ESA's: Common Questions Answered
What is a Phase I Environmental Site Assessment (ESA)?
- A Phase I ESA includes a site inspection, interviews with owners, occupants, environmental agencies and neighboring properties, the review of environmental databases, certain regulatory file reviews, analysis of local geologic conditions, and a review of historical records for the subject property. The purpose of a Phase I ESA is to determine if there are any known or potential significant environmental liabilities at the property. These liabilities can occur as regulatory-mandated cleanup, toxic-tort liability (civil), regulated waste, human health exposure, land-use limitations, and potential civil liability for devaluing nearby properties.
Why obtain a Phase I ESA and what standard governs them?
- The main reason for ordering a Phase I is to protect yourself from liability that may be associated with environmental contamination. Lenders often require an ESA to identify the true value (net of any possible underlying environmental liability) of a property before underwriting the loan.
- In order to claim the protections available by law, the assessment must adhere to All Appropriate Inquiries (AAI) regulatory requirements. ASTM Standard Practice E 1527-21 satisfies those requirements. This practice is intended to permit a user to satisfy one of the requirements to qualify for the innocent landowner, contiguous property owner, or bona fide prospective purchaser limitations on CERCLA liability (also known as landowner liability protections, or LLP’s). This standard practice constitutes AAI into the previous ownership and uses of a property consistent with good commercial or customary practice as defined at 42 U.S.C. §9601(35)(B). Make sure your Phase I clearly states compliance…ours do.
- Effective January 1, 2018, the Small Business Administration (SBA) updated their Standard Operating Procedures SOP 50 10 5 (J) for Lender and Development Loan Programs. Our reports are compliant with the updated SBA SOP. Our reports are accepted by numerous lenders. If your lender has informed you of any lender specific requirements, let us know so that we can ensure a smooth transaction.
What is a Phase II Environmental Assessment (ESA)?
- When a Phase I ESA identifies a recognized environmental condition, indicating probable environmental media contamination, clients may opt to evaluate the potential contamination by performing a Phase II ESA.
- The purpose of a Phase II ESA is to determine the presence, or absence of, regulated substances (e.g. metals, petroleum products, hazardous chemicals) within environmental media (e.g. soil, vapor, groundwater) at a site. Phase II ESA projects typically follow ASTM E1903 Standard Guide for Environmental Site Assessments: Phase II Environmental Site Assessment Process standard, but are often customized to lender or regulatory agency requirements. If elevated levels of regulated substances are identified, additional Phase II work may be needed to fully characterize the extent of contamination to form a remedial action plan. Remedial, clean-up work is sometimes referred to as a Phase III ESA.