In terms of due diligence, Phase I and II Environmental Site Assessments (ESAs) are vital requirements for investors or developers buying commercial or industrial real estate. Without the benefit of a Phase I ESA, discovery of adverse environmental conditions after a property purchase can potentially leave the new owner with full liability for decontamination or remediation.

The Basics of Environmental Site Assessments

This short blog post explains five basic facts about Phase I and II ESAs, which should prove especially useful for first-time buyers of commercial real estate.

  1. The baseline standard for a Phase I ESA is ASTM E1527-13, which was approved by the United States Environmental Protection Agency (EPA) at the end of 2013. Real-estate buyers wishing to reduce CERCLA liability for environmental contamination must ensure that any Phase I ESA meets that standard.
  2. The basic components of a Phase I ESA comprise:
  • A review of property records, which typically includes:
    • Chain of title review
    • Examination of surrounding land use
    • Review of any existing aerial photography records
    • Search of agency records
  • A visual site inspection
  • Interviews with anyone who may have relevant information about the site
  • Completion of a comprehensive ESA report
  1. No physical sampling is conducted as part of a Phase I ESA.
  1. Phase II ESAs are physical subsurface investigations performed when evidence of contaminants are identified during Phase I ESAs. In some cases, investigations might focus on contaminants other than those which subsurface inspection will reveal.
  1. A Phase II ESA involves sampling and analysis of elements such as soil, soil vapor, groundwater, waste materials, or indoor air, depending on the findings of the Phase I assessment.

Acting on Assessment Results

Commercial property buyers who have Phase I and II ESAs conducted can insist upon clean-up by the existing property owner or reduce the offer price commensurate with cost estimates for remediation (assuming evidence of contamination is revealed).Don’t land yourself or your business with liability for hazardous material clean-up after a commercial property purchase. Discover any environmental issues before the fact with an environmental site assessment performed by ATC.

Contact us to learn more about these and other services we provide.