LTR - Ep 45 - What Is A Phase 1 Environmental Site Assessment?

In this 45th episode, I discuss What Is A Phase 1 Environmental Site Assessment?

A Phase 1 Environmental Site Assessment ("ESA") is the first step in understanding the level of possible environmental contamination risk is associated with a particular property.

A Phase 1 Environmental Assessment is a historical of a property, from when it was raw land to its current use today.  Based on the historical and current use, is there a potential for contamination on site and if so, at what level.  

As part of the understanding, the nearby properties and the same investigative details are considered to determine if they could have created any concerns for the subject property.

The purpose is for a summarized conclusion and recommendation to be obtained as to whether further investigation is warranted.  Further investigation would suggest performing a Phase 2 ESA, which will be covered in our next episode.

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Transcript

SPEAKER_00 0:27

Hey there, let's talk remediation. This is your host, Charles Fader, and this is our 45th episode of Let's Talk Remediation. And our 45th episode is brought to us again by our ongoing sponsor, Hambi Environmental. Hambi Environmental is a manufacturer of field test kits that provide uh accurate within 10% of a lab result, uh, economical at$35 a test for soil and solids and surface, and$45 a test for water, and uh efficient results in four minutes for soil and solid surface and uh six minutes for water analysis. So thank you, Hambi Environmental, for your ongoing support of this podcast, Let's Talk Remediation, where we're trying to have a positive impact on the environmental remediation industry. And with that, we'll get started with our 45th episode. The topic for today is what is a phase one environmental? Um, oftentimes in the remediation space, uh we get told uh about different phases of uh environmental remediation. And um a phase one environmental is most often requested when um uh you're trying to obtain financing from a bank to acquire a piece of property. So um phase one environmentals give an idea of the possibility for contamination at a property. So what happened was back in the uh 80s when uh banks uh were failing right and left and uh getting all kinds of real estate back uh from uh borrowers, um uh they the banks were starting to learn that the properties that they were getting back oftentimes had environmental contamination associated with them, that uh if they took the properties back, they actually were gonna have to remediate uh those those properties. And oftentimes the cost of that remediation work uh was in excess of the value of the property. So ultimately, in the end, uh the the banks chose to actually charge off uh a hundred percent of the loan and uh not want that collateral back, that that property or land that they had financed because they didn't want, I mean, obviously the the borrower didn't have the means to clean up the property because they don't they're not paying for the their loan anymore. So um the bank was getting the collateral back, which was the property or the land, but it had been contaminated from whether it was an oil chain shop or car washes, uh, you know, that type of dis uh dry cleaning plants, stuff like that. But it the banks found out real fast that taking back those properties, um they they were gonna have to clean them up, and that cost was so much more than the property values, uh, given the the environment that was going on with uh all the properties, property values dropping so much from you know the banks failing, borrowers not being able to pay their loans. So property values were dropping, and um, you know, they didn't want to have additional costs. So oftentimes uh what was going on, they learned pretty quickly that uh, hey, we don't even want the collateral back. Uh so um we'll just charge off 100% of the loan. So they learned from that back in the uh the 1980s when that took place, and uh that's before they were requiring uh environmental studies in order to finance properties. And fast forward uh after that, the banks started saying, okay, well, we got to protect ourselves a little bit better. So uh they started requiring environmental site assessments to be done. And um the first of the types of the environmental site assessments is a phase one. A phase one environmental is basically think of it as a historical of a property, a background of the property. It is going to tell the story of the property from when it was raw land until whatever it is today. And it's going to say how that property has uh it does everything from ownership changes to what has operated on that property, from when it was raw land to when it was developed into whatever it is, if it has uh was torn down and new things developed upon there. Uh, it's basically an entire background historical of that property from when it was raw land to current day. And based on that, it would determine if there were um uh environmental contamination possibilities in its history. Has it been a dry cleaning plant? Has it been uh an oil change shop? Has it been a car wash? Has it um uh has it been a gas station? Um those types of things would uh and and if so, then further investigation would be needed, right? It would be it would the report would recommend further investigation. Um so that's the the thing about a phase one. A phase one again is a historical of the property from what it was when it was from raw land until whatever it is current day, and in everything in between to determine if there's a possibility for environmental contaminants. Now, in addition to that, not only the historical of the subject property that it the report is being on, as part of that report, it also uh investigates nearby property. What are the properties near this particular property that this report is being created for? And what are the possibilities those nearby properties could have contaminated the subject property? So not only is a background historical of the existing property that the report is for, it also investigates nearby properties to see if there's a possibility that the subject property could have been contaminated by a nearby property. Um again, what those same types of things. Uh uh is there a gas station nearby? If so, further investigation needs to be done there. Has that gas station ever had leaking underground storage tanks that could have um uh migrated over and contaminated the subject property? Um so are there nearby uh the same thing with oil chain shop, you know, dry cleaning plant, um oil chain shop, dry cleaning plant, gas stations, you know, those types of things. Uh so not only the historical background of the subject property, but nearby properties as well. Um and you know, as a standard report, you know, there's obviously pictures of the property and uh the nearby properties, um, you know, all kinds of reviews of uh public records, uh, like I said, to see if there's a possibility of contamination at the property, uh, if if available, to interview the past owners of the properties, um, to see if they are aware of any contaminants that uh took place or they they had were responsible for any contamination, had to do any type of cleanups. So uh investigation of all types of you know records to determine if there has been any past issues on the subject property or any nearby property. Um maps, pictures, uh data records, all that stuff is accumulated in this phase one environmental uh report or environmental uh assessment, um uh environmental site assessment, to come to a conclusion as to whether the creator of this phase one report, which is typically an environmental consulting company, um do they make the recommendation that there's no further uh action, which uh is the best case scenario. That means that based on all the information and their expertise, they're not recommending uh that any further investigation be performed, that this phase one environmental report is giving you all the detail about the subject property and there is little to no risk of any contamination at this property. Um however, if in the uh investigation there is a possibility that based on a prior use of this property or a contamination from a nearby property or the type of use of a nearby property, the environmental consultant feels that there is a possibility that there could be contamination on this property, then they're going to note that in the recommendations rather than saying uh no further action uh recommended, they're going to uh recommend that possibly moving on to a phase two environmental study uh or environmental site assessment be performed. Um and um that's basically the the the ins and outs to it all is that you know um you want to get the recommendation and the from the expert that is creating this phase one environmental report and get them to you know make a recommendation, whether no further action, or if they recommend uh moving on to a phase two environmental site assessment. And that is, you know, it's gonna be a bound uh report that uh depending on if it's raw land or if it's been improved and if it's been improved, how long it's been improved and stuff like that, it could be anywhere from you know uh a quarter inch to uh an inch an inch full of bound paper uh with all the supporting information uh in this phase one um uh environmental site assessment report that they generate for you. Um because all the data records, everything they used, all the interviews, every all the you know, data records, everything, all the maps, pictures, everything that they used to come up to their recommendation to support their recommendation, they're going to have an as phase one environmental uh report. And that's why oftentimes uh you know you know you anytime you're considering acquiring a property or cleaning up a property, or anytime you know, you always want to ask, is there a phase one environmental assessment uh on this property? And then in addition to not only looking to see what was recommended by that phase one, uh when what is it dated? How old is this data? Because a phase one environmental assessment report that was done in the last year or two probably is still relevant, but beyond that, that's old historical information that will be picked up when a new phase one is done. You really don't want to be relying upon an old phase one that was, you know, uh older than probably two years old. Um, because things could have changed since then, you know, either at the subject property or a nearby property that could have affected uh the subject property. So you'd want to get it uh one updated, you know. Um a lot of the data in that old phase one could help support a new one. Uh so not as much work because the the history of the property didn't change, so not as much work. It would just really need to be updated based on that old phase one information, um based on you know what's taken place over the last you know year, two years uh since that assessment was performed. So um like I said, you know, the the phase one, you want it to be um up to date, you know, uh so that the purpose of a phase one is you're trying to limit your exposure to risk, the risk of contamination on the subject property, um which would require, you know, some environmental remediation to be performed there. So you're trying to limit your exposure to risk by having a phase one environmental assessment performed, and that's why the banks started requiring it after the 80s um when they started trying to get properties back that were you know contaminated, uh, they started requiring it. And so always when there's a you know something that needs to be understood, you should always request one of the first things about a property is is there an environmental assessment uh that has been performed? Is there a phase one on the property? And then you get that phase one in hand, you check the date to see how old it is, to see if it needs to be updated or not, and based on that, you take a look at it and see what the recommendations were at that time uh from that uh phase one environmental and determine if a phase two needs to be further. And I'm gonna cover phase two and phase three in uh uh other uh episodes, but uh today is about the phase one, and again, just to summarize it in short to make it simple, a phase one environmental assessment uh is a historical of a property, a subject property, from raw land to its current use today, and as part of that investigation, and you know, that's mainly data records, really, uh accumulation, um, then also looking at what's nearby and trying to determine uh if there's a possibility of environmental uh contamination, you know, uh risk exposure uh based on its prior uses and the uses of nearby properties to this subject property for a better understanding. And that's done by researching historical data of the subject property and the nearby properties, um, having interviews, understanding past uses of the subject property and the nearby properties, and that's the whole investigative part to the phase one environmental, and then ultimately in the end, based on all the data that's accumulated by the environmental consultant expert, getting that recommendation in the phase one as to whether a phase two should be performed or no further action is recommended. Um and um a phase two uh would be is if they've identified some uh uh possibility of risk exposure on the subject property, they might recommend moving with a phase two. And a phase two is just limited uh uh limited sampling and testing on the subject site to identify whether there is any uh contamination or not. And then if in the phase two um sampling there is determined to be contamination, then it would move on recommend to move on to phase three, which is actually performing the remediation cleanup. And uh that's just kind of gives a brief overview uh light of phase one, phase two, phase three. Today's uh episode was to really discuss phase one, and I'll move on into another episode of what a phase two looks like, and uh also then from that we'll have another episode on phase three. So today's 45th episode is was uh to really discuss a little bit more in detail on what a phase one environmental site assessment report is, what it's used for, its purpose, what um what it really, what are the contents of it. And so with that, we'll go ahead and conclude this uh 45th episode. Again, that was brought to us by our ongoing sponsor, Hambi Environmental. So, Hambi uh Environmental, thank you for your support of this podcast. Uh, let's talk remediation, where we're trying to have a positive impact on the environmental remediation uh uh industry as a whole. And with that, I'm your host, Charles Fader, and I'm out.