FAQ: What is a Phase I ESAs?

What is a Phase I Environmental Site Assessments explained?

What is a Phase I Environmental Site Assessment – explained simply.

If you’re in the process of buying or refinancing a property, chances are you have heard the phase Phase I Environmental Site Assessment. While many people know they need one or should get one, they aren’t sure why.  Asking about Phase I’s is a very common question.

It’s a good question, because many people at some point in their business experiences may need to get one.  But you may not be familiar with a Phase I Report if you’ve never refinanced or purchased commercial or industrial property.  Even worse, the regulations around a Phase I ESA are confusing to anyone who is not an environmental expert, making DIY research complicated.

Fortunately, we’ve spent years both in the field and in the boardroom reviewing Phase I’s with clients like you, demonstrating what Phase I’s are and what kind of protections they offer your business.

Why get a Phase I Environmental Site Assessment?

Let’s start in a novel place and take a walk down history lane before we learn what one is.

We all know what a “Superfund” site is? The most famous Superfund site is Love Canal. Someone made an environmental mess, and someone needs to be responsible for cleaning it up. Other Superfund sites are listed here.

Congress didn’t protest either, and in response to realizing that the United States was starting to have a problem with highly contaminated properties, they created the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, commonly known as Superfund).

One principal component of this act, extremely oversimplifying, is that if you contaminate a site, you’re on the hook for cleaning it up.

However, it’s not always that simple. Assume you purchase a site and find out later it’s contaminated.  First, unfortunately for you, that means you didn’t get a Phase I done. Second, you’re reasonably wondering who’s going to clean up this mess?! Guess what, it’s your responsibility now.

That’s correct, if you didn’t go through the specific process of investigating the present and past uses of the property, and the potential presence of environmental contamination of the property, then YOU are responsible for the cleanup.  That’s the way the law is written.  As a result, you can’t fight it.

Without giving you legal advice, or getting in too deep into regulations, if your Phase I was administered in accordance with AAI standards (see below) you may not be responsible for clean-up costs at your location. Conducting a Phase I can provide you with some protection in this situation.

Meaning, you probably may not be liable for the cleanup.

So how do you avoid this? By getting a Phase I ESA.

But what is a Phase I Environmental Site Assessment?

A Phase I ESA is an investigation of a property that must be conducted following ASTM standards that conform to the All Appropriate Inquiry standards, acceptable to the USEPA for the provision of certain defenses against CERCLA liability. That’s confusing, right? Don’t worry, we’ll explain it further.

In layman’s terms, it’s a study of your property by an engineer who meets certain professional qualifications, known as an “environmental professional.” It covers a study of the current and past history and uses of the property. What was previously located on the site? What were past usages and did they impact the property? Did any usage pollute the soil or groundwater on the site? What are the current operations? Are any petroleum, hazardous materials, or chemicals used at the site.  Have contaminants been released to the air, soil, or groundwater at or close to the site?

It’s an investigation to resolve if there are any conditions that are characteristic of releases of petroleum or hazardous materials or chemicals at the site, now or in the past. These conditions are collectively known as “REC” or recognized environmental conditions. So really, a Phase I Report is meant to identify REC at the subject property, either at present or which may have been present in the past.

What’s covered in a Phase I ESA?

Some of the areas of investigation include:

  • A careful review of historical records of the property, including historical aerial photographs, fire insurance mapping (maps, usually older, of most of the US showing what properties contained in the past, such as buildings, fuel tanks, etc.), and historical topographic mapping.
  • A meticulous review of readily available government environmental records of the property, such as for spills, releases to the environment, fuel tank registrations, hazardous material manifests, environmental records, etc.
  • Interviews with current and past property residents or tenants that are available, as well as others who might be able to reveal facts on past or present uses of the property.
  • A thorough site inspection, including all building interiors as well as all exterior property and grounds. This site inspection would include a visual inspection of the presence of characteristics such as fuel or chemical storage tanks, the presence of stained soils, site activities, etc.

What’s not included in a Phase I ESA?

It’s important to know that a Phase I Assessment is restricted to a visual inspection with a documentation review only. There is usually no sampling or testing during a Phase I Assessment. Should concerns arise, you will probably need to get a Phase II Assessment done. To learn about that, see our article on what is a Phase II Environmental Site Assessment?

Additionally, there are some activities not normally part of Phase I.  These are deemed to be “non-scope items” although they could conceivably be provided during the site investigation. These might include the presence of mold, asbestos, lead paint, wetlands, compliance audits, etc.

What’s the outcome of a Phase I Environmental Site Assessment?

After the completion of the documentation and the inspection of the site is finished, it is the environmental professional responsibility to make conclusions about what has been discovered.  This includes identifying any RECs that are found.  The Environmental Professional must make recommendations about the need for any likely further investigations.

If no RECs are found, or the environmental professional considers them to be insignificant, then that’s normally the end of the process. If significant RECs are present, and the environmental professional recommends, then Phase II activities normally occur.

Not sure what RECs are? Check out our article on what are RECs in a Phase I ESA?

Don’t forget, some “professionals” like to automatically put you on the spot for additional work.  You should be aware that this is not always necessary and we discuss that here: do I need a Phase II ESA?   If you don’t need one, don’t get one!

What does a Phase I ESA look like?

We will prepare reports in a binder or other kind of print document. However, in an effort to be more environmentally conscientious, we will develop our documents as a PDF.

We find that reviewing records, that must in the report often includes hundreds, if not thousands of pages.  Some Phase I contain thousands of pages which is prohibitive to print out as a hard copy.

Some further Phase I ESA considerations.

Another important question you have is: How much does a Phase I Environmental Site Assessment cost?  Additionally, you must be careful and avoid cutting corners.  We explain here why you should avoid a cheap Phase I ESA.

The most valid reason for conducting a Phase I investigation is to protect you from making a bad investment or being liable for the actions of others.

Do it correctly, and you’ll get an appropriate measure of protection. If you do not conduct the Phase I ESA correctly, or not at all, and you’re taking a big risk and could lose money.

If you have additional questions we hope you will contact us, or give us a call to consider your needs.