ENVIRONMENTAL SITE ASSESSMENT FOR LEASED BUILDING

Q: We are consolidating several plants into one location in order to improve our efficiencies and better serve our customers. At this time we plan to lease with an option to purchase in the future. We have visited several potential sites. We have never done this before and are concerned about environmental liability. Is a phase 1 environmental site assessment required? Also, just based upon our review of the best potential site, there is visible mold growth throughout the office areas and it exhibits a very musty odor; the owner says he will take care of it, but I am concerned about the health of our employees in the future. Can you provide some guidance? G.K.

 

A: The phase 1 environmental site assessment you are referring to is the E1527-05 Standard Practice for Environmental Site Assessments: Phase 1 Environmental Site Assessment Process published by ASTM International (www.ASTM.org); this standard includes the standards and practices for All Appropriate Inquiries (AAI) as required by the U.S. Environmental Protection Agency. Since you are leasing the building and property, there is no requirement to perform this environment assessment; however, in order to protect you in case of future action by regulatory agencies and/or the owner, we strongly recommend to our clients in similar situations to perform at least an abbreviated version of the above environmental site assessment. We call it an environmental site review. The purpose of this environmental site review is to establish existing conditions, bring them to the attention of the owner, negotiate their remediation as condition of lease, and, if not remediated, document that the condition existed before you began operations at the site.

Again, the environmental site review of the leased facility does not have to meet the above standard, but certain elements of the standard will enable you to adequately document site conditions. We always conduct a site visit and a database search. The database search is useful to determine the site and surrounding properties’ current and historical usage and environmental status. This type of information is valuable in determining if there have been any reported spills or releases of hazardous wastes or chemicals, soil contamination, groundwater contamination, and long-forgotten underground storage tanks that had been removed but have incomplete closure. There are several companies that can provide these database searches at reasonable prices with turnaround times in as little as 24 hr, sometimes even quicker.

The key is to protect yourself from becoming responsible for actions by prior owners or tenants. Some years ago, a client was forced to pay for an expensive cleanup of oil contaminated soils along a streambank at a leased warehouse because they lacked documentation (other than hearsay) that it existed before they began using the facility; it is now their corporate policy that an environmental review, including photographs, is performed on any building and/or property BEFORE a lease or rental agreement is signed.

As for the mold you observed in the office areas, I agree with you that this is an issue that must be resolved. There are thousands of molds in our environment; most are fairly harmless, many can cause illness, and some are deadly. Unless this is completely resolved, I would consider it a deal breaker. Since this facility is your “best potential site” and to make sure actions are taken in your best interests, my recommendation is two fold.

First, engage a professional engineer to evaluate the roof, building, foundation, and drainage in the area of the office in order to determine the source of the water that is allowing the mold to grow so aggressively and how to correct the situation. Typically, we have found roof repair, repaired water supply and drain pipes, and/or improved drainage around the building’s exterior wall to be solutions. Even if the owner agrees to tear out all of the moldy material and replace with new, the mold will reappear if the water source is not stopped.

Second, hire a certified mold inspector to thoroughly evaluate the office area and its HVAC system in order to determine the extent of mold contamination through visual inspection, sampling and analysis; then utilize the report and recommendation as the basis to negotiate an acceptable remediation with the building’s owner. Also, consider bringing this person back for a followup inspection after remediation has been completed to verify that it has been successfully completed.
As you prepare to move into the facility, do not forget about the environmental permits, plans and notifications that may also be required for your operations regarding air pollution, wastewater discharge, industrial storm water, oil pollution prevention, hazardous waste generation and hazardous chemicals—community right-to-know.