When Phase One ESAs Get Weird

I love the title of this post because it really portrays a certain situation consultants, property owners, developers, etc. face when dealing with old Phase One Environmental Site Assessment (ESA) reports.  It happens all too often that these old reports get passed down like a bad family heirloom that no one wants to get rid of because they think it might be worth something.  In actuality they are probably worth nothing more than the paper that they are written on.  If you do end up with an old Phase One ESA and you are faced with making a decision about buying or refinancing a property based on those results, things can get weird, if not end badly, and possibly put yourself into an unnecessary lawsuit, if you do so.

The relationship between the client and the consultant that the client hired to assess their property is very special since the consultant is providing the client with a form of insurance through reliance on their Phase One report (that’s sounds complicated).  Reliance is such an important aspect of the due diligence assessment process which so few people understand.  All too often we have people with these old Phase One reports making decisions based on them without knowing the consequences of not having that reliance.  The reasons why we shouldn’t rely on someone else’s Phase One ESA are as follows:

  1. They might be too old. – Typically I wouldn’t recommend using a Phase One report if its older than a year.  These reports are nothing more than a snapshot in time.  In accordance with Ontario Regulation 153/04, if you need a Phase One ESA for the purpose of filing a Record of Site Condition you cannot use it if it is older than 18 months.
  2. Things can change overnight. – Anything can happen in a short amount of time…spills of fuel, changes in manufacturing or operations processes, moving of waste storage areas, etc.  If that old report was done after things or releases to the environment had occurred there may be hidden liabilities on the property that you will never know about until its too late.
  3. Standards and the Phase One ESA process has changed. – The fundamental components of a standard Phase One ESA haven’t changed much in Canada since the early 2000s.  In Ontario however, major changes in the process and criteria for ESAs have changed with respect to brownfield property assessment and Ontario Regulation 153/04, including the allowable limits for contaminant concentrations on a property.  In Ontario, as of 2011 new criteria used in the comparison of environmental soil and groundwater data have been redefined by the Ontario Ministry of Environment and Climate Change (MOE).  Here is a link to the new criteria (http://www.mah.gov.on.ca/AssetFactory.aspx?did=8993).  The MOE changed the standard soil and groundwater criteria in 2011 which resulted in more stringent allowable levels of contaminants on a property (for the most part, some levels actually went up).  Due to those reductions and more stringent levels imposed by the MOE we are now seeing properties that were assessed pre-2011 that were assessed as being clean, are now being identified as having levels of contaminants exceeding the criteria (now are dirty?), even though no changes to the operations or sources have occurred.  (email me if you are confused about this and I can give you some better examples, northenvironmental@gmail.com)
  4. Why was the Phase One done in the first place? – This is an important factor to consider when reviewing an old Phase One report.  Although the fundamental components of the process shouldn’t change, there are different reasons why a Phase One ESA is done that may affect the outcome, results or recommendations.  It is always recommended that the objectives for doing a Phase One are clearly stated to your consultant so that the Phase One is tailored to suit your needs.
  5. Who did the previous Phase One report? – Unfortunately you can’t go back in time and have control over the quality of the work produced in the prior report. In addition you will likely not even know who the previous assessor was or what company did it.  Lots of times the company doesn’t exist anymore, or maybe the assessor isn’t qualified to be doing Phase One ESAs.  They may not have been following the required standards in place at that time, or even worse, they might have been the cheapest outfit that the other guy could find to do the work.  Maybe they skimped on paying for important regulatory searches or made some short cuts to get the costs down? Remember, you get what you pay for…

If you rely on a prior Phase One done by someone else, and you end up finding contamination on your property at a later date (that the original Phase One didn’t identify due any one of the five reasons above) you may be held liable for that contamination since its on your property.  Furthermore, if you haven’t been given any legal permission to rely on that report from the prior consultant,  you will be left on the hook for possible clean up costs and not have their insurance to fall back on.  You may also be susceptible to fines or environmental penalties as a result of the contamination.

The best advice I can give is that if you end up with an old Phase One report, don’t put too much faith into it and rely on it as your only source of information…hire a good environmental consultant and give it to them as part of the records review of a new updated Phase One.  Your business and land are worth it, you have too much riding on it, financially and otherwise to make that mistake!




2 thoughts on “When Phase One ESAs Get Weird

  1. Shouldn’t rely on the old report, but be sure the new consultant gets a copy. The history and any prior recommendations (that may or may not have been followed) could be very valuable information.


  2. Great piece with some key insights I wish were more common knowledge. And Wayne is right on as well… old Phase I’s are great starting points. But you should never rely on a snapshot in time prepared with old technology, industry knowledge and perhaps a completely different regulatory regime.


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