Phase I Poll

Phase I environmental site assessment (ESA) work currently accounts for approximately $500 million in annual revenue for environmental consulting firms. This figure does not take into account any follow-up work that might result from recommendations made as a result of the Phase I process. Federal, state and local laws make it possible for current and past property owners and managers to be held liable for cleanup costs related to contamination regardless of their involvement. The mere possibility of contamination can also result in significant property devaluation. To deal with these concerns, today's real estate investors, developers, lending institutions and others involved in commercial real estate include a Phase I as a standard part of their due diligence prior to closing.

A Phase I environmental site assessment is a non-intrusive investigation of a tract of real property with the purpose of identifying the likely presence of any hazardous substances or petroleum products under conditions that indicate an existing release, a past release or the material threat of a release into the structures on the property or into the soil, groundwater or surface water of the property. A typical investigation includes a review of government records, research into prior uses of the property, physical inspection of the property, the conduct of interviews with owners and occupants of the property and local government officials and the preparation of a report (referred to as a Phase One report).

Thousands of firms across the country today are conducting approximately 250,000 Phase I's annually following the practice laid out in the American Society for Testing and Materials (ASTM) E 1527 standard. Updated in 2000, the standard contains many areas where the consultant must use his or her professional judgment. Thus, while most consultants follow ASTM's protocol for environmental site assessments, the similarities usually end there. In practice, Phase I's are often as varied and diverse as the consultants whose judgment is relied upon to conduct them.

In practice, Phase I's are often as varied and diverse as the consultants whose judgment is relied upon to conduct them.

In the interest of understanding Phase I industry practices and to develop a basis for performance benchmarking, Southport, Conn.-based Environmental Data Resources Inc. (EDR) conducted a survey of the industry in the summer of 2002.

Survey Sample Size
The survey, which contained 55 questions, was mailed to more than 3,000 environmental professionals who regularly conduct Phase I's. Three hundred and thirteen (313) professionals representing 283 unique firms responded. Respondents were instructed to answer questions based on practices company-wide -- rather than for an individual office. To avoid overstatement of results, multiple responses from the same company were averaged and incorporated into the analysis.

Figure 1. Distribution of Respondents
by Company Size (Annual Revue)

Survey Participants
Of the individuals who responded to the survey, 28 percent considered their firm to be national, 68 percent indicated they work for a regional firm and four percent classified their firm as local. The distribution of respondents in terms of company size measured by annual revenue is presented in Figure 1. Almost two-thirds of respondents worked at companies with annual revenues of less than $5 million. Eighty-five percent indicated that they conduct Phase I's out of five or fewer offices. Only seven percent indicated that their companies conduct Phase I's out of more than 25 offices.

Figure 2 indicates the distribution of respondents based on the number of Phase I's conducted company-wide in 2001, the last full calendar year prior to the survey. Nearly one-third conducted fewer than 50 Phase I's in 2001; almost half conducted between 50 and 250, and slightly less than 10 percent conducted more than 1,000 Phase Is in 2001. Interestingly, the firm conducting the greatest number of Phase I's in the survey averaged almost 1,000 Phase I's per month in 2001. The firm in the number two spot completed slightly more than half that figure.

Figure 2. Distribution of Respondents
by Annual Number of Phase Ones
Conducted Company-wide

Of the Phase I's conducted in 2001, almost half were driven solely by business environmental risk (often referred to as a "Phase I plus") as opposed to being driven by the desire to satisfy the "innocent landowner defense" under the Comprehensive Environmental Response, Compensation and Liability Act, also known as Superfund or CERCLA (often referred to as a "basic ASTM Phase I"). This finding is particularly notable due to the fact that five years ago, a similar benchmark survey conducted by EDR indicated that virtually all Phase I's were CERCLA-driven. The recent shift toward business environmental risk-driven Phase I's can be directly attributable to the addition of the term "business environmental risk" in the 2000 revision to the ASTM E 1527 standard. The addition of the new term reflected the growing emphasis on addressing other types of risk in Phase I's beyond mere CERCLA liability.

Survey Highlights
The ASTM E 1527 standard requires that a detailed scope of services be prepared for the client, but leaves the level of detail up to the consultant's professional judgment. Survey results indicated that the most common length for a basic ASTM E 1527 Phase I scope of services is two to three pages (44 percent). Twenty-one percent of respondents typically write scopes of services in one page; 15 percent use three to four pages. The remaining 20 percent typically write scopes of services longer than four pages.

Today, as a direct result of ASTM E 1527-00, Section 5.5, which focuses on other environmental conditions that could materially impact a property, non-ASTM scope considerations are increasingly being added to the Phase I scope of services. The most common non-ASTM scope considerations included in Phase I's today are presented in Figure 3; asbestos and lead-based paint top the list. Indoor air quality (including mold) was not commonly included in Phase I's when the survey was conducted this past summer; however, if the survey was today, mold assessments would undoubtedly be more common, particularly for multi-family housing, schools and office-type properties.

Figure 3. Most Common Non-ASTM Scope Considerations: Frequency of Use

The following are "always," "often," "rarely" or "never" included in our Phase I's:

Non-Scope Consideration










Lead-based paint










Regulatory compliance





Cultural and historic resources










Indoor air quality (mold)





Lead in drinking water





Endangered species





Health and safety





Ecological resources





In response to the increasing attention being placed on health risks associated with mold, the survey did ask a number of questions about this growing concern. Not unexpectedly, 92 percent of respondents reported a rise in the demand for mold assessments compared to one year ago, driven principally by property management firms, insurance companies, real estate developers and attorneys. When a mold assessment was conducted, 83 percent of the time respondents said it was a stand-alone investigation and not part of the Phase I or property condition assessment, even if it was conducted simultaneously with one of them.

Of the Phase I's conducted in 2001, almost half were driven by business environmental risk (often referred to as "Phase I plus") as opposed to being driven by the desire to satisfy the "innocent landowner defense" under CERCLA.

A number of survey questions addressed the historical research component of the Phase I process, with particular attention given to the types of sources consultants typically use. The ASTM E 1527 standard identifies eight standard historical sources. The environmental professional must then use as many of these sources as necessary to obtain a sufficient understanding of a property's prior use(s). Figure 4 summarizes the frequency of use for each of the eight historical sources in the ASTM E 1527 standard. Fire insurance maps, historical aerial photographs, street directories and historical topographic maps were the most popular.

Figure 4. Frequency of Use for ASTM E 1527's Standard Historical Sources

We check the following sources regularly:

Historical Source

Percentage of Respondents

Fire Insurance Maps


Aerial Photos


Local Street Directories


Historical USGS Topographic Maps


Building Department Records


Property Tax Files


Recorded Land Title Records


Zoning/Land Use Records


The ASTM standard does not define an allowable gap in the historical use investigation, except to specify that a gap of less than five years is not necessary. For the first time, the results of the survey identified how this gap is typically defined by the industry for each of the eight ASTM standard historical sources (Figure 5).

Figure 5. Gap in Historical Use Investigation
by Source-Type

In terms of physical setting sources, the survey also indicated that it is becoming increasingly common in the Phase I practice to check other sources besides a topographic map, particularly when there are nearby contaminant sources or sensitive receptors that might be impacted by plume migration. The survey revealed that the two most common sources reviewed, other than a topographic map, are soils data and groundwater flow direction data.

The 2000 version of the E 1527 ASTM standard requires that all pertinent documents relied upon to draw conclusions about the property must be included in the Phase I report, either physically or through referencing. Eighty percent of survey respondents physically include this documentation in the report, citing that clients generally prefer that the reports "stand on their own." This is understandable since most Phase I reports are peer reviewed, and excluding all pertinent information can delay the review process and ultimately the closing.

The most common non-ASTM scope considerations included in Phase I's today are presented in Figure 3; asbestos and lead-based paint top the list.

The survey also asked consultants how much time they spend on each component of the Phase I. In the benchmark survey conducted five years ago by EDR, most ASTM E 1527 Phase I's required approximately 30 to 40 hours to complete (not including travel). The most recent survey, however, indicates this timeframe has shrunk to 20 to 25 hours. Average sell prices for Phase I's are in the $1,500 to $2,500 range depending upon site-specific circumstances, with the national average being approximately $1,800 to $2,000. One of the more interesting findings was that a significant amount of time -- generally more than six to eight hours -- is being spent on report preparation (Figure 6). Noteworthy was the fact that a small number of respondents spend less than two hours assembling their Phase I report. When queried about their expediency, they indicated that their entire report writing process is automated, making it highly efficient.

Figure 6. Hours Spent on Components of the Phase I Process


1 to 2 hours

3 to 5 hours

6 to 8 hours

9 to 12 hours

More than 12 hours

Records Review

  • Government Records Review






  • Historical Use Information Review






Site Visit






Report Writing






In response to questions about turnaround time, nearly half (48 percent) of the respondents indicated that they typically complete a Phase I in 10 to 15 days. Twenty-eight percent work even faster, requiring just seven to 10 days to complete the job.

Another component of the survey addressed the potential for Phase I's to lead to additional work for consultants. As shown in Figure 7, for example, 24 percent of respondents indicated that five to 10 percent of their Phase I's led to further investigation. Across all respondents, the survey indicated that approximately one in seven Phase I's require some level of further investigation. The survey did not ask specifically what types of further investigation were being conducted.

EDR's environmental site assessment industry survey will allow Phase I firms to benchmark their practices against industry norms. Notwithstanding, the industry remains highly competitive, with significant pressure on price and turnaround time. The most successful firms will know how to differentiate themselves clearly, sell their firm's value, provide outstanding service and conduct a Phase I in the most efficient manner possible.

American Society for Testing and Materials --

This article originally appeared in the 05/01/2003 issue of Environmental Protection.

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