(Photo courtesy of The Wallace Group)
When considering the purchase of real estate for any type of commercial, industrial, or institutional development, or investment, a crucial first step is environmental due diligence to help ensure that the land and improvements you are buying is free from hidden environmental risks, such as contamination from hazardous materials. This typically involves commissioning an environmental professional to conduct a Phase I Environmental Site Assessment (ESA) which is a report that investigates a property’s environmental history. A Phase I ESA looks at past land use, nearby properties, and any signs of contamination through document reviews and site inspections. This process identifies potential issues before you commit financial resources to the purchase.
Why is it Important?
Protect Your Investment: Discovering contamination after a purchase can result in hefty clean-up costs. A Phase I ESA helps you avoid these financial surprises and may shield you from legal liabilities related to pre-existing site conditions and pollution. A Phase I ESA is also required by most all lending institutions as a condition for financing.
Regulatory Compliance: Environmental laws are strict. Without adequate due diligence, you could face fines or legal trouble as the party responsible for a contaminated property. A Phase I ESA helps ensure compliance with local and federal regulations, protecting you from unforeseen liability, and your project from potential costly delays.
Manage Risk: Even if no contamination is found, a Phase I ESA gives you a clear understanding of the property’s environmental status, helping you make informed decisions about your purchase and future development plans.
Preserve Property Value: Environmental problems can significantly reduce property value. A “clean” Phase I ESA report can help maintain or even boost the land’s market value, making it easier to sell or develop.
When Should You Get a Phase I ESA?
Phase I ESAs are often required when financing land purchases, but it is wise to conduct one before any major acquisition or development project. It helps protect against unexpected environmental issues that could derail your plans.
The Phase I ESA Process
Records Review: Environmental experts review historical data to assess any past land uses that could indicate contamination. This includes regulatory agency databases such as DEQ, historical aerial photography, and site-specific documentation provided by the seller. Interviews with current owners and knowledgeable parties are also included in the review process.
Site Inspection: A physical site visit is conducted to look for visual signs of contamination or environmental hazards.
Prepare Report: A summary of findings determines whether further investigation, such as a Phase II ESA, is needed. A typical Phase I ESA and report requires approximately 3-to-4 weeks to complete.
Bottom Line
A Phase I ESA is a crucial step in land acquisition, helping you avoid costly surprises and ensuring that your investment is environmentally sound. It is a small price to pay for peace of mind and long-term security for real property holdings.
Shane Cochran, R.G., is a Senior Geologist at the Wallace Group in Bend, Oregon. He has over 17 years of experience providing environmental, geological, and water resources services to private and public sector clients throughout Oregon. Shane’s multi-disciplinary expertise includes environmental assessments/due diligence, regulatory compliance, permitting, remedial investigations/feasibility studies, and water resource investigations.
