisconsin has no such requirement. Lenders, however, often require an assessment of commercial and industrial properties before financing a real estate transaction.

2. What are the differences among these terms?

• Environmental Site Assessment (ESA) – A commonly used term to describe the general process for evaluating the environmental condition of a property. Includes Phase I and Phase II. Also used in state law to establish requirements for lenders that want to qualify for a state liability exemption.
• All Appropriate Inquiry (AAI) – The federal code for conducting a Phase I ESA in order to preserve a Superfund liability defense and to qualify for federal brownfield grants, as well as state grants and loans that use federal funds. Equivalent to ASTM Standard E 1527-05.
• Environmental Due Diligence – An older, more general term used to describe environmental site assessment.

3. What are the goals of a Phase I ESA?

1. To identify recognized environmental conditions and establish a minimum level of inquiry for a Phase II; and
2. To identify specific areas of concern on or adjacent to the property where hazardous substance discharges occurred or may have occurred.

4. Why is it important for local governments and others to conduct an environmental assessment that conforms to federal All Appropriate Inquiry standards?

There are several reasons. First, it is always a good idea to know the environmental condition of a property. Second, if a potentially contaminated property is to be purchased, it provides a liability defense under federal Superfund law, even if the assessment shows that the property is contaminated. Third, for local governments, it preserves eligibility for federal brownfield grants, as well as for certain state brownfield grants and no-interest loans.

5. Does a Phase I assessment that follows All Appropriate Inquiry procedures provide state liability protection?

No. All Appropriate Inquiry is a federal regulation to address concerns about Superfund liability at brownfield properties. It has no equivalent in Wisconsin law. In fact, s. 292.11, Wis. Stats. [exit DNR], is clear in assigning responsibility for environmental contamination to both the person that caused contamination and to the person that currently owns the contaminated property.

6. Are there ways to obtain state liability protection?

Yes. Local governments have a statutory environmental liability exemption under state law for brownfield properties that they acquire through “involuntary” methods such as condemnation and tax foreclosure. Private parties also may obtain liability protection for contamination that arose on a different property, for property that they lease and after completing a cleanup. Lenders have a statutory liability protection when they follow state requirements. For more information, please see Liability Overview web page.

7. Must I sample beyond the borders of the property during the Phase II Assessment?

Sometimes. Sampling beyond the property boundary may be necessary if a discharge of hazardous substance on the property may have led to an environmental impact elsewhere, such as the discharge point of a drainage pipe.

8. What are the common problems that DNR finds in Phase I and II ESA Reports?

The most frequent problem is gaps in the data that DNR needs in order to make its determinations, such as approval of a Ready for Reuse loan or grant. For example, recognized environmental conditions may be too broadly described or there may be too little information about past property uses.

9. Who is responsible for notifying DNR when a Phase II assessment shows contaminated soil, groundwater or other media?

The legal responsibility falls to both the person who caused contamination and the person who currently owns the property. Please see our Spills web page for information about how to report contamination.

10. What will happen after I inform DNR of contamination?

Most often, the responsible person(s) will receive a letter from a DNR regional office informing him or her of the legal obligations to investigate the full extent of the contamination with the aid of a qualified environmental professional. On occasion, DNR will already have enough information about low level contamination to determine that no further investigation is needed.

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