how to know if you need a phase 1 environmental site assessment

How to Know if Your Project Needs a Phase 1 Environmental Site Assessment

By Breanne Cline, Environmental Scientist

You have finally mustered up the funds and courage to transition your side business into a full-time venture. You are confident that your new store front will give you the clientele and the local presence you need to be successful. You found the perfect location in town. The ground-breaking and construction has just begun for your new building. What an exciting yet scary time in any entrepreneur’s life.

Then you get the call.

Your contractor just discovered an abandoned underground fuel storage tank on your property. To make things worse, the tank was never properly closed and has been slowly leaking fuel into the soil for years. The previous landowners never bothered to remove it, and now you are stuck with a potentially catastrophic situation that could crush your hopes for success. Because you did not perform the appropriate due diligence prior to purchasing the property, you are now left with the financial responsibility of an expensive cleanup.

Sound like a nightmare? Well it could be, but the good news is that this situation is avoidable with a little forethought, and the completion of a Phase 1 Environmental Site Assessment (Phase 1 ESA).

What is a Phase 1 Environmental Assessment?

Performing a Phase 1 ESA is common practice in order to know whether a property is likely to contain any environmental issues, or “recognized environmental conditions.” Recognized environmental conditions include the presence, or likely presence, of hazardous materials or petroleum products due to a release or a probable future release. All Phase 1 environmental site assessments need to meet the standard practices set out in the ASTM E1527. They are best conducted before property transfers legal ownership or know before you buy.

Here are a few situations when a Phase 1 ESA would be a good idea:

  • Commercial property transactions
  • Commercial real estate transactions involving a bank loan
  • Transactions involving industrial or commercial operations that used regulated hazardous materials (like lumber treatment, electroplating or dry cleaning)
  • Transactions of property located adjacent to industrial or commercial operations
  • Transactions involving property used for oil or gas exploration
  • Transactions involving property with known environmental liens

non-commercial properties may have environmental issues present

What About Residential Property?

Mike Gray helps guide home and property buyers through environmental assessments.

Learn More


The purpose of the Phase 1 ESA is to perform adequate due diligence as part of the property transfer in order to limit the liability of property buyers from previously existing environmental conditions. Perform a Phase 1 environmental site assessment to determine if environmental hazards are present on the property before you buy. If they are discovered after you have purchased the property, you may have a liability. That could put you on the hook for the cost of remediating the property even though you did not cause the initial contamination.

The presence of storage tanks that may have contained hazardous materials or petroleum products could complicate real estate transactions.

How To Complete a Phase 1 Environmental Site Assessment

So, you have determined you need a Phase 1 ESA performed on the property you want to purchase—now what? According to the standard guidelines for the Phase 1 ESA process, an environmental professional must perform the Phase 1 ESA . The most common practice is for the prospective purchaser or lender to hire an environmental consultant to perform the work. There are several things to keep in mind when juggling your due diligence period and having a Phase 1 environmental site assessment completed:

  • The Phase 1 ESA process can take 20 business days or more to complete, depending on the details of the project.
    • Make sure you allow enough time in your due diligence period to complete the Phase 1 ESA.
    • Contact your environmental consultant right away or prior to the start of the due diligence period to ensure the timeline fits with the transaction schedule.
  • A Phase 1 ESA report expires 180 days (6 months) from the date of the environmental records database search (part of the Phase 1 ESA process and evaluated in the final report).
    • It is possible to update the report for continued viability past 180 days.
    • The Phase 1 environmental site assessment can conclude prior to the due diligence period for the property if necessary only if it is not more than 180 days old.
  • Cooperate with the requests of the environmental consultant as much as possible to streamline the Phase 1 ESA process—it could get completed in a shorter timeframe if all entities respond in a timely manner.

Here’s How an Environmental Professional Can Help

The Phase 1 environmental site assessment process and reporting can be confusing to those who are new to the process. This is why it’s important to find a consultant willing to walk you through the study and its results. Environmental professionals will keep you up to date on any important discoveries. Not having a professional evaluation could make or break your decision to purchase the property and potentially save you additional time and effort.

breanne carr in the field

Breanne Cline is an environmental scientist who works in Morrison-Maierle’s Kalispell office. She specializes in Phase 1 ESAs, wetland delineation and permitting, GIS, and NEPA projects. In her spare time, she also enjoys everything outdoors that Montana has to offer.

Technical review of this article provided by Mike Gray, PG

Have Other Questions?

There are several resources that can help you determine whether you should have a Phase 1 ESA performed on a property:

  • Mapping DEQ’s Data (http://svc.mt.gov/deq/wmadst/)
    • This website allows you to determine if potential hazards are on or around the property.
    • Helpful Hints:
      • Turn on the Hazardous Waste Handlers, Hazardous Substance Releases, and Underground Storage Tanks layers once zoomed in to your property.
        • Expand the Underground Storage Tanks layer to check the Closed Tanks and Active Tanks options.
      • Click on a symbol for further information. Click on View Detailed Report for a link to the Montana DEQ website records for that occurrence.
    • DEQ Data Search (NEW website coming in 2020) (http://svc.mt.gov/deq/dst/#/home)
      • This website contains all the detailed information from the Mapping DEQ website. It also allows you to directly search for your property in their records.
    • Commitment for Title
      • Receiving the commitment for title for your property allows you to look for any listed environmental restrictions or liens.
    • Online Records Search Websites
      • Some websites allow you to perform a federal and state records search of your property and the surrounding area. However, many of these website searches cost money and you may still leave you with questions.
      • Many commercial lenders utilize these online websites to perform a limited search of the property. The output tells them if the property is a risk to them. It will suggest whether a Phase 1 ESA should occur prior to lending money to their client.