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What is a Phase I ESA?

The purpose of a Phase I ESA as defined by the ASTM E 1527-13 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process is to identify recognized environmental conditions associated with a commercial real estate property. Recognized environmental conditions is defined by the standard as the presence or likely presence of any hazardous substances or petroleum products in, on, or at the 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. De minimis conditions are not recognized environmental conditions. Controlled substances are not included within the scope of this standard. Although the Environmental Professional may, at his/her discretion or by mutual agreement with the user, address some of the following issues while conducting the ESA, the following items are some of the issues that are not included within the scope of a Phase I ESA: asbestos-containing materials, radon, lead-based paint, lead in drinking water, wetlands, regulatory compliance, Endangered Species Act, indoor air quality and mold.

Further, a Phase I ESA satisfies one of the requirements to permit a user to qualify for the innocent landowner, contiguous property owner, or bona fide prospective purchaser limitations (referred to as the landowner liability protections (LLP)) on CERCLA liability (ASTM 1527-13 1.1). To qualify as the LLP, one must have no knowledge, or reason to have knowledge of the contamination at the time of purchase.  In the state of Maryland, a prospective purchaser who wishes to purchase a property with knowledge of contamination may apply to the Voluntary Cleanup Program for inculpable status. However, most Nutshell clients are not seeking protection from CERCLA liability, but are practicing due diligence prior to purchasing a commercial property and in most cases any discovery is worked out between the purchaser and the seller.

ASTM #1527-13 4.2 reads: This practice is designed to assist the user in developing information about the environmental condition of a property and as such has utility for a wide range of persons, including those who may have no actual or potential CERCLA liability and/or may not be seeking the LLPs.

 

What is included in a Phase I ESA?

To comply with the ASTM 1527 standard, a Phase I ESA must include the following four components: 1) Regulatory records review; 2) Site visit; 3) Interviews; 4) Report.

 

What is ASTM International?

ASTM International, known until 2001 as the American Society for Testing & Materials, is a not-for-profit organization that provides a forum for the development and publication of voluntary consensus standards for materials, products, systems and services. ASTM International E1527 defines the organization’s standard process for environmental site assessments.

 

What is CERCLA?

The Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), also known as Superfund, was enacted in 1980. CERCLA was enacted in response to hazardous waste management practices in the United States that resulted in highly toxic sites that presented a material threat to human health and the environment. The law allowed a tax to be levied on chemical and petroleum companies and granted broad Federal authority to respond directly to releases or threatened releases and to assign a “responsible party” liable for cleanup processes and costs. Liability for environmental contamination under CERCLA may be assigned based solely on property ownership.

 

What is the All Appropriate Inquiry Rule?

The Small Business Liability Relief and Brownfields Revitalization Act (the “Brownfields Amendments”) amended CERCLA to provide protections from liability for certain landowners and prospective purchasers of properties who can demonstrate compliance with specific statutory criteria and did not cause or contribute to contamination of the property. One criteria to qualify for liability protection is to practice “due diligence” prior to purchasing a property. But there was no standard for due diligence. In 2005, the EPA issued the All Appropriate Inquiry Rule (AAI Rule) which must be followed to qualify for protection from CERCLA liability. The All Appropriate Inquiries Final Rule provides that the ASTM E1527-05 and E1527-13 standards are consistent with the requirements of the final rule and may be used to comply with the provisions of the rule. Further, the AAI Rule allows users (including users not seeking CERCLA liability protection) to expect that the AAI standard will be followed to complete a Phase I ESA, unless otherwise agreed upon by both parties, and that specific inquiries regarding the history of the property will be made.

 

What is the expected turnaround time to complete a Phase I ESA?

Nutshell’s standard turnaround time to complete a Phase I ESA, from the date of formal engagement, is 30 days. Depending on Nutshell’s schedule and the client’s urgency, a shorter turnaround time may be negotiated.