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

Key Takeaways

• A Phase 1 Environmental Site Assessment (ESA) is a thorough evaluation of a property’s environmental history to identify potential contamination that may pose health risks or liability issues.
• Phase 1 ESAs typically include reviews of records, an on-site inspection, and interviews with relevant parties to uncover potential dangers like past petroleum storage or the use of hazardous building materials.
• Phase 1 ESAs are effective in ensuring regulatory compliance, obtaining liability protection under CERCLA, and building confidence prior to real estate transactions.
• Despite its thorough nature, a Phase 1 ESA does not involve physical sampling, meaning you may need a Phase 2 ESA to detect hidden contamination.

Understanding Phase 1 ESAs at a Glance

A Phase 1 Environmental Site Assessment (ESA) is a professional-led evaluation of a property’s environmental condition. This assessment helps determine if any existing or potential contaminations are present that may affect the property’s use, value, or legal status. Therefore, a Phase 1 ESA may be required by buyers, sellers, developers, lenders, or insurers to confirm that a property is safe, marketable, and not at risk of future cleanup costs or legal consequences tied to contamination.

Although Phase 1 ESAs may appear slightly different for each property, each assessment must adhere to the protocols established by the American Society for Testing and Materials (ASTM). Most Phase 1 ESAs include the review of records, site reconnaissance, and a series of interviews. The resulting information is compiled into a comprehensive report that lists Recognized Environmental Conditions (RECs), such as on-site chemical storage or nearby industrial activity.

The informative guide below can help you understand what a Phase 1 Environmental Site Assessment is, what red flags it may raise, and how to proceed if RECs are identified.

Why You Need a Phase 1 ESA

In most cases, before finalizing any commercial or industrial real estate deal, the business may need a Phase 1 ESA. Having a professional evaluate a site for potential environmental liabilities can promote informed decision-making and offer the following benefits.

Regulatory Compliance

Having a trained professional conduct a Phase 1 ESA is an excellent way to guarantee that you are satisfying federal and state environmental regulations. Sometimes, the Environmental Protection Agency (EPA) holds property owners responsible for contamination under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), even if the contamination predated the individual’s ownership of the property. 

Liability Protection

If contamination is discovered later, property owners can avoid liability by claiming innocence if a proper Phase 1 ESA was conducted before acquisition, potentially shielding them from the expenses associated with federal and state cleanup obligations.

To ensure legal protection and avoid missed red flags or the loss of legal protections, Phase 1 ESAs must be completed in accordance with ASTM E1527‑21. This current industry standard ensures properties meet EPA’s All Appropriate Inquiries (AAI) requirement for environmental due diligence.

Transaction Confidence

Lenders, insurers, and investors typically require a Phase 1 ESA before closing on a commercial real estate transaction. A thorough, professional-led assessment offers peace of mind that the site does not pose environmental issues. Without a Phase 1 ESA, property transactions can be delayed, terminated, or lead to unfortunate post-purchase surprises.

Core Components of a Phase 1 ESA

To meet ASTM standards for Phase 1 ESAs, the environmental specialist must follow a specific process, involving the steps below. In turn, the professional will be able to identify potential contamination concerns associated with a property and obtain a comprehensive understanding of the site’s environmental status.

1. Records Review

The environmental specialist typically begins by examining a wide range of documents that illustrate the property’s environmental history. Some examples of documents that may be reviewed during a Phase 1 ESA are:

• Old aerial photographs
• Topographic and fire insurance maps
• Relevant permits
• Original building plans

In addition to the items above, the professional may conduct federal and state environmental database searches to identify previous ecological reports related to issues such as leaking underground storage tanks or hazardous waste generators.

Reviewing a wide variety of records should provide meaningful context and help identify patterns of past land use that may have introduced hazardous substances to the site.

2. Site Reconnaissance

After reviewing relevant records, the professional should conduct an on-site inspection to catch any visual or olfactory indicators that give insight into the site’s existing conditions and previous industrial or chemical use. Some examples of things the specialist may look out for on the  property that is getting the Phase 1 ESA and adjacent lots are:

• Stained or discolored soil
• Poorly maintained structures, such as corroded storage containers
• Unusual odors, especially ones with a chemical-like scent
• Oily sheens
• Sewage buildups

Property owners can expect the environmental professional to compile field notes during site reconnaissance, which will be included in their final report. These notes may feature photos that document visible conditions.

3. Interviews

In addition to the steps above, interviewing relevant parties is an essential part of Phase 1 ESAs. Some examples of knowledgeable individuals whom the assessor may interview are:

• Current or former property owners, managers, or tenants
• Local government officials
• Utility providers
• Environmental regulators

During these interviews, the assessor may direct the conversation to uncover undocumented environmental concerns.

4. Report Preparation

As a final step, all findings from a Phase 1 ESA are synthesized and delivered as a comprehensive written report. Some examples of information that may be found in the resulting document are:

• A description of the site and its history
• Sources consulted
• Any RECs that were found
• Data gaps or limitations of the assessment
• Recommendations for further investigation, if needed

When performed by a qualified professional, most Phase 1 ESA reports are legally defensible and can be shared with stakeholders to facilitate and build confidence during transactions.

How Much Does a Phase 1 Environmental Site Assessment Cost?

In Portland, Oregon, and surrounding areas, most Phase 1 ESAs cost between $985 and $2,500. However, each project is unique, and the final cost is based on a variety of factors, such as:

• Property size
• Historical use
• Complexity of site research
• Report urgency

Typical Timeline and Process

Many Phase 1 ESAs can be completed within 10 to 15 business days, but the timeline can shift based on factors such as property size and the number of interviews required. Even though each assessment may be unique, the process typically follows the four-step timeline below.

1. Engagement and Planning (1 to 2 Days)

Environmental consultants typically initiate the Phase 1 ESA process by defining the scope of work, outlining property details, and asking their client to sign the contract. In many cases, these steps are completed within two days.

2. Data Collection (3 to 5 Days)

For roughly the next three to five days, the assessor will likely pull records from national, state, and local databases, comparing them with historical documents to identify any potential red flags.

3. On-Site Visit (2 to 4 Hours)

After getting information from the record review stage, the assessor will conduct a visual inspection of the property and adjacent lots. It typically takes a few hours to take photographs and record the necessary notes for the final report.

4. Report Delivery (5 to 7 Business Days)

It takes a substantial amount of time to compile all of the relevant information meticulously; nevertheless, a draft report is usually shared with the property owner within a week of the site visit. Following the review of the draft, revisions may be made before the final report is delivered.

Potential Findings: Recognized Environmental Conditions

While many properties pass Phase 1 ESAs without any noteworthy issues, some Phase 1 ESAs reveal red flags that suggest current or historical contamination. Some of the most frequently seen RECs during Phase 1 ESAs are:

• Petroleum and chemical storage – If your property has or ever had underground storage tanks (USTs), leaking drums, or fueling stations, it may be at risk of soil contamination.
• Hazardous building materials – Older buildings are at a higher risk of housing asbestos-containing materials (ACMs), lead-based paint, or polychlorinated biphenyls (PCBs), which present environmental hazards.
• Staining and odors – Discolored soil or pavement and chemical-like smells may serve as evidence of spills, leaks, or contamination, making them important to note during the site inspection.
• Nearby industrial activity – Operations on adjacent properties, such as manufacturing plants or landfills, may pose off-site migration risks, potentially jeopardizing the environmental status of your land.

Generally, the former presence of a gas station, dry cleaning company, or automotive repair facility can increase the site’s chances of having RECs that require attention.

What Phase 1 ESA Does Not Cover

Despite its thoroughness, a Phase 1 ESA does not cover everything. Some examples of this assessment’s potential limitations are:

• No testing or sampling – Typically, soil, groundwater, or building material samples are not collected during Phase 1 ESAs—those tasks are typically only performed during a Phase 2 ESA.
• No hidden contaminant detection – Since Phase 1 ESAs are generally non-invasive, instances of subsurface or sealed contamination, like those under pavement or inside walls, may go unnoticed.
• Not a long-term assessment – The report from a Phase 1 ESA only reflects a moment in time and does not provide ongoing monitoring or future projections.

Next Steps After Your Phase 1 ESA

The outcome of your Phase 1 ESA will determine what actions, if any, need to be taken before stakeholders can proceed with a property transaction. If no RECs are found, you can typically move forward with confidence. In fact, many real estate transactions close shortly after the Phase 1 ESA confirms no environmental concerns.

However, if RECs are identified, several additional steps may be required, such as scheduling a Phase 2 ESA. One of the main differences between Phase 1 and Phase 2 ESAs is how in-depth the inspection goes. Most Phase 2 ESAs involve subsurface sampling and lab testing to determine the presence and extent of contamination after red flags were raised during the Phase 1 ESA.

If hazardous levels of contamination are confirmed, planning for remediation with the assistance of environmental engineers and regulatory agencies is crucial. Additionally, insurance coverage or sale terms may need to be revised to reflect cleanup responsibilities or site limitations.

Move Forward with Environmental Confidence

By understanding what a Phase 1 Environmental Site Assessment is, you can make informed decisions about a property that can reduce environmental and legal risks. It is essential to remember that a Phase 1 ESA is not just a formality; it serves as an essential safeguard for real estate transactions that can protect buyers from inheriting expensive liabilities, offer negotiation leverage, and provide peace of mind by confirming that the property complies with environmental law.

Alpha Environmental Services is available to help anyone in or near Portland, Oregon, who is interested in purchasing, selling, refinancing, or redeveloping a property. Our environmental experts have substantial experience performing both Phase 1 and 2 ESAs, meaning we can guide you through each process with clarity, accuracy, and efficiency. Additionally, if any RECs are identified, our team can provide dependable remediation services to quickly and effectively restore the property’s environmental condition.

Contact Alpha Environmental to schedule a Phase 1 ESA that can help you feel confident about a property’s environmental status.