Chapter 3 CRI Exam I Environmental Law
and Due Diligence UPDATED ACTUAL
Exam Questions and CORRECT Answers
Lender Liability Rule - CORRECT ANSWER - Defines "participation in management" in
order to determine if the lender played a significant role in the transaction, with particular respect
to environmental matters.
Key to not being held liable - CORRECT ANSWER - Take extreme care conducting all
environmental due diligence prior to engaging in business on a property
Phase I Environmental Site Assessment - CORRECT ANSWER - Non-invasive high level
inquiry. Site reconnaissance of subject property and visual inspection of adjacent properties
Phase II Environmental Site Assessment - CORRECT ANSWER - Intrusive. Involves
sampling and laboratory analysis
Phase III Remediation Plan - CORRECT ANSWER - Actual plan to fix what is non-
conforming on the property following a confirmed phase II contamination. Also includes an
implementation plan
Four parts to Phase I ESA - CORRECT ANSWER - i) site reconnaissance
ii) review of historical sources of information
iii)interviews with past and present owners
iv) written report preparation and evaluation
Things a Phase I ESA can reveal - CORRECT ANSWER - Water waste, sewer/septic
issues, stressed vegetation, hazardous waste disposal, accurate historical environmental issues
and remedies.
, Adjacent property use and concerns
Recognized Environmental Conditions (REC) - CORRECT ANSWER - Presence or likely
presence of hazardous substances released into the environment by the property
De minimis - CORRECT ANSWER - Condition that generally is not a threat to human
health or the environment
Brownfield - CORRECT ANSWER - Site no longer in use after former CRE use due to
ESA failure
Conclusions of Phase II ESA - CORRECT ANSWER - 3 conclusion:
Property is deemed not to have actionable REC, property has REC however is de minimis,
property has REC which requires remediation
Things a Phase II ESA can reveal - CORRECT ANSWER - Asbestos, radon, PCBs
Petroleum products
Common Hazardous Concerns - CORRECT ANSWER - Underground Storage Tanks,
lead-based paint, asbestos, Radon Gas,Petroleum Product Contamination,
PCBs
Underground Storage Tanks (USTs) - CORRECT ANSWER - Must follow specific
requirements prescribed by the federal government
Lead based paint - CORRECT ANSWER - Must be disposed of, banned in 1978
Asbestos - CORRECT ANSWER - made up of microscopic bundles of fibers that may
become airborne when disturbed. If inhaled into the lungs, the fibers may cause significant health
problems including asbestosis, mesothelioma, and lung cancer
and Due Diligence UPDATED ACTUAL
Exam Questions and CORRECT Answers
Lender Liability Rule - CORRECT ANSWER - Defines "participation in management" in
order to determine if the lender played a significant role in the transaction, with particular respect
to environmental matters.
Key to not being held liable - CORRECT ANSWER - Take extreme care conducting all
environmental due diligence prior to engaging in business on a property
Phase I Environmental Site Assessment - CORRECT ANSWER - Non-invasive high level
inquiry. Site reconnaissance of subject property and visual inspection of adjacent properties
Phase II Environmental Site Assessment - CORRECT ANSWER - Intrusive. Involves
sampling and laboratory analysis
Phase III Remediation Plan - CORRECT ANSWER - Actual plan to fix what is non-
conforming on the property following a confirmed phase II contamination. Also includes an
implementation plan
Four parts to Phase I ESA - CORRECT ANSWER - i) site reconnaissance
ii) review of historical sources of information
iii)interviews with past and present owners
iv) written report preparation and evaluation
Things a Phase I ESA can reveal - CORRECT ANSWER - Water waste, sewer/septic
issues, stressed vegetation, hazardous waste disposal, accurate historical environmental issues
and remedies.
, Adjacent property use and concerns
Recognized Environmental Conditions (REC) - CORRECT ANSWER - Presence or likely
presence of hazardous substances released into the environment by the property
De minimis - CORRECT ANSWER - Condition that generally is not a threat to human
health or the environment
Brownfield - CORRECT ANSWER - Site no longer in use after former CRE use due to
ESA failure
Conclusions of Phase II ESA - CORRECT ANSWER - 3 conclusion:
Property is deemed not to have actionable REC, property has REC however is de minimis,
property has REC which requires remediation
Things a Phase II ESA can reveal - CORRECT ANSWER - Asbestos, radon, PCBs
Petroleum products
Common Hazardous Concerns - CORRECT ANSWER - Underground Storage Tanks,
lead-based paint, asbestos, Radon Gas,Petroleum Product Contamination,
PCBs
Underground Storage Tanks (USTs) - CORRECT ANSWER - Must follow specific
requirements prescribed by the federal government
Lead based paint - CORRECT ANSWER - Must be disposed of, banned in 1978
Asbestos - CORRECT ANSWER - made up of microscopic bundles of fibers that may
become airborne when disturbed. If inhaled into the lungs, the fibers may cause significant health
problems including asbestosis, mesothelioma, and lung cancer
