The ultimate responsibility for compliance with environmental laws and regulations rests with the property owner. Protect yourself with an environmental liability management program
While the CERCLA Brownfields Amendments provides three specific landowner environmental liability exemptions, only those who rigorously follow the All Appropriate Inquiries Rule (AAI) prior to purchase are protected. However, these exemptions do not protect a property owner from environmental liability for damage that occurs during his tenure as owner.
When private property is contaminated or damaged, the ultimate responsibility for compliance with environmental laws and regulations rests with the property owner.
A property may be “clean” when purchased, but the owner must ensure that current uses, by employees, tenants, or even the owner himself, do not create environmental liability that could require costly cleanups and/or reduce the value of the property.
What practical steps can a property owner take to achieve confidence that his property is environmentally safe–without taking actions that could be construed as direct involvement in a tenant’s business management?
Develop an environmental liability risk management program
Property owners who actively manage risk associated with environmental liability can help protect the value of leased and owner-occupied properties and ensure compliance with federal and state environmental regulations.
The objectives of this program should be to identify any potentially environmental damaging processes conducted on the property and help the owner or tenant mitigate such situations before problems occur.
An effective environmental liability risk management program has three parts:
- New-Tenant Assessment. Prior to lease development, evaluate the facility, review relevant processes, conduct an investigation looking for past environmental hazard violations, and identify issues for specification in the lease.
- Existing-Tenant Monitoring. To ensure ongoing compliance with lease agreements and environmental regulations, visit tenant facilities on a timely basis. The frequency of visits depends on results of the initial assessment.
- Exiting-Tenant Assessment. Prior to lease termination, visit the facility to verify the tenant’s lack of impact on the building and environs.
Owner/landlords and developers of commercial and industrial properties find such an environmental liability risk management program an asset in protecting their investments.
Financial institutions making loans on commercial/industrial properties recognize that owners using an environmental liability management program are serious about preserving property values. In some cases, this alleviates a large concern about commercial/industrial real estate financing and can result in a better loan package with the lending institution.
Law firms charged with writing lease agreements use the environmental liability management program to obtain scientific, regulation-based guidelines for tenant property use to include in the lease.
Tenants also benefit from environmental liability management because the program monitors for practices that are technically substandard, helping them avoid the liabilities inherent to contaminating a property and/or to not reporting the release or use of a hazardous substance.
Harris & Lee Environmental Sciences, LLC offers an environmental liability risk management program designed for owners of single- and multiple-tenant commercial and/or industrial properties. We created the program to assist owners and tenants in avoiding property endangerment and its associated legal responsibilities and costs.
We have extensive experience working with and coordinating efforts among property owners, attorneys, insurance companies, and financial institutions, with the goal of protecting investments by recommending efficient, scientifically sound business practices and procedures that meet regulatory requirements and limit environmental liability for other’s acts. For details on the Harris & Lee Environmental Sciences, LLC Environmental Liability Risk Management Program please email us.