9.4.2 Phase II Environmental Site Assessment Requirements

A. Purpose : The purpose of the Phase II ESA is to determine if the RECs or risks related to HUD’s toxics policy identified in the Phase I ESA have resulted in the presence of hazardous substances or petroleum products that exceed unrestricted use criteria. The Phase II ESA must be prepared in accordance with the ASTM E1903-19, “Standard Practice for Environmental Site Assessments: Phase II Environmental Site Assessment Process.” The Phase II ESA need not necessarily be a complete site characterization (total nature and distribution) of contamination, but must proceed to a point where it indicates the location of greatest concentration and risk, taking into consideration all of the Recognized Environmental Conditions (RECs) identified in the Phase I ESA or other hazards that affect the health and safety or occupants or conflict with the intended utilization of the property. A Limited Phase II ESA or a Limited Site Assessment is acceptable if it meets the requirements outlined above.

B. Timing : The Phase II ESA shall be submitted with the pre-application or, if the pre-application stage is omitted, with the application for Firm Commitment. It is recommended that Lenders consult with HUD before preparing a Phase II ESA.

• C. When Required : A Phase II ESA is required if:

1. The Phase I ESA indicates that there is a REC; or

2. HUD requires a Phase II ESA for reasons that are described to the Lender, including that the Phase I indicates an unacceptable risk under HUD’s toxics policy at §50.3(i).

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D. Exception to Submission Requirement : If it is obvious that remediation will be required, with HUD’s approval the Phase II ESA may be incorporated within the “site characterization” segment of the remediation plan referenced in Section 9.4.3.B.1.

E. Standards to Use : The Phase II ESA shall be performed pursuant to the logic model of ASTM E190319, Section 7, including developing the conceptual model and validation.

F. Report Format : The Phase II ESA must be prepared in accordance with the requirements of ASTM E1903-19 using the table of contents and report format specified in Appendix X3.2 as amended by X3.3. Some of the steps that a Phase II assessor might perform may be intuitive in nature, but they nevertheless must be documented in the report to demonstrate its scientific validity.

G. HREC : If the Phase I ESA indicates that there is a HREC, as described in ASTM E1527-13, i.e., a hazard has been remedied and an LSTF Authority has issued a No Further Action (NFA) letter or similar approval and, as consistent with current applicable LSTF standards, HUD may either deem the NFA as completion of the remediation or it may require a Phase II ESA and/or further remediation. Any ongoing commitments associated with operation, maintenance and monitoring must be incorporated as a condition of the Firm Commitment.

H. Vapor Encroachment/Vapor Intrusion : If it is determined that there is a potential for vapors to occur in the subsurface below existing and/or proposed on-site structures, the Phase II ESA shall include either a Tier 2 vapor encroachment screen (per ASTM E2600-15, Section 9), a vapor intrusion assessment (VIA) pursuant to LSTF policy and/or procedure (as discussed in ASTM E2600-15, Appendix X7.1), or go directly to a Tier 4 “mitigation” (per ASTM E2600-15, Appendix X7).

1. If a Tier 2 screen was performed and it determined that a VEC exists, either a vapor intrusion assessment (VIA) pursuant to LSTF policy and/or procedure or a Tier 4 “mitigation” (per ASTM E2600-15, Appendix X7) is required.

2. If a VIA was performed, any mitigation (or remediation) deemed necessary must follow LSTF policy and/or procedure or go through a Tier 4 “mitigation” as per ASTM E2600-15, Appendix X7.

• I. Phase II Conclusion : The Phase II ESA must conclude that:

1. There are hazardous substances as defined by CERCLA, and/or petroleum products and/or other hazards that HUD considers an environmental risk under §50.3(i) at levels that exceed LSTF unrestricted criteria and list any chemicals so found, or

2. No hazardous substances, petroleum or petroleum products or environmental risks under §50.3(i) have been identified above LSTF unrestricted criteria.

J. Off-site contamination conclusion : The Phase II ESA must indicate whether there is a risk of off-site contamination migrating on to the proposed site, including if:

1. There is no known or perceived off-site contamination in the vicinity of the proposed site, It is unlikely that any known or perceived off-site contamination will migrate on to the site, or

2. It is likely that known or perceived off-site contamination will migrate on to the site.

K. Description of Remediation : If there is off-site contamination, the preparer must describe the remediation underway for the off-site contamination and whether the remediation has effectively brought migration under control.

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L. Conformance to LSTF Requirements : The Phase II ESA written report must describe how it conforms to any applicable LSTF requirements and must include a detailed, common language summary.

M. Exception of requirement for Phase II preparation and submission for ongoing remediation : A Phase II ESA is not required when remediation is ongoing to the point of not yet being an HREC (see Section 9.4.1.A.5, above), if the Phase I ESA preparer states that such remediation should resolve any RECs and undecided Phase I ESA issues, (see Section 9.4.1.A.6, above), and if the remediation plan preparer indicates that all of the Phase II ESA requirements have been met. However, an NFA or similar from the LSTF authority must be submitted to HUD as per Section 9.4.3 and Section 9.4.4 or Section 9.4.5.