What Exactly is a Phase I ESA?
If you are going to buy, sell or refinance a property, you may hear the term Phase I Environmental Site Assessment (ESA). Most people know they need one, but many people aren’t sure what a Phase I ESA is. In fact, a fairly common question once we start talking about Phase I’s is pretty candid – exactly what is a Phase I Environmental Site Assessment?
It’s a good question, because many people at some time in their professional lives may need to get one. But a lot of people don’t exactly know what they are, especially if you’ve never refinanced or purchased a commercial or industrial property. Moreover, the regulations around a Phase I ESA are confusing to someone who’s not an environmental expert. This makes DIY research complicated.
Fortunately, we’ve spent many years reviewing Phase I’s with clients explaining what they are and what kind of protection they offer.
What Rules Must be Followed
The Phase I Environmental Site Assessment is an investigation of the property conducted in accordance with ASTM standards. These standards conform to the All Appropriate Inquiry (AAI) standards. These standards are acceptable to the USEPA for the provision of certain defenses against CERCLA or Superfund liability.
The US EPA is the United States Environmental Protection Agency. CERCLA is the Comprehensive Environmental Response, Compensation, and Liability Act, known also as Superfund.
In layman’s terms, a Phase I ESA is an investigation of your property by an environmental engineer. This expert meets certain professional qualifications, and is known as an “environmental professional”. A Phase I ESA is an investigation of the current and past history and uses of the property. What was on the site before? What past usage would have effected the property? Did any usage contaminate the soil or groundwater on the site? What about the current operation? Are any petroleum, hazardous materials or chemicals at the site. In the past, were any contaminants released to the air, soil or groundwater at or near the site?
The investigation determines if there are any conditions that suggest any 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 actually, a Phase I is meant to identify REC at the property, either at now or which in the past.
To learn more about Phase I Environmental Site Assessments, please following these links.
Why get a Phase I Environmental Site Assessment?
What’s included in a Phase I ESA?
Background & History of Phase I ESAs
Top Three Environmental Issues in Commercial Real Estate