What is a Phase 1 Environmental Site Assessment?
A Phase I Environmental Site Assessment, or Phase I ESA, assesses if the way a property has been used has impacted the underlying soil or groundwater in ways that could be harmful or potentially harmful to human health or the environment. Phase I ESAs can be completed on multi-family, residential, and commercial properties with current or historical agricultural, and industrial uses, or even vacant land.
Because the presence of any harmful or potentially harmful issues affects the value of a property and presents a potential liability for the lender and/or the new owners, a Phase I ESA is frequently completed as part of a commercial real estate transaction. The results of a Phase I ESA report are needed to fulfill particular requirements of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and ASTM E1527-13 (Exceptions are made for properties that contain large areas of primarily undeveloped land, which can be researched under ASTM E2247-16).
How is a Phase I ESA Conducted?
A Phase I ESA begins with a site visit to note current and past uses of the property and adjacent properties and evaluate current conditions.
Additional information is then gathered through the review of:
Federal, state, tribal, and local regulatory databases to determine the current or past locations of underground or above-ground storage tanks and/or the possible storage or disposal of hazardous substances like petroleum products, and institutional and engineering controls.
Historical city directories, topographic maps, aerial photographs, and Sanborn (fire insurance) maps.
State and local agency records from state environmental agencies, Building Departments, Fire Departments, Health Departments and more.
The next step of the Phase I ESA involves Interviews with:
Current and past property owners, occupants, operators, and others familiar with the property.
Report users to determine the reason for the preparation of the Phase I ESA and access to title or judicial records related to environmental liens, Activity and Use Limitations, specialized knowledge or experience, actual knowledge, commonly known or reasonably ascertainable information, and/or any reasons for the presence of a significantly lower purchase price. It is the report user’s responsibility to provide this information to qualify for the innocent landowner defense.
Are There Areas of Particular Concern?
At this point, the research conducted is evaluated by an Environmental Professional to identify potential environmental risks to the property, including current or historic operations that are known or suspected to have used hazardous substances or petroleum products during onsite operations. Gas stations, printing companies, dry cleaners, vehicle repair shops, and manufacturing operations may present soil and/or groundwater contamination. ASTM E1527-13 addresses the concerns associated with contaminated soil vapor and the potential for vapor migration as a potential hazard to onsite and offsite tenants.
What Information Does a Phase I ESA Supply?
A Phase I ESA may also include information on suspected or potential asbestos-containing materials, mold growth, lead-based paint, radon, or lead in drinking water. as well as the potential for lead in drinking water and radon. Because these issues are beyond non-ASTM concerns, they are not included in a typical Phase I ESA, but may be included by request.
Upon completion of the Phase I ESA, the Environmental Professional will summarize the concerns with the property as Recognized Environmental Conditions (RECs), Controlled Recognized Environmental Conditions (CRECs), or Historical Recognized Environmental Conditions (HRECs)—and recommend mitigation where needed.
RECs, CRECs and HRECs: What’s the Difference?
An REC means there is either known contamination or the potential for the subsurface to have been contaminated, either from the property being evaluated or an offsite source.
A CREC means that the property has been contaminated, investigated and remediated satisfactorily, but that additional decontamination work would be required if the property were to be redeveloped.
An HREC identifies that a release has impacted the property being evaluated that has been investigated and remediated in a way that meets “unrestricted use criteria.”
The presence of any type of Recognized Environmental Conditions typically triggers a recommendation for a Phase II Environmental Site Assessment (ESA) to analyze for the presence of contamination. Next month, we’ll talk about what is involved in a Phase II ESA, including soil collection, groundwater analysis, and soil vapor sampling from the subsurface of the property.
