Phase II Environmental Site Assessments
disclaimer on this section 1
Phase II Assessments - Overview
A Phase II Assessment typically involves the testing of soil and groundwater on your property. On average, about 20% of Phase I Assessment reports contain a recommendation for soil and groundwater testing.
A consultant may recommend soil and groundwater testing for a number of reasons, but some of the most common reasons include the following:
- The property is currently used or was formerly used by a dry cleaner that conducted dry cleaning on the premises.
- The property has underground fuel storage tanks and no soil or groundwater testing has ever been conducted to determine if the tanks have leaked.
- The site has a long history of commercial or industrial use and the current or former owners or operators used hazardous substances. Examples include many industrial manufacturers and sites engaged in automotive repair.
- The site has imported fill material, the fill is relatively deep (not all visible at surface), and comes from an unknown source.
Sampling of soil and groundwater is typically conducted with a drill rig. The soil and groundwater samples are then sent to a laboratory for analysis. The consultant then compares the test results to the standards recognized by the Texas Commission on Environmental Quality (TCEQ).
STC will typically complete a Phase II study in Texas in 30 days. At the end of this period, you will have a report on our findings. The report will typically include a scaled site plan showing the sampling locations, the certified laboratory reports, and a comparison of the test results to regulatory standards.
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1. The information contained in the section represents opinions of STC and is intended as a guide for laymen to understand the environmental assessment process for evaluation of commercial real estate in Texas. Costs are effective as of August 2007 and prices are subject to change. A portion of the information on this page pertains to legal issue such as business contracts with consultants and buyers/sellers, real estate law, and environmental law. STC is an environmental consulting firm composed of environmental scientists. For legal advice, STC recommends all clients seek qualified legal consul.
Who pays for the Phase II study?
It depends, sometimes the seller and sometimes the buyer. Some buyers have already planned for the Phase II study in their offer price. In some cases, the seller offers to pay the Phase II costs. Sometimes the costs are split.
OK, the Phase II Assessment is complete, I tested, now what?
Usually, one of four scenarios can be discerned once the Phase II Assessment is complete:
1. No contamination was found and no further work or regulatory notification is required.
2. Low levels of pollution were found and an NFA letter can possibly be obtained from the State of Texas by simply submitting the Phase II report.
3. Moderate levels of pollution were found and the site could potentially be exempt from formal cleanup actions if some additional testing is performed.
4. Relatively high levels of pollution are found and some form of site cleanup or response action is necessary.
The first scenario is the most clear cut and easiest for buyers and sellers to understand. However, STC cautions buyers to be careful on this first item and be sure to take some precautions. Without State concurrence, you are relying on the knowledge of the consultant. If the first scenario is encountered,STC suggests buyers take some reasonable steps that include:
1. The buyer has contracted the consultant to conduct the work (not the seller) and the contract language is reasonable. Or, the Buyer has a reliance letter or similar protections.
2. The consultant has professional liability insurance.
The second, third and fourth options provide increasing degrees of concern and potential cost. The second scenario is the least concern. Under the second scenario, it can be as simple as submitting the consultant's report to the State of Texas and waiting for a reply. Reply times typically vary from 60 to 180 days. However, be prepared for the State of Texas to not always agree with the consultant and request another well or boring to further substantiate site conditions. This request will increase the cost and time of the project.
For buyers, the most prudent approach is to not take title to a property until all testing is completed and the NFA letter has been received. In this way, the buyer is least likely to assume any liability for environmental impairment of the property. In regard to the revocability of the NFA letter, see the Words and Terms section of this website and the terms NFA Letter and VCP Certificate of Completion. In contrast to the NFA letter, the VCP Certificate of Completion provides buyers a greater degree of assurance that environmental liabilities have been permanently resolved.
Reviewing Phase II Proposals and Selecting a Consultant
If the Phase I report has a recommendation to test, then you probably have a proposal for a Phase II assessment in hand. Having problems understanding a Phase II proposal you received from a consultant? Or deciding which proposal has the better value? Here are some things that might help you understand the Phase II Assessment process a little better, and select a consultant:
1. The consultant guides the assessment. But, there are usually two additional key subcontractors. These subcontractors are the driller and the laboratory. The driller collects the soil and groundwater samples and the laboratory analyses the samples.
In general, you will probably see the total charges on the project are almost divided evenly between the consultant, the driller, and the laboratory. If the consultant’s portion of the project is higher than about 35%, it might be an indicator you are paying a higher than average rate for consulting fees.
2. Most consultants will at least give you a breakdown of the three aforementioned costs - but ask for a more detailed breakdown with unit rates and markup. Such detailed breakdowns are the standard practice at STC.
3. Compare the actual number of tests to be performed and number of borings and wells. Borings are often billed by the driller on a linear foot basis.
4. Compare the unit rates by various consultants, drillers, and laboratories.
5. Are the wells permanent or temporary? Permanent wells usually cost a little more, but permanent wells can be re-tested if a problem is found. With temporary wells, you will have to re-drill the hole if you need to re-sample. If you suspect contamination will be found and there will be an extended assessment or cleanup phase, permanent wells are usually the safer bet.
6. Does the proposal include waste disposal? If you install a good permanent well, you will probably be left with some drums of soil from the drilling of an 8 inch diameter hole.Some consultants will exclude this cost. Want to get stuck with several drums of contaminated soil on the property? A geoprobe rig may drill such a small hole that waste disposal is avoided. However, in this case, you may also be getting temporary wells (see Item 5)
7. Most all consultants will give you a list of client references on request. However, also ask the consultant to provide copies of closure letters or No Further Action (NFA) Letters. The NFA letter is provided by the State of Texas after the Phase II Assessment and all site cleanup is complete. NFA letters are proof the consultant has experience in bringing the project to completion. The NFA letters are usually addressed to the person paying the bill (a good reference). All NFA letters are a matter of public record and not confidential information. If the consultant can provide multiple NFA letters in the last year, it probably means he is doing the work on a regular basis.
8. Look at the VCP and IOP database. The Voluntary Cleanup Program (VCP) and the Innocent Owner Operator Program (IOP) are two departments of the TCEQ that review Phase II Assessment reports. Both programs maintain a database of all projects that is available online . These databases often include the consultant that worked on the project. If you see that the consultant has multiple database listings with closures over time, it may be a good indicator of his general experience. The database will also list specific consultant's names as well as the company. If the person signing the proposal is listed in the database, it can give you a degree of assurance that that the person actually managing the project has the requisite experience.
9. Is the work to be performed by either a Professional Geoscientist or a Professional Engineer? Effective September 2004, the Texas Commission on Environmental Quality (TCEQ) requires a Professional Geoscientist or a Professional Engineer to sign and seal many reports submitted to the State of Texas. Without the professional seal, you may have to hire another firm to complete the project and potentially duplicate some efforts.
2 The VCP database can be found at http://www.tceq.state.tx.us/remediation/vcp/vcp.html#Database and the IOP Database at http://www.tceq.state.tx.us/remediation/iop/iop.html#database
10. Does the consultant have Errors and Omissions liability insurance (Professional liability insurance)? Professional liability insurance provides a recourse if the work was not performed properly.
STC Environmental Services, inc
4754 Research Drive
San Antonio,Texas 78240
eMail: info@stces.com
Office: 210-696-6288
Fax: 210-696-8761