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Banking & Financial FAQs

Below are common questions we receive regarding environmental site assessments from lenders and financial institutions.

Q: Is a Phase I Environmental Site Assessment (ESA) important?

Phase I ESA is important in terms of providing due diligence measure for commercial real estate transactions. The completion of a Phase I ESA is not outlined specifically within any federal or state regulations, but the industry standard has been the American Society of Testing and Materials (ASTM) guidance document ASTM E1527-05.

Q: Why do I need a Phase I ESA?

Phase I ESAs are typically required by lending institutions to ensure that there is no liability associated with the property that could occur from the historical uses of the property and/or the potential offsite migration of contamination onto the subject property.

Q: Are there regulations that state I must complete an environmental site assessment?

No. Environmental site assessments, whether a Phase I or Phase II, are typically lender driven and never regulator driven.

Q: Who should perform an Environmental Site Assessment?

You should secure the services of an experienced environmental professional to conduct a Phase I or Phase II ESA. The performance of Phase II investigative activities should also be overseen by a registered professional geologist.

Q: What is included in a Phase I ESA?

A Phase I includes reasonable steps to best determine the current and historical condition of a property and its environs. Specifically, a Phase I includes a title search, a review of applicable state and federal regulatory databases, a review of applicable state and federal files, a review of aerial or satellite photography, a review of Sanborn Fire Insurance maps, a site and area reconnaissance and personal interviews.

Q: How long should I expect a Phase I ESA to last?

A Phase I ESA requires approximately 2-3 weeks to complete.

Q: How much should I budget for a Phase I ESA?

While the exact costs for a Phase I ESA may vary depending on the conditions of a site, you should estimate the cost ranging from $1,800 - $2,200.  

Q: What is a Phase II ESA report?

A Phase II ESA report is performed if the Phase I ESA reveals reasonable evidence for a potential environmental impact on a property, including the potential for contamination of soil, groundwater and/or surface water. A Phase II ESA includes collecting soil and groundwater samples for laboratory analysis and the preparation of a report of the findings.

Q: How long does it take to complete a Phase II Environmental Site Assessment?

A Phase II ESA requires approximately 2-3 weeks to complete.

Q: How much does a Phase II Environmental investigation cost?

Because the costs of a Phase II depend on site-specific details, the overall expense can vary greatly. Factors such as type of lab analyses required, drilling method needed, soils encountered within the subsurface, access to the subsurface, overhead constraints and other site-specific physical limitations influence the total cost, which may range from $3,000 - $10,000. GOS strives to provide an accurate price estimate, and we examine the specific site and develop a strategy to minimize costs while ensuring adequate determinations are made to the site conditions. 

Q: What is the difference between a Phase I and a Phase II ESA?

The primary difference to note is that no sampling occurs during a Phase I ESA. A Phase I ESA only includes a site inspection and a database search. If the Phase I reveals reasonable suspicion for an environmental issue, then a Phase II may be initiated. This includes collecting soil and groundwater samples for laboratory analysis to determine if any environmental impairment has occurred. Phase I ESAs are typically required by a lending institution and the findings are for private use only. A Phase II ESA may be requested by a potential purchaser of a property to assuage their concerns about buying a property with potential environmental liabilities.

Q: What if I find an environmental problem when conducting a Phase I or Phase II ESA?

If a Phase I ESA reveals the potential for an environmental issue on a property, the environmental consultant may recommend further investigation to the property owner, borrower or lending institution only. Important to note is that no governmental regulatory agency is required to be notified of the findings of a Phase I ESA. Conversely, it will be suggested that any environmental impacts documented by the laboratory analytical reports of soil or groundwater samples collected as part of a Phase II ESA be reported to the applicable regulatory authorities. Client approval is required for the environmental consultant to proceed with notifying the regulators.   

Q: If a lending institution acquires a site through foreclosure, is it responsible for corrective action?

No. In accordance with the applicable portion of the Code of Federal Regulations, 40 CFR Part 280, Subpart I, Lender Liability, the lender would not be held responsible for corrective action at a site if the institution acquired the site through or incident to foreclosure.

More Information

To learn more about environmental site assessments and our environmental consulting services, please contact us.