by Mohammed P. Jagani
Most stakeholders involved in real estate transactions are familiar with a Phase I Environmental Site Assessment (ESA), a study routinely undertaken as due diligence associated with property transfer and financing. Briefly, a Phase I ESA is a documentary review of a property’s historical land uses and a visual inspection of the premises to identify any actual or potential sources of environmental contamination.
Fewer people are familiar with a Phase II ESA, which is undertaken as a follow-up intrusive study when a Phase I ESA reveals sources of contamination. Perhaps this is because statistically, fewer than 30% of all Canadian properties have historically revealed potential problems that would warrant further investigation. However, for those properties that do, investment in Phase II ESA is well worth the cost incurred, for it could reveal gremlins in the subsurface you wouldn’t otherwise have a clue about, which could directly affect the market price of a property.
What is Phase II ESA? Simply put, a Phase II ESA is a soils and/or groundwater investigation, or a “down and dirty” way of getting “the dope” on real estate. It involves sampling and analyses of soils and groundwater. This could range from a number of drilled boreholes or test pits advanced around an underground storage tank (UST), to an extensive investigation over large tracts of the site to map contaminated soils or groundwater.
Which properties would warrant a Phase II ESA? Obvious examples include sites with USTs, such as gasoline service stations, apartment building properties, or automotive services garages; filling or dumping sites; sites with heavy industrial land uses; sites used by degreasing operations or dry cleaning facilities; and waste management facilities or transfer stations.
Why would you Conduct a Phase II ESA? As a
Realtor or Vendor of a property, it behooves you to know
if your site is contaminated, so that you have a chance
to cleanup the contamination prior to putting the property
up for sale. As a prospective Purchaser, you want assurances
that the property has clear title prior to doing the deal,
to preserve its market value.
As a property Developer, you could be looking at re-zoning the property for a higher use (e.g. Commercial to residential), and want to ensure compliance with Ministry of the Environment’s (MOE) guildelines for a specific use to facilitate a building permit application. As a Mortgage Lender, you obviously want your collateral to hold its value.
Who should Be Engaged to Conduct a Phase II ESA? Generally, any Environmental Consultant with a geosciences background can conduct a Phase II ESA. However, you would be well advised to use a licensed professional, such as an Engineer or Hydrogeologist, as your Assessor. Such persons are obliged by legislation to maintain a duty of care and to follow established standards, such as the Canadian Standards Association (CSA) protocol Z769-00 Phase II Environmental Site Assessment (CSA, March 2000). As an added bonus, most Assessors carry professional liability insurance that can cover inadvertent errors and omissions.
What if contamination is Identified? Follow-up studies are then undertaken to confirm or delineate the nature and extent of the contamination. Practical and cost-effective response actions can then be selected for cleanup or on-site management of the contamination.
Is there an Obligation to Report to the MOE? Normally, findings of contamination are kept confidentail under a privileged Consultant-Client relationship and your professional is not obliged to act as a “whistle blower” to any authority, except in cases of imminent danger to public health and safety, such as a noxious release into the atmosphere or a toxin into a water supply aquafier.