An environmental questionnaire is the preliminary task for environmental due diligence process by lenders and other information-seekers. The questionnaire screens the environmental hazards of a property undergoing any transaction. It consolidates the known facts of a property up front for a basic level of contamination and health risk presumption. Typically, the questionnaire applies in the pre-loan qualification process. In the same way, the form applies in sales and title transfers. Ultimately, any possibility of contamination could lead to a transaction screen review, desktop report, or Phase 1 ESA report. Updated November 26, 2018.
The Small Business Administration (SBA) specifies its own requirements for an environmental questionnaire. For instance, the SBA environmental questionnaire can require adjacent property information. The SBA suggests lenders complete this form in good faith upon visiting a site. Similarly, consultants request users of a Phase 1 ESA report to complete the form as well. Likewise, the USDA states any activity that may adversely affect the environment must not be undertaken without completing an RUS environmental review process. Thus, the USDA additionally has specific requirements for an environmental questionnaire. Other entities and institutions are also beginning to require the preliminary due diligence encompassed by an environmental questionnaire.
The environmental questionnaire in a loan process is only a basic screening tool. This is a preliminary step in risk assessment, and isn’t a proper ESA. The environmental questionnaire does not intend completion by an environmental professional. It is merely a tool for lenders or other entities. Consequently, it does not replace a proper Phase 1 ESA. If an environmental questionnaire indicates any chance of environmental risk, the services of an environmental professional then become a requirement. This might begin with a transaction screen review, or an environmental desktop report. In the same way, the requirement for a proper Phase 1 ESA report can become necessary.
On the other hand, an environmental questionnaire can also be requested by an environmental professional during a transaction screen review, desktop report or Phase 1 ESA. In this case, an engineering consultant may request their Client, the report user, or the property owner to complete the questionnaire. The purpose in the case, is cover all grounds during a comprehensive assessment.
It is not uncommon for there to be a signature requirement on the questionnaire. The purpose is to hold those completing the form accountable for their answers. All questionnaires, regardless of purpose or origin, are required to be performed in good faith.
To qualify for Landowner Liability Protection offered by the Brownfields Revitalization Act of 2001, a Phase 1 ESA report user must provide the a User Data Request Form to the environmental professional. This is also referred to as a User Data Questionnaire. However, it should not to be confused with the Environmental Questionnaire (discussed above).
Typically, there are at least four pillars to the user data request form. The first inquiry involves the potential knowledge of environmental cleanup liens against the site. The second question pertains to any knowledge of activity or land uses limitations currently on site, or whether any have been previously recorded in a registry. The third inquiry involves specialized knowledge or experience of the person potentially seeking to qualify for the Landowner Liability Protection. And lastly, the fourth question clarifies the relationship of the purchase price to the fair market value of the property, if there is no contamination. Failure to provide the User Data Request Form information could result in a determination that “all appropriate inquiry” is not complete.