Phase I Environmental Site Assessments

What is a Phase I ESA?

A Phase I Environmental Site Assessment, or Phase I ESA, consists of a detailed report that researches and assesses the current and historical environmental uses of a property during a commercial real estate transaction.

They are an integral part of the environmental due diligence and decision-making process ordered by stakeholders to mitigate risk regarding potential or existing environmental contamination at, or affecting, a property.

AEI’s Phase I ESA meets the most current ASTM Standard and can be customized to meet your unique needs. Our team of experienced and reliable professionals provide high quality reports for any site location or asset type.

When is a Phase I ESA required?

A Phase I Environmental Site Assessment is typically required by lenders or purchasers to identify whether there is a potential for contamination or other conditions that may affect property values, pose a legal or financial liability, or affect the ability of the borrower to repay a loan obligation. Clients may also obtain a Phase I ESA in order to satisfy requirements of the “innocent landowner defense” under CERCLA, or to protect against potential liability for contamination originating from an off-site source.  

How long is a Phase I ESA good for?

A Phase I ESA is valid for 180 days from the earliest initial date of research and may be updated within one year of completion. AEI reports include a report viability date so that clients can clearly understand when the report is no longer viable. Typically, it is recommended that closing occur prior to the expiration of this viability date.

How much does a Phase I ESA cost?

The cost for a Phase I Environmental Site Assessment typically ranges between $1,900 to $4,600 and is determined by several factors. The cost considers the location of the property, the complexity of the site’s history, as well as the specific ways in which the property will be used.

What is a Recognized Environmental Condition?

The ultimate goal of a Phase I ESA is to identify Recognized Environmental Conditions (RECs). A REC is essentially defined as the presence or likely presence of hazardous substances or petroleum products in, on, or at a property due to a release or a material threat of a release to the environment. In other words, a REC is found when the research and inspection of the property leads an Environmental Professional to conclude that contamination is present or potentially present at the property.

What is the Process of a Phase I ESA?

ASTM International sets accurate and consistent standards for environmental professionals to follow when conducting a Phase I Environmental Site Assessment. Additional requirements may be added by banks or lenders, but the general process sticks to several key points:

Site Visit

A site visit is conducted to make a visual inspection of the property as well as surrounding properties. The site visit includes an assessment of hazardous substance and petroleum product use, storage, and waste generation. Additionally, conditions and features of potential environmental concern are identified.

Geology and Hydrology Research

The soil type, geological setting, and groundwater flow direction/depth are examined in the larger context of potential on and off-site environmental conditions.  


In an effort to gather additional information about the property, interviews are conducted with strategic players such as tenants and owners as well as state and local regulators such as health departments, fire departments, and water departments.


Finally, a written report is delivered that outlines the findings of the Phase I ESA, including any specific insights or conclusions that can be made from the information gathered. For example, if the possibility of environmental contamination was found, it is likely that a Phase II Environmental Site Assessment will be recommended.

Historical Research

To evaluate historical changes or developments made to the property over the years, environmental professionals will examine historical aerial photographs as well as street directories, fire insurance maps, topographical maps, building permits, planning records, and any other relevant historical sources to identify the potential for a Recognized Environmental Condition.  

Review of Records

Records of previous transfers of ownership and property use are reviewed to determine if potential environmental conditions exist.

Regulatory Research

Regulatory bodies including city, county, state, and federal environmental agencies are consulted to gain more insight into the property.

What is ASTM E1527-21?

ASTM E1527-21 is the standard that is used to complete a Phase I ESA. On January 1, 2022, the ASTM E1527-21 replaced the E1527-13 standard as the industry’s best practice for Phase I ESAs. While much of it stayed the same, there were a few notable revisions:

Historical Research

It is now required to include a review of the “Big 4” historical sources (aerial photographs, topographic maps, fire insurance maps, and city directories) for both the property in question and any adjoining properties. If the property is used for industrial, manufacturing, or retail purposes, a review of additional resources may be required.

ESA Shelf Life

The new standard clarifies what aspects of a report need to be updated within the 180-day viability window.


Clarity has been made around a few definitions so that there can be consistent interpretation across the board. These definitions include Recognized Environmental Condition (REC), Controlled REC (CREC), and Historical REC (HREC). New definitions were also added for the terms Likely, Property Use Limitation, and Significant Data Gap.

Emerging Contaminants

The standard recognizes that emerging contaminants, such as per- and polyfluoroalkyl substances (PFAS), that are not currently classified as hazardous substances may be discussed as non-scope items.

Limited Environmental Due Diligence Assessments

While limited assessments will not qualify you for Landowner Liability Protections (LLPs) under CERCLA, they can be a helpful preliminary assessment tool. AEI can provide the following Limited Due Diligence Assessments:

Environmental Transaction Screen (ETS)

An ETS is the most basic assessment, often ordered to meet ASTM E1528-14 Standard Practice for Limited Environmental Due Diligence: Transaction Screen Process.

Limited Environmental Site Assessment (LESA)

A LESA is a more comprehensive assessment than an ETS, and the scope of work is usually customized to include certain components of ASTM Standard Practice E1527.

Record Search with Risk Assessment (RSRA)

The RSRA is an inexpensive evaluation of Environmental Risk Level of a subject property as either being a “high or elevated-risk” or “low risk” for contamination. After regulatory and historical research review, the environmental professional will determine risk level which will determine if further investigation is recommended. This type of assessment does not include a site inspection, and thus is typically referred to as a “desktop review.”

Custom due diligence Scope Investigation

Due Diligence Assessment scopes vary from lender to lender. AEI Consultants offers custom scope investigations to our clients.


Why do I need a Phase I ESA?

If you are buying a commercial property, many banks require the completion of a Phase I ESA before approving a loan. Government agency lenders (SBA, HUD, Fannie Mae, and Freddie Mac) will typically require a Phase I ESA or some form of due diligence. Seasoned investors also typically order Phase I ESAs for a full disclosure of potential environmental issues that may impact cash flow, property value, and purchase negotiations.

Who can perform a Phase I ESA?

An Environmental Professional must conduct the assessment.

How long does it take to complete a Phase I ESA?

On average, the total time is between two to four weeks.

What is the difference between a Phase I and Phase II environmental site assessment?

In short, a Phase I ESA conducts the initial research to identify if contamination may exist at a property. The Phase II assessment consists of the collection and analysis of samples to verify if contamination actually exists at a property.

A Phase I Environmental Assessment is conducted to determine if a release or likely release of hazardous substances or petroleum products has resulted in potential contamination at a property. This includes site visits, examining historical site records, consulting government and agency databases, as well as reviewing plans, photographs, and any other documents that would indicate what the property was used for in the past.

A Phase II assessment occurs if the Phase I ESA identified RECs or other conditions that require further investigation. During the Phase II, Environmental Professionals conduct a sampling of environmental media (including soil, soil vapor, and groundwater). These samples are then analyzed for the presence and contamination via various laboratory analytical methods.

What are the ASTM E1527-21 changes?

In 2021, the ASTM updated the standard for Phase I Environmental Site Assessments with the E1527-21, which replaced the E1527-13 standard on January 1, 2022. These changes did not significantly alter the Phase I Environmental Site Assessment report or process, but there were a few important revisions that offer clarification and guidance. For more details, please see our section above on “What is ASTM E1527-21?”

If you need the services of a Phase I Environmental Site Assessment company, AEI is here to help. Reach out to our team of environmental professionals to request a quote today.

If you have any questions, please reach out to our team of environmental professionals.

8 + 6 =

Adam Bennett

Senior Vice President
Due Diligence Services

/*** Collapse the mobile menu - WPress Doctor ****/