What is a Phase 1 Environmental Site Assessment?

A Phase 1 Environmental Site Assessment (ESA) is a preliminary investigation conducted to evaluate the potential for environmental contamination at a property. It aims to identify Recognized Environmental Conditions (RECs), defined as the presence or likely presence of any hazardous substances or petroleum products on the property under conditions that indicate an existing release, a past release, or a material threat of a release of any hazardous substances or petroleum products into structures on the property or into the ground, ground water, or surface water of the property.

Understanding the Purpose of a Phase 1 ESA

The overarching purpose of a Phase 1 ESA is to protect potential property owners, lenders, and other stakeholders from inheriting environmental liabilities. It allows them to make informed decisions about purchasing, developing, or financing a property. By identifying potential contamination, the assessment helps assess risks, estimate cleanup costs, and potentially renegotiate purchase agreements. In essence, it’s a due diligence tool that contributes to minimizing future environmental and financial burdens. A well-executed Phase 1 ESA can also provide a “safe harbor” from liability under federal law, specifically the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), also known as Superfund.

The Four Key Components of a Phase 1 ESA

A Phase 1 ESA, performed by a qualified environmental professional, typically involves four crucial components:

• Records Review: This involves examining historical and current records related to the property and surrounding areas. These records can include aerial photographs, fire insurance maps, city directories, Sanborn maps, and regulatory databases (federal, state, and local). The goal is to identify past uses that might have resulted in contamination, such as gas stations, dry cleaners, or industrial facilities.

• Site Reconnaissance (Site Visit): A visual inspection of the property and its surrounding areas is conducted to identify potential sources of contamination. This includes observing the condition of buildings, the presence of aboveground or underground storage tanks (ASTs or USTs), stained soil, stressed vegetation, and any other signs of environmental concern.

• Interviews: Interviewing past and present owners, operators, occupants, and local government officials provides valuable insights into the property’s history and potential environmental issues. These interviews can uncover information not readily available in written records.

• Report Preparation: The final step involves compiling all the information gathered from the records review, site reconnaissance, and interviews into a comprehensive report. This report summarizes the findings, identifies any RECs, Historical Recognized Environmental Conditions (HRECs), or Controlled Recognized Environmental Conditions (CRECs), and provides recommendations for further action, if necessary.

Why is a Phase 1 ESA Important?

Avoiding environmental liabilities is a significant advantage of completing a Phase 1 ESA. However, there are additional benefits:

• Risk Management: Identifies potential environmental risks associated with a property.
• Financial Planning: Allows for accurate budgeting of potential cleanup costs.
• Property Value: Protects the value of the property by addressing environmental concerns proactively.
• Regulatory Compliance: Helps ensure compliance with federal, state, and local environmental regulations.
• Informed Decision-Making: Enables stakeholders to make informed decisions regarding property transactions.

FAQs about Phase 1 ESAs

Here are 12 frequently asked questions to further clarify and enhance your understanding of Phase 1 Environmental Site Assessments:

1. When is a Phase 1 ESA Required?

A Phase 1 ESA is typically required during real estate transactions, particularly when a property is being purchased, sold, or refinanced. Lenders often require a Phase 1 ESA as part of their due diligence process to assess the environmental risk associated with the loan. Prospective purchasers also commission these reports to protect themselves from future liabilities. They may also be required for brownfield redevelopment projects and by regulatory agencies in certain situations.

2. What are the key differences between a Phase 1 and Phase 2 ESA?

A Phase 1 ESA is a preliminary investigation that focuses on identifying potential contamination through records review, site reconnaissance, and interviews. A Phase 2 ESA, on the other hand, involves sampling and laboratory analysis of soil, groundwater, and other media to confirm the presence and extent of contamination identified during the Phase 1 assessment. If the Phase 1 ESA identifies RECs, a Phase 2 ESA is often recommended to further investigate those concerns.

3. How long does a Phase 1 ESA take to complete?

The timeline for completing a Phase 1 ESA can vary depending on the complexity of the property and the availability of records. However, a typical Phase 1 ESA takes approximately 2-4 weeks to complete. Some rush options may be available at a premium.

4. How much does a Phase 1 ESA cost?

The cost of a Phase 1 ESA varies based on several factors, including the size and complexity of the property, the location, and the environmental professional’s rates. Generally, the cost ranges from $2,000 to $5,000. Properties with a complex history or located in areas with known environmental concerns may incur higher costs.

5. Who can perform a Phase 1 ESA?

Phase 1 ESAs should be performed by a qualified environmental professional who has the necessary education, training, and experience to conduct the assessment. Environmental professionals often hold degrees in environmental science, engineering, or related fields and possess relevant certifications. Look for someone who is considered an Environmental Professional as defined by the ASTM standard.

6. What is ASTM E1527-21?

ASTM E1527-21 is the current industry standard for conducting Phase 1 ESAs. This standard outlines the procedures and requirements for conducting a compliant Phase 1 ESA, ensuring consistency and quality in the assessment process. Lenders and regulatory agencies often require adherence to this standard.

7. What happens if a Phase 1 ESA identifies Recognized Environmental Conditions (RECs)?

If a Phase 1 ESA identifies RECs, the environmental professional will typically recommend a Phase 2 ESA to investigate the potential contamination further. The Phase 2 ESA will involve sampling and analysis to determine the nature and extent of contamination.

8. What is a Historical Recognized Environmental Condition (HREC)?

A HREC is a past release of hazardous substances or petroleum products that has been addressed to the satisfaction of the applicable regulatory authority, with no remaining contamination present. While a HREC indicates a past issue, it does not necessarily require further action.

9. What is a Controlled Recognized Environmental Condition (CREC)?

A CREC is a REC resulting from a past release of hazardous substances or petroleum products that has been addressed to the satisfaction of the applicable regulatory authority, with controls (e.g., engineering controls, institutional controls) in place to prevent exposure to remaining contamination. Ongoing monitoring or maintenance of these controls may be required.

10. What is the “All Appropriate Inquiry” (AAI) rule?

The All Appropriate Inquiry (AAI) rule is a set of requirements established by the EPA for conducting environmental due diligence to qualify for certain liability protections under CERCLA. A Phase 1 ESA conducted in accordance with ASTM E1527-21 generally meets the requirements of AAI.

11. How long is a Phase 1 ESA report valid?

A Phase 1 ESA report is generally considered valid for 180 days from the date of the report. After 180 days, the report must be updated to ensure the information is still current and accurate. Certain key information components, such as interviews and regulatory records searches, become invalid after one year and must be updated if that timeframe is exceeded.

12. Does a Phase 1 ESA guarantee there is no contamination on the property?

No. A Phase 1 ESA is a non-intrusive assessment that relies on available records, site observations, and interviews. It does not involve sampling or laboratory analysis. Therefore, it cannot guarantee that there is no contamination present on the property. It identifies potential areas of concern and recommends further investigation if necessary. A Phase 1 ESA minimizes risks and provides a reasonable level of assurance based on the information available at the time of the assessment.