A Phase I Environmental Site Assessment, commonly referred to as an ESA, is completed to research the current and historical uses of a property as part of a commercial real estate transaction. The report assesses if current or historical property uses have impacted the soil or groundwater beneath the property and could pose a threat to the environment and/or human health. If these issues are found, it presents a potential liability for the lender and/or owner, as well as affecting the value of the property. A Phase I ESA completed prior to the closure of a real estate transaction can be used to satisfy the requirements of CERCLA's (Comprehensive Environmental Response, Compensation and Liability Act) innocent land owner defense under All Appropriate Inquires (AAI).

Phase I Environmental Site Assessment reports can be completed on all types of properties including vacant land, agricultural, multi-family residential, commercial, and industrial; however, all Phase I ESA reports are completed to comply with ASTM E1527-13 (exceptions are made for properties comprised of large primarily undeveloped land, which can be researched under ASTM E2247-16).

 

A Phase I ESA typically includes the following:

• A site visit to observe current and past conditions and uses of the property and adjacent properties

• A review of federal, state, tribal, and local regulatory databases including, but not limited to, underground storage tanks (USTs), aboveground storage tanks (ASTs), known or suspected release cases, the storage of hazardous substances and disposal of hazardous wastes including petroleum products, and institutional and engineering controls

• A review of historical records, such as historical aerial photographs, fire insurance maps (Sanborn maps), historical city directories, and historical topographic maps

• A review of state and local agency records, including but not limited to state environmental agencies, Building Departments, Fire Departments, and Health Departments  

• Interviews with current and past property owners, operators, and occupants, or others familiar with the property

• Interviews with the Report User for title or judicial records for environmental liens and activity and use limitations (AULs); specialized knowledge or experience; actual knowledge; commonly known or reasonably ascertainable information; the reason for a significantly lower purchase price; and the reason for the preparation of the Phase I ESA.

 

It is the Users responsibility to provide this information to qualify for the innocent landowner defense.