When you are starting your own business, there are many complications and risks that you need to deal with. One such risk that can prove to be costly is a property with hazardous contamination. Therefore, getting your property checked by doing environmental site assessments such as Phase 2 ESA can significantly minimize risk. Before getting into the details, let’s understand what entails environmental site assessment and why it is needed.
What Does Environmental Site Assessment Mean?
An Environmental Site Assessment (ESA) entails conducting a detailed review of a specific property to determine its environmental conditions and any current or future liability associated with it. It involves looking into all the property uses in the past and present to find any impact of recognized environmental conditions (REC). A strict and costly liability befalls the owner for cleaning dangerous waste on their property as per the CERCLA act, regardless of the owner’s fault.
The process of ESA involves:
- Property inspection.
- Review of property’s historical records.
- Verifying records available with government agencies.
It is an essential procedure for all the stakeholders involved in the property, such as lenders, owners, land developers, real estate attorneys, and the insurance company. All details and facts are reported in Phase 1 ESA with the opinion on the past or present event that caused the contamination of the property. However, ESA’s are only valid for six months.
Why Take Up Environmental Site Assessment?
As discussed above, the primary reason for conducting an ESA is to determine if any existing or potential future liability exists with the property in question. Usually, properties used for commercial or industrial purposes undergo ESA. It helps identify the chances of contamination from pollutants such as pesticides, petroleum, and heavy metals. Hence, it is beneficial for both the buyer and owner before finalizing the real estate deal.
Apart from assessing the cost liability, ESA also focuses on finding out the extent of contamination, compliance with the laws applicable, and the ideal methods of disposing or cleaning the identified contamination. It can also act as a defence for innocent landowners and give them an escape from the substantial liability concerning contamination. That is why it is conducted by Environmental Professionals assigned by the American Society for Testing and Materials (ASTM) to prove that appropriate inquiry has been made.
What Is A Phase 1 ESA?
Before diving into the details of Phase 2 ESA, it is beneficial to know about Phase 1 ESA. In simple words, a Phase 1 ESA is a summarized report that states facts and reviews about the property’s environmental condition with all the past and present uses. Additionally, it gives an opinion to conduct a further environmental investigation, i.e., Phase 2 ESA or not, for determining the liability of risk associated with the property in question.
It is a credible source of information, as an accredited Environmental Professional conducts the environmental assessment. The process involves the following elements:
- Review of records such as chain of title, use of the surrounding land, review of historical aerial photographs, contacts of agency, etc.
- A visible inspection of the property, its measurement of boundary, and any potential pollutants
- Interviews of past and current owners, tenants, and managers. It can also include interviewing local authorities such as the fire department etc.
- Detailed report presenting any findings, scope of service, documentation of facts, opinion on an additional investigation, a gap in data, conclusion.
What Is Phase 2 ESA?
Phase 2 ESA gets triggered by the opinion stated in Phase 1 ESA in favour of the additional environmental assessment. All the unanswered questions during Phase 1 ESA get resolved here, such as any buried tanks, cause of contamination, etc. The process of Phase 2 ESA involves on-site drilling by geologists to determine any contamination and its severity in the soil, soil gas, and groundwater. It is also known as subsurface investigation or, more commonly, as site investigation.
The process involves determining soil extraction, physical analysis, and laboratory testing to know whether contamination exists or not and to what extent. Like Phase 1 ESA, a qualified professional conducts and supervises the entire process of Phase 2 ESA. Usually, it takes months for the completion of the assessment. As per the reports of Phase 2 ESA, remedial action and liability are determined for the existing and potential contamination in the site.
What Is the Importance Of Phase 2 ESA?
Usually, the cost associated with Phase 1 ESA is relatively low. Whereas expenditure of Phase 2 depends on several factors such as quality of testing, expert’s remuneration, etc., and can be expensive. Despite the high cost, Phase 2 ESA is vital for minimizing the exorbitant cost of future clean-up and legal issues with contamination. Additionally, the best remedial course of action is stated in the report of Phase 2 ESA.
For any commercial or industrial property, ESA must be undertaken in due time to minimize any risks and costs associated with hazardous contamination. Additionally, it can be credential proof that can aid in faster sell-out or lending of the property.