Red Flags to Look for in a Phase 1 Environmental Site Assessment in Illinois

When purchasing or developing a commercial or industrial property, a Phase 1 Environmental Site Assessment in Illinois (Phase 1 ESA) is a crucial step in mitigating environmental risks. This assessment helps identify potential contamination, regulatory violations, and other issues that could affect property value, future land use, or liability. While a Phase 1 ESA does not involve soil or groundwater testing, it provides a thorough review of historical records, regulatory databases, and site inspections to detect possible environmental concerns.

Failing to recognize red flags in a Phase 1 ESA can lead to unexpected financial and legal burdens down the line. That’s why it’s essential to be aware of common warning signs. Below, we explore the most critical environmental risks that can emerge in a Phase 1 ESA, helping property buyers and developers make informed decisions.

1. Historical Land Use Concerns: Uncovering the Past to Protect the Future

A property’s past can have a lasting impact on its environmental condition. Even if a site appears uncontaminated today, previous land uses might have introduced hazardous materials into the soil or groundwater. Understanding a property’s history is one of the first steps in assessing potential environmental liabilities.

Common High-Risk Land Uses

• Industrial and Manufacturing Facilities – Many older industrial sites housed factories, chemical processing plants, or refineries that may have left behind dangerous pollutants, including heavy metals, solvents, and petroleum hydrocarbons.

• Gas Stations and Auto Repair Shops – Fuel leaks, improper disposal of motor oils, and abandoned underground storage tanks (USTs) are common concerns associated with former fueling stations and auto service centers.

• Dry Cleaning Establishments – Historically, dry cleaners used perchloroethylene (PCE), a toxic solvent that can seep into soil and groundwater, posing a long-term contamination risk.

• Farms and Agricultural Land – Agricultural properties may have residual pesticides, herbicides, or fertilizers in the soil, which could affect future development or require costly remediation.

• Landfills and Dumping Grounds – If a property was used for waste disposal—whether officially or unofficially—there could be subsurface contamination that poses environmental and health risks.

A Phase 1 ESA includes an examination of aerial photographs, fire insurance maps, and property records to uncover potential past uses. If any of these high-risk historical land uses are identified, further investigation through a Phase 2 ESA (which involves soil and groundwater testing) may be necessary to determine the extent of contamination.

While historical land use provides an essential foundation for identifying risks, another common environmental hazard often hidden beneath the surface is the presence of underground storage tanks (USTs). These tanks, particularly those left behind from older fueling stations or industrial facilities, pose a serious contamination threat if they have leaked over time.

2. Underground Storage Tank (UST) Risks: The Hidden Dangers Beneath the Surface

One of the most significant environmental risks uncovered in a Phase 1 Environmental Site Assessment is the presence of underground storage tanks (USTs). These tanks, used to store fuel, chemicals, or other hazardous substances, are particularly problematic if they are abandoned, deteriorated, or leaking.

Key Warning Signs of UST Issues

• Historical Gas Station or Auto-Related Business Presence – If the site previously operated as a fueling station, auto repair shop, or industrial facility, there’s a high likelihood of old USTs being buried underground.

• Unexplained Vent Pipes or Fill Caps – These above-ground structures can indicate the presence of decommissioned or abandoned USTs that may still pose contamination risks.

• Soil Discoloration and Strong Odors – If there are visible stains or a strong petroleum-like smell in certain areas of the property, it could be a sign of leaking fuel from old storage tanks.

• Regulatory Listings – If the site is listed in Illinois state or federal environmental databases for UST-related violations, it’s a red flag that contamination might be present.

If a Phase 1 ESA identifies potential UST issues, further testing through a Phase 2 ESA is often required to assess soil and groundwater contamination.

While USTs are a direct source of contamination, they are not the only environmental hazard to be concerned about. In many cases, past industrial or commercial activities have resulted in soil and groundwater contamination, which can pose serious health risks and impact property value.

3. Soil and Groundwater Contamination: The Silent Threat to Property Safety

Environmental contamination isn’t always visible, but it can have serious consequences for both property owners and future occupants. Contaminants can migrate through soil and water, spreading far beyond their original source and making remediation challenging.

Signs of Potential Soil and Groundwater Contamination

• Visible Sheens or Staining – Dark-colored soil, oily residues, or a rainbow-like sheen on groundwater can indicate petroleum or chemical contamination.

• Unusual Odors – A strong chemical or fuel-like smell in the soil or water can be a red flag that hazardous materials are present.

• Vegetation Damage – Patches of dead or discolored vegetation can indicate subsurface contamination.

• Proximity to High-Risk Sites – Properties near industrial zones, refineries, or known hazardous waste sites are at higher risk for contamination due to pollutant migration.

If contamination is suspected, soil and groundwater testing may be necessary to determine the severity of the issue and whether remediation will be required before development can proceed.

In addition to physical contamination, regulatory compliance issues can also pose significant challenges for property owners. If a site has unresolved violations, non-compliance with environmental laws, or failed remediation efforts, it can lead to costly legal liabilities and delays.

4. Regulatory Non-Compliance Issues: Legal Pitfalls That Can Affect Property Value

A Phase 1 ESA also reviews regulatory compliance history. Unresolved environmental violations or incomplete cleanup efforts can make a property difficult to sell, finance, or develop.

Common Regulatory Issues Identified in a Phase 1 ESA

• Past Violations of Environmental Laws – If a property has been cited for improper hazardous waste handling, illegal dumping, or failure to obtain permits, it may require additional remediation.

• Incomplete Cleanup Efforts – Some properties may have undergone partial remediation, but if contamination is still present, further action may be required.

• Zoning and Land Use Restrictions – Certain environmental conditions may limit how a property can be used, impacting its value and development potential.

Identifying these compliance issues early on can help buyers and developers make informed decisions about the potential risks and costs associated with the property.

Even if a property itself does not have contamination issues, external factors can still pose risks. Nearby hazardous waste sites can influence the environmental condition of a property, impacting its safety and value.

5. Nearby Hazardous Waste Sites: External Risks That Can’t Be Ignored

A property does not exist in isolation. Contaminants from nearby hazardous waste sites, industrial plants, or leaking underground storage tanks can migrate onto an otherwise clean property.

Red Flags Related to Nearby Sites

• Proximity to Superfund or Brownfield Sites – If a property is near a designated environmental cleanup site, there may be risks of contaminant migration.

• Neighboring Fuel Stations or Factories – Leaking USTs or chemical spills from adjacent properties can spread underground.

• Chemical Storage Facilities – Properties near storage or waste disposal facilities may be at higher risk for exposure to hazardous materials.

Understanding nearby environmental hazards is just as important as evaluating the property itself.

Making Informed Decisions

A Phase 1 Environmental Site Assessment provides invaluable insights into potential environmental risks, helping buyers and developers make well-informed decisions. Identifying red flags early can prevent costly remediation, legal liabilities, and future project delays. By paying close attention to historical land use, underground storage tanks, soil contamination, regulatory compliance, and nearby hazardous sites, stakeholders can ensure a smoother and safer property transaction.