What Is an Environmental Impact Assessment?

With the increased interest in green building and sustainable development, any developer looking to get a significant project approved these days must be prepared to answer questions about doing an environmental impact assessment, especially if it’s brought up by the community. Generally, a private developer will be required to conduct […]

With the increased interest in green building and sustainable development, any developer looking to get a significant project approved these days must be prepared to answer questions about doing an environmental impact assessment, especially if it’s brought up by the community.

Generally, a private developer will be required to conduct a Phase 1 environmental site assessment (ESA). This is different from an environmental assessment of development outlined in a plan or policy. The intention of both, however, is to identify and evaluate potential consequences for the existing environment of the community or area prior to beginning any development.

While only federal agencies and those seeking to develop using federal resources must complete an environmental assessment or official “environmental impact statement” before developing, which is part of the National Environmental Policy Act (NEPA), most commercial developments must do a Phase 1 ESA as part of the due diligence process.

Here, we discuss what an environmental assessment is and isn’t and whether you need one.

What is an environmental assessment?

An environmental assessment is intended to be a quick, proactive analysis of what consequences a plan or project may have on the environment in the area where it’s being proposed. It is supposed to preface and possibly lead into a more in-depth environmental impact assessment; only if the initial environmental assessment is determined to have negative effects would the more in-depth study be necessary.

Commonly confused terms

When trying to figure out as a developer/investor/builder what you’ll need to get, it’s important to know the difference. Here’s a look at some terms and an explanation of each.

Environmental assessment vs. environmental impact assessment

An environmental assessment considers the broader effects of a plan, a policy, or project(s). It’s quick and concise. On the other hand, an environmental impact assessment (or environmental site assessment) specifically relates to a project, and it takes a deep dive. So, if a broader environmental assessment — for example, to develop a large swath of land into a planned community — has returned a Finding of No Significant Impact (FONSI), the in-depth study would not be necessary.

For example, if developers put in a bid to build townhomes on a few parcels of that land, they wouldn’t have to do an environmental impact assessment to further investigate. The entire plan has been determined to have no significant impact.

Environmental impact assessment vs. environmental site assessment

While the former is generally only required for projects developing on public lands, the latter is for private commercial developments.

Environmental assessments and environmental impact assessments fall under the oversight of NEPA. Only those proposed projects situated on certain public lands would need an EIA.

Environmental impact assessment vs. strategic environmental assessment

The environmental assessment process is driven by governmental/NEPA guidelines. Projects that might require it would be, for example, wastewater treatment plants or developments on former mining lands. Environmental site assessments are similarly driven by public policy, though applied to private commercial developments.

The strategic environmental assessment is more of an opt-in due diligence process whereby private developers, investors, and companies can assess proposed projects against benchmarks of environmental, community, and public health parameters. Entities that are interested in sustainable, responsible development — either from a good-citizen standpoint or because they’re going after incentives — gravitate towaed organizations such as the volunteer, member-guided IAIA (International Association for Impact Assessment) for education, third-party assessment, and to become part of the sustainable community.

What might be discovered during an environmental assessment?

The types of things discovered during an environmental assessment that could have an impact on the development might include:

  • Contaminated areas of land or water.
  • Potential public health risks.
  • Potential negative effects of development on a nearby community.

What would lead to the need for other studies/investigations?

Basically, if it’s found that significant negative impact/consequences could potentially be triggered by development, a more thorough environmental impact assessment and reporting process would follow. However, there could be all sorts of minimal impacts that would not set off the next phase.

Why is this study important to real estate investors?

Knowing the particulars of environmental assessment at the start of a project is a step a developer can take to demonstrate they’re approaching in good faith and that they want to respect the integrity, natural features, and character of the land they’re proposing to develop. A more jaded yet realistic reason is that if an environmental impact study turns up something like contaminated water or hazardous waste in a landfill, the developer may not want to go forward with the project.

In most cases, completing an environmental assessment for a new plan or policy will actually provide grounds to show that a more in-depth environmental impact specifically for each project that follows isn’t necessary. That’s pretty much the best-case scenario developers want.

Who among developers does environmental impact studies?

The builders, developers, and owners who proactively and assertively seek guidance and oversight from groups like the IAIA generally have a business mission of environmental responsibility. Social and community responsibility goes hand in hand. Developers and investors with a goal of developing sustainably, obtaining LEED certification, or being a positive force in the community are typically first to look into this process.

For a builder or investor to undergo any variant of an environmental impact study, though, they have to be in the project for the long term and ready to work harder to make it happen the right way. Whether dealing with the federal government or with a group like IAIA, a developer has to see it through. And they may have to redo their plans based on the findings or walk away.

Should you prepare to do an environmental impact assessment?

In short, if your proposed project isn’t some sort of large-scale endeavor that requires usage of federal lands, you don’t need to prepare for a NEPA evaluation. But if you take pride in holding your projects to higher environmental stewardship standards than the government does, you’ll probably want to undertake an impact assessment with the likes of the IAIA.

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