Phase 1 ESA Basics
What is a Phase 1 Environmental Site Assessment (ESA)?
The purpose of a Phase 1 ESA is to 1) evaluate a property for current and historic sources of potential environmental concerns, evidence of hazardous substance disposal and environmental threats from nearby properties, and 2) determine whether further investigation into a property's environmental status is warranted. A Phase 1 ESA is generally considered the first step in the process of environmental due diligence.
What tasks are included in all Phase 1 ESAs?
Phase 1 ESA tasks can be categorized as 1) research into the history of activities conducted at a property and improvements at a property, 2) a site visit to tour the buildings and walk the property to check for items of potential environmental concern, and 3) a review of environmental databases and project files of nearby contaminated sites to determine if there are any off-site environmental concerns that represent an environmental threat to a property.
Historical research tasks should always include reviewing available assessment and building permit records, conducting at least a 50-year ownership history search, searching city directories to determine the past property occupants, determining when the property was first serviced by natural gas, reviewing historical aerial photographs, reviewing a topographic map, reviewing historical Sanborn Fire Insurance maps, and interviewing persons knowledgeable of activities conducted at a property. The above information is not available for all properties and unique research tasks must therefore be conducted in Phase 1 ESAs of some properties.
Why are Phase 1 ESAs done?
The primary reason Phase 1 ESAs are done is that an owner of a contaminated property or a property that has certain environmental hazards is financially liable for the remediation of the contamination or removal of the environmental hazards. Therefore, a buyer is hoping to avoid being financially liable for environmental problems at a property. In most cases though, a Phase 1 ESA is done because a lender states that it must be done before they will accept the property as collateral for a real estate loan.
When are Phase 1 ESAs done?
Phase 1 ESAs are often done by a buyer before they purchase a non-residential property and are almost always done by a lender before they foreclose on and take title to a non-residential property. Lastly, lenders sometimes require Phase 1 ESAs before they will refinance a non-residential property.