ERAS personnel have been performing Phase 1 and Phase 2 Environmental Site Assessments (ESA) since

The purpose of an ESA is to determine the financial risk to owners and lenders to real property based on current, historical and off-site sources of contamination. A secondary purpose is to determine whether additional investigation including Phase 2 investigation is necessary.

It is ERAS philosophy that ESA projects should include all the proper prior planning and complete and appropriate research. Scientific reasoning should be utilized to evaluate the information to assess and document the environmental risks.

ERAS mission is to provide buyers and sellers with conclusions and recommendations that are based on the research, grounded in proper use of the ASTM standards, legally defensible and understandable to the reader. Thus ERAS work will leave no doubt as to why a Phase 2 investigation is or is not necessary.

Key Conclusion: Environmental database radius reports are a tool used by environmental professionals (EP) to evaluate risk to a subject Property. It is up to the EP to decide which databases and which sites are important for a Property assessment.

Environmental database radius reports are ordered from outside companies for typical ASTM due diligence projects. These reports are a tool that is used by the environmental professional (EP) to evaluate risk of off-site sources of contamination to the subject Property. Thus it is up to the EP to interpret the databases and decide which listings require additional evaluation, based on risk to the Property

Current commercially available database reports include a large number of supplemental and proprietary databases. Many of these databases include sites that are duplicate listings of sites in other databases, are lists of sites based on keywords that have them unnecessarily listed as potential risks and on databases indicating the routine and proper use of hazardous materials. Often the Property and many adjacent and nearby sites are found on these exhaustive listings.

ERAS has determined the database sites that are considered to pose the greatest threat to a subject Property, these are listed in our reports and are also at the top of the database listings on the database radius reports. As a normal method of operation, ERAS evaluates ALL the databases on the database radius reports to assess whether sites on supplemental or other databases could pose a threat that warrants further research or other action but does not list repeated or unnecessary sites to pad the report

Recommendation - Users of Phase 1 reports should be extremely cautious of recommendations for additional work based solely on the listings of the databases.

Key Conclusions: Years of under funding of state and local agencies has taken a toll on conducting business involving environmental agencies. Even collection of increasing fees for labor costs of environmental regulatory agencies does not seem to be helping expedite some projects.

Some of ERAS clients have been experiencing significant delays in the time it takes for an environmental regulatory agency to complete a review.

Over 5 years of significant budget deficits and staffing cuts, furloughs and funding cuts in California have taken their toll at environmental regulatory agencies from the local city level to the state level.

Most of the state and local agencies have implemented fee structures and in some cases raised their fees for case oversight. Others have limited file review appointments. Management has requested that their employees prioritize their caseloads to favor sites with better revenue streams. New leak cases must be formally accepted through a review process and existing leak cases are subject to legal agreements for cost recovery by the agencies.

Even when the site is listed as an active case there are sometimes delays due to lack of sufficient personnel. Some agencies have not been able to hire more workers or replace workers who leave.

ERAS has long experience working with many agencies in the San Francisco Bay Area and elsewhere in California and will to attempt to expedite turnaround. We recommend that sites that have requirements for regulatory oversight be identified as soon as possible. Sites that may be subject to Cost Recovery Agreements should be identified as soon as possible.

In the current regulatory environment, ERAS recommends that extra time and budget be allocated to resolve outstanding environmental issues if the Property is involved or could become involved with the environmental regulatory agencies.

ERAS also recommends the owners of Property carefully consider the implications of performing any Phase 2 work that could tie the Property up with regulatory agencies.


In 2002, the Environmental Protection Agency (EPA) passed The Small Business Liability Relief and Brownfields Revitalization Act (“Brownfields Amendments). This legislation amended the CERCLA (Superfund) regulation and provides statutory protection to bona fide prospective purchasers, contiguous landowners and innocent landowners.

The legislation provides new Federal (Superfund) exemptions to liability for two very important categories of entities.

The first exemption to liability is the Prospective Purchaser exemption. To qualify for this, the buyer must not have any other liability for pollution at the Property. To qualify the owner must not impede the response action or natural resource restoration. The pollution must have occurred before purchase, the person made “all appropriate inquiry” into the previous ownership and uses, the person cooperated with cleanup, institutional controls, and the personis not liable or affiliated with any person that is potentially liable.

The second exemption is for Contiguous Landowners: owners of land that is “contiguous to or otherwise similarly situated with respect to” land not owned by that person and that is or may be contaminated by pollution that has migrated from the contiguous property. The contiguous land owner must document that they did not cause or contribute to the pollution, is not potentially liable or affiliated with any other person that is potentially liable, took reasonable steps to stop or prevent pollution and fully cooperates with and gives access to those authorized to conduct cleanups.

How does this help us?

  1. the legislation basically precludes federal enforcement against property that has been cleaned up in accordance with state law
  2. the EPA will provide “comfort letters” that name the contiguous landowners or prospective purchasers
  3. the legislation specifically refers to the Phase 1 Environmental Site Assessment ASTM standard for conducting appropriate inquiry.
  4. The Brownfields Amendments provide significant legal protection for owners, buyers and lenders.

ERAS has recently been involved with an EPA site where a comfort letter was issued that allowed SBA financing.

ERAS can discuss these issues and a variety of agency comfort letters with you. ERAS has almost 15 years experience in conducting Phase 1 Environmental Site Assessments for appropriate inquiry.

ERAS also has extensive experience in conducting Phase 2 remediation projects at Brownfield sites.

The California Underground Storage Tank Cleanup Fund (USTCF) is a state fund that will provide eligible claimants a grant of up to $ 1,495,000 to investigate and cleanup contamination from leaking Underground Storage Tanks (USTs).

This source of funding can be used by lenders as an assurance that a site will be properly remediated. An active claim can now be transferred to a new owner, allowing the contaminated site to change hands.

ERAS has been successfully involved with recovering funds through the USTCF for active leak sites since 1994.

ERAS submitted a claim for approximately $22,000 following our environmental case closure of the site at 707 West Hedding Street in San Jose, a former paint manufacturing facility.

Recently (April 2001), we submitted a claim for a Hayward site, requesting a reimbursement of approximately $68,000.