August Mack Newsletter | April, 2018

To Drill, or Not to Drill: Do I need a Phase II ESA, is the Question!
by Shawn Woll

In real estate transactions time is money. Many real estate professionals work around tight deadlines and must gather, analyze, and make decisions during a compressed due diligence period.  One due diligence piece that can throw a transaction off is environmental findings.  These environmental findings are usually presented in a Phase I Environmental Site Assessment (ESA) report. A Phase I ESA is a process followed by an Environmental Professional (EP) to evaluate (in a non-intrusive manner) environmental findings at a site.  The Phase I ESA process includes a review of historical site development, regulatory data, interviews, and a physical site inspection.  The information gathered during a Phase I ESA will be used by the EP to formulate an opinion regarding the potential for ESA findings to be substantive enough to merit a Recognized Environmental Condition (REC) designation. A REC is defined as “the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property: (1) due to release to the environment; (2) under conditions indicative of a release to the environment; or (3) under conditions that pose a material threat of a future release to the environment. In layman’s terms a REC means an issue was identified that needs to be addressed. 

In some cases a Phase II ESA may be the next logical step to address a REC.  Phase II ESA’s are more intrusive than Phase I’s as they most often involve soil and/or groundwater sampling.  For example, if an EP walks a manufacturing facility and observes a stockpile of 55 gallon drums located behind the facility with vegetation loss underneath, staining, and odors this finding would likely cause a REC to be identified in the Phase I due to the indicators of a release being observed.  A Phase II would then answer the question on if this REC has impacted the Site by collecting and analyzing soil samples underneath the stockpile of drums.

All Phase I reports are the opinion of an EP and, as presented above, those opinions can lead to Phase II triggers.  This makes selecting an EP important and Phase I users should look for the following qualities when selecting an EP for their next project: 

  1. Experience. Experience may sometimes be overlooked in the haste of completing the deal or choosing an EP solely on cost. To be clear, I am not suggesting that price and experience are mutually correlated; I am however invoking the old adage “You get what you pay for.” American Society for Testing Materials (ASTM) standards require that Phase I and Phase II work be completed by an EP. What defines an EP? Professional licensure such as Professional Geologist (PG) or Professional Engineer (PE) with three years environmental due diligence experience are granted EP status, as well as those with a Bachelor’s degree in science or engineering and five years related experience, or those who have at least 10 years’ experience conducing environmental due diligence. It always pays to take the time to dig a little deeper and make sure that the EP you are using has the requisite education and experience so that it doesn’t come back to haunt you.
  2. Communication. There is nothing more frustrating than being in the dark on a project. While a Phase I ESA may just require site access, a Phase II will require site access, drilling, sampling, and possibly other activities. While orchestrating these activities your EP must have high quality communication (and organization) skills. You will want to make sure that your EP is keeping you informed of the progress with the Phase II ESA as well any delays or obstructions. In addition, it is also courteous when your EP can give you updates throughout the project and not just unwelcome surprises when the report is submitted.
  3. Sound understanding of business principles. I think it is safe to say that everyone has the same first principles when it comes to environmental stewardship: we want clean air and clean water. However, it also needs to be understood that a real estate transaction is a business transaction and there is money to be made or lost on the transaction. It is important to choose an EP who understands this and does not look at a Phase II as a science project. Is your EP suggesting eight boreholes to be sampled when only four would reveal the same results? Is the EP placing the samples in areas that make logical sense and strives to keep costs down or are they attempting to make up profits for their low priced Phase I ESA? This quality may not be apparent at face value, though a scrupulous chat with your EP about the Phase II ESA can start to reveal if your EP is looking for an A+ at the science fair or is looking to get you results in the most cost effective way.
  4. Reputation.  Don’t be afraid to ask for references or ask others if they have used this EP. An EP, or consulting firm, should be willing and able to provide references and discuss current relationships. If you know your EP through a mutual contact, even better! When a firm is respected and in good standing with their peers and the community they are less likely to do something to damage that reputation and will work hard to fix a relationship if it sours. When a firm has good relationships this allows for a level of trustworthiness that you are being consulted and led in a direction that is beneficial.

So, back to our original questions “Do you really need a Phase II ESA?” Well, if a Phase II ESA is being recommended by an EP who is experienced, communicates well, understand you have a bottom line, and has a good reputation…then probably yes. Obviously, there are many factors that play in the decision of why a Phase II ESA may be suggested by an EP. Though if you trust the expertise of the EP then the question should not be “Do I Need a Phase II ESA?” rather it should be “What are my risks if I don’t completed the Phase II ESA they are recommending?”


Shawn Woll is the Business Development Representative for August Mack Environmental, Inc. in the Lancaster, Pennsylvania office. He has industry experience in geologic field services, sustainability, and, design and installation of renewable energy systems. Shawn heads the business development in the Pennsylvania office focusing on compliance, transaction, and eCAP clients. Shawn earned a Bachelor’s of Science degree in Geoscience from The Pennsylvania State University. Shawn can be reached at 717.399.9587 ext. 227 or via email at swoll@augustmack.com


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