ERAS has been cautioning our clients for over 10 years about the long-term financial dangers and pitfalls of performing random Phase 2 subsurface investigations.  The main problem is the findings from such investigations do not provide useful information and the usual outcome of comprehensive testing for unknown contaminants without identifying specific targets is often disastrous for the real estate. 

Random grid sampling is useful and necessary in some situations; however, random investigations usually detect low concentrations of contaminants and further investigation is usually necessary (an obvious cash cow for environmental consultants). 

There is one Bay Area environmental agency driving this approach for virtually every commercial property and their requirements differ with the approach of all other local and state environmental agencies.  This agency is ignoring the Phase 1 due diligence process that provides the proper justification for subsurface investigations. 

Buyers and owners should be cautious of going the route of random investigations.  ERAS can provide evaluations of proposed work and determine if a focused approach is being followed for your investigation and/or provide a cost estimate for one.

ERAS was invited to present to the Commercial Brokers Association at their monthly meeting on September 19, 2019 at the offices of Key Point Credit Union in Santa Clara.  The subject of the presentation was Phase 1 and Phase 2 Investigations and was designed to discuss why Phase 2 investigations are important and necessary and how the Phase 1 process is used to determine the scope of a Phase 2 investigation.

ERAS is happy to answer your questions about these issues and to present this to your group of financial lenders or brokers.

Phase 2 subsurface investigations are conducted to investigate real property for the presence of contamination from historical, current or sometimes nearby sources of contamination that could affect the property.  It is very important for lenders, brokers and property owners to know that the detection of ANY contamination, regardless of the levels or concentrations are subject to reporting to environmental agencies under the State of California Health and Safety Code.

Regional Water Quality Control Board (RWQCB) Environmental Screening Levels (ESLs) are NOT to be used to determine the reporting requirements for unauthorized releases of contamination.  ESLs are derived from the concentrations of individual contaminants that pose a risk to various human and environmental receptors, based on scientific risk-based studies.  Phase 2 subsurface investigations should be carefully considered prior to their commencement since the detection of contamination must be reported, an act that could lead to significant consequences to the value of property.

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