Expert Commentary

Conducting Proper Environmental Site Assessments

Without a universal or federally mandated approach to ERAs, it is difficult to make proper, cost-effective decisions regarding suspect property. Jeff Slivka explains the most commonly used standards and offers guidelines.

July 2001

Whether it's the purchase or sale of a new parcel or parcels of property, the merger or acquisition of a company, or just a method of proactively managing environmental risk at existing properties, environmental site assessments (ESAs) play an integral role. ESAs, conducted properly, could save a company thousands, if not millions, of dollars in future problems or liability by simply identifying environmental conditions or contamination before it affects third parties. The operative phrase here is "conducted properly." If you are considering an ESA for various reasons, keep in mind there is no universal approach to the assessment process. This makes it a bit difficult to purchase such services.

Furthermore, there are no federal or state regulations that stipulate proper investigation procedures. However, several organizations, including the American Society for Testing Materials (ASTM), the American Society of Engineering Firms Practicing in the Geo-Sciences, and the National Groundwater Association, have developed guidelines for conducting environmental site assessments.

The Phase I

The most commonly used criterion is the ASTM standard (designation E1527). Designation E1527 identifies guidelines to perform the most widely known ESA, the Phase I. A Phase I ESA, performed in accordance with ASTM standards, should consist of the following:

  • An inspection of the property, including all structures, to identify possible sources of contamination, such as asbestos, electrical equipment containing polychlorinated biphenyls (PCBs) and hazardous substances or wastes.
  • An inspection for evidence of possible contamination from leaking storage tanks, old disposal areas, chemical containers, or drums.
  • An investigation of past spills or illegal disposal of hazardous substances, which can be evidenced by observing stained soil or stressed vegetation.
  • Interviews of individuals familiar with the property and its history to identify past events and uses that may have created conditions that could lead to environmental compliance problems.
  • Searches of available federal, state, county, and municipal records to identify possible sources of contamination on or near the site. Often, the firm conducting the Phase I will subcontract a company to perform a state and federal environmental database search, given specified distance radii around the subject property.
  • A search of title records for previous 50 years to identify past owners and uses of the property.
  • A review of available historical aerial photographs of the site to identify its past uses and any evidence of large-scale past waste disposal on the property.

In general, the goal of the Phase I is to identify signs that might indicate a need for further action or investigation. It is not a complete or all-encompassing study of the site; therefore, the potential for failing to detect contamination exists. The Phase I assessment, in many instances, can be performed by in-house personnel or by a firm specializing in environmental management services. The cost can range anywhere from $500 to a few thousand, depending on the scope of services requested.

The Phase II

As you might guess, the Phase II ESA is a continuation of the Phase I. The Phase II is an "intrusive" type assessment, which means sampling will be conducted in those areas identified as concerns. Additional subsurface investigations and sampling activities can include:

  • Subsurface soil and groundwater investigations and analyses on both the property and neighboring properties
  • Underground storage tank (UST) integrity testing and removal activities
  • Septic system, potable well water, and floor drain discharge point evaluations
  • Asbestos survey
  • PCBs, asbestos containing materials (ACMs), lead-based paint (LBP), and radon sampling
  • Mold/fungal investigations

The Phase II will assist with making business decisions about the property or contamination; however, it will not fully characterize the site or provide remedial solutions. It will identify what contaminants are present, the possible extent of contamination, and preliminary estimates for remediation. Costs for the Phase II vary greatly depending on the extent of the problem or contamination, the type of contaminants present, the materials on which the laboratory analyses must be conducted, etc. In general, Phase II assessments range from $5,000 to $25,000. However, in the event the site is an industrial facility or truly has complex issues, the cost could increase substantially.

The Phase III

The goal of the Phase III is simply to identify the most appropriate remedial solution to the problem and remediate it. During the Phase III, additional sampling analysis is conducted so the site is "characterized," which means the extent of contamination is known, and remedial action steps or corrective measures are determined and reported to the site owner. Lastly, the remedial action plan is implemented.

The chosen method of remediation is usually what drives the cost of the Phase III. In general, a Phase III could cost as little as $10,000 for minor excavation and disposal of non-hazardous soil (i.e., petroleum contaminated soil), to hundreds of thousands of dollars for surface or groundwater remediation. Specifically looking at soil removal, which is the most common remedial technique used, excavation and disposal of non-hazardous soil usually costs between $75-$100 per cubic yard, with some type of minimum costs to cover the remedial company's fees. If hazardous, soil excavation could run between $150-$400 per cubic yard. This also includes the cost for any treatment prior to disposal.

Environmental Risk Assessment Surveys

A bit different from the Phases I and II, but worth mentioning, is the environmental risk assessment survey or ERAS. The ERAS focuses not only on site conditions, but also on corporate philosophy, spill and contingency plans, and in-house training. The ERAS is a more proactive approach to managing environmental risk at a site or within a service organization. It is structured to evaluate existing standard operating procedures and facility programs for their effectiveness in reducing or eliminating both potential catastrophic and gradual pollution events. This is accomplished by assessing various areas of an operation.

Corporate Organization—Initially, the risk management consultant gathers information on the overall company philosophy. Does management appear to be proactive or reactive when addressing potential environmental exposures? Is management committed to implementing recommendations for reducing existing exposures? At the outset, management may indicate their commitment, but their attitude can change at budget time.

Environmental Setting—Who are the surrounding neighbors? What are the underlying soil and groundwater characteristics at the site? Where are surface water bodies located in relation to the site? Is the groundwater or surface water used for potable purposes? Upon answering these questions, resources may be allocated to protect environmentally sensitive areas.

Layout and History—What were some past environmental practices? Do facility operations take place along the property border or is there a buffer zone of several hundred acres? Depending on answers to these questions, the risk management consultant may uncover additional operational exposures.

Operations—How are materials such as ash or hazardous wastes stored and handled? Are acids properly contained to prevent a release to the surrounding environment? What about caustics? What types of pollution control equipment are utilized to reduce the amount of pollutants discharged to the air, water, and soil?

Training—Effective employee training can reduce or prevent the likelihood of a catastrophic event. With regard to the operations being performed, are the facility's training programs adequate?

Contingency Planning—In the event of a catastrophic event, are the plant personnel sufficiently prepared to respond? Efficient emergency response planning can help reduce the severity of a spill or release.

After completing the ERAS, the risk management consultant summarizes both the positive aspects of the company's operations, as well as those areas needing improvement, and recommends a program that continues positive initiatives and improves deficient areas. Most insurance companies offering environmental coverage provide ERAS to many of their clients to assist in the management of risk. Cost for the ERAS is in the range of $3,000 per location.


If you are in need of an ESA, it is best to site down with a qualified environmental consultant to determine the best approach to the situation. Many times, the above assessments can be combined, altered, etc., to provide the best information available to assist in any decisions that need to be made about the property.


  1. Miller, Lynne; Environmental Strategies Corp., "Environmental Risk Assessment," Society for Environmental Insurance Professionals Seminar (2001) New York City.
  2. Biddle, Chris; ECS, Inc. "Phase I Assessments and Their Limits" (2000).

Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.

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