What is a Phase I Environmental Site Assessment?
Here is the full article continued from Issu.com
In case you haven't noticed, land values for homeowners, commercial, industrial, and government properties are through the roof lately. The transfer of ownership from one party to another always comes with a risk. Whether the transfer of ownership comes from a purchase, donation, or eminent domain doesn't matter, the fact is not knowing the complete history of a particular property can have major implications for owners should issues arise immediately or in the future.
Phase I Environmental Site Assessments (ESAs) are investigations conducted by trained and certified professionals of a property into current and historical issues and usage. What's the story of the property in question? Has the soil ever been contaminated? Are there wetland problems? What about petroleum or chemical hazards on the property? Has the groundwater ever been polluted?

Many banks and lending institutions require Phase I Environmental Site Assessments (ESAs) prior to large property transactions to better protect their investment and mitigate the risk involved with the cost. According to the EPA, Phase I studies must be performed by certified environmental professionals (EP).
Foundation Test Group (FTG), a certified Women-Owned engineering and testing company in Owings Mills, MD, offers a wide spectrum of environmental capabilities, with an expertise predominantly focused on conducting “due diligence” Phase I and Phase II Environmental Site Assessments (ESAs). They also offer site screening investigations to minimize clients’ risk during property evaluations and real estate transfers. FTG uses trained geologists and environmental scientists and all ESA’s are reviewed by a licensed Professional Engineer and/or Professional Geologist.
"We perform our assessments in accordance with the latest protocols and standards developed by ASTM for properties as simple as vacant land to more challenging real estate holdings, industrial/commercial facilities, and Brownfield redevelopment sites."
Diana Goodwin, FTG President.
So how do you know whether a property has had or will show environmental issues? You do a Phase I Site Assessment. Whenever possible, these assessments should be conducted during the discovery period prior to ownership transfers of properties. It protects all parties involved. Every Phase I environmental site assessment is required to meet the standard practices as specified in the ASTM E1527.
ESAs are a widely used practice to determine whether a property exhibits any “recognized environmental conditions.” Recognized environmental conditions can include:
"The presence or likely presence of any hazardous substances or petroleum products in, on, or at a property: (1) due to any release to the environment; (2) under conditions indicative of a release to the environment; or (3) under conditions that pose a material threat of a future release to the environment.”
What's the difference between a Phase I Environmental Site Assessment and a Phase II?
Phase I Environmental Site Assessment are more basic risk assessments designed to satisfy certain requirements for landowners and potential purchasers according to the EPA’s Comprehensive Environmental Response, Contamination, and Liability Act.
The biggest difference between Phase I and Phase II appears in the scope of work of the assessment. Phase I Assessments address the likelihood that a might be contaminated through review, records, and visual observations, while a Phase II assesses whether contamination potential detailed in the Phase I is in fact present. More on Phase II in our next article.
- Here are a few methods FTG uses in their ESAs to determine any likelihood of property issues:
- Review of records to determine if the property had ever been exposed to potentially hazardous materials.
- Visual observation of the property’s current condition with close comparison to available site plans.
- Visual inspection of adjacent properties.
- Interviews with current owners, occupants, and local officials.
Typically, if the assessment exposes no cause for concern, the stakeholders can proceed with confidence. Where the Phase I Assessment determines possible issues, a Phase II Environmental Site Assessment will be recommended.
Most people don't realize that a Phase I Environmental Site Assessment does not include soil sampling, testing for mold, radon, or lead paint, or current or potential environmental hazards such as wetlands, endangered species, stormwater pollution, etc...
A Phase I Environmental Site Assessment is essentially a safeguard against the notion of "buyer beware." It provides confidence for owners, buyers, and investors from financial and legal liabilities.
Risk comes from not knowing what you're doing.
Warren Buffett
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