We work with lenders and borrowers nationwide and historically, environmental due diligence consisted of Phase I ESAs for most transactions/loans and Transaction Screen Assessments (TSAs) for lower risk transactions/loans.  However, over the past 10+ years, for many reasons including new SBA guidance documents, higher levels of risk tolerance and the development of new lower level environmental screening tools (Records Search with Risk Assessment, Desktop Reviews, ORMS EnviroFlash reports), we have seen more variations of environmental due diligence being used. Because of this, we have seen the use of the TSA decreasing dramatically.  In addition, the TSA provides no protections from CERCLA liability like a property ASTM/AAI Phase I does.

In our opinion, the main reason for this is cost.  The SBA has pretty much removed the TSA from its due diligence options (with the exception of car washes without fueling operations).  Unfortunately, we often see TSAs being used to save money for SBA deals but if anything is found to be an issue, it automatically has to go to a Phase I before anything else is done.  This costs money and often more importantly, time to be lost for a transaction.  The issue isn’t that it is usually not being used to add more “meat” to a screening product but rather to remove fees from a more robust Phase I.

I would welcome thoughts on this topic.