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When Do I Need A Phase I ESA?

Prospective property purchasers, banks, realtors, and property owners often request Phase I ESAs for these common reasons:

  • Purchase of real property by a grantee not previously listed on the title
  • Lending institution’s consideration of new loans, refinance packages, and foreclosures
  • Partnership buyout or principal redistribution of ownership
  • Application to a public agency for change of use or other discretionary land use permit
  • SBA Loans, HUD Housing, NEPA Assessments, Parks and Wildlife EAs, and FCC EAs
  • Divestiture of properties
  • Oil and Gas Leases
  • Real Estate Redevelopment
  • Vapor Intrusion Risk

What Type of Phase I ESA Do I Need?

Business Risk Phase I ESA

A Phase I ESA is an investigation and subsequent report prepared for a real estate transaction which identifies environmental risk caused by a current or past use of a target property. Environmental professionals evaluate the risk of an existing release, past release or material threat of a release of hazardous substances or petroleum products.  A Business Risk Phase I is not as comprehensive as an AAI-Compliant Site Assessment.

All Appropriate Inquiry (AAI)

Under the 2002 Small Business Liability and Brownfields Revitalization Act, Congress ordered the U.S. EPA to codify the first federal environmental site assessment rule in history to address each of ten steps that must be satisfied prior to a property purchase to qualify a landowner for liability protection under CERCLA.

Effective November 2013, a property purchaser must comply with either the federal rule entitled “Standards and Practices for All Appropriate Inquiries” (40 CFR Part 312) or ASTM’s revised Phase I environmental site assessment standard (ASTM E 1527-13) to qualify as an innocent landowner, contiguous property owner or bona fide prospective purchaser under CERCLA. With the adoption of the ASTM E1527-13 standard, ASTM E1527-05 has been archived.

Business Risk vs. AAI

Due Diligence ProcessBusiness Risk
Site Inspection by Environmental ProfessionalCheckmarkCheckmarkCheckmark
Radius Report with Aerial PhotosCheckmarkCheckmarkCheckmark
Comprehensive Property HistoryCheckmarkCheckmarkCheckmark
State and Federal Database SearchCheckmarkCheckmarkCheckmark
CERCLA Liability ProtectionCrossed-outCheckmarkCheckmark
Environmental Lien SearchCrossed-outCheckmarkCheckmark
Local and Tribal Database SearchCrossed-outCheckmarkCheckmark
Vapor Intrusion ConsiderationCrossed-outCrossed-outCheckmark
Regulation Agency File ReviewCrossed-outCrossed-outCheckmark

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