A Complete Guide to Phase I Environmental Site Assessments in New York

A Phase I Environmental Site Assessment (ESA) is an important environmental due diligence tool for commercial real estate transactions. It helps property buyers, developers, lenders, investors, and other stakeholders better understand a property’s current and historical environmental conditions before a transaction moves forward.

For commercial properties in New York, a Phase I ESA can identify potential environmental concerns that may affect a transaction, redevelopment plans, or future property use. Understanding these conditions early gives the parties involved more information for evaluating environmental risks and determining whether additional investigation may be appropriate.

 

What Is a Phase I Environmental Site Assessment?

A Phase I Environmental Site Assessment evaluates a property for Recognized Environmental Conditions (RECs), which generally relate to the presence or likely presence of hazardous substances or petroleum products due to a release, likely release, or material threat of a future release.

The assessment considers current and historical uses of the property, along with other reasonably ascertainable information that may indicate potential environmental concerns. A standard Phase I ESA is primarily non-intrusive. It does not ordinarily involve collecting or analyzing soil, groundwater, or other environmental samples.

ASTM E1527-21 is the current ASTM standard commonly used for conducting Phase I Environmental Site Assessments. The assessment is completed by an environmental professional who evaluates the available information and documents findings and conclusions in a written report.

 

Why Is Environmental Due Diligence Important?

Environmental conditions can create potential liability, financial, redevelopment, and transaction concerns for commercial property owners and purchasers. Contamination associated with current or historical property uses, for example, may affect how a property can be acquired, financed, redeveloped, or managed.

Environmental due diligence can also be relevant to certain federal landowner liability protections under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Eligibility for these protections depends on the circumstances of the property and transaction and other applicable requirements.

More broadly, a Phase I ESA provides buyers, lenders, developers, and investors with information they can use when evaluating a commercial property and determining appropriate next steps.

 

What Does the Phase I ESA Process Include?

The scope of a Phase I Environmental Site Assessment can vary based on the property and the information available. However, the process generally combines records research, a site visit, interviews, and professional evaluation.

Historical and Regulatory Records Review

Historical research helps establish how the subject property and surrounding properties have been used over time. The review may incorporate historical aerial photographs, maps, directories, property records, and other reasonably ascertainable sources.

Applicable federal, state, and local environmental records and databases are also reviewed for information that could indicate environmental concerns affecting the property.

Site Reconnaissance

The environmental professional visually inspects the subject property and observes adjoining properties from appropriate vantage points. The inspection looks for conditions that may indicate a release or potential environmental concern.

Depending on the property, relevant observations could include tanks, drums, waste storage areas, staining, or other features associated with current or historical activities. Pertinent observations are documented and considered with the other information collected during the assessment.

Interviews and Other Information

Interviews with current or past property owners, operators, occupants, or other knowledgeable parties can provide information that may not appear in historical or regulatory records. This information can help clarify previous operations, property conditions, and other relevant activities.

The environmental professional also considers whether significant data gaps exist when relevant information cannot reasonably be obtained.

Phase I ESA Report and Findings

After gathering the available information, the environmental professional evaluates the findings and documents conclusions in the Phase I ESA report.

RECs are among the primary findings a Phase I ESA is designed to identify. A report may also identify Controlled Recognized Environmental Conditions (CRECs), where contamination remains subject to required controls, or Historical Recognized Environmental Conditions (HRECs), where a past release has been addressed to applicable standards without required controls.

 

What Is the Difference Between Phase I and Phase II Environmental Site Assessment?

A Phase I ESA primarily evaluates potential environmental concerns through records of research, site observations, interviews, and professional analysis. It generally does not include environmental sampling.

Phase II environmental investigations typically involve intrusive investigation when additional information about site conditions is needed. Depending on the concern being evaluated, this may include collecting and analyzing soil, groundwater, soil vapor, or other environmental samples.

A REC identified during a Phase I ESA may lead to further investigation, but that does not mean every REC automatically requires one. The appropriate next step depends on the finding and the circumstances surrounding the property and transaction.

 

What Happens When a Phase I ESA Identifies a Potential Environmental Concern?

The next step depends on the nature of the finding, the property’s history, the intended transaction, and the client’s objectives. Additional investigation may be recommended to determine whether contamination is present and, when necessary, evaluate its nature or extent.

That information can then support decisions involving the transaction, financing, redevelopment, remediation planning, or other environmental risk-management considerations.

Some environmental concerns also fall outside the standard scope of a Phase I ESA. Depending on the property and project objectives, these issues may warrant separate evaluation.

 

How Long Is a Phase I Environmental Site Assessment Valid?

ASTM E1527-21 includes timing considerations that affect how long a Phase I ESA may remain usable for a property transaction. The age of an existing assessment should therefore be considered when determining whether it remains appropriate for a planned transaction.

Changes in property conditions, property use, ownership, regulatory information, or other relevant circumstances may also warrant an updated assessment. An environmental professional can help determine whether additional or updated due diligence is appropriate based on the property and transaction.

 

Phase I Environmental Site Assessments in New York

Commercial properties in New York can have long and varied histories, making historical use and applicable environmental records important considerations during environmental due diligence. Properties previously associated with manufacturing, dry cleaning, automotive services, petroleum storage, or other potentially contaminating uses may warrant particularly careful evaluation.

Working with environmental professionals familiar with applicable federal, state, and local environmental considerations can help property stakeholders understand the information identified during a Phase I ESA and determine appropriate next steps.

New York projects may also be subject to the New York State Environmental Quality Review Act (SEQRA). SEQRA is a separate environmental review process that may apply when a proposed project requires certain state or local agency approvals, funding, or other discretionary actions.

As part of the SEQRA process, an Environmental Assessment Form (EAF) provides information about a proposed action and its potential environmental impacts. Projects subject to SEQRA may require evaluation of these potential impacts before an involved agency makes certain approval, permit, or funding decisions.

SEQRA and a Phase I ESA serve different purposes. A Phase I ESA focuses on environmental conditions associated with a property, while SEQRA evaluates potential environmental impacts associated with a proposed action. Depending on the transaction and plans for a property, both processes may be relevant to a New York real estate or development project.

 

Work With Walden on Your Environmental Due Diligence

Walden Environmental Engineering provides environmental consulting and site investigation services to clients evaluating commercial properties in New York. Our environmental professionals can assess site conditions, identify potential environmental concerns, and help clients determine appropriate next steps.

When additional investigation or remediation is warranted, Walden can also provide broader environmental services to help clients address identified concerns as a property transaction or project moves forward.

Contact Walden Environmental Engineering to discuss a Phase I Environmental Site Assessment for your New York property.