June 9, 2020

Phase I ESA

Who is responsible for clean-up?
Blog Due Diligence Phase I ESA Blog Due Diligence Phase I ESA

That popular corner lot could very well be a great real estate investment, but while it may look good on the outside, environmental contamination may be lurking beneath the site requiring serious environmental remediation. The best way to determine the historical uses of the site is to have a Phase I Environmental Site Assessment (ESA) completed prior to purchase. It is the smart investor’s tool to protecting oneself from potential environmental liability lying beneath the surface.

A Phase I ESA determines the level of environmental liability associated with a property based upon its current or historical uses. The guidelines established in ASTM E-1527-13 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment act as the framework for Phase I ESAs. Environmental liabilities can include contamination in the soil, soil vapor, and groundwater beneath a property which may pose environmental as well as human health concerns. While some property uses – such as gas stations, industrial facilities, and dry cleaners – are more likely to have contamination concerns, an ESA can and should be completed on all types of properties prior to taking ownership.

A Phase I ESA generally includes:

  • Historical research on property ownership and use
  • Review of local, state, and federal environmental records
  • Interviews with past and present owners, occupants, and government officials
  • An evaluation of site and area geology and hydrogeology
  • A report documenting the inquiry and an opinion on the potential environmental risk

The ESA is conducted by an environmental professional, a person with the experience and training to carry out research, site inspections, and interviews per the ASTM standard. Based on the collected data, they can identify potential recognized environmental conditions, also known as RECs.

We have all heard of those property transactions that lead to unexpected costs, like the discovery of an underground petroleum storage tank or contamination from past uses that involved storage of hazardous substances or petroleum products. A site may be located on a vacant lot previously occupied by an auto repair business or in the wooded, back corner that also happens to be filled in with solid waste debris. Discovering these types of property conditions before property ownership makes good fiscal sense and prevents delays or construction plan changes.

Who Is Responsible for Clean-up?

If you unknowingly purchase a contaminated site, you are responsible for cleaning it up. According to the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and “Superfund,” it is the responsibility of whomever contaminated the site to clean it up, unless someone purchases the site without doing the proper due diligence - then they may become responsible.

Don’t let this happen to you. Westwood’s team of environmental professionals are trained and experienced in performing the appropriate level of due diligence for all types of properties so our clients can make informed decisions and minimize costly environmental liabilities.


This article was originally published December 6, 2018

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