by Kerri Boddy
Senior Environmental Specialist

Have you ever come across a situation where the property owner provides a Phase II Environmental Site Assessment (Phase II), which indicates the property is “clean.” You contact your bank and your loan officer indicates you still need a Phase I Environmental Site Assessment (Phase I). You are confused and after you hang up the phone, you are still unclear why you need to have the added cost of a Phase I.   

If you have existing Phase II, many times we are asked if a Phase I Environmental Assessment (ESA) is needed. After all, a Phase II indicates if a property is contaminated, so why would a Phase I ESA be needed to tell you if you have a potential for on-site impacts if a Phase II indicates you have no impacts? This can be confusing, especially if you have a No Further Action letter from the State or other governing regulatory body saying all is well. The best way to explain this is to think of a Phase II as going to the dentist to address one cavity, one issue, one tooth.  The dentist does not look at the entire health of your mouth and take X-rays, after all, that is a different visit. Well, the Phase I ESA is the overall checkup from the dentist where he/she looks at the overall health of your teeth and looks at the entire picture of your mouth. If the dentist had only addressed the one cavity, taking no notice to the health of your entire mouth, other issues could be missed.   

In environmental terms, this can best be explained by the following examples:

  1. You have a Phase II that has been conducted on a shopping center, which was constructed in 1960 and originally was anchored by a K-Mart Automotive Center.  The K-Mart closed and the space remains vacant.  The owner is aware of one underground storage tank that stored waste oil.  The owner has the tank removed and the consultant collects soil samples (and possibly groundwater samples) and laboratory results indicate no impacts.  All seems well until a prospective purchaser conducts a Phase I ESA, which indicates four underground hydraulic lifts and violations regarding chlorinated solvent disposal (Note: these types of solvents generally were used to clean carburetors in the past).  Also, a past employee indicates two of the lifts had not been used for years due to operational problems.  Furthermore, the report indicates evidence of an on-site oil/water separator.  The Phase I ESA recommends removal of the automotive lifts and sampling in the vicinity of the lifts and the vicinity of the oil/water separator.  Thereby resulting in someone incurring the cost of another Phase II.

  2. You have a Phase II on a former gasoline station.  Three USTs that were installed in 1995 were removed in 2015, and you have a No Further Action letter from the State or other governing regulatory body saying all is well.  A prospective purchaser conducts a Phase I ESA, which indicates, unbeknownst to you, that the property operated as an older gasoline/fueling facility from 1920 to 1960.  Because this facility is long gone, its past existence is unknown by current owner.  The Phase I ESA recommends a Ground-Penetrating Radar (GPR) survey to determine if the original tank system remains on site, followed by sampling and removal of the original tanks if they exist.  The GPR does indicate that two USTs remain on site.  As such, removal of the USTs and sampling is recommended.  Thereby resulting in someone incurring the cost of another Phase II.

If you have due diligence needs or other questions regarding other environmental concerns, please contact EI’s Senior Environmental Specialist, Kerri Boddy, at (502) 499-2985 or [email protected].