NYC OER To Issue Environmental Review and Assessment (ERA) letters

One of the key challenges facing purchasers of contaminated property is that the Bona Fide Prospective Purchaser, Contiguous Property Owner and Innocent Purchaser liability protections that are available under the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA or Superfund) and similar state laws are self implementing. While EPA may occasionally enter into a prospective purchaser agreement or issue a comfort letter, EPA and state environmental agencies do not have the resources to routinely review the thousands of phase 1 reports generated annually in commercial real estate or financing transactions. Thus, purchasers will not know if they have qualified for one of these defenses until a court ruling after the purchaser has been sued or a defendants files a counterclaim in a contribution claim filed by the purchaser .

There is one significant exception to this practice. The New York City Office of Environmental Remediation (OER) recently announced that it would issuing Environmental Review and Assessment (ERA) letters here the presence contamination may complicate at real estate or financing transaction. OER will issue ERA letter where it determines that existing conditions at a property are protective of public health. OER does not anticipate issuing where contamination requires further action beyond that contemplated under the transaction to render a property protective for its intended use.

To an ERA letter, a party will meet with OER to discuss the nature of the transaction, prior and current site uses and operational history of the property, the proposed development, known site contamination, and how the ERA letter will facilitate the transaction.  As part of the process, OER will review available data on the property, including a Phase I and all Phase II reports, and compare the identified contamination against the state cleanup standards found at 6 NYCRR § 375 to determine if  the existing or proposed property conditions are protective of the property’s future use. If as a result of this review OER determines further environmental investigation or remedial action is warranted, OER will consider issuing an ERA letter to identify those additional studies and remedial actions if requested by both parties

The fee for the ERA letter is $3500.

For an earlier discussion about OER’s authority to issue comfort letters, click here


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