Due Diligence Terminology

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.
  • Transaction Screen (TS) – A transaction screen is conducted for a parcel of commercial real estate where the user wishes to conduct limited environmental due diligence (less than a Phase I ESA). If the driving force behind the environmental due diligence is a desire to qualify for one of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) Landowner Liability Protections (LLPs), this practice should not be applied.  The ASTM standard for this practice is ASTM E1528 - 06 Standard Practice for Limited Environmental Due Diligence: Transaction Screen Process.  Guidance Document
  • Controlled Recognized Environmental Condition (CREC): A recognized environmental condition which involves a past release of hazardous substances or petroleum products that has been addressed to the satisfaction of the applicable regulatory authority and that is subject to activity and use limitations. The environmental professional shall list any controlled recognized environmental conditions in the findings and conclusions sections of the Phase I Environmental Site Assessment report.