Environmental Due Diligence: What Is It?
The Environmental Due Diligence practice has evolved to assist property buyers and developers to make informed decisions about a site’s environmental risk. Understanding the history of a property, its prior uses, and potential presence of contamination are vital pieces of knowledge every buyer should have. In Ontario, when you buy a property, you also assume liability for any soil or ground water contamination that exists on site – an expensive mistake that you might be left with to clean up!
The following services are commonly conducted for purposes such as a sale of a property between parties, to obtain financing or a mortgage, and to obtain approval from a municipality for a land use change or building permit.
The objective of a Phase I ESA is to establish whether there is evidence of actual and/or potential sources of environmental contamination on the site, including a review of neighbouring properties located within a 250 metre radius of the site. Phase I ESAs include a historical records review, site visit, and interviews with knowledgeable persons and regulatory officials. Phase I ESAs assist buyers by helping them understand the potential environmental risks of a property.
Should a Phase I ESA identify areas of potential environmental concern, a Phase II ESA is recommended in order to determine if the contaminants identified in the Phase I ESA are actually present. Having knowledge about potential environmental liabilities early in the acquisition and/or financing process allows you to focus your attention on whether to move forward with a transaction, or whether further investigations are required to determine the extent of contamination, and how best to remediate the property, if necessary. As the cost to remediate contaminated land can be substantial, it is important for the buyer to be aware of potential environmental liabilities.
The objective of a Phase II ESA is to quantify potential contaminants of concern found on the site subsequent to the Phase I ESA. Phase II ESAs include underground utility clearances, mobilizing and drilling of boreholes, installation of ground water monitoring wells, and collection of samples and submission for chemical analysis at an accredited laboratory. The sampling of soil and ground water is conducted during a drilled borehole and/or test pit program, which can vary in size depending on the extent of the investigation required.
Phase II ESAs are an investment worth the cost incurred, as it could reveal soil, ground water, and/or sediment impacts which could affect the market price of the property, or the ability to redevelop the property to other sensitive land uses such as a residential subdivision or condominium buildings. In the case of a Phase II ESA being conducted for due diligence or pre-acquisition purposes, a Phase II ESA can indicate the extent of environmental liability a property owner can obtain. This liability can include an expensive remediation process if extensive contamination in soil and/or ground water is found.
If subsurface contamination was identified during the Phase II ESA, then Site Remediation will commence which involves developing an effective remediation strategy for the site. Part of this process is ensuring that sufficient knowledge about the extents of the contamination is known, which may include drilling more boreholes as part of a delineation program, and installing additional ground water monitoring wells on the property.
Remediation and redevelopment of brownfield sites is becoming more common in Ontario as urban intensification is increasing land values, and the demand for residential housing. Brownfield sites are sites that former industrial or commercial land uses left significant sub-surface contamination in either the soil, ground water, or surface water. As a result of the contamination, the properties have been left undeveloped, or underdeveloped.
Upon identification of areas requiring remediation, a detailed design for managing contaminated media and a verification sampling program are developed.