News Environmental Site Assessments: What’s the Difference between a Phase I ESA & Phase II ESA?

WithersRavenel’s Environmental team provides environmental site assessments for properties identified for current or planned projects.

What is an environmental site assessment?

In North Carolina, an Environmental Site Assessment (ESA) evaluates potential risks or contamination on a property. It is typically conducted before property transactions, development, or financing. It helps identify liabilities, ensure regulatory compliance, and inform decision-making for buyers, lenders, and investors.

The process is primarily guided by the American Society for Testing and Materials (ASTM) standards, particularly ASTM E1527-21 for Phase I ESAs.

What is a Phase I ESA?

A Phase I ESA is a non-invasive investigation to identify potential or existing environmental contamination liabilities, known as recognized environmental conditions (RECs). It provides due diligence for property transactions and qualifies for liability protections under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly known as the Superfund.

A Phase I ESA typically follows these steps:

1. Historical Records Review: The team collects and reviews chain-of-title documents, municipal directories, aerial photographs, and other documentation to understand past land use with an eye toward identifying potential environmental concerns. For example, a site that was once used as a fueling station or auto body shop may have petroleum contamination.
2. Database Searches: The team scours records in federal, state, and local databases to identify any past contamination or hazardous waste issues reported at a property or nearby sites.
3. Site Inspections: The team visits the site and performs a visual inspection to identify sources and signs of contamination. Examples include above-ground and underground storage tanks, visible leaks and spills, and stressed vegetation. Team members often meet with current or prior owners and local officials to corroborate any conclusions drawn from the inspections.
4. Final Report: The team compiles a report of all findings and any recommended actions, including conducting further investigations such as a Phase II ESA. The report ensures compliance with the All Appropriate Inquiries (AAI) rule under CERCLA.

What is a Phase II ESA?

A Phase II ESA is an invasive investigation to confirm and quantify contamination, specifically RECs, found during a Phase I ESA. This phase requires physical sampling and testing to find the presence of any contaminants and to understand the extent of contamination. The timeline for these assessments and final report varies depending on the complexity of a given site and findings reported by the laboratory.

A Phase II ESA typically follows these steps:

1. Sampling and Testing: The team collects samples of soil, groundwater, surface water, and/or soil vapor to screen for hazardous substances such as petroleum hydrocarbons and heavy metals. Samples are analyzed in accredited labs to measure contaminant levels and compare them against a state or local authority’s goals and standards.
2. Site Assessments: The team assesses contamination levels, migration pathways, and site characteristics using monitoring equipment and computer modeling. Risk of vapor intrusion into buildings is just one example of an environmental risk the team can search for and measure.
3. Report and Recommendations: The findings lead to the report detailing whether contamination exceeds regulatory thresholds. We will then recommend remediation options or land-use controls, if needed. If findings show contamination exceeds unrestricted use levels such as residential standards, property owners must consent to site-specific remediation plans, and public notification may be required under a state’s regulations.

Why should someone get an ESA?

For property buyers, an ESA is part of a comprehensive due diligence process. It provides important information about the environmental conditions of a site, which can limit how the site may be used and developed now or in the future. Purchasing a site with environmental contamination may open up the buyer to liability for cleanup and damages, so buyers should strongly consider an ESA if they want to manage their risks.

For property owners, an ESA can reveal possible sources of environmental contamination that may be contributing to ecological degradation or human health concerns. An ESA may also be required to show compliance with a cleanup plan such as one developed as part of Brownfields program participation.