Written By Alana Crump, MSc., PAg.

Introduction

Before taking the plunge into property investment, land development or redevelopment understanding the environmental health of your prospective property is crucial. Environmental due diligence not only illuminates hidden risks but also safeguards your financial and legal interests. Whether you’re a buyer, seller, developer, a corporate investor, or a financial institution, knowing if contamination exists on a property can prevent unexpected cleanup costs and legal headaches down the line. What exactly are Phase I Environmental Site Assessments (ESA) and Stage 1 Preliminary Site Investigations (PSI), and how do they differ? Let’s dive into how these essential evaluations can protect you from the unseen, ensuring better more informed property decisions.

What is a Phase I ESA and a Stage 1 PSI?

Phase I Environmental Site Assessments (ESA) and Stage 1 Preliminary Site Investigations (PSI) are due diligence reports outlining the current and past activities on a property with the potential to impact the environment.  Phase I ESAs and Stage 1 PSIs include:

• historical desktop reviews,
• interviews with knowledgeable individuals of the site property,
• an inspection of the site and surrounding areas,
• and identification of Areas of Potential Environmental Concern (APECs) and Potential Contaminants of Concern (PCOCs) on the site. These may represent a liability in the form of contamination.

When do I need a Phase I ESA?

The term Stage 1 PSI is sometimes used interchangeably with Phase I ESA, and while very similar, each report has different applications.

Phase I ESAs are commonly performed for:

• Financial lenders during real estate transactions, financing lease agreements, or for insurance purposes
• Buyers, sellers and investors considering a transaction with potential contaminant liability such as an old industrial site, or commercial site with an intensive use such a gas station, dry cleaner or auto shop.
• Corporate or personal due diligence to ensure an operation or land use are not exposing you to contaminant liabilities.
• Baseline inventory of potential contaminant liabilities on a site prior to sampling or remediation.
• Non- CSR Regulatory purposes.

Phase I ESA Purpose

The main purpose of a Phase I ESA is to protect any interested party from unexpected issues and costs in the future due to contaminant risks. By identifying the presence or absence of potential APECs on a Site, a buyer, seller, lessor, lessee, or investor can make an informed decision about the property in question. Based on the findings of a Phase I ESA, recommendations will be made on whether or not future investigations should be conducted on the site. These reports meet CSA Z768-01 (R2022) standards and do not require sampling.

When do I need a Stage 1 PSI

In British Columbia, a Stage I PSI is similar to a Phase I ESA as it also protects parties from unexpected future issues and costs and can be used for financing or insurance purposes but is required for regulatory matters or land development.  A Stage 1 PSI is required under the BC Contaminated Sites Regulation (CSR) upon submission of a Site Disclosure Statement identifying a Schedule 2 use on a property. The Stage 1 PSI will be conducted in a similar manner to a Phase I ESA but will meet additional requirements outlined under BC CSR Technical Guidance for a Stage 1 PSI including updated site visit and records searches within 6 months submission to the BC Ministry of Environment. If you wish to redevelop, subdivide, zone or rezone, build on, or decommission/cease operations on a property, a Site Disclosure statement is required to be submitted to your municipality as part of the permitting process if you have a current or historical Schedule 2 use on your property. Schedule 2 uses are land uses listed under the Contaminated Sites Regulation (CSR) with a higher potential to impact the environment. Examples of Schedule 2 uses include dry cleaning, automotive repair, and welding or machine shops. A full list of Schedule 2 uses can be found here.

Stage 1 PSI Purpose

Following a Stage 1 PSI, recommendations for next steps will be provided. A Stage 1 PSI is part of the potential multi-step process to obtain a CSR legal instrument such as certification document for your property and proceed with redevelopment, rezoning, building, etc. Certification documents include Determinations that the site is not contaminated, Approvals in Principle of a site remediation plan, Releases for specific one-time development or construction needs,  and Certificates of Compliance determining the site has been satisfactorily remediated.

So Why not just buy a Stage 1 PSI?

It is true that a Stage 1 PSI covers both financial and regulatory criteria and so would work in all of the above noted due diligence scenarios. Phase 1 ESAs can be provided faster and often at a lower cost than a Stage 1 PSI.  Make sure you talk to your consultant about your current and future plans to make sure you are buying the best product for your project.

Contact Sage Environmental

Contact us today to find out how we can assist you with your Phase I ESA or Stage 1 PSI needs. Sage is based in Vernon in the Okanagan Valley. We primarily service the Southern Interior including the areas around Vernon, Kelowna, Kamloops, Penticton, Revelstoke and Salmon Arm.

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