We conduct Phase I Environmental Site Assessments (ESA) to determine the liability of property buyers during mergers and acquisitions, refinancing of commercial real estate, and other situations in order to identify the environmental risks of a site. Often a Phase 1 ESA is required by the lending institution providing the funding for a purchase or refinancing.
To properly protect the involved parties, the ESA must rigidly follow the ASTM guidelines. The latest ASTM guide is ASTM-E-1527-13 which was revised and update in 2013.
A Phase I Environmental Site Assessment (ESA) follows the American Society of Testing and materials (ASTM) guidelines known as ASTM-E-1527-13 Standard for Phase One ESAs, and satisfies the “Due Diligence” process in a real estate or financial transaction.
This ASTM-E-1527-13 standard is intended for Commercial Properties to identify possible environmental risks of a particular site and surrounding sites that may adversely affect the property value or pose a liability on a property owner, purchaser or financier. Only a Phase 1 Environmental ESA will satisfy the liability protection under CERCLA for “recognized environmental conditions”.
ASTM defines “recognized environmental condition” as the presence or likely presence of hazardous substances and petroleum products on a property under conditions that indicate an existing release, a past release or a material threat of a release into ground, groundwater or surface water.
Why do a Phase 1 Environmental Site Assessment (ESA)?
Federal, state and local laws make the current and prior property owners liable for the cost of cleaning up contaminated soils, groundwater and surface water. If you are buying – or financing – a property, you would want to know if any contamination or hazardous conditions exist on a property before the transaction since you may be paying the cost of clean-up. Clean-up may not just be on your property but any other property including surface and groundwater that may have originated on your property. A Phase I ESA provides the appropriate level of “due diligence” in the transaction.
A Phase 1 ESA that conforms to the appropriate level of “due diligence” as specified in ASTM-E-1527-13 includes the following:
- Thorough database/records review of all available sources in federal, state, county and municipal records of recognized environmental conditions.
- Historical land use research.
- Site inspection including surrounding properties.
- Interview with property owner, occupants and possible neighbors.
- Documentation questionnaire.
- Obtaining any previous Phase 1 ESAs, Business Plans, Permits or any other documents that may have environmental significance.
- Photographs of property and surrounding property.
- Geologic characteristic of property, soils, surface and groundwater (i.e. 7.5 minute topographic maps).
- Aerial photographs and Sanborn Maps as available.
- Other relevant documents such as tax maps, title records, zoning and land use records, building department records (as reasonably available).
- Records review of environmental records at county and state level (NEW)
- Comprehensive report outlining findings of all above items.
The comprehensive Phase I ESA Report will identify all known or suspected hazardous material or petroleum product releases with recommendations for sampling/testing and analysis (referred to as Phase II) and/or remediation/clean-up (Phase III).
Often Phase II or Phase III recommendations are not possible until the previous phase has been completed. Thus a Phase II soil, groundwater or surface water sampling/testing and analysis cannot be developed until the Phase I Environmental Site Assessment (ESA) has been completed. Likewise a Phase III – clean-up remediation cannot be developed until the Phase II Testing is complete.
Some of the most unlikely items found during a Phase I ESA are (but not limited to):
- Underground storage tank (UST) spill or leakage from gas stations or commercial fuel tanks.
- Surface and subsurface contamination due to commercial activities as chemical production, junk yards, service stations, leaking surface contaminants
- Stack or uncontrolled air emissions that settle on soil, drainage area, or surrounding properties.
- Illegal dumping of waste material including chemicals, fuels, oils, asbestos, lead and radioactive materials.
The most common reasons for a Phase 1 ESA include:
- Purchase or sale of a property.
- Financing of a commercial property.
- Re-Financing or second mortgage of a commercial property.
- Change in use of property such as from farmland to school/daycare/playground/park/golf course etc.
- Evidence of clandestine (illegal) dumping, spills.
- Follow-up after flood where sewerage, chemical, or fuel release is suspected.
What does a Phase I Environmental Site Assessment (ESA) Cost?
There is a wide varied of costs to perform a Phase I ESA. As you may have guessed, there is a wide variety of quality on such ESA. Honestly, you get what you pay for!
The ASTM requirements for a Phase I, the most recent of which is ASTM-E-1527-13. This is a rigid protocol and to protect the property owner, buyer, or lending institution. This “due diligence” protocol must be followed rigidly. It is almost a certainty that a price of $1,000 will not rise to the level of quality to satisfy the ASTM requirements and protect you with “due diligence” requirements as well.
It is our belief that the lowest cost to do an ASTM valid and “due diligence” Phase I is in the range of about $1,800. There is a reasonable ceiling amount for a Phase I as well. Remember it is only an assessment of the property and buildings and the possible impact of the neighbors. It is not a thorough building inspection. From experience the maximum, except for extremely large or complex properties is about $8,000.
As an ethical matter, Atlantic Environmental, Inc. generally recommends a Full Phase I Environmental Site Assessment according to ASTM-E-1527-13 rather than the more limited Pre-Phase 1 according to ASTM-E-1528-06 known as a “transaction screen.”
For further details, quotes or references, please contact Robert Sheriff directly at 1-800-344-4414 or e-mail us at firstname.lastname@example.org.
Our primary service areas for Phase I Environmental Site Assessment (ESA) in compliance with ASTM-E-1527-13 are: NJ, NY, NYC, PA, CT, DE, MA, RI, Wash DC, WI, MD, MI, IL, VA, IN, GA, AL, NC, SC, TN, TX, OK, DC, AR, we can service most other areas of the U.S. but with some added travel charges.