Did you inherit a contaminated industrial site in a merger or are you interested in purchasing a commercial property? Well, if you haven’t purchased the property yet — you’re in a good place. However, let’s say you buy a site, and later find out it’s contaminated. That likely means you didn’t get a Phase I Environmental Site Assessment completed and that you are currently liable for an environmental mess you didn’t create. You wouldn’t buy a used vehicle without looking at the CARFAX, close on a home without it first being inspected, and hopefully wouldn’t hire a babysitter to look after your child without first obtaining a background check.
In the same vein, Phase I Environmental Site Assessments are an essential step for most real estate transactions or transfers of commercial property. It’s a property evaluation conducted in accordance with ASTM Standard E1527-13 and rules and regulations of EPA’s All Appropriate Inquiry (AAI) that determines the presence of Recognized Environmental Conditions (RECs) that are indicative of subsurface contamination that could then create liability for the seller or buyer. The opinion comes from a party independent from the interests of the buyer or seller and if nothing is found during a Phase I ESA, then typically no Phase II Assessment is necessary. However, if potential or existing contamination is found, a Phase II may be conducted to determine the presence and extent of impact to the property.
What Is Included in a Phase I?
- Historical research of the site such as historical maps and aerial photographs, city directory listings, building permits, and regulatory records
- Public Information Requests to the local government
- The geologic, hydrogeologic, and topographic characteristics of the property
- Regulatory research with federal and state agencies
- A physical site inspection
- Interviews with the purchaser, the current property owner, state and local regulators, and anyone who may have knowledge about the current and historical use of the property and any pertinent environmental records.
What Do You Look for During a Site Visit?
While dependent on the property, the environmental inspector will be largely looking to identify contamination or potential for contamination. This may include areas where there may be aboveground or underground storage tanks (ASTs or USTs); handling, use, or storage of hazardous materials or petroleum products; evidence of release such as stained soil, concrete or distressed vegetation; or cracks within concrete where hazardous materials or petroleum products could have reached the subsurface. It’s good practice to obtain the property’s safety data sheet (SDS) to know what chemicals they store, where and how they store them (ground surface or secondary containment), and what waste streams the facility generates prior to physically inspecting the site.
How May Site Assessments Differ?
Environmental site assessments may look slightly different depending on the client or specific requirements of the lender. For example, mold, lead, and asbestos are not required and are typically not included in Phase I ESAs, but can be considered additional scope items if desired by the client. Additionally, there are requirements under the Department of Housing and Urban Development (HUD) and the Small Business Administration (SBA) that each has its own internal standards for Phase I ESA reports that build upon the ASTM and existing federal standards. Examples of issues that may be required in a HUD environmental assessment include evaluating the presence of wetlands, floodplains or endangered species on or near the site.
Contact Our Environmental Consultants
Hiring qualified professionals to provide accurate data and reporting saves the potential for major risk down the line. Braun Intertec has a great track record in real estate due diligence, remediation and closure projects and has environmental professionals specializing in Phase I Environmental Site Assessments. If you have questions or would like assistance, please give us a call or click the link below to fill out our Contact Us form.