“How much does it cost for a Phase I Environmental Site Assessment (Phase I ESA)?”
I am asked that question weekly. I certainly don’t want to be unhelpful, but it depends. At Brilliant Environmental Services, LLC (Brilliant) a “typical” Phase I ESA, undertaken using ASTM 1527-13 – the latest guidance available – usually runs around $2,500 to $3,500. That said, at complex facilities, I have had to charge as much as $25,000 or more for Phase I’s. Similar pricing is expected for Preliminary Assessments in New Jersey, in accordance with New Jersey specific rules as well as a hybrid report satisfying both federal and New Jersey innocent party defense requirements.
Why do some of Brilliant’s competitors charge less? I don’t know. Expenses alone (database searches, agency visits, site visits) now run close to $1,200, and the actual time for a site visit (usually at least 4 hours if done properly) can be costly. If a consultant says a Phase I will cost anything less than $2,000, be very careful. The product (report) you receive may not be compliant with regulations or provide you the protection you need. The Phase I is the initial step in providing a buyer of a property protection for the unknown – buyer beware!
Questions to ask a consultant when inquiring about a Phase I:
- Will you visit the environmental agency if there are files available? By regulations, they must answer YES.
- How long will you spend on site? It must be long enough to walk the entire property, exam the interior as well as the exterior (including the roof) and review any and all onsite records. How long would that take you?
- What are the qualifications of the person doing the site visit and writing the report (not the person signing off on the report, but rather the person actually doing the work)? ASTM E-1527 (all editions) sets forth who qualifies as an Environmental Professional including specific education and experience requirements. Depending upon advanced degrees and/or licenses (or certifications) as few as 3 years or as much as 10 years relevant full-time work experience may be required.
- How long have you been in business? Go with experience as you are relying on their expertise.
- Have you ever been sued and what is the limit of your professional liability insurance policy? If a company is cutting corners on a Phase I ESA, then they no doubt have been sued before and probably carry minimum insurance so as to limit their exposure. There are no limit requirements for environmental professionals, but you should insist on at least enough coverage to protect the value of your investment –just in case!
Phase I costs vary with the nature of the property (size, use, and regulatory history) as well as the client’s needs (refinance, purchase, risk tolerance). Those and other factors need to be taken into account to properly complete a Phase I and provide our clients real value. A properly completed Phase I ESA can avoid thousands, if not hundreds of thousands of dollars in mistakes, unnecessary risk exposures, and regulatory fines.
Many property investors view a Phase I Environmental Site Assessment no differently than they view a title report – just a document to have such that a box can be checked during a commercial real estate closing. I encourage those of you who think that way to reevaluate your perspective.