When buying a piece of land, it’s important to know what was there before you entered the scene. Why? Believe it or not, you could be held liable for a contamination that existed on the property prior to your purchase that you didn’t cause. Long story short, you don’t want to be hit with fines and penalties for the presence of a toxic situation. Potential contaminations may not always be obvious. With how fast things change, you can’t assume that environmental regulations were always in place or that substances were always handled properly. In order to protect yourself, it is vital that you avoid surprises by doing your due diligence. One important component of due diligence is discovering which Recognized Environmental Conditions may be present by doing a Phase I ESA.
What are Recognized Environmental Conditions (RECs)?
A REC is a recognized environmental condition. According to the ASTM E 1527-13, it is defined as “the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property.” Basically, a REC is any possible source of contamination. A contamination release can come from improperly functioning hydraulic machinery, improperly contained or disposed chemicals, or a leaking storage tank, to name a few.
For Earth Day, we wanted to take a deeper dive into some of the top RECs and what you can do to protect yourself. Some examples of RECs are:
Underground Storage Tanks (USTs) – A UST is considered to be a tank and its attached piping that has at least 10% of its total volume underground. Federal regulations only apply to UST systems storing either petroleum or certain hazardous substances. USTs are considered a REC because any possible leakage can potentially contaminate soil and groundwater.
Dry Cleaners – Any location that used to house a dry-cleaning business is suspect because of the possible presence of tetrachloroethylene, aka perchloroethylene (PCE) solvent. This is a de-greasing agent that is simply referred to as “dry cleaning fluid”. It is generally slow to break down because it is lipid soluble, and therefore poses a vapor intrusion threat.
Automobile Repair or Salvage Operations – The activities that take place at these businesses involve a plethora of chemical agents such as solvents, petroleum products, metals, motor oils and other fluids. Some specific chemicals to watch out for in case of an environmental release are polychlorinated biphenyls (PCBs), per- and poly-fluoroalkyl substances (PFAS), petroleum hydrocarbons (PHCs), and volatile organic compounds (VOCs). PBCs were banned in the US in 1979 but may be present if operations took place before the ban. PFAS are often used in water- and grease-resistant coatings. PHCs are usually associated with the use of gasoline, diesel, fuel oil, kerosene, lubricants and motor oils. VOCs are often found in solvents, paints, degreasers, lubricants and oils.
Metal Plating Facilities – Facilities that specialize in metal plating utilize toxic substances such as hexavalent chromium, heavy metals, VOCs, solvents and degreasers (including PCE), plating solutions and other hazardous substances. Degreasing of metal parts emits chlorinated hydrocarbons, electroplating releases caustic mists, cyanides, and metals, and painting emits VOCs. These chemicals can be released into air, water, and soil and cause contamination.
Manufacturing Facilities, or Other Heavy Industrial Complexes - Electrical transformers, hydraulic equipment, capacitors, and similar equipment may contain PCBs in hydraulic or dielectric insulating fluids, especially if equipment was manufactured before 1979. Many various activities can utilize petroleum-based materials such as vanishing oil, refrigeration oil, cutting oil, and hydraulic fluid. Heavy metals are often found in leaded fuels, fertilizers, industrial process waste, animal waste and/or coal residues. Any number of other hazardous substances used in industrial operations can compromise the quality of the air, soil, groundwater, and surface water.
What can you do about this?
Get a Phase I from a reputable environmental consulting company. A Phase I is generally required by banks when purchasing any sort of property, and with good reason. A Phase I allows all parties involved to understand exactly what hazards may pose a threat to the environment, by looking at the current and historical use of a property. The Phase I may indicate the need for further action if RECs are identified, such as sampling and testing.
Are you looking into purchasing a property and on the fence about getting a Phase I? Contact PM today to speak with one of our professionals about your next commercial real estate transaction. Click here to contact us or give us a call at 1-800-313-2966.