Introduction to Phase I Environmental Site Assessments

I am writing this article to explain what a Phase I Environmental Site Assessment is for people that may have never even heard of a Phase I and have been asked by a lender, broker, owner, buyer, attorney, etc. to get one. A Phase I is research, observations, and a report on the history of the property by an environmental professional looking for chemical contamination.

Here are some of the more common records which environmental professionals research during a Phase I:

Sanborn Fire Insurance Maps
Historical city directories
Historical aerial photographs
A radius search of government lists
Building permits
Fire department/Hazmat records
Interviews with site owners
Any other sources that might be available such as websites, newspapers, etc.

The environmental professional will also walk the site looking for current or past usage of chemicals. The kinds of things that the environmental professional would look for include staining that might indicate a chemical leak, piping that would indicate an underground tank (like they have at gasoline service stations), dry cleaning use, washing equipment, oil/water seperators, floor drains, hydraulic hoists, etc.

The reason for Phase Is is to attempt to address one thing, lawsuits. Lawsuits can come in many forms, lawsuits from the city, state, or federal government over past chemical spills at a site, lawsuits from new owners for the previous owners contaminating their property, and lawsuits from people which may have gotten injured or made ill by chemical contamination at a site, etc.

The government can also inflict consequences that might be worse than a lawsuit. The government can make an owner clean up a contaminated property and incur costs the owner can’t afford. It can also forceably clean up a property and send the owner an expensive bill. It can even file criminal charges against people for failure to comply with a cleanup order (although that is rather unusual).

The point of the Phase I is to minimize risk from environmental contamination at a property. It is an important part of the real estate process and should be viewed as an essential document such as an appraisal or the property title.

I'll be discussing the new Phase I standard in my next installment....