What is a Phase 1 Environmental Site Assessment?

A Phase 1 Environmental Site Assessment (AKA “Phase 1” or “Phase 1 ESA”) is a report which examines the historical and current uses on a given property in order to determine if environmental contamination or related risks are present. Specifically, the soil and groundwater on the property are examined for signs of contamination or toxicity. Phase 1 ESA’s may also include a discussion about the potential for asbestos materials, lead-based materials, and radon gas.

The Phase 1 Environmental Site Assessment is typically prepared as part of a commercial real estate transaction and is usually required by the lender(s).

All Phase 1 Environmental Site Assessment which which are properly prepared will comply with ASTM E1527-13, while large primarily undeveloped land may be researched under the requirements in ASTM E2247-16.

Red flag land uses may include the following:

These land uses have historically employed chemicals which could cause contamination.

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A Non-Invasive Property Study

A Phase 1 Environmental Site Assessment could be considered a non-invasive study of the property, meaning excavation or sampling are usually not conducted. Rather, historical records, landowner interviews, in-person site visits, permit history, and government databases are typically utilized in order to understand potential contamination risks.

 

Upon completion of a Phase 1 ESA, the property will either be determined to be clean, or will demonstrate the presence of a “Recognized Environmental Condition” (REC). If contamination (REC) is discovered in the soil or groundwater, a Phase 2 Environmental Site Assessment may be required. A Phase 2 ESA would be considered more invasive than a Phase 1 and will include collecting physical samples of soil, groundwater, vapor, and/or building materials for analysis.

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Why do you need a Phase 1 Environmental Site Assessment?

Completing a Phase 1 Environmental Site Assessment is a critical part of property due diligence. Prior to purchasing a property, the prospective owner will want to know the risk profile, or, alternatively, to be assured that there is no environmental risk present.

 

Typically, you’ll need a Phase 1 Environmental Site Assessment in order to obtain funding for a commercial land purchase unless waived by a lender. In most cases, Phase 1 ESA’s are not required for residential lot purchases (but homeowner within subdivisions should understand that a Phase 1 ESA was most likely prepared as part of the purchase of the original development land).

Phase 1 Environmental Site Assessments also offer some level of liability protection against civil lawsuits.

When completed as part of a financial real estate transaction, a Phase 1 Environmental Site Assessment can be used to satisfy the requirements of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA’s) innocent landowner defense under All Appropriate Inquiries (AAI).

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John Abbott

John Abbott
Director, Environmental Services

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