• So You need a Record of Site Condition… Part 2

  • In last month’s blog, I discussed the issue of obtaining a Record of Site Condition (RSC) in Ontario, specifically directed at property owners and buyers and consultants who are unfamiliar with the RSC process.  This month I will explore some of the realities faced by stakeholders who find they now require an RSC for their property.

    Transactional Due Diligence and the RSC

    Similar to a home inspection prior to purchasing a house; many purchasers of commercial/industrial properties and their lenders require an Environmental Site Assessment (ESA) to assess potential environmental concerns that may be present. The ESA requirements for supporting the RSC under Ontario Regulation 153/04 (as amended) are different, and generally more stringent and costly to conduct than the CSA guidelines generally accepted for transactional due diligence and financing purposes. The RSC format also does not include an evaluation for the potential presence of asbestos-containing-materials, lead-based paint or other hazardous building products.

    It may be prudent for a purchaser to commission a preliminary Screening Level Assessment (completion of the records review, research and site visit that forms the basis for the formal Phase One ESA report), prior to completing the full RSC-compliant ESA. This way the proponent can better determine if a Phase One ESA will be sufficient to satisfy both due diligence and RSC requirements; or whether a more costly and time-consuming Phase Two ESA will be required to investigate potential environmental concerns and to support the eventual RSC. In some cases the Screening Assessment may confirm actual site contamination or identify a high probability of environmental risk and liability, giving the purchaser an opportunity to back out of the deal before spending tens of thousands in investigation fees. Of course if the proponent already owns the site and requires the RSC, they are stuck with the strict regulatory process.

    What will it take to get your RSC?

    Too often I hear a recent purchaser tell me they just found out they need an RSC and were told “it’s only a bit of research and then file some forms”. That’s not the case, even for relatively “simple” RSC properties. The owners and stakeholders need to be aware of a few important things in this regard. The RSC regulations require that the necessary ESA reports to support the RSC be signed by a Qualified Person (a P. Geo, or P. Eng. licensed to practice in Ontario), and the RSC is submitted to the Environment Ministry for review. At a minimum, A Phase One ESA is mandatory. In many cases an intrusive Phase Two ESA investigation will be necessary; due to the strict ESA requirements, the long list of Potentially Contaminating Activities that will trigger a Phase Two, and the legal certifications the QP must make regarding the environmental condition of the Site. In addition, the soil and groundwater at the site must meet the applicable Site Condition Standards (i.e. be free of contamination), or undergo remedial actions and/or a Ministry-approved Risk Assessment prior to filing the RSC.

    The owner will also be required to obtain an up-to-date legal survey and retain a lawyer for review and assessment of certain documents. It can be quite common for the Ministry to reject the initial RSC submission and even request additional work, especially for complex sites and for properties subject to remediation or Risk Assessment.

    In a future blog I will discuss realistic time frames and consulting costs to successfully obtain an RSC.

    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