Environmental liability risk management
An environmental risk management plan can help safeguard your property from tenant impact.
Also see:
Dry cleaners pose worst of worst environmental risk for property owners
Create an environmental liability risk management program
Manage environmental risk by monitoring tenants' impact on the environment
A small commercial strip center has a variety of small businesses located on the premises anchored by one moderately large retail establishment.
- One of the small tenants is a dry cleaner which began operations in the strip center shortly after it was constructed.
The dry cleaner initially used an apparatus for its cleaning equipment that was not a closed loop system although he did convert to a closed loop design three years later.
As the economy went through its various gyrations, the financial status of the dry cleaner owner also varied. Personal problems severely affected his ability to perform proper maintenance on the equipment in the business.
- Accordingly, the required maintenance on the dry cleaning apparatus was "make do" and done in an improper manner.
When the strip center owners were seeking to refinance their property, the lender required an environmental site assessment. Soil samples were collected from beneath the concrete slab underneath the dry cleaning machine.
- The soil samples indicated that the dry cleaning apparatus had been leaking Perchloroethylene (PCE) solvent.
Before any further progress could be made on the loan, more investigation was required. As the investigation progressed, it became clear that the dry cleaner had been leaking solvents for some time.
- The PCE contamination plume extended for a distance of over 300 feet from the source.
Had
the property owner proactively managed environmental risk by
insisting from the beginning that the dry cleaner maintain
scrupulous care in the management of the equipment and solvents,
this case might never have happened. If, for instance,
the owner had insisted that the dry cleaning apparatus be kept
inside a secondary containment (in addition to that which is
supposedly intrinsic with the apparatus), then small spillage
might have been eliminated.
Five key safeguards for environmental risk management:
- Be sure that tenants are using solvents and chemicals safely.
- Be sure that tenants have taken every safety precaution with their equipment so that in the event of leaks (for example) the property is not impacted.
- Be certain that the tenant complies with all local, state and federal regulations.
- Require that the tenant verify to the property owner that the above items are complete and proper.
- Consider having a qualified environmental auditor conduct brief but complete audits of the property on an occasional basis.
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