Understanding Environmentals

//Understanding Environmentals
What is a Phase 1 or Phase 2 Environmental Site Assessment?
Phase I and Phase II Environmental Site Assessments (ESAs) have been developed to evaluate environmental issues at any site previously used for commercial purposes.
A Phase 1 Report is when an agency comes in and investigates a property and the surrounding areas to make sure that there is no contamination on the property or near the property.  If a Phase 1 shows the potential or actual contamination on the site then many times the bank or agency will recommend a Phase 2 to gather more details to help determine how bad the contamination may be.
What is a Phase II ESA?

If a Phase I ESA identifies potenial contamination of the site by hazardous materials, a Phase II ESA will usually be recommended. The Phase II ESA includes sampling and laboratory analysis to confirm the presence of contaminants. Some of the tests that may be performed include:

  • surface soil and water samples
  • subsurface soil borings
  • groundwater monitoring well installation, sampling, and analysis (may be appropriate on
  • neighboring properties as well to determine the presence of contamination)
  • drum sampling (if any were left on the property)
  • sampling of dry wells, floor drains and catch basins
  • transformer/capacitor sampling for Polychlorinated Biphenyls (PCBs)
  • geophysical testing for buried tanks and drums
  • testing of underground storage tanks
Do I need one?
We always recommend getting a Phase 1 done on commercial deals in order to minimize potential risk in acquiring a property.  Banks will many times require this to be done as well.
Why do we have to do them?  How does it affect the viability of a deal?
When should I walk away from a contaminated site?
If you know a site is contaminated you have the following options:
  • Clean Up
  • Move on
  • Ignore the problem
If you choose to clean up there are grant funds for assessing and cleaning up contamination that could be available.  Usually, it is the responsibility of the seller to establish cleanup standards based on NR700 Regulations.  An experienced environmental company will provide the most up to date remediation methods and cost estimates.  In our experience, the cost of clean up can vary substantially based on the type of contaminate, the location (is it on the desired property or adjacent to it), how long it the contaminate has been there, and how deep it is in the soil.  Dry cleaners and gas stations will have more complicated remediation issues than a light industrial manufacture if there was a problem, in most cases, but there is no way to know until your actually looking at the project on what that cost could be.