In the 1930’s through the 1970’s, there were “Mom & Pop” service stations all over California. These were during years when there were no government controls in place for storing, dispensing, or handling of petroleum fuels. Fuel storage tanks were made from thin single-wall steel cylinders that were buried with their tops about 3-ft. below ground surface. Most underground (UG) service station tanks were 8-ft. in diameter and 27-ft. long (holding 10,000-gallons each). Stations carried 2-grades of gasoline (regular and ethyl), requiring 2 tanks. Some also carried diesel fuel - requiring a third tank. Many had smaller (+-500-gal.) waste-oil holding tanks for vehicles they serviced with oil changes. Keep in mind as you read on, that; there were no government rules during this period regarding how long a fuel tank could be kept in the ground, or when it should need replacing. Single-wall steel tanks, and their single-wall piping, of course, rust through and fail over time when exposed to the moisture and electrolysis that occurs in the ground. The “average” life expectancy of single-wall steel underground fuel tanks before they start leaking is 15 to 25-years. It was during the late 1960’s that some water wells in Southern California began smelling and tasting like gasoline. The first one that got significant attention was a “Forest Lawn” drinking fountain. Without getting into details, scientists investigated and estimated that between 100,000 and 250,000-gallons of gasoline may have leaked from somewhere into the groundwater in that area. The estimates could not, however, be substantiated. Of course, this caused more water well investigations in the state over the next 10-years, through the late 1970’s. In the early 1980’s, tank integrity leak testing became required for underground fuel tanks in California. If a tank was found to be leaking, subsurface studies were required to determine the extent of the leakage. Early on, It was the responsibility of the Property Owner to; 1) remove and dispose of the leaking tank(s); 2) delineate (determine) the areas of soil and groundwater that were affected, and; 3) take responsibility for cleaning-up the problem. Here’s where you may want to hold your breath… By about the mid-1980’s, 55,000 underground fuel tanks in California were found to be leaking! You can only imagine the costs required to do these three things. Even in the 1980’s, the costs for this very precise scientific work could easily be in the hundreds of thousands of dollars, and in many case even millions! You might imagine what happened next. The “Mom & Pop” service station properties in that era simply weren’t worth more than $200k or $250k. So, what were many forced to do? Bankrupt. The Property titles and ownership went right back to the banks who had financed the Properties. And this was not just only the “Mom & Pops”, but also a large percentage of the businesses who had fuel tanks at their Properties – like trucking companies, and others. Literally thousands of properties ended up in the hands of the banks. And who were then the responsible parties for the clean-ups? The banks, of course. Almost all banks immediately adopted policies to never finance a Property with a fuel tank history unless and until it could be proven that there was absolutely no leak history and no subsurface petroleum contamination present at the site – with no exceptions. And this, friends, is where Phase I ESAs began. 35-years later, not one major bank in America that we know of has canceled or reduced the Phase I study requirement - to this day. What has happened is that their scope has been extended far beyond just underground fuel tanks, and now encompasses many other sources of subsurface contamination. This includes; dry cleaners, early auto repair facilities, electronics manufacturing, early off-set printing companies, and other businesses who commonly used hazardous materials. But it was the California underground fuel tank Government regulations that started it all, and created the Phase I ESA requirement by almost all banks – which still persists today across the country. The California Cleanup Fund (CUF): Of course, the banks (and others) lobbied heavily for the state to create a program that would aid Responsible Parties (RPs) for the cost of cleaning up the thousands of petroleum contaminated sites. In 1989, the California Underground Storage Tank Cleanup Fund Act (CUF) was created by the California Legislature. The CUF is funded by a fee (tax) that is collected by the CUF on all fuels that go into underground tanks, and provides reimbursements for most of the costs required for site clean-ups. The only costs that are not covered by the CUF are those associated with the actual tank removals and disposals. The taxation for the CUF began in 1991 and currently generates about $180m annually. There you have it, friends. We hope that this has helped enlighten your understanding of Phase I ESAs. Contact us with any questions or help that you need. Silicon Valley Environmental Group, Inc. DBA: Phase-1 Environmental Services Stuart G. Solomon, President (831) 422-2290 – Office www.sveginc.com
Recognized Environmental Condition (REC) or the potential for soil or groundwater contamination from current or past property usage, a Phase II subsurface investigation might be necessary. Also, at times, a Phase II is necessary to identify if a neighboring property's contamination has impacted the Subject Property. The purpose of a Phase II Environmental Investigation is to determine if the presence of contaminants or hazardous waste exists in the subsurface areas beneath the property. Note about new developments: In the recent years, soil vapor intrusion caused by historic dry cleaners and past semiconductor operations has become a serious problem. The chemicals used in these processes have penetrated our groundwater and migrated to surrounding properties. Unfortunately, due to this, all future developments are required to conduct a vapor intrusion study if a historic dry cleaner or other operation nearby has been identified to have used certain Volatile Organic chemicals.
Whenever commercial or industrial property is sold, leased or financed, the checklist of due diligence items includes a Phase I environmental site assessment (Phase I). Phase Is are performed both for possible defenses to liability as well as for broader due diligence purposes. A Phase I includes four basic components: (1) historical review of the property usage back to the first developed use, (2) agency record review for indications of use or release of possible contaminants, (3) site visit to assess the site for evidence of releases of contaminants, and (4) interviews with individuals with knowledge of the current and past use of the property. The area of the property is also included in the review although surrounding properties are only assessed from the property line. If "recognized environmental conditions," or RECs, are identified in the Phase I, then sampling of soil, groundwater, surface water, soil gas or indoor air may be necessary to confirm whether there has been a release of hazardous substances or petroleum products. Such sampling reports are known as a Phase II environmental site assessment (Phase II).