Business
Fact-checked

At WiseGEEK, we're committed to delivering accurate, trustworthy information. Our expert-authored content is rigorously fact-checked and sourced from credible authorities. Discover how we uphold the highest standards in providing you with reliable knowledge.

Learn more...

What Is a Phase 2 Environmental Site Assessment?

Terry Masters
Terry Masters

A phase 2 environmental site assessment (ESA) is a US government-mandated process of testing commercial land and improvements to determine the level of environmental contamination. It is conducted after a phase 1 ESA has determined that contamination likely exists. The assessment process helps establish liability for purchasers seeking to buy the property and to determine the clean-up costs.

Environmental contamination of real property occurs when hazardous chemicals or petroleum seep into the ground or hazardous materials are used in the construction of improvements. This can happen when a property is too close to a manufacturing facility that dumps chemicals into the local river, for instance. Building materials often contain contaminants as a result of changing industrial standards that at one time approved the use of certain substances only to find they are hazardous to humans over time, such as asbestos and lead paint.

Woman with a flower
Woman with a flower

The US government established strict liability standards for purchasers of commercial real estate, making any purchaser responsible for the clean-up of contaminated property once the purchase goes through. This responsibility attaches regardless of when the contamination occurred, who was responsible for the problem, or whether or not the purchaser was aware of the problem before completing the sale. The only exception is if the purchaser can prove he conducted a diligent investigation of the property to determine contamination. If his due diligence raised no red flags, he is considered an “innocent purchaser” and is not responsible for clean-up.

Purchasers satisfy due diligence requirements by ordering an ESA on the property. An ESA has three phases. The first phase is investigatory. It searches the history of the property and the surrounding area for signs of environmental impacts, such as the proximity of manufacturing facilities, historical environmental incidents, and the common uses of building materials for the age of the property. A phase 2 environmental site assessment is ordered if the investigation reveals any problem.

A phase 2 environmental site assessment is the testing phase. The investigator takes samples of the soil, groundwater, and surface water, and tests them for petroleum, heavy metals, pesticides, and solvents. He also takes samples of the building materials used on the improvements and tests the indoor air quality. The process looks for lead paint, radon, mercury, asbestos, mold, and mildew.

The American Society for Testing and Materials (ASTM) sets the standards for a phase 2 environmental site assessment. A consultant is hired to conduct the investigation and provides the purchaser with a written report. Typically, the report establishes the type of contamination involved and the level of exposure as well as provides a professional opinion on the corrective action that should be taken to clean-up the property. This is an indispensable part of the process for a purchaser, and allows him to determine the costs associated with government-mandated clean-up if he decides to go through with the sale.

Discuss this Article

Post your comments
Login:
Forgot password?
Register:
    • Woman with a flower
      Woman with a flower