Key Conclusion: P-2 subsurface investigations should be carefully considered before they are implemented. A somewhat recent development is the requirement of some lenders to perform P-2 projects regardless of finding a “smoking gun” or any documented significant releases of chemicals.
ERAS strongly cautions against random, unfocused P-2 investigations because it creates a bad, unscientific basis for these investigations and is likely to cause TRAGIC CONSEQUENCES for Property owners.
The answer to this question may depend on who you talk to. For years, ERAS has been cautioning the commercial real estate community to carefully consider whether a Phase 2 investigation should be conducted, even when it is recommended by an environmental consultant.
The caution has been based on the following:
- A phase 2 must be clearly justified and focused, otherwise the findings will be suspect. Buyers should ensure recommendations are clear and supported by evidence.
- Note there can be Recognized Environmental Conditions (RECs) discovered that DO NOT require P-2 investigation. See the photographs below that illustrate two examples: 1) a monitoring well that requires proper abandonment and 2) superficial staining that requires cleaning
- ANY detectable contaminants must be reported to the environmental agency, the Environmental Screening Levels (ESLs) are NOT used for this decision.
- A leak case opened by an agency is likely to cause at least a 2-3-year delay for the owner and is liable to cost $50,000 at a minimum.
- Due to the sensitivity of current laboratory analyses, SOME contaminants are likely to be detected in EVERY Phase 2 investigation.
Several financial organizations currently require Phase 2 investigations for certain types of facilities, regardless of quantities of chemicals, documented significant spills or known former specific locations of items of concern. These include auto paint and repair shops, machine shops and commercial printers to name a few.
Bankers, brokers and sellers should realize their “simple or routine” Phase 2 investigation to “just make sure” could tie up the property for years or even decades before the property can be sold.
ERAS uses the “ABC” approach, Assertions of problems without Basis are Crap. Long experience with most regulatory agencies indicates this is the correct and scientifically sound approach.
ERAS contends that “willy-nilly” investigations are likely to cause more problems than they solve.