by Robert S. Harris
One of the most challenging types of property to evaluate for environmental risk is the retail shopping mall or small strip center
Dry cleaners use a solvent in the cleaning process called Tetrachloroethylene (also known as Perchloroethylene, or Perc), a significantly toxic chemical. It is particularly obnoxious and difficult to remove from the environment and, over time, it degrades into a potent carcinogen.
Perc is heavier than water; it sinks to the bottom of the body of water it is in.
- Thus, when Perc is spilled or leaks from a dry cleaner operation, it moves into the groundwater and continues to work its way down until it contaminates the deeper aquifers from which wells typically draw their water.
The result is a major contamination situation that may effect many water wells in an area and can cost up to tens of millions of dollars to clean up.
Property owners are ultimately responsible for environmental contamination
Typically, the dry cleaners that created the mess are “Mom & Pop” operations with limited financial resources, if any, to deal with the clean up. Hence, the regulators move on to the next level of responsibility, the property owner.
- It is the property owner who is ultimately responsible for contamination that emanates from his property. While CERCLA provides three specific landowner liability exemptions, only those who rigorously follow the All Appropriate Inquiries Rule prior to purchase are protected.
All Appropriate Inquiries – Environmental Site Assessment, Phase 1 Investigation is essential when purchasing a retail mall or strip center
One of the most challenging types of property to evaluate for environmental liability risk is the retail shopping mall or small strip center, a typical location of dry cleaners – past and present. In fact, these types of commercial entities can be, and are, the most difficult of business properties to evaluate when performing an environmental site assessment. Some of the reasons for this are:
- Small strip centers and shopping malls typically have many different small businesses that move in and out frequently.
- Property managers change on a surprisingly regular basis; on average commercial property managers work with a specific retail property for only about 5 years. New property managers do not usually keep records of tenants that were present on a property prior to their involvement, making it difficult to recreate an accurate history of occupancy.
From this scenario come the following principles:
- When purchasing property that is or has been used for commercial entities, the All Appropriate Inquiries Rule must be rigorously followed for the purchaser to benefit from a liability exemption under CERCLA.
- If environmental risk insurance is available to a property owner, it is likely to be very expensive because of the likelihood of contamination and the cost of remediation.
- Owners of a property with a dry cleaner present in one of the units should closely monitor the tenant or create an environmental liability risk management program that includes a requirement that the dry cleaner use secondary containment to include not only the dry cleaning unit itself, but all of the chemicals and filters that come in contact with the solvent. No secondary containment, or inadequate secondary containment, virtually assures that Perc will contaminate the property. In that event the property owner may well be “taken to the cleaners” himself, facing up to an 8-figure cleanup cost.
Robert S. Harris is president and senior scientist of Harris & Lee Environmental Sciences, LLC, a Santa Rosa, California environmental consulting firm serving the western United States. He holds degrees in chemistry and biochemistry, and has 32 years experience in environmental analytical chemistry and environmental toxicology. Mr. Harris has established and operated large laboratories andhas developed several ground-breaking methodologies for environmental analysis, including the standard method for analysis of polychlorinated biphenyls in water, soils and oils. His firm has saved lending, insurance, real estate and law clients millions of dollars, including conversion of a waste costing $120,000 per month to a usable fuel.