Table of contents
- Phase I Environmental Site Assessment (ESA)
- What Is a Phase I Environmental Site Assessment?
- Why Do Property Owners and Developers Order a Phase I ESA?
- What Does a Phase I Environmental Site Assessment Look For?
- What Is Included in a Phase I ESA?
- Does a Phase I ESA Test the Soil?
- What Happens If a Phase I ESA Finds a Potential Environmental Concern?
- Phase I vs. Phase II Environmental Site Assessment
Phase I Environmental Site Assessment (ESA)
Buying, selling, developing, or redeveloping commercial property can involve much more than evaluating the building and land above the surface. A property may have a history of industrial, commercial, or other activities that could have affected the soil or groundwater long before the current owner acquired it.
A Phase I Environmental Site Assessment (ESA) is one of the primary tools used to identify potential environmental concerns associated with a property.
For property owners, developers, lenders, investors, and other stakeholders, a Phase I ESA can provide important information about a property’s environmental history before a transaction or development project moves forward.
A Phase I ESA does not normally involve digging up soil or collecting physical samples. Instead, it is primarily a records-based environmental investigation and site assessment designed to identify recognized environmental conditions and determine whether additional environmental investigation may be warranted.
For development projects in Massachusetts, understanding what a Phase I ESA does—and what it does not do—can help property owners make better decisions before committing to construction or redevelopment.
What Is a Phase I Environmental Site Assessment?
A Phase I Environmental Site Assessment is an environmental due-diligence investigation performed to evaluate the potential for contamination or other recognized environmental conditions associated with a property.
The assessment generally involves reviewing available historical and environmental information about the property and surrounding area, conducting a site reconnaissance, and interviewing appropriate parties when information is available.
The purpose is not to prove that a property is free of contamination.
Instead, the goal is to identify conditions that may indicate a potential environmental concern and determine whether additional investigation should be considered.
A Phase I ESA is commonly performed using the ASTM E1527 standard for environmental site assessments of commercial real estate.
Why Do Property Owners and Developers Order a Phase I ESA?
There are several reasons a Phase I ESA may be appropriate.
A property owner or developer may order an assessment before:
- Purchasing commercial property
- Selling commercial property
- Refinancing or obtaining financing
- Redeveloping an existing property
- Purchasing an older industrial property
- Developing a former commercial site
- Evaluating a brownfield property
- Planning a change in property use
- Determining whether additional environmental investigation is warranted
A Phase I ESA can help identify potential environmental issues before they become unexpected problems during construction.
For developers, this is particularly important because discovering contamination after excavation has already started can affect project costs, schedules, soil handling, disposal, permitting, and construction planning.
What Does a Phase I Environmental Site Assessment Look For?
A Phase I ESA evaluates the property’s history and current conditions to identify potential environmental concerns.
One of the most important concepts is the Recognized Environmental Condition (REC).
An REC generally relates to the presence or likely presence of hazardous substances or petroleum products in, on, or at a property due to a release, likely release, or conditions that may pose a concern under the applicable environmental standard.
Examples of conditions that could warrant further evaluation include:
- Historical releases of petroleum
- Underground storage tanks
- Former gas stations
- Dry-cleaning operations
- Manufacturing facilities
- Industrial operations
- Auto repair facilities
- Chemical storage
- Historical dumping or disposal
- Contaminated neighboring properties
- Historical spills
- Known environmental cleanup activity
The presence of a former industrial use does not automatically mean that contamination exists.
Instead, the historical use may indicate that additional investigation should be considered.
What Is Included in a Phase I ESA?
Although the exact scope can vary depending on the property and assessment standard, a Phase I ESA commonly includes several major components.
Historical Research
Historical records can provide valuable information about how a property and surrounding parcels were used over time.
Researchers may review sources such as:
- Historical aerial photographs
- Historical maps
- City directories
- Sanborn fire insurance maps
- Property records
- Previous environmental reports
- Regulatory databases
- Historical business information
- Available governmental records
The objective is to determine whether previous uses could have resulted in environmental contamination.
For example, a property that is currently an office building may have previously been used for manufacturing, automotive service, or another activity involving petroleum products or hazardous materials.
The current appearance of the property alone may not reveal that history.
Regulatory Database Review
Environmental databases and regulatory records can provide information about known or suspected releases associated with the property or nearby properties.
The assessment may consider records involving:
- Hazardous material releases
- Petroleum releases
- Underground storage tanks
- Environmental cleanup sites
- Hazardous waste facilities
- Brownfield properties
- Regulatory enforcement
- Reported spills
- Known contaminated sites
The surrounding properties can also be important because contamination does not necessarily remain confined to the parcel where a release originated.
Site Reconnaissance
A Phase I ESA generally includes a physical inspection of the property.
The environmental professional may look for visible evidence that could indicate environmental concerns, such as:
- Storage tanks
- Drums or containers
- Staining
- Floor drains
- Chemical storage
- Waste disposal areas
- Pits or lagoons
- Electrical equipment
- Industrial equipment
- Unusual fill materials
- Evidence of historical operations
The site visit provides an opportunity to compare current conditions with information identified during the historical research.
Interviews
Interviews with property owners, occupants, managers, government officials, or other knowledgeable parties may provide information that is not apparent from records or a visual inspection.
For example, someone familiar with the property’s history may know about a former tank, spill, disposal area, or industrial operation that is not obvious during a site visit.
Does a Phase I ESA Test the Soil?
No, not normally.
This is one of the most important distinctions for property owners and developers to understand.
A Phase I ESA is primarily a non-intrusive environmental assessment. It generally does not involve collecting soil, groundwater, or indoor-air samples.
If the Phase I identifies a potential environmental concern, additional investigation may be recommended.
That investigation could involve:
- Soil sampling
- Groundwater sampling
- Soil-gas sampling
- Vapor intrusion assessment
- Underground storage tank investigation
- Test pits
- Monitoring wells
- Geophysical investigation
- Other site-specific environmental testing
The need for additional investigation depends on the conditions identified during the Phase I ESA and the objectives of the property transaction or development project.
What Happens If a Phase I ESA Finds a Potential Environmental Concern?
A potential environmental concern does not automatically mean that a property cannot be developed.
Instead, it means that the property may warrant further evaluation.
The next step could involve a Phase II Environmental Site Assessment or another type of targeted environmental investigation.
A Phase II investigation is generally more intrusive and may involve collecting physical samples to determine whether contamination is actually present and, if so, to characterize its nature and extent.
For example, if historical records indicate that an underground storage tank operated on a property, additional investigation may be appropriate to determine whether a release occurred and whether petroleum contamination remains in the soil or groundwater.
Phase I vs. Phase II Environmental Site Assessment
The distinction is important. If your site needs test pits, sit sampling or further investigation, that is where you get an environmental remediation contractor involved.
If additional investigation confirms contamination requiring corrective action, the project may progress to environmental remediation. Depending on site conditions, remediation can involve contaminated soil excavation, material management, sampling support, and other specialized site work.