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Phase I Environmental Site Assessment

The gold standard in evaluating environmental risk.

Environmental Due Diligence

Phase I Environmental Site Assessments (Phase I ESA) are an important risk management tool during commercial real estate transactions. Partner is a market-leading expert in Phase I ESAs and we fully understand how the Phase I Environmental Site Assessment Report is used in the commercial and multi-family real estate industry. Partner provides Phase I ESA reports throughout the United States, Canada, Mexico, and Europe for U.S.-based commercial real estate lenders and those based outside of the U.S.
 

Phase I Environmental Site Assessment

A Phase I Environmental Site Assessment is the gold standard for evaluating the environmental liability associated with a real estate asset of any type. Whether the property is industrial, commercial, mixed-use, or multifamily, Partner is able to fully assess the historical and current uses of the property. Partner is truly an expert at the implementation of the ASTM E1527 Standard, current with both the 2013 and 2021 requirements. Our Phase I Environmental Site Assessments are done by Environmental Professionals who meet the requirements of the EPA's AAI Standard.

Our experience in Phase I Environmental Site Assessments dates back to before the creation of the ASTM Standards. Having performed Phase I ESAs on hundreds of thousands of properties, we offer our clients an expert perspective on every property type.
 

All Appropriate Inquiries Rule

The EPA's All Appropriate Inquiries Rule governing the scope of Phase I Environmental Site Assessments went into effect on November 1, 2006, and provided specific scope requirements for a Phase I ESA to meet the requirements of CERCLA's innocent landowner defense.

In Partner's environmental risk practice, we help buyers meet the legal requirements for the CERCLA innocent landowner defense and we provide practical business advice on environmental liability to our clients.
 

ASTM E1527-21 Standard Update

Standards for environmental site assessments are published by ASTM and should be carefully reviewed to fully understand the work to be completed as well as the limitations of reports.

The ASTM committee has completed its revisions to the E1527-21 standard and will be submitting it to EPA for review to verify it satisfies AAI.

In November of 2021, ASTM will publish the long-anticipated new standard for conducting Phase I Environmental Site Assessments, ASTM E1527-21. The standard will then be submitted to the EPA for review and to verify it satisfies AAI requirements. ASTM E1527-21 will take effect January 1, 2022 and will replace the E1527-13 standard as the industry best practice for Phase I ESAs. Partner is fully prepared to implement the new standard.

The changes from the 2013 to 2021 ASTM standards do not significantly alter the Phase I Environmental Site Assessment report or process, but there are a few key changes you should be aware of. The most significant changes include:

Historical Research – The E1527-21 now requires the review of at least the “Big 4” historical sources (aerial photographs, topographic maps, fire insurance maps, and city directories) for both the subject property and its adjoining properties. If a Big 4 resource was not reviewed, the EP must explain why the review was not completed and may need to review additional resources. Additionally, if the subject property’s use is industrial, manufacturing, and (now) retail, the review of additional resources (building department records, property tax files, interviews, and zoning), may be needed.

Definitions – The definitions for Recognized Environmental Condition (REC), Controlled REC (CREC), and Historical REC (HREC) have been updated for greater clarity and consistent interpretations. [A simplified flow chart is now included in the appendix to aid in the designation of a REC, CREC, HREC, or De Minimis Condition]. In addition, new definitions have been added for the following terms: Likely, Property Use Limitation, and Significant Data Gap.

ESA Shelf Life – The E1527-21 standard will now require the inclusion of the dates upon which relevant parts of the assessment were completed to make it easier for users to recognize when updates are needed so that they comply with AAI’s 180-day viability timeframe.

Emerging Contaminants – The new standard has added PFAS and other emerging contaminants to the list of “non-scope issues” that a user may want to evaluate as a business risk, as is commonly done with asbestos and mold. Until EPA classifies PFAS as a hazardous substance, it cannot be considered a REC within the constructs of an ESA.
 

The National Engineering and Environmental Due Diligence Association (NEEDDA), a non-profit formed to improve the practice of engineering and environmental due diligence, has published a user guide for ESAs that can provide as a useful starting point. 
 

Phase I ESA Scope:

Site Visit

  • Inspection of the Site by an Experienced Inspector
  • Catalog the Presence of Hazardous Materials or Petroleum Products
Historical Research
  • Historical Aerial Photographs
  • Reverse Street Directories / City Directories
  • Sanborn Fire Insurance Maps
  • Topographical Maps
  • Building Permits
  • Planning Records
  • Department of Oil and Gas Maps
  • Interviews

Geology and Hydrogeology

  • Soil Type
  • Geological Setting
  • Groundwater Depth

Regulatory Research

  • Fire Departments
  • State Environmental Agencies
  • Federal Environmental Agencies
Interviews and Document Review
  • Interview Tenants and Owners
  • Interview State and Local Regulators
  • Review Provided Reports


Limited Environmental Due Diligence Products

Not all circumstances require a full Phase I Environmental Site Assessment. If the user is not looking to qualify for CERCLA liability protection, like the many lenders conducting environmental due diligence for loan originations, a tiered environmental due diligence policy utilizing both the Phase I and limited-scope or "desktop" environmental reports can be successful at screening for high environmental risk properties. Read more about limited environmental reports.