FAQ & Guide to Phase I Environmental Site Assessments (ESA)
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EnviroDesign Associates, Inc. (EDA) provides hundreds of ASTM-Format Phase I Environmental Site Assessments (ESA) Reports each and every year! Our Phase I Environmental Site Assessments are fully compliant with ASTM Standard Practice E1527-13 and the Environmental Protection Agency’s (EPA) All Appropriate Inquiry (AAI) Rule 40 CFR Part 312.
At EnviroDesign Associates, Inc. (EDA), Phase I Environmental Site Assessments are our specialty. In fact, we have completed thousands of Phase I Environmental Site Assessment (ESA) reports for the wireless communications industry, lenders, property owners, realtors, real estate attorneys, and others. Armed with all this experience, we are committed to not only help you identify potential environmental property issues or concerns, but more importantly, to advise you on the most cost-effective solutions to resolving such risks or concerns, if they are identified.
Our standard Phase I ESA’s comply with ASTM Standard Practice E1527-13 (or the latest edition), as well as All Appropriate Inquiry (AAI) Rule 40 CFR Part 312. We have worked with most major lenders and many local lenders, as well, and we can cater our Phase I Environmental Site Assessment Reports to meet any lender-specific requirements, as needed.
So what exactly is a Phase I Environmental Site Assessment (ESA)?
A Phase I ESA, by definition, is a non-intrusive investigation to evaluate the environmental risks associated with a certain parcel of real property. It includes site reconnaissance and an extensive search of public records, and it is typically performed in conjunction with a purchase, sale, or refinancing of a parcel of commercial or industrial property. A Phase I ESA, can also be performed on single-family residential properties, if warranted. A Phase I Environmental Site Assessment is typically required by the lender to gain a level of comfort with the real property that will be securing their loan, or by the purchaser to determine the environmental risks associated with the property they are purchasing.
Do I really need a Phase I Environmental Site Assessment?
Most commercial lenders will require a Phase I ESA to be performed on commercial properties and even for residential properties of more than four units. If a lender is not involved, however, the decision is really up to the purchaser. Similar to investing in stocks or other financial securities, when it comes to purchasing real property, every buyer has a different tolerance for risk. Most single-family homes do not warrant a Phase I ESA unless they are located in a neighborhood of higher risk uses, or if there are known concerns, such as on-site storage tanks. Similarly, professional offices (in general) carry a much lower level of environmental risk than a general commercial or a heavy-industrial building. However, when evaluating a site for potential environmental risks, it is important to remember that a Phase I Environmental Site Assessment considers not only the property itself, but the surrounding areas, as well. Contamination introduced into the groundwater of a neighboring property can migrate over time and negatively impact a parcel that has never even been formerly occupied. Therefore, the uses and risk factors of the surrounding neighborhood, as well as the former uses of the site itself should factor into your decision as to whether you should obtain a Phase I Environmental Assessment report.
Are there less expensive alternatives to evaluate the potential for environmental risk on a particular property?
In short, YES. However, these other alternatives may not be the best choice, depending on your situation. For example, when obtaining a real-estate loan backed by the Small Business Administration (SBA), the SBA allows a very-abbreviated form of the Phase I Environmental Site Assessment for properties of less than $150,000 in value. EDA offers such abbreviated environmental investigation alternative services such as an “Environmental Questionnaire” or “Transaction Screening Assessment” if desired by the client. While these alternative reports are certainly good tools for certain properties, they are not a replacement for a Phase I ESA, nor are they anywhere near as comprehensive as a full Phase I ESA. With the volume of Phase I ESA’s performed by EnviroDesign, we are able to provide extremely competitive rates for complete Phase I ESA’s for not much more than most firms charge for these alternative (and lesser) forms of environmental research. Therefore, for purchasers of non-residential properties in excess of $250,000, we generally recommend that they would be best served by performing a comprehensive Phase I Environmental Site Assessment, as a Phase I ESA is the industry-standard, and it provides most cost-effective and comprehensive assurances for an investment of this size.
Do Phase I Environmental Site Assessment Reports vary from firm to firm, or from region to region?
Thankfully, most lenders and other real estate professionals have adopted the standardized Phase I Environmental Site Assessment Format published by the American Society for Testing and Materials (ASTM). This format is published as ASTM Standard Practice E1527-13. ASTM is an independent organization that develops and distributes consensus standards for a variety of industries throughout US and in other countries, as well. EnviroDesign was producing Phase I Environmental Site Assessment reports long before the adoption of the current ASTM Format and we can attest that the implementation of these Standards has helped tremendously to improve consistency in reporting amongst consultants. Prior to a single recognized format, every lender had a different set of requirements for a Phase I ESA report. Moreover, the methods of research and quality of Phase I ESA report varied greatly between location and between consultants prior to the adoption of the ASTM format. While the quality of work product and Phase I ESA report can still vary a good deal between certain environmental consultants, the ASTM Standards for Phase I Environmental Site Assessment Reports has made significant strides towards standardizing the research conducted by consultants and standardizing the quality of report across the industry.
What information or research is included in an ASTM-Format Phase I ESA Report?
An ASTM-Format Phase I ESA report should contain the following (at a minimum):
Results of inquiry by an environmental professional.
Interviews with past and present owners, operators, and occupants.
Reviews of historical sources of information.
Searches for recorded environmental cleanup liens.
Reviews of Federal, State, Tribal, and local government records.
Visual inspections of the facility and of adjoining properties.
Commonly known or reasonably ascertainable information about the property.
The degree of obviousness of the presence or likely presence of contamination at the property, and the ability to detect the contamination by appropriate investigation.