Phase 1 ESA

Overview

Phase 1 Environmental Site Assessments (ESAs), are a foundational due diligence step in real estate transactions that evaluate potential environmental risk(s) to a property.

EnviroPhase performs Phase 1 ESAs on commercial, industrial, mixed-use, multi-family, undeveloped, and vacant properties to meet the most current ASTM standards as published by the Environmental Protection Agency (EPA). The ASTM E1527 standard establishes specific requirements for conducting a Phase 1 ESA on a property to identify hazardous contaminants found within the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

The purpose of the Phase 1 ESA report is to evaluate whether current and historical uses of the property or surrounding properties have impacted the soil and/or groundwater at the subject property by contaminants which may threaten the environment and human health. The latest version (ASTM E1527-21), which took effect February 13, 2023, clarified the shelf life of Phase 1 reports and the “User Responsibilities” necessary to qualify for CERCLA defenses to liability, defined the minimum standard historic sources required for review, and provided guidance on whether to include emerging contaminants in the scope of work, based on state regulation or client request. Environmental concerns include aspects that could lead to liability in the event of ownership that has the potential to significantly impact property value or that could affect the current or future use of the site.

Benefits of Performing Phase 1 ESAs

The benefits of performing a Phase 1 ESA include:

• Identifying/reducing environmental liability
• Assessing risks of ownership
• Aids in the understanding of the costs associated with redevelopment or changes in land use
• Often required by lending institutions
• Can disclose conditions which can be used to “re-evaluate” the real estate transaction

The cost of performing an ESA is relatively insignificant when compared to the value of the transaction. The cost of not performing an ESA can be staggering and long term.

Recognized Conditions: REC’s, HREC’s, and CREC’s

Several key terms are used in evaluating and preparing Phase 1 ESA reports.

• A Recognized Environmental Condition (REC) is the presence (or likely presence) of any hazardous substance or petroleum product that can impact a subject property by contamination directly on the subject property or possibly from an offsite source.
• A Historical Recognized Environmental Condition (HREC) is the identification of a previous release that impacted the subject property but has been investigated, remediated, and met the criteria to achieve site closure.
• A Controlled Recognized Environmental Condition (CREC) is the identification of a previous release of a hazardous substance that impacted the subject property, which has been investigated and remediated. However, the contamination remains on the subject property and requires additional work for future development or redevelopment.

Site Reconnaissance

A Phase 1 ESA is performed by a qualified Environmental Professional (EP) on the Envirophase Phase 1 team staff and involves a site reconnaissance, which is an on-site evaluation of the subject property and surrounding properties, if required, for visible indicators of potential RECs from suspected use of hazardous substances or petroleum products. Examples of some common on-site areas of concern include:

• dry-cleaning facilities which have utilized Perchloroethylene (PERC) as a solvent
• gas stations with a release that has not met cleanup closure criteria, have a failed tank or line tests, or have tanks 25 years of age or older that are still located on the property
• automotive repair facilities with in-ground hydraulic lifts, or other on-site operations that may have led to releases over time
• industrial or manufacturing properties that pose a higher risk for environmental impacts due to the on-site operations.

Agency Records Search

Another area of research is obtaining and reviewing historical aerial photographs, Sanborn fire insurance maps, topographic maps, and city directories to help identify RECs for the property in connection with past or present uses of the subject property or surrounding properties. Other documents sought and reviewed during the research include those obtained from state and local government agency archives for environmental permits and regulatory action on the subject property and surrounding properties, county appraisal district or county assessor property parcel information and maps, FEMA maps, oil and gas maps, and prior environmental reports.

Regulatory Database Review

A regulatory database review is also conducted to identify the potential for any REC, HREC, or CREC. Potential database findings may be sourced from, but not limited to:

• National Priority List (NPL)
• Resource Conservation and Recovery Act (RCRA)
• State Superfund Registry (SHWS)
• Leaking Petroleum Storage Tanks (LPST)
• Sites with Controls (AUL)
• Voluntary Cleanup Program Database (VCP)
• Brownfields Site Assessments (BROWNFIELDS)

The regulatory database includes information regarding the subject property and surrounding properties; the subject property elevation, soil type, geological and hydrology settings, flood zone, wetland data, on-site and surrounding water wells, groundwater direction, and depth to groundwater.

Interviews

Interview questionnaires are provided to both the owner and the report user to obtain any prior knowledge of the subject property and surrounding properties. If the user questionnaire is not completed and returned for inclusion in the Phase 1 ESA, the EP will evaluate the significance of this “data gap” and determine whether it would constitute a REC for the property.

Non-ASTM Scope Considerations

Although not required by the ASTM standards, some Phase 1 ESAs, upon request, may include a discussion for consideration of emerging contaminants, asbestos-containing materials (ACM), lead-based paint (LBP), industrial hygiene, lead in drinking water, mold, PCB-containing materials, radon, wetlands, and others.  Often, Phase I ESAs are paired with asbestos surveys and/or Property Condition Assessments (PCAs) to provide diligence in those complementary areas. EnviroPhase can assist clients with both of these supplemental areas should they be needed.

Final Phase 1 ESA Report

The acquired documents mentioned above, any additional information, an executive summary, conclusions, and recommendations, constitute the final comprehensive Phase 1 ESA report. Further investigation is recommended when the Phase 1 ESA findings identify a REC to the subject property. A Phase 2 ESA is typically suggested as the next step, followed by other investigative actions if necessary.