A Phase I Environmental Site Assessment (ESA) is an environmental report prepared for commercial real estate transactions such as leasing buildings, purchasing property, business acquisitions, new residential developments, owner refinancing, and foreclosures. The purpose for this investigation is to prevent a prospective owner from purchasing a contaminated property or the commercial lender from taking on the environmental risk of a property with potential impacts.
A Phase I ESA is prepared for a property to evaluate its potential to contain contamination by hazardous substances or petroleum products that constitutes a “recognized environmental condition” (REC). The report is prepared according to the American Society for Testing of Materials (ASTM) standard E 1527-13 and the United States Environmental Protection Agency (USEPA) All Appropriate Inquiries Rule (40 CFR 312). This enables the landowner to qualify for liability protection (innocent landowner defense) from the Comprehensive Emergency Response, Compensation, and Liability Act (CERCLA) liability.
The Phase I ESA will be conducted by an environmental professional who is experienced in collecting and interpreting available site information, conducting interviews and performing detailed site inspections. The preparer of a Phase I ESA must meet the EPA’s criteria for Environmental Professionals. MGF workers exceed the criteria and each report undergoes a thorough review by a licensed Professional Geologist before submittal to the client.
The identification of RECs at a property are based on a review of sources as follows:
- Historical aerial photographs
- Sanborn fire insurance maps
- Historical topographic maps
- City directories
- Building permits
- Federal and state governmental records
- Fire department and emergency responders
- Inspection of the subject property and surrounding areas
- Interviews conducted with property owners, managers and occupants
Commercial lenders should require a Phase I ESA to identify environmental risks to reduce liability for their clients and themselves. Environmental remediation on a property is a costly and sometimes long-term expense that can affect a property owner’s ability to operate profitably. A Phase I ESA is a nominal expense that could save money and time.