I’ve never had to get a Phase Two Environmental Site Assessment (ESA) done on any property that I own, but I have to imagine it’s got to be a lot like going to see the doctor when you’ve noticed that you haven’t been feeling well. You might luck out and come out of your doctor’s office with their recommendation to lay off the McDonalds or maybe quit smoking…or on the contrary, you might find out that you have something seriously wrong like a tumour or heart problem and they are going to have to go in and surgically remove whatever it is to make you healthy again, or inject you with medicine to make you feel better. I’m not trying to make light of serious health issues through this comparison. There is no question that one’s personal health is paramount above all else, however some people may argue that their land is everything they have and is truly their livelihood, especially if their business resides and operates there, or if its their home.
What I’m trying to say is that during the due diligence process of a land transaction for example, the Phase Two is when things start to get serious. Someone has made the opinion that there needs to be some further investigation into the quality of the land to determine if historical or current activities have caused an issue which might be harming the occupants. All of this is being spurned from the Phase One (read my previous post about how we get to this point). In brief summary, the Phase One ESA is completed which leads the project to either some form of closure by not finding anything that warrants further investigation, or else it will come to the determination that there is enough actual evidence of contamination, or potential for contamination to exist, on the land that there is a need to do a Phase Two in order to confirm those opinions or findings.
And in a nutshell that is what the Phase Two is…an intrusive investigation of the environmental condition of the property…there is going to be some actual digging into the past…there is going to be some poking around to see what’s going on down there. Test pits will be excavated, boreholes will be drilled, monitoring wells will be instrumented, soil will be stuffed into jars, water will be pumped, chains of custody will be filled, coolers will be shipped, labs will be busy doing whatever they do, data will be crunched and reports will be written…this is really the front line of the environmental due diligence industry.
The Phase Two ESA can be a really complex process but doesn’t have to be complicated. Once the decision has been made to commence with the recommendation to move forward with the Phase Two, the majority of the work comes in the initial preparation and planning stage. First and foremost a sampling plan needs to be designed. This is the most important step. If the sampling plan isn’t well thought out you are going to either miss something or end up with a bunch of lab data that doesn’t mean anything or is worth nothing. This could be a very costly mistake at your client’s expense. Sampling plans take so much into consideration and should be designed by someone with experience, and whose considerations might include:
- Where are we going to sample? Are we going to collect samples randomly or are we going to focus on a certain area like the old underground storage tank nest?
- Once we decide where we are going to do the testing, what contaminants are going to test for? Petroleum hydrocarbons? Cyanide? Mercury? Methylethylmeatball?
- What are we testing? Soil? Groundwater? Sediment? Air?
- How are we going to get the samples? Test pits? Boreholes? Monitoring wells? All of the above?
- What lab is going to test them? The one in some guy’s garage or an accredited certified and approved lab?
Somebody good better have some good answers to these questions…you need to hire a good consultant and trust them, but ask lots of good questions about the sampling plan they design for you (the word ‘good’ 4 times in one sentence is emphasis). I’m sure there are lots of cases where the over design of the plan due to the conservatism of the practitioner possibly leads to unnecessarily overspending or inflated costs for the Phase Two project…do we really need 5 boreholes for one underground storage tank? Do we need to test for every element on the periodic chart? And the under design of the sampling plan will lead to big misses which could possibly lead to contamination not being discovered.
Once a good sampling plan is established and agreed upon by all stakeholders the project moves forward with the field investigation. It is important that everyone agrees and understands what is going to happen during the Phase Two so there are no surprises when a drilling crew shows up to drill a 20′ borehole through the ceramic floor tiles in your office’s foyer).
Underground utility locates are filed, safety concerns are addressed for the field staff and then the sampling plan is implemented. It is critical that the people conducting the field work specified in the sampling plan are qualified…I can’t stress that enough. Mistakes made in the field can be very costly if you have to go back because a sample was missed or insufficient data was collected because the field technologist “didn’t know”. In Ontario the Ministry of Environment (MOE) has provided a general guidance document for public consultation in regards to the sampling of contaminated sites. Although it’s a bit dated (1996) it is still relevant as one of our industry standards (https://archive.org/details/guidanceonsampli00ontauoft). In later posts I will provide additional details for sampling procedures as there is a ton of information out there worth reviewing and posting about.
Once that sampling plan is executed, the field data and samples are gathered and analyzed. An accredited laboratory follows analytical procedures to determine the concentrations of the contaminants that are in the samples. Those procedures are defined by our good friends at the MOE (https://dr6j45jk9xcmk.cloudfront.net/documents/1006/3-6-12-protocol-for-analytical-methods-en.pdf).
Typically an environmental scientist, engineer, hydrogeologist or someone with the necessary qualifications and experience, will evaluate all the field and lab data and come to a conclusion about the environmental quality of the land under investigation. In Ontario there are criteria or limits used for the comparison of the lab data to define the presence of contamination (http://www.mah.gov.on.ca/AssetFactory.aspx?did=8993).
At the end of the evaluation stage a formal written report is normally prepared which outlines all the work that was completed and conclusions regarding the results. The report usually ends in one of two statements (not in these exact words): 1) The concentrations found on the property are below the allowable limits and no further investigation or work is required, or 2) The concentrations exceed the allowable limits, contamination is present, and something should be done about it…CONSULTANT INSERT RECOMMENDATIONS HERE.
Recommendations based on unfavorable results usually include some form of supplemental delineation, remediation or risk assessment. Without writing a novel about this stuff I will delve into that in separate posts. Those recommendations may proceed further if needed to meet the overall objectives of the whole ESA process. For example the sale of a parcel of land to a buyer may not go through unless they get financing and the bank will not lend money until they can get a clean bill of health. Therefore remediation will need to take place to clean up any contamination that was found.
Similar to the Phase One process, the following two versions of the Phase Two ESAs are typically completed in Ontario:
- The standard Phase Two that is used for day-to-day business/property transactions. This type generally follows the Canadian Standards Association (CSA) Standard “Z769-0o (Reaffirmed 2013) – Phase II Environmental Site Assessment“. http://shop.csa.ca/en/canada/environmental-auditing-and-related-investigations/cancsa-z769-00-r2013/invt/27010352000.
- The MOE Ontario Regulation 153/04 (as amended) version of the Phase Two ESA that is used for filing a Record of Site Condition. This type of Phase Two has specific requirements of what is completed during the assessment which are defined for us by the MOE. A copy of the MOE’s guide to completing a Phase Two ESA to the regulated standard is here http://www.mah.gov.on.ca/AssetFactory.aspx?did=9279.
The costs to complete a standard due diligence Phase Two are highly dependent on the results of the Phase One. Simple Phase Twos could range anywhere on average from $5,000 up to $10,000 and might include the investigation of one or two areas of concern only. More detailed investigations for larger properties with many areas of concern requiring investigation could range easily between $20-50k and could involve multiple rounds of testing to narrow down the volume of contamination. Driving factors in the determination of the costs for Phase Two investigations are usually the lab fees and drilling subcontractor costs. Both easily add up to 50% or more of the total cost of the project. The costs for the regulated version of the Phase Two are typically double the costs of the standard.
Organized and efficient firms can generally turn basic Phase Two projects around in 3-4 weeks; however a Phase Two ESA for the purpose of filing a Record of Site Condition can take months, or over a year to complete if remediation is required. A project’s schedule should be carefully considered if any environmental due diligence requirements need to be met.
This post is intended only to give an overview of the Phase Two process. What I’ve put down in words only scratches the surface. I haven’t spent any time discussing important topics such as what do with off-site contamination issues and reporting to the regulators; Phase Two liability importance; quality assurance and control practices; the actual science behind environmental contamination and its mobility in the subsurface, etc. etc. etc.
Phase Two investigations are really quite interesting especially if you are crazy about hydrogeology and environmental science, or if you are really into the business models behind brownfield sites and what value they hold for redevelopment purposes…the Phase Two is the key to unlocking what steps are needed to move forward.