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Environmental Site
Assessments |
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Applying due diligence |
February 2006 |
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Contaminated soil or water can be harmful to humans and other living organisms,
and careless waste disposal and leakage of underground fuel storage tanks are
only two examples of how contamination can occur.
In addition to the 10,000 spills reported
every year in Canada, it is estimated that as many as 40,000 contaminant spills
go unreported. Upward of 20,000 fuel storage tanks may be leaking, and any
number of the 10,000 landfills in Canada may be seeping further contaminants
into our soil and water.
Although
there are presently (2005) no legal requirements in Canada to conduct
environmental site assessments, purchasers, mortgage lenders and real estate
practitioners should be aware of the potential financial, legal and
environmental consequences of bypassing assessments where they may be
advisable. Resale industrial, commercial or farm properties are among those
which can represent an elevated risk to anyone involved in a real estate
transaction.
An environmental site assessment (ESA) in
Canada typically consists of three phases. A preliminary (Phase I) assessment
is first conducted to determine if there is any evidence to suggest that a site
could be potentially contaminated. As of 2005 the costs are approximately $2000
to $3000 which is not pocket change, however considerably cheaper than the costs
involved in a major clean-up.
A Phase I assessment consists of site
history research, a site visit, interviews and a written report provided by a
qualified consultant adhering to the Canadian Standards Association (CSA)
guidelines for environmental site assessment.
If a Phase I assessment discloses evidence
of contamination or potential contamination, a Phase II site investigation
should be conducted to confirm the presence of contaminants. A Phase II
investigation may include drilling, sampling, testing and groundwater
monitoring, and cost $5000 to $10,000 and sometimes more.
If a Phase II determines that unacceptable
levels of contamination exist, a Phase III Remedial Investigation should be
carried out to determine what approach should be taken to clean up, or contain
the contaminants present at the site. Ballpark costs cannot be offered for this
phase, as every site will have its own specific set of considerations.
Actual cleanup is not considered to be part
of an environmental site assessment.
The Bottom Line:
Applying “due diligence” is a key
responsibility of everyone involved in a real estate transaction. Ignoring
potential problems at sites where prior usage may have led to contamination, can
lead to serious legal and financial costs for anyone involved in the purchase
and sale of such property, in addition to the environmental ramifications.
To locate an
environmental consultant:
Canadian Environmental Auditing Association
www.ceaa-acve.ca
Associated Environmental Site Assessors of
Canada
www.aesac.ca
Related Resources:
Canada Mortgage and Housing Association
www.cmhc.ca
Environment Canada
www.ec.gc.ca
Environmental Science & Engineering (ESE)
Magazine
www.esemag.com
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