Whitehead Environmental Solutions (Whitehead E. S.), is a Plano, Texas based consulting firm that specializes in environmental due diligence services for Texas properties.
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What is a Phase II Environmental Site Assessment?
When is a Phase II ESA Needed?
How Long Does a Phase II ESA Take?
How Much Does a Phase 2 ESA Cost?
Who Typically Needs a Phase II ESA?
In most Real Estate deals, a Phase I ESA is conducted to determine if there are any potential environmental concerns with the property. The ESA will determine if a Recognized Environmental Condition (REC) or a Vapor Encroachment Condition (VEC) is present. In some cases, a Phase II Investigation is recommended and in others it is inferred by the REC and/or VEC.
The environmental assessment process is generally performed in a stepped process to keep costs down, and limit more expensive Phase II Investigations (soil, groundwater, and/or vapor) to properties that need this extra level of evaluation.
For example, a vacant undeveloped property with no apparent environmental concerns or RECs will generally not warrant any sampling. On the other hand, if the Phase I ESA identified potential subsurface concerns as is the case for older convenience stores, former filling stations, and dry cleaners using tetrachloroethene or “perc”, then a Phase II Investigation would be recommended to fully assess the property. The results of the assessment will ultimately determine if the chemicals of concern (COCs) or contaminants on the property exceed state regulatory levels. If they do, then the Site may be identified as “contaminated” and need assessment through an applicable state regulatory program.
In regard to Who Pays, it depends. We have had sites where the Seller or Buyer paid for the Phase II Investigation and in other cases they split the cost. In my experience, Buyers are less likely to pay for the Phase II Investigation by themselves because they may not purchase the property if it is impacted. However, if the value of the property is sufficient and the costs for clean up and regulatory closure are reasonable, the seller/buyer can come to an agreement and make a deal.
A Phase II ESA is a more detailed investigation that typically follows the Phase I ESA. However, in some cases the Phase II Investigation could be performed concurrently or before the Phase I ESA. This would be the case on a property with a high likelihood of contamination such as a cleaners that had used perc for 40 years or an old service station.
While the Phase I ESA primarily involves review of available data, the Phase II Investigation is based on collecting environmental data. This step includes soil, groundwater, and soil gas sampling to confirm the presence/absence of chemicals of concern (COCs) such as petroleum hydrocarbons, heavy metals, chlorinated compounds (dry cleaner solvents and degreasers), and/or PCBs.
A Phase II ESA is triggered when a Phase I ESA identifies RECs that suggest possible contamination. For instance, if the property was once a gas station, cleaners (other than a drop off station), or manufacturing plant, a Phase II ESA is recommended to determine the environmental status of the Site. This assessment is crucial for properties intended for redevelopment or for transactions where the buyer or lender requires an understanding of environmental risks and costs.
The duration of a Phase II ESA can vary significantly depending on the size and complexity of the Site, availability of drillers, weather, number and types of samples required, laboratory analysis time, and any follow up sampling needed to clarify the first round of sampling. Typically, a Phase II Investigation will take 15 to 30 calendar days. The time frame should be discussed with the environmental professional conducting the assessment to set realistic expectations.
The scope and resulting cost of the Phase II varies based on the nature of the potential RECs, what media is potentially impacted (soil, groundwater, air, surface water, and/or sediment), number of samples and timing (standard or rush analysis), contaminants identified, and complexity of the Site. Additional sampling and analysis may be required at a later time, if the initial data set is inconclusive or not sufficient to fully evaluate the Site. The initial sampling is generally used to determine if the potential RECs have impacted the property and then determine which is the best Path Forward..
At Whitehead E. S., we recommend an iterative approach to sampling with some initial preliminary sampling of the primary COCs in the primary Areas of Concern, which in most cases may consist of a Limited Phase II Investigation. This iterative process can usually avoid spending too much on properties that may look bad but are not actually impacted with any COCs above state regulatory levels. Based on past experience, the cost for Phase II Investigations can vary from $7,000 to $10,000 for small properties with limited sampling (generally soil only) to somewhere in the range of $16,000 to $19,000 for larger sites with multiple sources of contamination.
The responsibility for paying for a Phase II ESA generally falls to the party with the most interest in determining the environmental condition of the property. In a real estate transaction, this can be either the buyer or the seller, depending on negotiations and the motivation for the assessment. In some cases, the cost may be shared, especially if both parties stand to benefit from the findings. Lenders may also require a Phase II ESA before approving financing and may have specific requirements for the assessment.
Pretty much anybody buying property or any business that is leasing a property that wants proof that their operations did not impact the property. Typically, the following groups of people are most likely to require a Phase II ESA:
In summary, a Phase II ESA is a critical tool for a wide range of stakeholders in real estate, development, finance, corporate management, and public administration to manage environmental risks associated with land and property transactions. A Phase II ESA is a vital process for ensuring environmental safety and compliance. It provides crucial information for property transactions, redevelopment projects, and land use planning. Understanding when it is needed, how long it takes, and who bears the cost is essential for anyone involved in real estate or land development.
Our staff has conducted many Phase II Site Investigations of real estate properties and industrial facilities in Texas. Whitehead E. S. has the expertise you need to evaluate potential contaminants/COCs and develop a “game plan” commonly referred to as a Path Forward letter with potential costs for cleanup and regulatory closure. Our goal is to be your “Deal Maker” and Solution to Pollution!
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Whitehead Environmental Solutions (Whitehead E. S.), is a Plano, Texas based consulting firm that specializes in environmental due diligence services for Texas properties.