Learn about the impact of soil contamination when developing or selling a property, minimizing the risk, and the role of environmental consulting services.
Soil contamination is a major problem for landowners globally. It presents a significant issue when it comes time to sell or develop a property. As a landowner, it is in your interest to do all you can to prevent soil contamination. As a buyer, it is in your interests to complete the necessary due diligence to ensure you are not buying what could be a problem.
What is Soil Contamination?
Soil contamination is the presence of contaminants, usually human-made, at a higher level than would occur naturally and poses a risk to human health.
Although historically, the party that caused the contamination was liable for the damage caused by the contamination, the cost of tracking the offending party was cost-prohibitive, resulting in a policy change. Since 1986 and the reauthorization of the Superfund Act in 1986, the burden has shifted to the landowner, whether they caused the contamination or not. It has been accepted in some jurisdictions that the legislative change was overly onerous. As a result, some states have limited the liability and established maximum limits regarding remedial costs.
Despite the limitations on the landowner’s liability in certain instances, it is important to bear in mind that there are potential personal injury and property damage claims in tort that they remain liable for.
Notwithstanding this, the flow-on effect from this change has impacted the real estate industry, legal industry, and the buyers and sellers of property across the US. It also emphasized the importance of environmental consultants and amplified their role when a property is changing hands.
Contrary to popular belief, the properties that are most likely to have contamination issues are the sites of previous gas stations, paint shops, auto repair shops, and dry cleaners. Sites of previous landfills and the neighboring properties are also potential sites of contamination.
The Comprehensive Environmental Response, Compensation, and Liability Act, also known as Superfund, may, in some circumstances, offer bona fide purchasers some limited protection where they have undertaken comprehensive due diligence, and there is pre-existing contamination.
The Importance of Due Diligence
Due diligence in the purchase of real estate is essential. It is the process of taking reasonable steps to assess the risks associated with the purchase of a property.
When purchasing a property, the minimum recommended assessment would be an ASTM Phase I Environmental Site Assessment, which entails evaluating the historical activities there and basic site reconnaissance. This is the minimum requirement if a person is to qualify for the innocent landowner defense should the land be contaminated and the remediation cost claimed against them. A Phase I assessment will generally be agreed upon as a condition of an agreement for the sale and purchase of a property.
A typical environmental assessment done by licensed and certified environmental consultants, as part of the due diligence for property purchase would usually entail:
- Investigating whether there has been any known or historical soil or water contamination on the property;
- Investigating any potential sources of contamination from neighboring properties and the likelihood of it affecting the property;
- Investigating the risk of soil vapors entering onsite buildings whether from the site or neighboring sites;
- Investigating the presence of hazardous material in buildings such as asbestos or lead-based paints; and
- Ensuring compliance with environmental regulations.
Where issues are identified during the Phase I investigation, the potential investigators will likely want to complete a Phase II investigation. A Phase II investigation typically involves taking samples of soil and groundwater and confirming contamination and the extent of that contamination. There is potential for discord between the purchaser and seller if the agreement does not expressly address this point. However, ultimately the seller must understand the extent of any issues, so should not acquiesce on this issue.
For property developers, there are additional considerations that they should incorporate into any assessment for soil contamination. For example, the assessment should include whether threatened or endangered species are present on the property and the wetlands.
Role of Environmental Consulting Services
Environmental Consultants generally cover four key areas concerning soil contamination:
- Phase I Environmental Site Assessment: Investigates historical and current use to determine potential hazards such as soil contamination.
- Phase II Sub Service Investigation: Assessment of site for soil contamination, including soil groundwater testing. A Phase I assessment is required when recognizable environmental conditions are recognized during the Part I assessment.
- CCDD Soil testing: Certifications for clean construction and demolition debris are provided by environmental consultants following appropriate investigations.
- Underground Storage Tank Assessment: Test to ensure integrity is maintained and contaminants are not leaching into the soil and causing contamination.
Contamination and the Purchase or Development Process
The presence of contamination does not necessarily mean the termination of an agreement for sale and purchase. Instead, it may lead to negotiations regarding the conditions of purchase and price. As a purchaser or developer, it is essential that you receive good advice regarding the cleanup costs and the extent of any liabilities you may be taking on. A competent attorney and environmental consultant are essential in this process to ensure the advice received are accurate and appropriate.
Guaranteed fixed price remediation, whereby a company agrees to undertake the remediation work for a set price, is another option that can reassure parties when negotiating an agreement where there is contamination onsite.
Soil contamination is a serious issue, and the costs of remedial work can run into the millions in some instances. It is, therefore, essential if you are considering purchasing property that you do all that you can to ensure you do end up bearing the brunt of someone else’s action, or inaction, as the case may be. That said, contamination doesn’t have to be a nail in the coffin of a property purchase or development. As a certified and licensed team of professionals, Midwest Environmental Consulting Services has over 35 years of experience. Our team includes professionals with diverse backgrounds including; engineering, science, safety, industrial hygiene, construction, and geology. We diligently meet every client’s project goal while following appropriate federal and state guidelines. Give us a call today, we will be there every step of the way.