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4 min read

A New Era of the Phase 1 ESA

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Phase 1 ESAs just got a makeover and can now be ordered with just the press of a button!

Managing potential environmental issues on a property is an unenviable yet necessary task for anyone wishing to buy a property, especially for the development of utilities or renewables. However, any transfer of property may necessitate reports intended to determine the past uses of that property and, therefore, your duties once you become its new owner or steward.

Phase 1 ESAs are a necessary part of that environmental due diligence process. While the ESA process does cost time and money, it is worth its weight in gold when it comes to uncovering potential problems of any parcel you’re considering. Because of this, you’re smart to perform them as soon as possible. That way, you can avoid transactions that end up being more difficult than you imagined – or worse, straight-up useless.

So just what is a Phase 1 ESA? Where are they performed, when do they necessitate follow-up reports, how much do they cost, and how do they impact future timelines? These are all good questions that we’ll consider today before discussing how to get started with your own Phase 1 ESAs.

Read on to learn everything you need to know.

 

What Is a Phase 1 ESA (Environmental Site Assessment)? 

A Phase 1 ESA – environmental site assessment – is a due diligence report intended to assess the risk of environmental liability on a property. You may also see it written as a Phase i Environmental Site Assessment Process or Phase I ESA.

“The Phase 1 Environmental Site Assessment (ESA) uses existing information to help a community understand the property conditions by examining current and historical uses of the site and potential threats to human health or the environment,” explains the Environmental Protection Agency (EPA). Specifically, a Phase 1 ESA is looking for evidence that contamination of soil or groundwater has likely occurred in the past. These recognized environmental conditions include asbestos, underground storage tanks, prior dry cleaners operations, gas stations, lead-based paint use, and petroleum products

This assessment follows guidelines set by the Standard Practice for Environmental Site Assessment by the American Society for Testing and Materials (the ASTM standard). This standard, ASTM e1527, outlines the ESA process as a standard business practice for commercial property and industrial development alike.

 

The assessment is performed by an environmental professional, such as environmental consulting experts, who complete on-site and off-site research for the project. The site assessment report may include:

  • A site visit and visual inspection of the subject property

  • Review of records, topographic maps, aerial photographs, fire insurance maps, and government databases pertaining to the property

  • Interviews with workers, neighbors, or owners who might have information about the site

  • Reviews of local, regional, state, federal, and tribal regulations

The report not only decides whether there’s reason for concern, but if so, who might be liable in that case. The liability protection aspect of the ESA is another beautiful way it can help land developers when utilized properly. To qualify for the innocent landowner defense, all appropriate inquiries (aai) must complete this process to identify hazardous materials or contamination before purchase. In short, the ESA isn’t another seemingly unnecessary task in a lineup of site audits, it could save property owners from a costly mistake.

In certain situations where there’s reason to suspect environmental contamination or hazardous materials, a Phase 1 ESA may trigger a Phase 2 assessment, which we’ll discuss in greater detail below.

 

Where Are Phase 1 ESAs Performed? 

The above EPA definition is offered in the context of brownfield sites. However, many other instances may require a Phase 1 ESA, such as property sales, leases, loans, buyouts, and more, on any type of property. The requirements vary depending on the state, regional, and local jurisdictions that apply to the property.

You may need to perform Phase 1 ESAs on properties as widely varying as:

  • Agricultural land
  • Vacant lots
  • Commercial real estate sites
  • Industrial properties
  • Multi-family residential properties

… as well as the aforementioned brownfield sites. According to the EPA, a brownfield site is “a property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substances, pollutant, or contaminant.”

So when does Phase I lead to Phase II? Let’s take a look.

 

When Is a Phase II Environmental Site Assessment Needed? 

If a Phase 1 ESA report determines that environmental risk or contamination is unlikely, then you can move on to the next stage of the buying, leasing, lending, or other type of transaction. However, when the Phase 1 ESA determines that there’s a good chance of soil or groundwater contamination on the site, you will need a Phase 2 ESA.

As you might assume, this is a much more in-depth process. Geologists will sample soil, soil-gas, and groundwater via a wide variety of collection models. They then take the samples back to a lab and run a battery of tests on them looking for potential health risks. With data in hand, experts then compare the results to the acceptable levels, as determined by agencies at every level of jurisdiction.

 

How Much Does a Phase 1 ESA Cost? 

Many developers are understandably concerned about the cost of the Phase 1 ESA, especially since it will trigger further costs if it finds anything. Unfortunately, the test is non-negotiable. Fortunately, it doesn’t cost as much as you might think … between $1,000 and $2,500 depending on conditions at your site. If you bundle these costs, you might pay less.

Costs for a Phase 2 ESA are significantly higher, anywhere from $5,000 on up. That’s due to the significantly greater number of tests and a higher level of detail.

 

How Does a Phase 1 ESA Impact Project Timeline? 

As with any regulatory hurdle, a Phase 1 ESA can slow down your timeline if you’re not intentional about it. The Phase 1 ESA can:

  • Trigger a Phase II ESA, which means more tests and more loss of time
  • Require cleanup of the property if the Phase 2 assessment finds anything

Because of this, property owners and lenders are better off getting the report right upfront when considering a parcel rather than waiting for the stage of the process in which it is officially required. Although you might avoid some ESAs that way, you’re likelier to set yourself up for irritation when you have to cool your heels and wait for it. Plus, someone else could beat you to the punch on a really good property during that time – and we all know how lame that feels.

The good news? There’s a solution.

 

Get Your Phase 1 ESA From Transect Today

Phase 1 Environmental Site Assessments might not be your idea of a good time, and that’s okay. Transect is here to help you get it done faster, sooner, and with less fuss than ever- with automated ESAs. You can order them à la carte through our Marketplace or add them on to an existing project in Transect. Use automated ESA recs to avoid costly remediation efforts on your next site! Ready to learn more about how easy you can make the environmental due diligence process? Get in touch with us for a demo today!

 

 

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