We discuss if Phase I ESA's include environmental compliance reports.
Many of our customers call us asking about 'environmental due diligence', and explain they're not entirely sure what they need, or are even asking to purchase. The issue is, environmental due diligence can mean a lot of things to a lot of different people. And, since few people have any experience with environmental reports or assessments, they are often confused, expecting different things, or generally just need help figuring out what they really need to buy.
Two of the biggest things we hear our customers ask about, since a lot of the work we do is in the industrial realm, is the need for a Phase I Environmental Site Assessment or some type of evaluation of environmental compliance at a facility. These are two fairly common forms of environmental due diligence', but mean drastically different things. In order to make sure you know what you need, and what you're looking for, let's go over both and make sure everyone's on the same page with what they mean.
What is a Phase I Environmental Site Assessment?
This is by no means a full or thorough explanation, but essentially a Phase I ESA is a tightly defined evaluation of a piece of property for contamination from hazardous materials or petroleum products. If you want a full breakdown of what it is, check out our article What is a Phase I ESA? for a complete explanation.
When people hear hazardous materials, they usually think of things like asbestos or lead paint, and often ask if a Phase I looks for those things. The short answer is no, a Phase I done by the books does not include any sort of testing or inspection for lead, mold, or asbestos. If a Phase I provider seems ample evidence of one of those items, they may make a note about it in their report, but are not required to at all. An environmental professional, assuming they're preforming a Phase I in accordance with the ASTM standard, won't go out of their way looking for those items. Read more about that topic in our article: Phase I ESA, Lead, Mold & Asbestos Inspections as well as our articles specially on What a Phase I Environmental Site Assessment covers? and Is a mold inspection included in a Phase I ESA?
There's other things to consider as well when it comes to a Phase I ESA. You might want to know Phase I ESA costs, or who can conduct a Phase I ESA. Most people assume a Phase I ESA only prevents them from buying a contaminated property, but there are other protections a Phase I Environmental Site Assessment provides as well. Another very common question is if Phase I ESA findings need to be reported, which... can depend! And a final thing to remember is that a Phase I ESA does in fact have a shelf life, which is 6-months, or up to a year depending on variables. In other words, it expires quickly! You can read why in our article How long is a Phase I Environmental Site Assessment good for?
What does environmental compliance mean?
Environmental compliance means a business is in compliance with the environmental rules, laws, and regulations that impact that particular business or facility. When someone wants to conduct environmental due diligence on a business's operations or facilities, sometimes they are in fact referring to their level of compliance with regards to environmental regulations. This can be done through limited evaluations, or thorough and detailed environmental audits. Our article What is an Environmental Audit? goes over the topic in more detail.
Another common question people have is Do I have to report the results of an environmental audit?, which again like above... depends!
Does a Phase I ESA include an environmental audit or environmental compliance evaluation?
The long story short... No. Phase I Environmental Site Assessments do not include any kind of environmental compliance evaluation, whether it's an audit, or something simpler. A Phase I ESA includes only the items that are specifically outlined in the ASTM standard, that's it. The ASTM standard does not include any kind of environmental compliance evaluation in any way, shape, or form. Remember, a Phase I is concerned about contamination at a piece of property, not a business or facility.
Can a Phase I Environmental Site Assessment include an environmental audit?
Sure! But, at that point your Phase I is then including non-standard items, which means your getting extra stuff added on. When you get extra stuff added on, you should expect to pay a little extra. Sometimes clients aren't thrilled to hear this, usually because they aren't sure what a Phase I includes, but like anything else in this world, if you get extra stuff, you pay extra money.
A Phase I and an environmental audit, or any form of environmental compliance evaluations, are like comparing apples and oranges. They aren't even remotely close to being the same thing. It's like ordering a pizza and expecting a free order of tacos to go with it. They're both different, they can both stand on their own as their own separate reports, but they don't automatically get included together.
This common misconception is something we see frequently when dealing with customers working in or around industrial industries, whether they're buyers, seller, realtors, etc. As always, the best way to stay on top of understand a Phase I is to educate yourself or talk to a professional. To learn more about Phase I Environmental Site Assessments, or environmental audits and how they can both help your organization, click here to contact us or give us a shout at 888-RMA-0230.