Phase I vs. Phase II

A Phase I ESA under ASTM E1527-21 sets out to identify recognized environmental conditions (RECs) at a property, through records, a site visit and interviews, and it takes no samples (E1527-21, 7.1, 7.2, 7.4). A Phase II ESA under ASTM E1903-19 samples and chemically tests environmental media to answer the questions the Phase II Assessor and the user put in a written Statement of Objectives (E1903-19, 5.1.1, 6.2). A Phase II can follow a Phase I, but the Phase I's REC calls do not decide what the Phase II investigates (E1903-19, 1.1.2).

Side by side

What a Phase I is for

E1527-21 sets out good commercial and customary practice for assessing a parcel of commercial real estate for CERCLA substances and petroleum products, and is meant to let a user meet one requirement of the bona fide prospective purchaser, innocent landowner and contiguous property owner protections: all appropriate inquiries (E1527-21, 1.1). Its goal is to identify RECs, meaning hazardous substances or petroleum products that are at the property because of a release, are likely there because of a release or likely release, or are present in circumstances posing a material threat of a future environmental release; a de minimis condition is not a REC (E1527-21, 1.1.1). The practice does not address whether a user has met the CERCLA requirements beyond all appropriate inquiries, such as the continuing obligations (E1527-21, 1.1.3). Conditions outside its scope can be added as additional services, which the standard says should be agreed before the assessment begins (E1527-21, 1.4).

Taking no samples itself (E1527-21, 7.4), a Phase I can still point toward more work. Under the All Appropriate Inquiries rule, "The inquiry of the environmental professional should include an opinion regarding additional appropriate investigation, if any" (40 CFR 312.31). E1527-21 asks for the same opinion, and says the opinion does not oblige the environmental professional to recommend a Phase II (E1527-21, 12.8). Recommendations are not required; a recommendation for Phase II testing is an additional service outside the practice, and the standard says it should be in the report only when the terms of engagement call for it (E1527-21, 12.9, 12.10). The rule also says "Sampling and analysis may be conducted to develop information to address data gaps" (40 CFR 312.20).

What a Phase II is for

E1903-19 serves a user who wants sound, scientifically valid data on actual conditions at the property, whether or not a Phase I called them RECs or data gaps (E1903-19, 1.2). The standard names objectives such as these, without limiting them to these (E1903-19, 1.2.1 to 1.2.6):

• whether a CERCLA release has occurred, for the landowner liability protections;
• continuing obligations, such as the reasonable steps that keep those protections;
• brownfield sites and EPA brownfields remediation grants;
• risks to human health or the environment, and tort liability;
• business environmental risk in transfers, financing and insurance;
• disclosure of liabilities in financial statements and securities reports.

Its use is not limited to CERCLA (E1903-19, 4.1.3). The scope is defined against the user's objectives, and the confidence the user wants shapes how much testing is done (E1903-19, 1.4, 1.4.1). The standard sets no level at which target analytes become a concern (E1903-19, 4.1.2.2), and legal and business advice fall outside the assessor's role (E1903-19, 4.2.5).

How a Phase II can follow a Phase I

A Phase II may follow a Phase I done under E1527, E2247 or the All Appropriate Inquiries rule, or a transaction screen under E1528 (E1903-19, 1.1.2). The Phase I standard's nonmandatory legal appendix says a user whose Phase I identifies RECs may want additional subsurface investigation, commonly called a Phase II (E1527-21, X1.6.3). E1903-19's own nonmandatory legal appendix notes that the inquiry rule and the Phase I standards do not require sampling, and assumes that a user seeking a CERCLA landowner liability protection already has an inquiry that complies with the rule (E1903-19, X1.1.2).

Once the Phase II starts, the Phase I is one input among others: the assessor must independently evaluate all relevant information that is reasonably ascertainable, including any Phase I report, for completeness, accuracy and adequacy as the basis for investigation (E1903-19, 7.2). The Phase II Assessor must also consider whether data gaps named in a prior Phase I should be addressed by sampling and chemical testing (E1903-19, 7.3.3).

The Phase I's REC calls do not set the Phase II's scope

E1903-19 says so directly: an earlier decision to classify a condition or area as a REC, or not to, does not settle whether investigating it fits the Phase II's objectives (E1903-19, 1.1.2). The Phase II Assessor may designate Phase I RECs for investigation as far as the objective needs; not every REC has to be designated, and a condition the Phase I did not call a REC may be (E1903-19, 7.3.1). A likely release area can be a Phase I REC, but it is not limited to one (E1903-19, 3.1.27). What decides is the objectives: the Phase II Assessor must designate every area where substances that matter to them are present or likely present and that must be investigated to meet them (E1903-19, 7.3.4).

Related

• What is a Phase I ESA?
• What is a Phase II ESA?
• What happens if the Phase I finds a REC?
• REC, CREC, HREC or de minimis condition
• Scoping a Phase II
• Who can perform a Phase II
• SBA environmental investigation steps
• When HUD requires a Phase II on an FHA multifamily loan

This page is general reference. It does not assess any property. ASTM E1527-21 and ASTM E1903-19 are the standards and are not reproduced here.