Buying land or a building comes with risks. One of the biggest is environmental liability. The surface may conceal old gas tanks, spilt chemicals or previous industrialization. They may not be apparent, but they will still cost you.
It is all due to the importance of a Phase 1 Environmental Site Assessment (ESA). It is a defensive line. It covers you before, during, and after the purchase, lease, or development of the property. It is an instrument that reveals the unsuspected problems in the environment- it does not require digging or drilling.
A Phase 1 ESA is not just for big companies. It’s for anyone involved in property deals. Whether you’re a buyer, a lender, or a developer, this report matters. It can save you millions and help avoid legal trouble.
In this article, you will find all the important information regarding ESA phase 1.
What is a Phase 1 Environmental Site Assessment?
Phase 1 ESA is a thorough estimation of the environmental history of a property. It runs following a norm, ASTM E1527-21. This standard is used across the United States.
The test fits against what is known as Recognised Environmental Conditions or the RECs. A REC implies that there may have been a vicinity of dangerous substances on or around the location. The danger may come from old leaks, buried tanks, or industrial waste.
This assessment, unlike a Phase II ESA, is non-invasive. It is not associated with digging, drilling or testing. Rather, the aim will be to determine risk through observation and research.
Phase 1 ESAs are common in real estate. They comprise a larger procedure termed environmental due diligence. This enlightens the property buyer as he/she know what to expect before making a deal.
Why is ESA Phase 1 Required?
Many deals won’t close without a Phase 1 ESA. Lenders, especially banks and government programs like the SBA or HUD, require it. It protects their loan and investment.
It’s also required by law in many cases. There are some rules of the federal Superfund law, which is officially called CERCLA. According to these rules, property owners can be held liable for contamination. Even if they didn’t cause it. Even if it happened 40 years ago.
The only way to protect yourself is to show you took “All Appropriate Inquiry” before buying. That’s where a Phase 1 ESA comes in. It proves you did your homework.
This report may also be required in deals involving:
- Refinancing
- Mergers and acquisitions
- Public-private partnerships
- Construction or redevelopment permits
In short, if there’s money or risk involved, a Phase 1 ESA is needed.
What Does a Phase 1 ESA Cover?
A good Phase 1 ESA looks at many things. The process is detailed and methodical. It follows four key steps to gather evidence and form a conclusion.
Site Inspection
The environmental consultant walks the site in person. They look for anything unusual. This includes stained soil, standing water, chemical containers, or strange smells.
They also look around the neighbouring properties. A nearby factory or gas station could pose a risk. Sometimes the threat doesn’t come from your land. It may occur from next door.
Old underground storage tanks (USTs) are a big concern in Southern California. These tanks may leak over time and affect soil and groundwater.
Records Review
The second part of the ESA is research. The consultant reviews historical maps, land use records, and environmental databases.
They check old aerial photographs. These can show what the site looked like over the decades.
They review Sanborn fire insurance maps. These detailed maps list past land uses, including hazardous ones.
Government databases are searched. These include lists from the Environmental Protection Agency (EPA), the California DTSC, and the Los Angeles Regional Water Quality Control Board. Records from Los Angeles Department of Building and Safety (LADBS) and Los Angeles County are often reviewed as well.
Environmental liens and property restrictions are also checked. These may limit how you can use the land.
Interviews
The consultant speaks with people who know the property. This could be current owners, tenants, or even neighbours.
They may also contact government officials. Building inspectors are usually aware of previous spills or accidents. Similarly, local fire marshals have an idea of past incidents. Red flags that do not have records may be found through these interviews.
For example, a former tenant might say they dumped oil in the back lot 20 years ago. That’s not in any file, but it’s critical information.
Report and Conclusions
Everything is then documented in a written report. This is the final and most important product of the assessment.
It includes maps, site photos, tables, and summaries of records. It lists any RECs, Historical RECs (HRECs), or Controlled RECs (CRECs). A REC means potential contamination today. An HREC is a past issue that was resolved. A CREC is contamination that’s under control with some land use limits.
The report concludes whether further testing is needed. If no risks are found, it may recommend no further action. If there are RECs, the next step could be a Phase II ESA with soil or water sampling.
Read more to find out What Happens If You Don’t Perform a Phase 1 Environmental Site Assessment.
Environmental professional conducts Phase 1 Environmental Site Assessment at a former industrial site in Los Angeles County. Identifying Recognized Environmental Conditions (RECs) through visual inspection ensures environmental due diligence per ASTM E1527-21.
How does the process of ESA work?
The process of the ESA occurs in a way that the total process normally requires 10 to 20 business days. The schedules are pegged to the size and complexity of the site. Historical or industrial type properties and big properties can take longer.
The process includes these phases:
- Project kickoff and planning
- Site visit and inspection
- Research and records review
- Interviews and local contact
- Report writing and QA review
- Final report delivery
The report can only be prepared by a Qualified Environmental Professional (QEP). This person must meet the ASTM standard. They require studying, experience and training in environmental science or engineering.
It is important to have the right consultant. An experienced QEP can spot subtle signs others might miss.
Common Findings in Phase 1 ESAs
Most Phase 1 ESAs uncover minor or manageable issues. But some findings can lead to serious next steps. Finally, historical use of the site often reveals surprises.
An empty lot today may have been a dry cleaner, printer, or oil field in the past. This is why records research is so important in the Phase 1 ESA process.
Legal and Financial Benefits of a Phase 1 ESA
There are many benefits to doing a Phase 1 ESA. Some of them are listed below:
The biggest is legal protection. If contamination is found later, you can avoid Superfund liability. Moreover, you can opt for it by proving that you did a proper assessment.
This protection also helps you qualify for environmental insurance. Some policies require a clean Phase 1 report before they will cover a site.
For lenders, the report reduces risk. No one wants to foreclose on a toxic property. If a clean report is on file, the risk of lending money goes down.
Developers also benefit. It is simpler to get permits in case there is evidence that the land is clean. These reports are commonly considered in the planning and approval process by the authorities. These agencies or authorities include Caltrans, Metro, and LADBS.
Buyers can use the report to negotiate. If contamination is suspected, the seller may lower the price or fix the issue first.
In some cases, investors use the Phase 1 report to increase property value. A clean history is a selling point. It can attract tenants, buyers, or partners.
When and Who Needs a Phase 1 ESA?
Phase 1 ESAs are needed in many different situations. They’re not just for heavy industry.
If you’re buying or developing commercial or industrial land, a Phase 1 ESA is likely required.
It’s also needed if the site has any of the following:
- Old gas stations or auto shops
- Dry cleaners or factories
- Warehouses with unknown past use
- Former rail yards or ports
- Nearby refineries or waste sites
Vacant lots in downtown Los Angeles often require review. Past uses may not be obvious from the surface.
The ESA is requested by many parties:
- Lenders and underwriters
- Developers and engineers
- Cities and counties
- Environmental lawyers
- Equity firms and REITs
Even residential properties may need a Phase 1 if they are part of a larger development or near a known spill site. Infill housing and urban redevelopment projects often qualify.
Conclusion: Know Before You Buy
A Phase 1 ESA is a smart move. It’s more than a formality. It’s a legal shield, a financial filter, and a planning guide. It tells you what risks may lie beneath the surface.
In Southern California, where industrial history runs deep, the risk is real. Many sites have a complex past. Contamination may not be visible, but it can still impact your future.
Don’t skip this step. Protect your deal, your funding, and your reputation.
Are you planning a property transaction? Get in touch with us today to book your Phase 1 ESA with an accredited environmental expert. Our professionals will assist you in making bold, compliant and well-informed choices.
Build with knowledge. Build with confidence. Build smart from the ground up.
