Phase I ESA

A Phase I Environmental Site Assessment (ESA) is completed to evaluate the historical and current uses of a property as part of a commercial real estate negotiation. It follows the American Society of Testing and Materials (ASTM) guidelines known as the ASTM-E-1527-21 Standard for Phase I ESAs. These guidelines satisfy the due diligence process in a financial or real estate transaction. Without a Phase I ESA, the purchaser is responsible for all liabilities associated with the property.  With a Phase I, the purchaser would not be liable for any pre-acquisition impacts that may arise 

A Phase I ESA is suggested for any property about which you have a responsibility to understand the environmental liability associated with purchasing the property. A Phase I ESA will protect purchaser or loan institution from unanticipated liability and cleanup costs for historical environmental actions which could affect the property's marketability. 

Phase I ESAs are typically used by:

• Banks: Bankers typically require Phase I ESAs to evaluate the impact of environmental conditions on the value of a property and provide the liability protection if historical contamination is found at the property following acquisition.  Banks are not interested in being responsible for environmental cleanups of a property if the owner declares bankruptcy due to unknown historical site impacts that occurred prior to their ownership but are now liable for.    
• Investment firms: Firm investment managers typically require Phase I ESAs to assess potential borrower's ability to repay loans on commercial properties. 
• Commercial and industrial real estate developers: For any organization taking on considerable risk in a real estate transaction, it's beneficial to have a Phase I ESA before the deal concludes. 
• Commercial and industrial expansion: A Phase I ESA is generally performed on a commercial property as part of a purchase or sale by a broker or other lending institution. 
• Infrastructure firms: For infrastructure firms, the best way to minimize risks associated with contamination and the resulting delays or potential costs to project development or financing is to have a Phase I ESA conducted before leasing or acquiring a property. 
• Midstream and downstream energy assets: Companies in the oil and gas industry are usually divided into one of three groups: upstream, midstream and downstream. Oil and gas operators are typically required to perform Phase I ESAs to help identify significant liabilities.