Commercial Real Estate developers are notoriously impatient. The following story is about a Site Remediation Program (SRP) nightmare we are currently working through.
Buying a Contaminated Property in Chicago, Illinois
We were contacted by a commercial real estate developer who had purchased a former plating facility in a great location to build their next development. The client purchased the property without performing environmental due diligence or completing a Phase I ESA. The client only had a few pages from a previous Phase II Environmental Site Assessment. Purchasing a former gas station property is sometimes easier than a former plating facility. Although both have environmental risk, plating facilities are not as regulated as gas stations and environmental issues are more common.
A REALLY Contaminated Property
This particular commercial property was formerly industrial, and specifically, it was a former electroplating facility. Now, if you’re not in the environmental consulting business, you may not know but electroplating facilities are arguably the worst possible property to own, or to be in the process of buying or selling.
Why?
Glad you asked.
Electroplating facilities are what I call the trifecta of bad. They include the contamination of heavy metals like chromium, copper, nickel, zinc. The poison everybody knows and everyone loves, cyanide. Then there’s PCE & TCE which are de-greasers. These facilities operate with huge vats of these chemicals. They also have very strong acids with which they dissolve the metals. Once they are in solution, they use electricity to make the metal ions stick to the part. These facilities, especially the old ones, are notoriously dirty. Over the last century, electroplating facilities the world over took part in standard practice behaviors which would be considered felony environmental crimes if they happened today.
Let’s take a moment to unpack TCE & PCE. They are used to get oils such as fingerprints off metal parts so the electroplating sticks to the metal part. They are very good at this job. They are also part of a class of chemicals called DNAPL. It stands for Dense Non Aqueous Liquids which is a fancy way of saying when these chemicals are spilled, they head straight down and don’t stop by floating on top of groundwater like oils or fuels like gasoline and diesel. I like to call them “bad juju magumbo”.
Straight to a Phase II ESA
We received the project in the month of March. With no prior Phase I ESA and only 4 pages of an old-old Phase II ESA clearly showing a problem, we
completed a Phase II ESA to confirm the contamination present. The subject property was “Hot” with trichloroethylene (TCE), perchloroethylene (PCE) and hazardous amounts of chromium. The client did not do anything with our findings until September when were told to investigate as much as possible as fast as possible so development could begin before winter. We did our best to delineate the extent of the contamination but ultimately found more contamination.
“Rolling the Dice” on the SRP
We told the client the site was severely impacted and would take more investigation and remediation to meet regulatory agency buy-off in order to obtain a No Further Remediation (NFR) letter. We explained we needed the Illinois Environmental Protection Agency (IEPA) to buy into our action plan and wanted to enroll the property into the Site Remediation Program (SRP). All of this would take time.
The client gave us a hard “No” and said to “roll the dice” with the IEPA and get the report in as fast as possible. We did our best to address the chromium issues with in situ remediation and toss it over to the regulators. We wrote the report as best we could knowing the IEPA would likely deny it and emotionally prepared our client.
IEPA Says “Nope”
Ninety days later, after we submit the report to the SRP we get a denial by the IEPA but the client had already started developing the property. It will be difficult, if not impossible to investigate and remediate with a new development in place.
Lessons Learned?
Sometimes patience and trusting the process will benefit in the long run. Proper due diligence and knowing your environmental concerns as well as the time frame involved to clean the property should be thoroughly discussed with your client so everyone is on the same page and expectations are managed. As an environmental consultant, it can be difficult to predict regulatory agency review times and responses, but they can be fairly well estimated.
When you, your client and the regulatory agency are on the same page, the cleanup process and ultimately the development process will go smoother, faster and possibly under budget.
Listen to your consultant. The consultant will know how to navigate the regulatory agencies and can work within your time and budget constraints. They can assist in providing you with the knowledge you may need to develop your property while managing exposure pathways.
For our part, its really difficult to work with clients who are in a rush. It’s hard to manage their expectations while managing regulatory agency expectations and often the two don’t mesh well. When we start a project it’s unclear where it will ultimately go. We don’t know if the client will be reasonable or not. We don’t know how bad the contamination will be. We don’t know what the regulators will say. But we have over 40 years of combined experience working in the Site Remediation Program and have learned how to manage expectations, provide good customer service and good science.
If you have a SRP Project, give A3 Environmental Consultants a call. We’ll work to get your Environmental issues rectified with the utmost in confidentiality, we’ll meet or exceed your expectations on any sort of commercial or industrial property.
A3 Environmental Consultants can be reached at (888) 210-2357 or by email at Info@A3E.com.
