Phase I Environmental Site Assessments


Due Diligence

A Phase I Environmental Site Assessment (Phase I ESA) is a core part of real estate Due Diligence for commercial, industrial, and multi-family properties. Whether your lender is requiring a Phase I ESA or you want one for your own piece of mind, the environmental assessment can provide you with valuable information before you close. Once you are the owner any environmental liability stemming from the property is your responsibility.

All Appropriate Inquiries (AAI)

What happens if years after buying the property you find out it is contaminated? Or even worse, contaminating neighboring properties as well? If you don't want to be responsible for cleanup costs it is important you satisfy the EPA's All Appropriate Inquiries rule (AAI) which allows you to establish an Innocent Land Owner Defense. Getting a Phase I ESA report that follows the ASTM E1527-13 standard before you purchased the property can help satisfy the All Appropriate Inquiries rule saving you a lot of headaches and money.

ASTM E1527-13

Phase I Environmental Site Assessments are governed by the ASTM Standard E1527-13. In 2013 this replaced ASTM E1527-05 as the industry standard. An environmental assessment that doesn't follow this standard is not a true Phase I ESA and will not satisfy the EPA's AAI rule.

What is in a Phase I ESA?

In general, a Phase I consists of a site visit, intense research, and a report.

Site Visit

An inspector will visit the subject property in order to get some information on the layout of the site, buildings, and the surrounding area. An important part of this is to note any above or underground storage tanks (AST/UST) present on the property. The inspector will look for any evidence suggesting a current or past release of hazardous materials or petroleum products.

Research

Research makes up the bulk of the Phase I ESA.

Historical Research

The point of historical research is to attempt to identify the past uses of the property dating back to its first development. While the site you are looking to purchase might appear harmless now the activities occurring 50 years ago might not be. Sources used to conduct historical research often include old city directories, historical aerial photographs, Sanborn fire insurance maps, topographical maps, and more.

Regulatory Research & File Review

Local, state, and federal environmental databases are searched for any relevant information regarding the subject property or surrounding properties in the area. When necessary, further records are requested from the appropriate agency and reviewed in order to get a better sense of any environmental risk.

Physical Site Setting

Topographic, geologic, hydrogeologic, and hydrologic information is reviewed in order to get an idea of the site's physical setting. Information like elevation, soil characteristics, and surface and subsurface water can be vital to determining the property's risk profile.

Interviews

Ember Environmental will make an attempt to interview various peoples regarding their knowledge of the subject property. This can include the prospective purchaser, current owners and tenants, and state/local regulators. Any helpful documents that can assist Ember in the Phase I Environmental Site Assessment that can be provided by these parties will be requested as well.

Report

All the appropriate information gathered from the site visit and research is presented in the Phase I ESA report. The environmental professional uses the information attained to make a determination if any past/present/future hazardous substance or petroleum releases are likely in relation to the subject property. These are identified in the report as RECs (Recognized Environmental Conditions). Any other findings of note are also related in the report.

Time Frame

The shear amount of information that must be acquired and poured through means a Phase I ESA generally takes 2 to 3 weeks to complete, at the end of which the report is presented to the User. The exact timing can vary based on the size of the property and the information discovered during the investigation. Be wary of anyone telling you they can complete a Phase I in a week. Chances are they are not acquiring or reviewing all the information needed to properly follow ASTM E1527-13.

Scope of Work

ASTM E1527-13 clearly states what is and what is not considered part of a Phase I Environmental Site Assessment. The following are stated as NOT being the concern of a Phase I ESA.