$10,000,000 to learn what can happen without an ESA
A massive price to pay for avoiding the relatively minor cost of a Phase I environmental site assessment
A successful business had been operating in a relatively large building for several years. As luck would have it, an opportunity to acquire the adjacent property presented itself. The last business went into bankruptcy.
The successful business owner took advantage of the opportunity to acquire the adjacent property for only the back taxes due, literally a steal considering the apparent value of the property.
The deal closed without an environmental site assessment.
The successful business owner was familiar with the adjacent property as far as his local experience provided but he was not acquainted with uses of the property before he became a neighbor. He did not know the adjacent property had housed several different businesses over the years.
In his haste to commence the transaction and believing that “all there is to know” about the property was known, he closed the deal to buy the property without an environmental site assessment.
What was not known to the successful business owner was the fact that 20 years ago a manufacturer of printed circuit boards had occupied the property. The operators of that business had spilled copious quantities of the chlorinated solvent, Trichloroethylene, as well as various acids and solutions of heavy metals onto the property. In fact, a regulatory agency had issued an order to cleanup the property while the circuit board manufacturer was still operating. However, that order was not heeded.
To make matters worse, the regulatory agency was lax in enforcing the cleanup order.
After the successful business owner acquired the property, the regulatory agency sent a notification that cleanup of the site would have to commence immediately. The new property owner, knowing nothing of the prior history, did not believe that there was a problem.
As time passed, the agency issued another cleanup order that they began to aggressively enforce. The former operators of the offending business were nowhere to be found, having left the country or had died with empty estates, the ultimate escape. The successful business owner was viewed as the “Responsible Party” even though he had done nothing to directly contribute to the contamination that was now over ½ mile south of the subject property as it spread in the water table, a problem that could carry a price tag of over $10 million.
This case study is a prime example of the value of the landowner exemptions provided by the CERCLA Brownfields Amendments. Today, if the business owner rigorously followed the All Appropriate Inquiries – Environmental Site Assessment, Phase 1 Investigation while purchasing the property, he would likely be protected.
