My Bank Let Me Out Of A Phase I Environmental Site Assessment!

I Don’t have to Worry

The buyer is elated – “No Phase I! Celebrate!” Really? Are you sure that’s a good thing? The buyer’s response is quite often something to the effect of: “It must not be a concern if the bank isn’t concerned.” To which we usually respond “Not necessarily!”

See, quite often the bank is not concerned, because if the loan recipient goes bankrupt trying to pay for a cleanup on down the road, the bank may just write off the loan as bad debt. They are not liable for the cleanup and that came from the 1996 Amendments to CERCLA (Comprehensive Environmental Response, Compensation, & Liability Act, known as Superfund, ( That gave banks a “safe harbor” from becoming a Potentially Responsible Party (PRP). Thus, the banks cannot be held responsible for a cleanup just because they loaned money on the property. Of course, they have to be very careful in their involvement with the property and cannot actively manage it.

Suddenly, it doesn’t look like such a great favor the bank did for the buyer. And perhaps, the buyer had selective hearing at the time. A savvy banker may say “Officially we are not requiring a Phase I, but we do recommend you do one, for your own protection.” And, regretfully, the buyer only heard the first part of the banker’s statement.

It’s Part of Your Due Diligence

Bank Doesn't Require Phase I ESAForget the bank! As the buyer, you exercise your due diligence to check out other aspects of the property – title, back taxes, infringements, rights-of-way, utilities, building systems, structural integrity of the building, and probably many more things. But you don’t want to know if there is a solvent plume under the building? Something like that can sicken occupants from what is known as vapor intrusion. But, you say, “The building is in great condition and in good repair, that vapor intrusion situation is highly unlikely.” On the contraire, it is highly likely. There are always cracks, crevices, and breaches that vapors can follow into the building. And how about that expensive addition you are going to make? It may get much more expensive or become impossible when you attempt to deal with the contamination beneath the building.

They Can’t Make Me Clean it Up!

You are striking out again. They can make you clean it up. In some cases, they can allow you to leave the contamination in place but they can also require a restrictive covenant be placed on your deed. Getting to that point can be expensive because they can require a Phase II Environmental Assessment, that is, testing of the soil and groundwater at numerous depths and locations to define the plume’s degree of contamination, horizontal extent, and lateral extent. Once the covenant is on the deed, it restricts your use and future buyers’ uses of the property. It can suddenly become very hard to sell the property.

Savvy Buyers Do Phase I’s

That is what we have seen over the past twenty years. The Phase I Assessment is an important part of their due diligence, regardless of the bank not requiring it. As a matter of fact, we have quite a few clients who start with the Phase I because if it shows contamination or a strong potential for contamination, they cut their losses, spend no more on due diligence, and move on to the next property.


You should seriously consider if you want to omit a Phase I Site Assessment. You may save a couple thousand dollars up front but it could turn into losses in the hundreds of thousands of dollars in the future.

Further Assistance

If you need any help, Environmental Safety Consultants ( is here.  We are a Florida licensed environmental engineering company with a Florida licensed Professional Engineer and certified Environmental Assessors on staff. We have been completing Environmental Assessments since they first started being done in 1988. We have the credentials and experience to help you complete your Environmental Site Assessment project.

We are just a telephone call (800-226-1735) or an e-mail away (  Contact us today! We are your Phase I Environmental Assessment Company.

Skip The Phase I Environmental Site Assessment

I Just Want to Do a Phase II Environmental Site Assessment

We have that telephone call quite often. The caller usually says, “Look, just give me an estimate for a Phase II Environmental Site Assessment. I don’t want to do a Phase I.” To which we respond, “Okay, so you have already had a Phase I done?” “No, but I know it was a gas station.” At which point we explain how skipping the Phase I risks omitting information and data which could affect the type of testing you do in the Phase II.

Due Diligence

We further explain that in so doing, the caller may not be exercising due diligence in determining if the site is or could be contaminated from usage of the itself or properties in the vicinity. Why the concern about due diligence? Well, if due diligence is exercised via a Phase I and, if required, a Phase II, and contamination is found later on, Superfund (CERCLA, Comprehensive Environmental Response, Compensation, & Liability Act, is supposed to cover the cleanup. Considering cleanups can start at less than $50,000 and run into the millions, that is nothing to take lightly.

What Could be Omitted on the Site Itself?

Environmental Site AssessmentLet’s use the gas station example. A gas station today is not necessarily a gas station yesterday. In the 1950’s to mid-1970’s, a gas station was normally a full service station, not the convenience store that sells gasoline and diesel fuel today.  Not only did they sell fuel from underground storage tanks, but they quite often dumped used oil, chlorinated carburetor cleaner, and other petroleum based wastes into a used underground storage tank.  And, yes, those tanks leaked just like the fuel tanks.  At the end of the day, they often hosed down the floor of the repair shop and squeegeed it out the door onto the pavement, grass, dirt, road, and storm drains. Oh, by the way, they also had hydraulic oil tanks underground for the lifts, which also leaked.

A lot of the details on the site usage would be missed by jumping to a Phase II. The operations above raise the need to include used oil, solvents, hydraulic oil, and heavy metals from the used oil in the Phase II. But guess what? Prior to it becoming a service station in 1960, it was part of a former celery field for 30 years where every pesticide available was used. And that is an even bigger omission. One would not necessarily have discovered that by skipping the Phase II.

How about the Vicinity?

Well, it turns out, there was a perchloroethylene (perc) contaminated dry cleaner right across the street. But it is clear across the street, who cares? You should because that contamination could have migrated to your site and you could end up bearing the cleanup cost. And by the way, the ASTM E 1527 -13 Standard E-27 for Phase I’s ( considers that an adjacent property – the road offers no separation. Oh, and right down the street was a paint and body shop which was less than meticulous in handling and disposing solvents and paints. Matter of fact, the groundwater plume from that operation is now at the edge of your site.


So that should be enough information for you to decide that skipping a Phase I is not a good idea. If you do, the consequences may be more than you can stand – emotionally and financially!

Further Assistance

Environmental Safety ConsultantsIf you need any help, Environmental Safety Consultants ( is here.  We are a Florida licensed environmental engineering company with a CIH on staff.  We have the credentials and experience to help you complete your industrial hygiene project.

We are just a telephone call (800-226-1735) or an e-mail away (  Contact us today!

Phase II Environmental Site Assessments

phase ii esa reportSo you had your Phase I Environmental Site Assessment (Phase I) done and Recognized Environmental Conditions (RECs) were found.  You have decided to proceed with the transaction but you now need a Phase II ESA (Phase II) to fulfill your due diligence in determining if the site is or could be contaminated from usage of the site or properties in the vicinity.  On the financial end, you and the seller have decided who will pay for the Phase II.  This could mean that the seller will pay for it all, you will pay for it all, or the two of you will share the expense.  Many times if you are paying any part of it, there is a proviso that the seller will reimburse you in full if contamination is found and you cancel the trans-action.  The specifics are provided by your attorney.

The next step is to retain an environmental consulting firm to complete the Phase II.  It may be the same firm that did the Phase I or a different firm.  Not all Phase I firms complete Phase II’s.  Qualifications, licenses, availability, and a myriad of other considerations may result in switching firms.  However, if all things are equal, it is best to stick with the firm that did the Phase I.  The reason is that they are most intimately involved in both the assessment of the site and the basis for the RECs they reported.

Whichever firm you select, there are a number of items to check out.  You need to know how experienced they are in completing Phase II’s in general and, more specifically, in completing them on similar properties and similar contaminants.  Ask for a Statement of Qualifications & Experience which will list Phase II projects completed, resumes of the staff, and engineering or geological licenses with the State of Florida.  You can check these licenses out at

Phase IIOnce you have selected a firm, discuss the Scope of Work, turnaround, and terms.  The Scope should be designed to specifically investigate the RECs that were found during the Phase I.  This includes the media type and the contaminant types.  The media may include soil, surface water, sediments, and groundwater.  One or more of these media may need to be included.  Types of contaminants include gasoline, diesel fuel, used oil, solvents, pesticides, heavy metals, and perc (perchloroethylene, a dry cleaning chemical), among others.  There may be concerns with different contaminants in different locations on the site.  These locations may have different media to be tested.

The Scope of Work should follow Standard Operating Procedures of the Florida Department of Environmental Protection (FDEP) for quality assurance and control. Additionally, make sure the firm is using a laboratory accredited by the National Environmental Laboratory Accreditation Program, NELAP ( and certified by the Florida Department of Health (  Otherwise, the data may not be court defensible or accepted by regulatory agencies in the event that those agencies become involved with the site.  Similarly, make sure that if a Well Driller is involved that they are licensed by the FDEP.

After all of this is done, request a Professional Services Agreement from the firm.  This is the written contract between you and that firm.  It must spell out the basis for the Phase II, the turnaround, Scope of Work, and Terms & Conditions.  Review it closely and make sure it meets your satisfaction.  Otherwise, request revisions before you sign it.

So you have retained the firm, they are ready to start the project, and you are done, correct?  Not so fast.  When you give them notice to proceed, you need to request that they keep communications open.  Tell them that you want to know when the site work is scheduled, what the results are from the site work, what the significance of those results are, and what the analytical results from the laboratory are and what they mean. You may need to notify the seller of any significant findings as the work progresses.  Finally, let the firm know that you need the report at the time specified in the Agreement.

Once you receive the report, review it closely, then call or meet with the firm to answer any questions or clarify certain sections.  Keep in mind that there is no requirement to have the report submitted and approved by environmental regulatory agencies.  However, some lenders and other entities use other environmental consulting firms or attorneys to conduct peer reviews of the reports.  If significant contamination is found, then you or the seller should explore remediation options, which are the topic of another paper.  At that point, you may cancel the transaction and look for another site.  Your attorney must advise you.

Environmental Safety Consultants ( can make sure due diligence is exercised in completing your Phase II.  We have the credentials and experience to properly complete the work.  We are a Florida-licensed Engineering business with certified Environmental Site Assessors, a Professional Engineer (P.E.), environmental scientists, and 30 years of experience completing ESAs.  We are just a telephone call (800-226-1735) or an e-mail away (  Be diligent and contact us today!

Phase I Environmental Site Assessments Can Save You

There are certain extremely important environmental considerations in commercial property transactions. The soil, groundwater, or surface water, may be contaminated with pollutants such as solvents, PCBs, dry cleaning fluids, petroleum products, pesticides, arsenic, etcetera. There may be buried drums or tanks of pollutants. Or a retention pond may be part of an industrial wastewater treatment system and may be leaking pollutants into the aquifer affecting nearby residents.environmental site assessment

The conditions above may create an economically significant, environmental liability for you as the buyer. Once you enter into the chain of ownership, you are potentially liable for cleanup costs in the future. That is called joint and several liability in legalese and it could bankrupt a business, cause a default on the loan, and affect the market value of the property.

However, the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, aka Superfund, offers protection to the “innocent purchaser”. To qualify, a purchaser must exercise “due diligence” in determining whether a site is or could be contaminated. This is done by completing an Environmental Site Assessment (ESA) prior to the property transaction. The ESA is designed to determine if the property is or could be contaminated from past or current operations both on the site itself or on properties in the vicinity.

phase 1 assessment Environmental Site Assessments are conducted in phases. A Phase I ESA includes an inspection of the site and properties in the vicinity; review of environmental regulatory records, data, permits, and complaints; interviews of the buyer, seller, managers, and regulatory personnel; review of current and historical aerial photographs of the site and vicinity; review of environmental title search back to 1940; and review of nearby landfills, surface waters, and U.S. Geological Survey (USGS) topographical maps.

If the Phase I concludes that the site does not appear to be contaminated, you are done and can move on with the transaction. However, if it indicates that the site is or could be contaminated, then a Phase II ESA will be needed to test the soil, surface water, and groundwater to conclude the due diligence. But that is the topic of another paper.

The key to the ESA is exercising due diligence. Most purchasers of commercial properties retain environmental consulting firms to complete the ESA. Extreme care must be exercised in selecting the firm. It is not a situation where a penny saved is a penny earned. It can be more like a few hundred dollars saved can be thousands to millions of dollars lost.

As a consumer, you must make sure that the consulting firm has the experience, credentials, and qualifications to properly complete the ESA. This applies to the firm itself and to the actual staff members completing the ESA. Highly qualified principal consultants in offices miles away and not actually completing the ESA are of limited to no use.

Desired qualifications may include Professional Engineers, certified Environmental Site Assessors, and Professional Geologists. Of course, appropriate insurance coverage is a must. Check for inclusion of commercial general liability, professional liability, pollutant liability, workers compensation, and automobiles.

There is no requirement to have the ESA Reports submitted and approved by environmental regulatory agencies. However, some lenders and other entities use other environmental consulting firms or attorneys to conduct peer reviews of the Reports.

There are two ways that Environmental Site Assessments can help you. First, they can help you avoid acquiring contaminated properties. Second, if the ESA is completed properly and due diligence is exercised, Superfund is supposed to fund the cleanup if contamination is found later that could not be detected during the ESA. Ultimately, due diligence would be determined by the U.S. Environmental Protection Agency (EPA, or the courts.

Environmental Safety Consultants ( can make sure due diligence is exercised in completing your ESA. We have the credentials and experience to properly complete your Environmental Site Assessments. We are a Florida-licensed Engineering business with certified Environmental Site Assessors, a Professional Engineer (P.E.), environmental scientists, and 30 years of experience completing ESAs. We are just a telephone call (800-226-1735) or an e-mail away ( Be diligent and contact us today!