(250) 307-7365 info@sageenvironmental.ca

Written By: Kristen Cockburn GIT, Environmental Scientist

A Stage 1 Preliminary Site Investigation (PSI) or Phase I Environmental Site Assessment (ESA) is typically used to:

  • reduce uncertainty about potential environmental liabilities or provide a baseline before site remediation;
  • provide a liability assessment prior to an acquisition or divestiture of a property or site;
  • provide a due diligence measure in support of a real estate or financing agreement;
  • provide baseline liability assessment prior to tenancy of a site;
  • provide a due diligence measure for compliance in corporate stewardship; or
  • meet a regulatory request, order or direction.

A Phase I ESA or Stage 1 PSI are essentially the same property assessment, with minor differences in components. The standards for a Phase I ESA defined by CSA document Z768-01 (R2016), have been developed by the CSA Group, an independent standards development body which is federally regulated, while a Stage I PSI is defined by the BC Ministry of Environment & Climate Change Strategy under the BC Contaminated Sites Regulation[1],[2].

Both a Phase I ESA or Stage 1 PSI are accepted by local insurance or finance agents, and by the Canadian Mortgage and Housing Corporation (CMHC).

Many of the tasks typically undertaken during Phase I ESAs are some of the initial steps of decommissioning or redeveloping a property.

A Phase I ESA: What story does this lot have to tell us?

What is it?

A Phase I ESA is primarily a desktop review accompanied by a site visit that will assess the current and historical uses of a property and the surrounding area to understand if there are any potential environmental liabilities associated with the property.  This investigation identifies risks and uncertainty associated with the current and former land uses of a property. The assessment will also help the client understand how these risks can be mitigated.

Most Phase I ESAs we complete for clients are required to obtain financing or insurance prior to the purchase, redevelopment or refinancing of a property.  This can provide valuable information about former property uses that may be unknown, or not obvious during a viewing.   In the case of a lease agreement, a good idea is to have a benchmark Phase I ESA completed prior to leasing a property or space to establish a baseline on what the tenant of a property may be responsible for at the exit of a lease, and what may have been a pre-existing issue.

Completion of a Phase I ESA prior to a property transaction for due diligence is never a bad idea, as the results may change your opinion of the property or give you reassurance that any risks associated with the property can be addressed.

Phase 1 ESA: are we worried about this drum?

How can a Phase I Environmental Site Assessment protect you?

A Phase I ESA is often seen as a “hurdle” to get over in order to ensure financing or insurance, however it can protect a buyer, seller, lessor, lessee or an investor from unexpected issues and costs down the road. Research into historical property uses and development is combined with current land use information to understand if there is potential for contamination of the soil and/or groundwater at the property.  Surrounding properties and land uses are also taken in to consideration, as they may have had an environmental impact on the subject property.

Some of the sources used to gather information about a property and its surrounding areas include:

  • Government mapping and records data bases including groundwater and well information, floodplain mapping, surficial geology and bedrock geology.
  • Land Title and Survey Authority – Current and historical title searches to identify past property owners and charges or liens against the property
  • Historical Aerial Photographs – visual imagery of the property and surrounding area, usually available from 1930’s-current.
  • Municipal Records – history of fire response, building permits, general property information, utility providers, zoning, Official Community Plans, and photographs
  • Local Archives – historical information about the property and area, historical fire insurance plans
  • Information provided by the current owner – previous environmental reports, corporate information, information about activities on the property
  • Interviews – former owners, occupants, or workers at a site are often interviewed to fill the gaps historic records
  • Site Visit – an inspection of the property with the owner or operator for potential sources of contamination on the property, or surrounding properties.

Information from all of these sources is used to form a picture of the current and historical land uses, and if there are any Areas of Potential Environmental Concern (APECs) that may require further investigation.  This allows parties in the transaction to understand if there are potential environmental contamination liabilities associated with the property, and how this could affect financing, insurance or future land uses of the property.

A Phase 1 ESA report is particularly valuable when it clearly outlines APECs and how best to address them through further investigation, housekeeping measures or perhaps remediation.  This will help you make an informed decision about a property’s environmental risk, and how to mitigate or remove that risk.

Phase 1 ESA: Area of Potential Environmental Concern (APEC) at the site of a previous Underground Storage Tank (UST)

Key Information

Completing a Phase I ESA as part of a property transaction can identify current and historical environmental risks associated with a property, or surrounding areas.  This can help you make a stronger decision on the property by understanding what risks there may be, if any, and how they can be addressed.  While it may be another step in the process to secure financing or insurance, it is important to understand what risks you may be taking on yourself, and how they can be dealt with.

[1] http://www.bclaws.ca/EPLibraries/bclaws_new/document/ID/freeside/375_96_00

[2] https://www2.gov.bc.ca/assets/gov/environment/air-land-water/site-remediation/docs/technical-guidance/tg10.pdf