The term “Environmental REC” is shorthand for Recognized Environmental Condition. It’s a phrase that tends to perplex first-time commercial property buyers who hear it and imagine a scene from a disaster movie. Rest assured, it’s not shorthand for “environmental wreck,” though the implications can still be significant.
An Environmental REC means that an environmental professional has identified the presence or likely presence of hazardous substances or petroleum products in, on, or at a property due to one of the following: (1) a release to the environment; (2) conditions indicative of a release; or (3) conditions that pose a material threat of a future release. In simpler terms: something potentially problematic has been found, and it’s serious enough to warrant a closer look.
These conditions are typically identified in a report called a Phase I Environmental Site Assessment (ESA). If your Phase I ESA includes mention of a REC, you’ll usually find it highlighted in the executive summary. And if you’ve arrived here by Googling “Environmental REC,” chances are high you’ve already got one on your hands.
You Have an Environmental REC. Now What?
If a REC has been identified in your Phase I ESA, the report should also include recommendations for next steps. Nine times out of ten, that recommendation is for further investigation — known as a Phase II Environmental Site Assessment.
A Phase II ESA is the deep dive. It involves collecting soil, groundwater, or vapor samples to determine whether contamination is actually present. Think of the Phase I ESA as the warning light on your dashboard. The Phase II ESA is the mechanic popping the hood.
Here’s your first bit of good news: You’re not required to stick with the consultant who performed the Phase I ESA. That report can be shared with other qualified environmental consultants who can bid on the Phase II work. Better yet, you can ask those consultants if they even agree that a Phase II ESA is necessary. Sometimes they don’t.
Phase II ESA Scope of Work: What You Need to Know
The consultant who performed the Phase I ESA will likely provide a Scope of Work (SOW) for the Phase II ESA. This should come alongside a cost estimate. The SOW outlines what needs to be done to address the REC and determine whether there’s a legitimate problem.
But here’s the catch: scopes of work are not one-size-fits-all. They vary wildly depending on the consultant’s risk tolerance, interpretation of data, and — let’s be honest — their sales strategy. As the client, your goals matter just as much.
Ask your consultant two critical questions:
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“What’s the minimum scope of work we can do to get an answer?”
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“What’s the maximum scope of work to fully resolve this issue and satisfy regulators, if needed?”
The answers will give you a range to work within, depending on whether your priority is minimizing cost, minimizing risk, or expediting resolution. All three are valid — and often mutually exclusive.
Comparing Consultants: Get Second (and Third) Opinions
Once you have your initial SOW, get at least two more opinions. Send the same Phase I ESA and initial SOW to other consultants. Ask if they agree with the proposed investigation. If they don’t, ask them to explain why.
Beware of consultants who lowball the estimate by skimping on scope. A cheaper Phase II ESA that drills in the wrong place, to the wrong depth, or avoids key sampling areas can leave you with unresolved liability. They might win on price, but if they miss contamination that’s actually there, you’re left holding the financial bag — potentially to the tune of tens or hundreds of thousands of dollars.
This is why being an informed buyer matters. You don’t need to be a geologist to ask smart questions and insist on answers that align with your goals.
The Big Picture: Liability, Risk, and Long-Term Thinking
If you’re buying a commercial property in 2025 and the Phase I ESA has turned up a REC, take it seriously. Environmental due diligence isn’t just about checking a box for your lender. It’s about understanding and managing real risks — financial, legal, and operational.
A well-scoped, competently executed Phase II ESA can resolve a REC and clear the path for your acquisition. A poorly executed one can leave you with hidden liability and expensive surprises down the road.
At A3 Environmental Consultants, we help clients nationwide make sense of Environmental RECs. Our work complies with ASTM Standard E1527-21 and meets the standards of SBA, HUD, USDA, and other government and financial institutions. We work with discretion, speed, and clarity — because you’ve got a business to run, not an environmental crisis to manage.
Contact A3E at (888) 405-1742 or Info@A3E.com to discuss your Environmental REC. Let’s turn that “environmental wreck” into a non-issue.
