• Phase One Problems, Part 1

  • A few years ago, I wrote a series of blogs about some of the pitfalls that you may encounter during a Phase Two Environmental Site Assessment (ESA) as well as some of the issues faced when writing Phase One ESA reports. It’s time for a deeper look at some of the problems that you may run into when conducting a Phase One ESA.   While there are many components of the ESA that can have potential deficiencies, I am focussing on three main areas that I commonly see in peer reviews – Structural Errors, Procedural Errors and Interpretation Errors. This month I will discuss some of the Structural Errors that may occur in the procurement, initiation and organization of the Phase One ESA.

    Regulatory and Guideline Issues
    There are numerous regulatory (and non regulatory) regimes and differing guidelines for conducting ESAs in Canada. It’s vital for successful project completion that the assessor and all stakeholders understand the purpose of the ESA, and any associated regulatory requirements. For standard, transactional due diligence, the CSA Standard Z768 is acceptable to most buyers, seller and banks. For Oil and Gas properties in Western Canada, you will need to follow provincial guidelines for the Oil and Gas sector. For redevelopment to a more sensitive land use in Ontario, you need to follow the regulatory standard for completing a Record of Site Condition. If you are procuring or providing ASTM-compliant ESA, there are significant differences in conducting the ESA and records review, wording and legal liability when compared to CSA or RSC reports. All of these Canadian standards are different, and many require specific assessor qualifications. Failure to follow the appropriate guidance can lead to rejection of the ESA report or Assessor, regulatory delays, disappointed stakeholders, and potential liability for the consultant.

    Stakeholder Concerns
    When there are specific regulatory requirements for procedures and reports, they must be followed to obtain regulatory approval. However, in the absence of regulatory review – such as transactional due diligence – the concerns of all stakeholders must be considered and satisfied. A property buyer may have less tolerance for risk and require a greater comfort level than a seller; and a bank providing financing may have even lower tolerance for risk. The assessors report must somehow satisfy all stakeholders, even if they have differing objectives and viewpoints. When it comes to financial institutions, they may have their own specific requirements for assessor qualifications; some even have “shortlists” of pre-qualified consultants, and they won’t accept reports from non-listed consultants. Others have specific requirements for report wording, limitations, reliance letters and liability insurance. If all stakeholder requirements are not accounted for the report may be rejected, or in some cases have to be re-done by an accepted consultant. 

    Qualifications of the Assessor
    The experience and qualifications of the Assessor are also important. For regulatory submissions, there are usually specific requirements for professional accreditation, experience, and liability insurance. Financial institutions may also have their own specific requirements, as noted above. Regardless of the regulatory or stakeholder pre-requisites; any assessor should have the necessary combination of relevant education, specialized training, and experience to conduct a valid, thorough, accurate and defensible ESA. The necessary expertise wont always be found in the lowest price bid; and there is no substitute for good value obtained through experience and local knowledge. I am also a huge proponent for senior consultants to provide the needed training, mentoring and sharing of knowledge to enable their junior and mid-level assessors to build the necessary expertise.

    Bill Leedham, P. Geo., CESA
    Bill is the Head Instructor and Course Developer for the Associated Environmental Site Assessors of Canada (    www.aesac.ca); and the founder and President of Down 2 Earth Environmental Services Inc. You can contact Bill at info@down2earthenvironmental.ca