Phase 1 Environmental Site Assessments, A Checked Box for Lenders or a Valuable Tool for Buyers?



Buyers and sellers of property are familiar with the need to have Phase I Environmental Site Assessments (Phase I ESAs) prepared when there is a transaction or a refinancing of a property.  To most stakeholders, including the buyer, seller, and lender, the Phase I ESA is part of the due diligence checklist, simply a report like a home inspection report, to identify potential environmental concerns with a property.

In the environmental consulting industry, Phase Is are considered “loss leaders,” meaning there is little to no profit to be made conducting the Phase I.  Either the consulting company believes they must offer the service because their competitors offer it, or they believe that a certain percentage of Phase Is will require follow up environmental work because of the likelihood of contamination turned up during the investigation. Because the profit margin on a Phase I is at best slim, it is not uncommon for consultants to use lower paid and generally less experienced staff to conduct much of the Phase I. One side note, there is no project that carries with it more risk for the consulting firm than a Phase I, because if contamination is not identified during the Phase I, but is found later in time, the consultant and its liability provider could be on the hook for damages.

For the lending officer, their goal is to get the loan approved by the internal lending committee so they can get the sales commission. There is stiff competition between banks, and the cost of a Phase I can make a difference in a sale or not.

These dynamics set the stage for the Phase I becoming a commodity in the marketplace, and little thought is given to the value of the Phase I and, conversely, to the risk of having a Phase I completed that does not adhere to ASTM Standard E1527.

So, what is the true value of a Phase I ESA? What is often misunderstood or unknown to Buyers and Lenders is the actual liability protection afforded to potential purchasers by correctly completing a Phase I ESA. This liability protection is known as achieving bona fide prospective purchaser (BFPP) status through the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). People acquiring property, even with known contamination, can obtain BFPP protection if “all-appropriate inquiry” (i.e., completing a Phase I ESA) is completed prior to purchasing the property. The purchaser also must meet continuing obligations regarding any known or suspected contamination, including taking reasonable steps to stop any continuing release, preventing a future release of hazardous substances, ensuring property occupants are not being exposed to contamination, and there is not a threat of exposure to off-property persons. Obtaining BFPP protection can prove financially invaluable to the property owner or tenant, potentially saving hundreds of thousands or even millions in cleanup cost responsibility. Property owners without BFPP protection that did not contribute to or cause contamination at a property can still be held liable for cleanup costs by state and/or federal environmental regulators.

The Phase I ESA is a complex document that must be completed in its entirety to afford the prospective purchaser BFPP. Minor details that are often missed in Phase Is can result in a court rejecting a BFPP claim for a property owner. These minor details include but are not limited to not listing the exact purchasing entity as having reliance on the report, the prospective purchaser not completing the required questionnaire, and having an expired Phase I at the time of closing. This last point is especially important as we hear many parties state that they don’t need a Phase I ESA, as there was one previously completed for the property. The truth is that environmental standards change, and what may have been acceptable several years ago may constitute an environmental concern under today’s environmental regulations. Unless the exact prospective purchasing entity is listed as having reliance in the Phase I ESA and the report is under 180 days old, the Phase I is likely not valid for BFPP purposes. Additionally, it should be noted that the 180-day window for Phase I ESAs is from the date the first record is reviewed by the report preparer, not the date the report was issued.

Baseball great Leo Durocher once said that baseball is a game that many attend, but few understand. This can absolutely be applied to the world of environmental due diligence and Phase I ESAs. There are many environmental companies who claim to complete Phase I ESAs, but their product often will not afford the purchaser BFPP, even if it was completed prior to the property purchase. It’s the nuances that make the difference in the world of environmental due diligence. If you have questions or a need for environmental due diligence of Phase I ESA services, EnviroForensics would be happy to discuss your situation and, if appropriate, prepare a complete Phase I ESA that will provide liability protection and peace of mind for you and your business.

Disclaimer: Some states do not accept BFPP status as absolute liability protection.  We are not lawyers and cannot give legal advice; as such, all Buyers should consult with qualified legal counsel when buying property.

Contact us with your questions about real estate due diligence.

As seen in Cleaner & Launderer

Steve Henshaw, PG, CEO

With 30+ years of experience, Stephen Henshaw holds professional registrations in numerous states. As Officer of EnviroForensics, Henshaw serves as a client manager and technical manager on complex projects involving contaminated and derelict properties, creative litigation, deceased land owners, tax liens, non-performing bank notes, resurrecting defunct companies, and cost recovery. Henshaw’s expertise includes a comprehensive understanding of past and current industry and waste handling practices and the fate and transport of chlorinated solvents in soil and groundwater. He has served as a testifying expert for plaintiffs and defendants on high-profile cases involving causation and timing of releases, contaminant dispersion, allocation, damages, past costs, and closure estimates. He has a strong knowledge of state and federal regulations, insurance law, RCRA, and CERCLA. He has managed several hundred projects, including landfills, solvent and petroleum refineries, foundries, metal plating shops, food processors, dry cleaners, wood treating facilities, chemical distribution facilities, aerospace manufacturing facilities, and transporters and provides strategy instrumental in funding projects and moving them to closure.

Casey McFall, CHMM, Director of Real Estate Due Diligence

Casey McFall is the Director of Commercial Real Estate Services and a Certified Hazardous Materials Manager with 15+ years of experience as an environmental consultant. He has managed numerous petroleum and chlorinated solvent projects throughout various stages of investigation, remediation, and closure. His professional experience includes all areas of project management, due diligence, reporting, and regulatory negotiation. He has experience managing projects in Alaska, California, Georgia, Indiana, Kentucky, Ohio, South Carolina, Wisconsin, and Washington. Casey also has experience acting as an environmental liaison for municipalities, offering expert advice regarding environmental issues and providing risk communication to stakeholders and the community by explaining complex environmental issues in a concise, understandable way.

EnviroForensics to Present Research Findings at Battelle Chlorinated Conference 2022


Three EnviroForensics scientists will present the results of their current research projects at this year’s Battelle International Conference on Remediation of Chlorinated and Recalcitrant Compounds. The conference is considered the signature forum for the environmental remediation industry and will feature the largest technical program to date with over 1,300 platform and poster presentations on the schedule.

“Scientific innovation and excellence form the foundation of our environmental remediation service lines. A mainstay of scientific work is peer review, and Battelle’s 2022 Chlorinated Conference gives us the opportunity to share what we have learned and receive valuable feedback from the remediation community,” said EnviroForensics President, Jeff Carnahan. “We believe that our application of cutting-edge environmental investigation and remediation approaches keeps our clients at the top of the list of regulated closures each year, particularly at chlorinated solvent sites. We are excited to collaborate and learn at the Chlorinated Conference this year.”

This year’s presentations by R. Scott Powell (PE, LPG), Brian Kappen (LPG), and Michele Murday Pariso (Project Geologist), cover current remediation topics like the study of dilution to improve injection-based remedial treatment, targeted soil excavation with a passively dispersed reductive amendment in a source area over fractured bedrock, and the use of horizontal colloidal activated carbon permeable reactive barriers to control vertical mass loading into a sandstone aquifer. Read our summaries below.

EnviroForensics designed and directed implementation of in-situ treatment of solvent contamination at a former drycleaning facility in Northwest Indiana. The remedial approach consisted of source area reagent injections and installation of a permeable reactive barrier (PRB). The Site logistics played an important role in this plan, as a down-gradient right-of-way provided a buffer zone between the site and off-site properties that allowed for the limited migration of the diluted source area DNAPL after the first injection event. Following a second injection event in 2021, groundwater monitoring data indicate a substantial reduction of the remaining source area mass, and no breakthrough of contamination has been detected beyond the down-gradient PRB.

Extensive remediation was needed at a site in Northeast Indiana with high concentrations of tetrachloroethene (PCE) source material located directly over fractured bedrock. This contaminant mass was leaching directly into unconsolidated and bedrock groundwater, resulting in an elevated dissolved phase plume that migrated offsite. A multi-faceted (and costly) remedial approach would be needed to reduce both the vadose zone source area contaminant mass and the dissolved phase contaminant mass within the bedrock fractures.

Soil excavation was selected as a cost-effective remedial option to remove the source area vadose soils overlying the fractured bedrock, but excavation of deeper saturated soils and fractured bedrock was not a feasible or cost-effective option. Therefore, a soil reagent was applied to the bottom of the excavation by specialized methods prior to backfilling to promote 1) abiotic degradation within residual saturated soils and bedrock interface impacts, and 2) enhanced reductive dechlorination (ERD) in the natural groundwater environment for prolonged dissolved phase contaminant mass reduction. The effectiveness the remedial approach has been demonstrated through enhanced reducing conditions, PCE breakdown products, and abiotic markers in groundwater samples collected to date, with additional groundwater monitoring to continue during 2022.

A novel approach for reducing mass loading of chlorinated volatile organic compounds (CVOCs) to a sandstone aquifer was implemented at a site in Southern Wisconsin. Glacially-deposited material and a fractured dolomite unit overly a sandstone unit, creating a complex hydrogeological system. The CVOCs moved vertically through the unsaturated overburden into the dolomite, spreading through it and migrating into the sandstone. These conditions formed a 30,000 square feet area of contaminant mass loading, resulting in a mile-long CVOC plume in groundwater.

Direct treatment of contamination in the dolomite would not be effective due to the clay-filled fracture network. Rather, a horizontally-oriented colloidal activated carbon (CAC) permeable reactive barrier (PRB) was applied to remove contaminants from the dissolved phase and reduce the vertical migration of CVOCs into the sandstone. Nearly 100,000 gallons of CAC mixture were injected via a network of 21 specially designed and positioned injections points to form the horizontal PRB. Post-application monitoring has demonstrated reduced CVOC mass loading to the aquifer, and compound-specific isotope analysis (CSIA) of groundwater samples indicates that CVOC biodegradation will continue to occur in the absence of any further remedy. Based on these results, the overseeing agency has agreed that the site is ready for regulatory closure.

These and over 1,000 other posters and presentations will be on display at the Twelfth International Conference on Remediation of Chlorinated and Recalcitrant Compounds in Palm Springs, California, which runs from May 22-26.

Learn more about our innovative environmental investigation and remediation capabilities.


Michele Murday Pariso, Northwest Indiana Branch Manager
Michele Murday has more than nine years of experience in environmental consulting with a focus in investigation and remediation projects involving dry cleaners, lead, and petroleum impacts. Michele has been responsible for the management of numerous projects throughout various stages of investigation, remediation, and closure ranging from $1,000 to $5,000,000. Michele has directed numerous subsurface investigations of varying size and employed a variety of remedial technologies, including soil excavation, multi-phase extraction systems, vapor mitigation, soil mixing, and chemical injections. Michele’s experience includes data analysis and interpretation, reporting on all phases of projects from investigations through closure, preparing 3D site visualizations, proposal scoping, project management, due diligence research, and risk communication. She has also worked closely with clients, subcontractors, and municipalities, as well as state and federal regulators.

Scott Powell, PE, LPG, Senior Project Manager
R. Scott Powell has 20+ years of environmental consulting experience. Powell’s expertise covers a wide variety of projects ranging from due diligence, petroleum, hazardous material remediation, asbestos, lead-based paint, to remedial systems. He manages complex relationships and fosters cohesive involvement of PRPs on multiple sites with co-mingled contaminant plumes requiring the implementation of remedial solutions for chlorinated solvents, hazardous materials, and petroleum hydrocarbon impacts. Powell manages negotiations with state and federal regulatory agencies and provides litigation support in matters concerning environmental issues. Powell has been responsible for the overall management and administration of environmental projects ranging from $1,000 to $3,300,000.

Brian Kappen, PG, Senior Geologist, Project Manager
Brian Kappen has 15+ years of experience in environmental consulting with a focus on contaminated site management. His diversified professional experience includes research, proposal scoping and budgeting, preparation of work plans and reports, project management, geologic and hydrogeologic data collection, vapor intrusion assessments, data analysis and interpretation, remedial action evaluation, and implementation of remedial actions. Kappen has served in supporting and management roles on numerous investigation and remediation projects regulated by state, RCRA and CERCLA programs, primarily involving chlorinated solvent impacts. Kappen has also been involved with several Phase I and Phase II environmental site assessments and served as a field team leader for a comprehensive two-year environmental baseline study at a remote mine prospect in Michigan.

Are PFAS a Drycleaning Problem?



If you have not heard of Perfluorooctanoic Acid (PFOA), Perfluorooctyl Sulfonate (PFOS) and other perfluoroalkyl substances (PFAS) yet, you will soon. For brevity, we will refer to these groups generically as PFAS plural. PFAS are a broad group of chemicals widely used in manufacturing and found widespread in the environment. The 2019 movie Dark Waters starring Mark Ruffalo and Anne Hathaway featured one of the first and highest-profile lawsuits regarding PFAS. PFAS are emerging contaminants that the United States Environmental Protection Agency (USEPA) is attempting to regulate. Some states like Michigan, Wisconsin, Florida, and New Jersey have gotten out in front of the USEPA and have established state regulatory limits for a small number of the more commonly used compounds.  

First, the “what”: PFAS are part of a broad chemical group first developed in the 1940s. Since then, manufacturers have introduced over 4,000 PFAS compounds into the production of consumer goods both as primary and secondary components. Some of these compounds are being phased out due to toxicity concerns; however, manufacturers are developing new fluorinated compounds like Gen X and ADONA to replace them. Many PFAS are banned from use and import in manufactured goods in the United States. 

Well known for their unique chemical properties, PFAS repel oil and water and resist temperature, chemicals, and fire. These are the attributes that make PFAS attractive and are why so many durable industrial and everyday products like non-stick surfaces, firefighting foam as a flame retardant, stain resistant fabrics, water repellent coatings, and plating demisters contain PFAS. 

The chemistry is complex because PFAS are not one chemical compound; they are a class of chemical compounds that share the common carbon-fluorine bond. The carbon to fluorine bond is one of the strongest bonds in organic chemistry, making PFAS compounds particularly resistant to degradation and therefore cleanup. Since they do not break down and they have widespread use, they are being found everywhere in the environment.   

The USEPA advisories in the May 25, The USEPA first announced PFAS health advisories in the May 25, 2016 Federal Register. Since then, numerous updates and significant research has been published by USEPA, State Agencies, and private researchers. After which, State regulatory agencies began pushing primary and secondary industries into investigate for PFAS. To date, most of the investigations and cleanups have centered on both the manufacturers of PFAS compounds and military airports. The three general sources of PFAS impact on the environment include:    

  • Primary: Manufactures of PFAS Compounds  
  • Secondary: Manufactures of Items with PFAS or direct use of PFAS compounds  
  • Tertiary: Use/Disposal of PFAS containing products  

The manufacturers of the PFAS compounds generally include the large chemical manufacturers that have been the subject of much regulatory scrutiny and private litigation. The secondary group includes all the industrial and commercial processes that directly applied these chemicals to products or processed materials previously coated. Dry cleaners that offered the application of stain-resistant coatings containing PFAS fall within this second group but also fall within the third group.    

The third group is comprised of all consumer and commercial use and disposal of PFAS treated products. The potential for PFAS impacts to the environment from this third group is probably least understood. This third group is where dry cleaning may have its most significant exposure for PFAS impacts since dry cleaning byproducts (spent solvent, lint, still bottoms, etc.) have had contact with PFAS containing textiles.  

We know historically dry cleaners accidentally released solvents to the environment, but how much PFAS were in these spent solvents? Studies from Toronto University have shown fast fashion items contain high levels of PFAS and other contaminants at levels that cannot be coincidental. When these PFAS laden clothes are washed, PFAS can accumulate in the various waste streams and mechanical vents at dry cleaners. Additional studies show that cosmetics also contain high levels of PFAS. Clothing with cosmetics stains may also contribute to low level accumulation of PFAS in facilities that would concentrate wastes. That is to say, dry cleaners, through filtration processes, concentrate PFAS, which may then enter the environment incidentally near waste storage and vent discharge points at dry cleaning and laundry facilities.   

Learn more about testing for PFAS and the available remediation methods  

The Florida PFAS study evaluated both virgin and spent dry cleaning products from seven (7) Florida dry cleaning facilities. Virgin cleaning products at two of the seven facilities contained detectable concentrations of PFAS. One facility had a small detection of PFAS in a dry-cleaning machine cleaner and the other facility had a more substantial detection in a virgin petroleum-based solvent mixed with soap. Some virgin dry cleaning products do contain PFAS. The take-away message for you is to ask your chemical supplier for details on what is in your incoming products.   

PFAS were detected in dry cleaning wastes (spent solvents, solids, filters) in six out of seven of the facilities tested. PFAS compounds on treated fabrics clearly come off the fabrics during the cleaning process and are concentrated in the resultant waste products. Although use of some of these compounds have been phased out years ago, you can probably expect to see this continue for a while.   

The Florida study went even further and evaluated PFAS in virgin and spent products from seven wet laundry facilities. One out of four laundry detergents contained PFAS at relatively low levels. However, PFAS were detected in every wastewater discharge sample analyzed.   PFAS clearly come from treated clothing even during a wet laundry process, although to a lesser extent than from dry cleaning. One interesting finding of the study that speaks to the ubiquitous nature of PFAS is that they were detected at low concentrations in the incoming potable water at most of these facilities.   

In the Florida study, ten sites with known dry cleaning solvent contamination (chlorinated and petroleum based) were evaluated. Eight of these sites had undergone some level of remediation. Samples of soil and groundwater were collected and submitted for analytical testing for 28 PFAS and GenX compounds. PFAS compounds were detected in groundwater at all ten sites. While the presence of PFAS seemed to correlate to the presence of PCE there was little correlation between concentrations of PFAS and PCE. This is likely due to how these compounds behave in the environment.  

The study did identify four sites where it appears there was PFAS entering the site from an off-site source. Again, given PFAS widespread use and their propensity to not degrade, this is not entirely unexpected. However, even at these four sites, there was evidence of PFAS contribution due to the releases of dry cleaning products.   

Similar results were seen in soil samples collected and submitted for laboratory analysis.  Although all the soil sample detections were below levels deemed safe by Florida for direct exposure, they were above levels that have the potential to impact groundwater above safe levels.   

Dry cleaners inadvertently introduce PFAS compounds through the chemicals they use. Going forward it’s important that dry cleaners document the PFAS content of incoming chemicals from your suppliers and if possible avoid PFAS containing products. What is clear is that the dry cleaning process itself introduces PFAS into your waste streams by extracting them off of the stain-resistant garments. How big of a problem this will be for the dry cleaning industry is unknown as the science and regulatory framework surrounding PFAS is evolving.   

Should someone ask you to sample for PFAS compounds at your site, what should your response be? First and foremost, your response should be a cautious one made with input from a qualified consultant and potentially legal counsel. It should be clear under what authority the demand is being made and what some of the ramifications might be should PFAS be found on your property. If the decision is made to proceed, you will want to consider:  

  1. What PFAS compounds am I being asked to sample for? 
  2. What analytical methods will be acceptable to the entity asking for these results? 
  3. To what criteria will the results be compared to? 
  4. Are there other sources of PFAS surrounding my property? 
  5. Will my consultant control the accidental introduction of PFAS into environmental samples?   
  6. What are the consequences of not responding?  
  7. Is any of this data confidential? 

Currently, it is difficult to say what will be required should you discover a release. One thing that is certain is that the cleanup of a PFAS release, to likely very low cleanup standards, will not be easy. The amount of research into PFAS cleanup being conducted at this time by commercial and private companies is staggering. Promising interim technologies are being developed by the not-for-profit Batelle research organization and others. It is likely that the best solution will present itself in a technology yet unknown to us at this time.  

Because of PFAS chemical structure, they are recalcitrant and do not lend themselves to many of the chemical and biological processes traditionally employed to remediate dry cleaning solvent plumes. Research is being conducted but as of now, there are few in place options for soil and groundwater remediation. The physical removal of the compounds from soil and groundwater is, for now, likely the best remediation option. Excavation of soil and the pumping and treating of groundwater are two ways of physically removing PFAS from the environment. Physical removal of these compounds creates waste products that need ultimate disposal. Heat destruction of these waste products offers promising results; however, the temperatures required are difficult to achieve and economically unsustainable. 

Find out why PFAS are so difficult to remediate, and why they’re known as “forever chemicals” 

The Florida study indicates that PFAS may well be an issue at drycleaner cleanup sites. Prior to implementing any sampling efforts that may put you in the liability hot seat, make sure you are thoroughly engaged with a consultant and legal counsel that can outline your options.   

The USEPA will within the next two years establish certain PFAS as a hazardous substance, which will make it easier for them to regulate. Without the hazardous substance designation from the EPA, investigations and remediation vary by State. PFAS sampling is more expensive than traditional environmental sampling and because the remedial options are limited and the regulatory framework is still up in the air, your long-term costs and liabilities are difficult to predict.  

Contact us with your questions about PFAS 

As seen in Cleaner & Launderer

Brad Lewis, CHMM, Principal Scientist
Brad Lewis is a detailed-oriented and collaborative environmental professional with over 24 years of environmental consulting experience. Brad has a Master’s Degree in Environmental Science and is a Certified Hazardous Material Manager (CHMM) with expertise that covers a variety of projects ranging from due diligence, environmental compliance, Brownfields, underground storage tank, and chlorinated hydrocarbon investigations and cleanups.  Because of his strong analytical chemistry background, Brad has implemented many innovative site investigation strategies including the use of mobile laboratory, and immuno-assay to characterize sites. Brad is a member of the Midwestern States Environmental Consultants (MSECA) organization and took part in MSECA’s work group advising the Indiana Department of Environmental Management (IDEM) on revisions to the Remediation Program Guide. 

Brad manages large chlorinated hydrocarbon sites with large, deep, groundwater plumes that impact overburden, bedrock, and surface water resources.  To these projects he brings a keen understanding of contaminant fate and transport and an ability to develop a thorough conceptual site model.  This includes development of 2-dimensional and 3-dimensional visualizations of site lithology, hydrogeology and plume characteristics. 

He provides strategic planning of the technical and regulatory approach on most EnviroForensic projects.  This includes evaluation of new and innovative remedial technologies and changing regulatory and business climates. Brad facilitates communications between the responsible party, project managers, counsel, regulators, and the affected residences.    

Rob Hoverman, LPG, Northern Midwest Regional Director
Rob Hoverman is the Northern Midwest Regional Director and a registered professional geologist with more than 19 years of professional environmental services with a focus on contaminated site management. Rob currently serves as senior project manager for several projects in Indiana and Wisconsin.  His diversified professional experience includes research, scoping and budgeting, project management, data analysis and interpretation for both hazardous and non-hazardous substances, including compounds such as chlorinated solvents, petroleum-related constituents, as well as metals. Rob has managed numerous investigation and remediation projects regulated by state programs, and his responsibilities involved every aspect of projects from proposal preparation through project closure, regulatory negotiations and stakeholder communications.  Beyond technical evaluation and interpretation duties include obtaining contract approval, job initiation, budgetary analysis, budget tracking, and subcontractor contracting and management. Rob has also served as technical support for numerous vapor intrusion including soil gas, sub-slab, indoor air sampling and mitigation.  As the Regional Director for EnviroForensics, Rob maintains momentum and resources for Wisconsin projects.   

Everything a drycleaner needs to know about environmental contamination


We’ve discussed a lot of topics pertaining to drycleaners over the years, and I hope that the information has been helpful. There has been the full gamut of information regarding the process of dealing with contamination related to drycleaning operations. The primary focus, of course, has been on how to manage liabilities and costs associated with a subsurface release of Perc. The focus has been here, largely due to the fact that Perc releases are the most complicated, the most expensive to remedy, and present the greatest amount of risk to owners and operators of drycleaning facilities and associated properties.

It is so important to find a scientifically and strategically sound technical representative to guide you through the process of evaluating the extent of your contamination problem, and to help you choose the right remediation approach. If you’re just getting started in the environmental closure process, or you want to revisit my advice on making sure you have the right help, you’ll find some ideas in this article.

I wrote about the subsurface investigation process in these articles:

Sometimes it can be confusing or frustrating that it takes a long time to get your arms around a sizeable soil or groundwater plume. The above articles should give you a better understanding as to why it’s so complicated.

We also discussed remediation technologies and regulatory closure strategies in these articles:

There is a lot of information in these articles related to risk-based closures and more active closures. You may recall that a risk-based closure is one where a primary mechanism for regulatory closure is a demonstration to the agency that there is no direct human exposure or harm being done as a result of the contamination’s existence. These approaches are fine to get closure, but they don’t actually cleanup your property to a significant degree. EnviroForensics has also done a substantial amount of data research and analysis that show once you factor in the cost of long-term monitoring to ensure that exposure control methods remain viable, active cleanup approaches that remove contamination from the property are actually cheaper than risk-based approaches.

We explored the wide range of legal risk that the owner and/or operator of a former Perc shop may have to contend with as a result of an environmental release from your plant or someone else’s in these articles:

When the stigma of environmental contamination at a drycleaner site gets out in front of actual investigation and cleanup, operators and owners are subject to a whole host of different types of legal liability from multiple sources.

The high cost of cleaning up and dealing with a Perc contamination problem has been covered in many of the articles I’ve written for The Cleaner & Launderer, but expense was the focus in these articles:

You know as well as I do that those decisions based on impact to the profit and loss statements are a huge part of any business. The fact remains that the investigation and cleanup of environmental contamination caused by a release of Perc is extremely costly. Look through these articles again and ask yourself what your plan is going to be if you discover a Perc problem.

Updates on developments in the environmental world that are impacting drycleaners were provided in these articles:

Time marches on, folks, and I know it may not always seem like it, but the science related to the toxicological effects of chemicals we are exposed to gets better all the time. New contaminants of concern and revised health-based cleanup levels will be a constant moving forward.

As industry trends and reader input turned an interested eye toward business succession plan topics, we also spent some time talking about the environmental aspects of this process in these articles:

When you stop and think about it, nearly every old environmental problem is related to buying, selling, or owning a piece of property. Maybe not yours; but someone’s. The intentional or accidental transference of environmental liability along with commercial real estate is one of the driving forces behind the entire environmental industry. It was designed that way as a method of ultimately evaluating all old industrial properties. Please get help during a property transaction. You may think you understand the game, but the playbook is complicated, and you can only score big if you stay on offense.

Finally, I’ve tried to sprinkle in some of my own commentary related to drycleaners and how our clients have worked through the gut-wrenching decisions that they must make when they decide to take-on a contamination issue headfirst in these articles:

Listen, I get it. Nobody wants to poke the bear. Ya’know….my mother was an amazingly pragmatic woman. What she told me often was, “It is what it is,” and “You gotta do what you gotta do.” When it’s time to do what you gotta do, give me a call. We’ll help you through.

Contact us with your question about the environmental cleanup process.

As seen in Cleaner & Launderer

How to manage environmental risk through historical and modern insurance agreements



The strategic avoidance of risk through insurance agreements was contemplated as early as the Babylonian Empire over 6,000 years ago. The history of applying insurance products directly to environmental contamination risks isn’t quite as ancient; but the sequence of identifying environmental risks and developing insurance products to offset those risks has been ongoing since environmental contamination was first perceived and understood several decades ago. Insurance products from the 20th Century are still being used today to pay for environmental cleanup of old releases, and modern insurance policies are being created to address the threat of a new environmental release, the threat of legal action being taken against a policyholder due to environmental issues, or the threat of encountering unknowns during remediation projects that can threaten your cleanup.

The development of new insurance products by the carrier market is an iterative process. As new risks are identified, the insurance market develops new products, or policies to sell to their policyholders to help manage those risks. The insurance products that commonly apply to old environmental releases are commercial general liability (CGL) policies. Commercial General Liability Policies are those that nearly every business purchases to help them in the case of a lawsuit or damage that could be related to just about anything, so long as it’s not excluded by the policy. Those CGL policies were typically written such that only the occurrence needed to exist within the policy term. The claim could come later. So, let’s put that in the perspective of an environmental incident. If somebody at a company with a CGL policy accidentally knocked over a drum of solvent out back in 1960, there was an occurrence, but there was no regulatory agency in existence that would make a demand for anything to be done about it. There was no liability associated with that spilled solvent, but the occurrence happened, and it happened during the term of a CGL policy. It was only later after environmental agencies began enforcing their new regulations and laws that a liability to do anything about environmental releases was created. So, you can see how a spill in 1960 didn’t really turn into a liability until, perhaps, 1970 with the formation of the Environmental Protection Agency (EPA), or 1980 with their creation of a significant Act that defined environmental responsibility. By the early 80’s there were environmental liabilities for sure. Since the CGL policies written in 1960 to a premium-paying policyholder was occurrence based, a liability that was applied in 1982 could constitute a claim that could be tendered against that old occurrence-based policy. Depending on the language written into the policy, historical CGL policies may be used for legal fees, defense against lawsuits, site investigation, remediation/cleanup, interim remedial measures, building a legal case, potentially responsible parties (PRP) search, and interfacing with regulatory agencies in response to an old environmental release.

Learn more about the different environmental services old CGL policies can pay for.

As insurance companies started getting a bunch of environmental claims tendered against their old CGL policies, they started putting exclusions in their new CGL policies around 1985 or 1986. That means that releases that occurred after 1985 or 1986 were most likely excluded from coverage under those policies. The insurance industry then developed contemporary insurance products that were and are intended specifically to manage risks in the environmental arena.

As pollution issues were being excluded from CGL policies, new types of policies were being created by insurers to specifically cover pollution related problems. For those industries, like drycleaning, where the risk of an environmental release is real for some operators, the insurance industry now offers specific pollution coverage that can be triggered to respond to accidents, or even cover currently unknown pre-existing conditions. Site Pollution Policies or Pollution Legal Liability are for cleanup of pollution that has occurred on the insured’s own site, or if it runs off into a neighbor site. The next most important coverage is for third-party bodily injury and property damage and associated defense costs. They won’t cover first-party damages, like your own employees or first party property, but just third party. Included in that is diminished value of potentially diminished value of neighbors, neighboring properties, matched coverage for natural resource damages, and coverage for things like civil fines and penalties.

If you send your wastes to non-owned disposal sites, like when a waste vendor comes and collects your spent filters and waste barrel, and if one of their disposal facilities becomes a Superfund site you can be protected by pollution insurance. If your waste or product is being transported by your own employees, which shouldn’t happen, or by third party and there’s a pollution release, then the same coverage is applied.

A significant difference about pollution legal liability policies is that their coverages are claims-made based, not occurrence-based coverage. This means that the claim must be made during the policy term or during the extended reporting period. Coverage can be provided for both sudden and accidental and gradual pollution conditions. Coverage can also be provided in certain circumstances for known pollution conditions. Interestingly, these policies can cover both preexisting and new pollution conditions, so a pre-existing condition, like we discussed earlier, is easiest to cover it if it’s unknown and happened in the past and you purchase insurance covered for pre-existing conditions for a site. Pre-existing conditions are where the spill or release occurred prior to policy inception, so these can be very helpful and flexible policies that can be tailored to the insureds specific needs. Usually, they are purchased for one to three years, three years being the sweet spot, but these types of policies can be purchased for terms as long as 10 years.

Other coverages that are provided are coverage for natural disasters, so if there is a windstorm or a flood and it causes a pollution release, that resulting pollution would be covered. Coverage is included for mold Legionella and in some circumstances can be included for asbestos, lead-based paint, PFAS, disinfection of mold and Legionella and things like virus and bacteria can also be covered. Nearly anything you can think of can really be covered by these policies as far as contamination goes. You just have to work with your insurance representative, who will help you put together one or more policies that include the specific coverages you need to protect your business.

Watch the webinar: “Insurance to help manage remediation costs and risks”

Our company works with policyholders who have purchased either non-specific environmental protections from old CGL policies, or specific environmental liability related protections from contemporary policies. As a result, we have a good working knowledge of how these policies work, but please consider the information presented here as a very broad overview of the types of coverages that may be available to you to help manage your environmental liability. I strongly suggest that you reach out to a specialty insurance product agent or broker and start a discussion about how they may help. You will get the precise information that you need. There are several reputable insurance professionals who work closely with the drycleaning industry, so ask a friend or post a question on the  .

Start a conversation with us today about how to manage your liabilities using insurance.

As seen in Cleaner & Launderer

Headshot of Jeff CarnahanJeff Carnahan, President
Jeff Carnahan, LPG, has 24+ years of environmental consulting and remediation experience. His technical expertise focuses on the investigation and interpretation of subsurface releases of hazardous substances for the purpose of evaluating and controlling the risk and cost implications. He has been a partner of the drycleaning industry for the past decade and is a frequent contributor to the national drycleaning publication Cleaner & Launderer. He is an industry leader in understanding that environmental risk

How to convert a former drycleaning property into a commercial rental space



Across the country, a wave of small and independent drycleaning business owners are shutting their doors to retire or start new careers in response to a volatile economic landscape. Some rented their properties and are now leaving property owners and real estate investors scrambling to fill those vacancies and protect their investments. The fact that drycleaning properties have a history of environmental contamination paired with the quickly dwindling demand for drycleaning services means these properties will likely need to be retrofitted for use by a non-drycleaning business.  

Preparing your commercial property for a life after drycleaning is a complex process. There are physical updates that need to be made, potential environmental liabilities that need to be assessed, and legal obligations that need to be upheld. But it is all worth it to ensure that the property remains active, and cash continues to flow into your pocket. Here are the six steps you should do as a commercial property owner before leasing your former drycleaning property to a non-drycleaning tenant.

Decommissioning drycleaning equipment is something the drycleaner is obligated to take care of, so we won’t go too far into the details. However, there are a few things that a property owner can do to help facilitate and make this a smooth and mutually beneficial procedure.  

  1. Help the drycleaner plan the route their equipment will take to the outside of the building, and make sure the equipment can fit through doors or openings 
  2. If it can’t fit, arrange for windows to be removed in order to move the equipment outside 
  3. Coordinate a moving schedule with the drycleaner, and rope off parking spots for the drycleaner to stage their equipment as it comes out of the building 
  4. Make sure all solvent, waste, carbon and filtration have been removed from the drycleaning machine before it’s transported 
  5. Make sure refrigerant has been evacuated from the chillers 
  6. If the drycleaners’ boilers have mercury switches, make sure they’ve been removed and properly disposed of 
  7. Make sure that all remaining chemicals are safely disposed of by consulting with your Material Safety Data Sheets (MSDS) or an environmental consulting firm  

As the landlord, you will have the ultimate say on the moving schedule and the precise conditions the property should be in when the tenant hands over the keys. Be sure to communicate these parameters in your lease agreements, so everyone is on the same page, and you can avoid any legal ramifications.    

Read this blog post to plan your drycleaner decommissioning 

Making sure the air inside the building is safe to breathe is the single most important step in this process. Former drycleaning plants almost always test higher in Perc concentration than the extremely low vapor intrusion screening level that non-drycleaning businesses like retail clothing stores or ice cream shops must abide by. While vapor intrusion is a common cause of this spike, it is possible that other conditions are at play.  

Certain building materials can off-gas Perc vapors and cause high concentration levels during air sampling. The most common example of this is the concrete floor and walls around the area where the drycleaning machine was housed. Over the years, the concrete becomes saturated with Perc, and even if it doesn’t make it to the subsurface, it can still release vapors for a very long time. Other building materials can also cause indoor air problems. Drywall, insulation, and ceiling tiles are all porous materials that can trap Perc vapors during active operations and slowly release them over time. It is for these reasons that you should remove any drywall, insulation, and drop-ceiling tiles that were present during drycleaning operations, and seal floors and walls with a vapor barrier product designed to stop off-gassing before a new tenant moves in. 

Another common structural problem that leads to higher Perc concentrations are the floor drains. If separator water, floor wash water, or small spills of Perc were ever routed to the sanitary sewer floor drains, the vapors can return over time. Most floor drains are equipped with P-traps that are designed to create a vapor seal using the water that is poured into them. However, if these drains don’t get used and the water inside the P-traps dries up, vapors can seep back into the room. It’s recommended that these drains are used frequently to keep the water seal intact. Other options include installing one-way vapor lock valves for the drains or sealing them up altogether. 

After the drycleaning equipment is moved out, and all structural issues that may cause indoor air quality concerns are addressed, it’s time to figure out if there are any larger underlying environmental problems. This can be kickstarted through a Phase I Environmental Site Assessment (ESA). During a Phase I, a consultant will review the history of a property to determine past use and regulatory records for the site and surrounding properties, conduct a site walk, and interview site contacts and local agencies to decide whether there are any outstanding liabilities on the property. A Phase I ESA done through ASTM standards also satisfies what is known as the Bona Fide Purchaser Protection (BFPP) which provides some legal protection from environmental liability to a future property owner or future tenant. 

Sometimes a more thorough investigation of an underlying environmental problem is called for, and when that happens, we recommend starting the insurance archeology process as quickly as possible to see if you’re covered. Environmental investigation and remediation services–especially at properties that have a history of Perc use–can be pricey, and even one found policy can potentially offset a significant amount of the cost.  

See what kind of environmental services historical CGL policies can help pay for 

Even if you can’t find the actual policy, a trained insurance archeologist can use evidence like an old receipt, canceled check, or piece of mail to prove that coverage existed at one time or another. Another piece of good news for landlords is they can use the old tenant’s insurance coverage as well as their own. Every previous drycleaning operation is considered a Potentially Responsible Party (PRP) to the contamination and therefore is legally obligated to pay for part of the cleanup. The sooner you get in touch with an insurance archeologist like the ones at PolicyFind, the sooner you can start compiling evidence of coverage, searching for other PRPs to share in the cost, and tender claims to insurance to pay for the necessary environmental services. 

In order to continue to benefit from the BFPP liability protection that a Phase I ESA provides, a property owner has a continuing obligation to manage any pre-existing contamination and protect tenants and occupants from exposure to a release. These requirements include: 

  1. Compliance with land use restrictions; 
  2. Taking reasonable steps to manage releases; 
  3. Providing full cooperation/access/assistance to regulators overseeing the property; 
  4. Compliance with information requests and administrative subpoenas; 
  5. Not impeding performance of response actions; 
  6. Not causing or contributing to contamination. 

Although there is a lot of maintenance involved in this step, it will work to your advantage as the property owner to have that legal protection and be able to promote a safe property to future tenants.  

The BFPP liability protection is extended to tenants through the BUILD Act of 2018, so keeping up on those continuing obligations can and should be a team effort. Be open and transparent with future tenants and make sure there are parameters regarding those continuing obligations written out in the leasing agreement. We’ve seen some very messy tenant/owner lawsuits when there is no BFPP protection and no defined liability in the terms of the lease. And, if a tenant is not aware of this existing protection, and they mess up the continuing obligations by causing or contributing to a release, or exacerbating an existing release, legal battles could ensue.  

Preparing your property for a life after the drycleaning operation is a long and sometimes tedious one, but it will be worth the effort to make sure the property can operate safely and stand up to regulatory scrutiny. With the drycleaning community shrinking year by year, it will make a huge difference in your property management portfolio if the property can operate as something other than a drycleaner. 

Contact us today to learn how we can help you assess and manage environmental liabilities on all of your commercial properties. 

Morgan Saltsgiver Morgan Saltsgiver is a Licensed Professional Geologist (LPG, PG) with sixteen years of experience in the environmental industry specializing in providing Agribusiness, Brownfields development, and traditional environmental consulting services to her clients. Her educational background in geology provides a strong basis for geological and hydrogeological interpretations of contaminant migration through subsurface media and the development of conceptual site models used to develop the path forward towards closure for each project site. She assists her clients with finding and using alternative funding sources for their environmental issues, including historical insurance policies, federal and local Brownfields grants, and state trust funds. 

City of Hammond Fast-Tracks Lead-Contaminated Soil Removal for Residents



The City of Hammond, Indiana is accelerating the timeline of a lead-contaminated soil removal project in a residential neighborhood this year. The cleanup project in the Robertsdale neighborhood was originally forecasted to start sometime in the next 7 to 10 years; however, with the safety of their residents in mind, Hammond leaders pushed to fast-track the timeline to start this Fall. The City will pay for the soil remediation along with new topsoil, grass, and landscaping for each impacted property.

In 2017, the U.S. Environmental Protection Agency (EPA) determined that several properties in the Robertsdale section contained levels of lead in the soil as a result of a nearby metals processor that operated decades ago. In response, the EPA cleaned up a few properties in the area containing high levels of lead but determined that federal funding wasn’t available to clean up the remaining properties.  The City and EnviroForensics will manage the removal and disposal of the lead-contaminated soil at 12 different properties in the final quarter of 2021 and will continue to clean up the remaining properties in the neighborhood through the next two to three years using City funds.

The Mayor’s office and the Hammond Department of Environmental Management have given notice of the upcoming cleanup to the residents of the Robertsdale area. When the remediation is completed, Hammond will provide a certificate to each property owner to show future interested buyers that their property meets environmental standards.

Learn more about EnviroForensics’ Environmental Investigation & Remediation Services.

Morgan Saltsgiver is a Licensed Professional Geologist (LPG) with eighteen years of experience in the environmental industry specializing in providing Agribusiness, Brownfields development, and traditional environmental consulting services to her clients. Her educational background in geology provides a strong basis for geological and hydrogeological interpretations of contaminant migration through subsurface media and the development of conceptual site models used to develop the path forward towards closure for each project site. She assists her clients with finding and using alternative funding sources for their environmental issues, including historical insurance policies, federal and local Brownfields grants, and state trust funds.

Five questions about old insurance policies and how much environmental cleanup they will cover



Environmental cleanup is an expensive and time-intensive endeavor but finding old insurance coverage can alleviate some of that burden. Once you find your old insurance, the next step is to figure out if that insurance can actually be used and how much protection it will provide. The answer lies somewhere on the other side of a lengthy analysis of your policies, the language written within them, and the state case law in the physical location of the business being covered.  

EnviroForensics recently discussed this topic at length in a webinar with attorneys Andrew Skwiewarski and Ted Warpinkski of Davis|Keulthau Attorneys at Law. At the end of the presentation, the panelists took questions from drycleaners about their unique circumstances and provided broad-stroke answers to their policy concerns. Read on to see their answers.      

Get instant access to the recording of the webinar: How much environmental cleanup will your insurance actually pay for?”

This Q&A session has been lightly edited for clarity.

ANDREW SKWIEWARSKI: It is not a guarantee that it will happen. The reality is if you’re going to try to get the insurance carrier to pay upfront it’s going to be easier if you use their recommended counsel or their recommended consultant. New Jersey’s a little bit different because New Jersey has this LSRP program where if you’re getting a specifically licensed individual to do it and they have strict obligations as to what needs to be done. In other jurisdictions, we’ve seen where the insurance carrier’s consultants are sometimes cleaning up to reach the bare minimum requirement from the regulators. It’s not an inherent conflict of interest, but there’s a business conflict there that you need to be aware of, and in this case, you would be better off with your own consultant, especially when the insurance carrier is reserving their rights. An investigation is also going to be used to determine whether the occurrence happened during the policy period or other legal issues that are going to come up. So, in terms of New Jersey, there is some argument that by accepting what the carrier has given, you’re going to have a better position to get them to pay upfront. 

TED WARPINSKI: The key question is what exactly are they identifying as the reasons for their reservations and how do those reservations impact how the investigation or the defense of the claim is handled? If it’s unlikely that those issues are going to be impacted by the investigation, then letting them do it may be less of a risk. 

WARPINSKI: We’re definitely talking about a more recent type of coverage if you have a claims-made, pollution liability coverage, so I would have to see the exact language to give a more definitive answer. That said, I have seen those policies that include an exclusion for government-mandated work. So, if you’re just complying with normal business regulations, that’s not necessarily a claim that’s going to be covered now. It’s already in normal business operations versus an accident or occurrence. That may give rise to a claim that’s covering that policy, so we have to look at the incident that is triggering coverage under that claims-made policy and how is that related to the exclusion language? 

SKWIEWARSKI: It depends on the fund. Some funds have a requirement that you try to use your insurance first before you can use the fund. Recently, I had to deal with the Alabama Trust Fund, which was an interesting one because Alabama had provisions that yielded the dry cleaner from any liability whatsoever if you were actually in the fund. And so, there’s a pretty good argument in Alabama that if you’re in the fund and you got in before a certain deadline, and you’ve got that full shield of protection, you don’t actually have a claim yet against your insurance carrier. The shield and the protection is so good, there’s no third-party liability for you to make on a claims-made policy. Each fund is different. We have had success where somebody had gone into the fund, used the fund to pay for certain amounts of cleanup, and then when the fund was either dried up or taking too long to reimburse switched to the insurance carrier. You’re likely not going to see recovery of those past funds that you may have fronted, whether you’ve been reimbursed from the state, and again, if they’re pre-tender, they’re probably not going to be covered, but mixing and matching between the insurance carrier and the drycleaning funds is possible, depending upon the jurisdiction and the fund. 

WARPINSKI: Right, the issue is going to be double-dipping. You can’t try to recover the same cost from two different sources. It makes great sense to do all this insurance work before you get into a fund, but you should check what your state fund allows. Some state cleanup funds require that you at least give them notice of having made a claim, and you may even have to return money to the fund. That’s how it is in Wisconsin and a lot of other states.  

SKWIEWARSKI: So, if you can’t jump back into the fund you have to consider a few questions: How good is my insurance recovery? What’s the likelihood I’m going to get money from the insurance carrier versus the likelihood I’m going to get money out of the fund? We know that these state cleanup funds are having difficulty staying afloat. 

Learn how a dry cleaner was able to use insurance archeology to fund his environmental cleanup after having trouble with his state cleanup fund 

WARPINSKI: You have to determine if there are still arguments that could be made to cover some of the loss even though you may not get, for example, this continuous trigger and sudden accidental pollution exclusion. Do you still have something sudden that you can pinpoint to a policy or that may still get you coverage? Are you being sued by a third party? Is there a risk of there being a third-party claim? And are there other responsible parties out there that we might be able to compel to share your costs?  

SKWIEWARSKI: And if there are, does your state have a law that allows you to sue somebody else and allocate the required cleanup costs between the two of you? Some states have those, some states don’t. If you’re in a state that doesn’t, or if you’re in a state that has a lousy recovery statute, there are federal laws—CERCLA—that allow you to make that same claim. The downside is the litigation fees. Those are not inconsequential in order to make that type of recovery. 

WARPINSKI: If you can find the evidence of the insurance, arguably, you’re now the claimant against that prior owner. Oftentimes, that forms the basis for making a claim against the prior owner, which may be covered by that policy. You can get an assignment on the rights the prior owner has to that policy as part of a resolution of a claim. Has that prior owner-operator been noticed by their state agency as being a responsible party because there may be a claim that could be tendered on their behalf? Even if we had evidence of coverage for you, we would always look to see if there was evidence for somebody before you. Another issue that I will just touch upon is sharing of costs over years of operation. There are rules in some states about how liability is allocated between responsible parties and across different years of coverage. 

SKWIEWARSKI: I’ll add that you should always check your purchase documents from when you bought the business. In some cases, when someone has bought the business, they have also bought the insurance rights from the previous owner. In that case, you are the successor to those rights and then you can just make a claim directly to the insurance carrier.  

Learn more about funding your environmental cleanup with old insurance coverage. 

Photo of Dru Shields, Director of Accounts at EnviroForensicsDru Carlisle, Director of Drycleaner Accounts
For over 10 years, Dru has helped numerous business and property owners facing regulatory action, navigate and manage their environmental liability. Dru has vast experience in assisting dry cleaners in securing funding for their environmental cleanups through historical insurance policies. Dru is a member of numerous drycleaning associations in addition to serving on the Midwest Drycleaning and Laundry Institute (MWDLI) advisory council and on the Drycleaning & Laundry Institute Board (DLI) as an Allied Trade District Committee Member.

How to be a good neighbor during an environmental cleanup on a drycleaning property

What’s worse than a bad neighbor? Different things annoy different people, so the definition of a bad neighbor is a personal thing, but I’m sure you’ve all heard from your neighbors a time or two through the years. What kind of things did they have to say? Most residents don’t take the time to call a neighboring business unless it’s bad news; right? Maybe they don’t like the noise or smell from your operations, it could be that they don’t like all the traffic on their street caused by your new drive-through lane, or perhaps the sight of your back lot with storage and a dumpster is displeasing to them. When an environmental investigation and cleanup is necessary, dealing with neighbor concerns can become a nightmare for everyone since these activities can be temporarily loud, spatially disruptive, and ugly. It’s very easy these days for a negative comment or sentiment from a neighbor to get posted to a social media platform and really cause some trouble. Nobody wants that.

Practically speaking, your neighbors are either residences or businesses. Of course, there could be a farm field, or a park, or a forest, but there is cause for less concern since there isn’t full-time human occupation in these settings. When considering how your neighbors will perceive your environmental project, your environmental team must look at the potential aesthetic impacts, such as noise and ugliness, and how those less severe issues can lead to legal liability.

Starting with the least offensive issue to your neighbors: an environmental investigation can create a small spectacle at your property. The process of collecting soil and groundwater samples from locations across the property requires reasonably large equipment. One of the most common pieces of equipment at an environmental project site is a drilling unit of some type. The hydraulic hammer drives the coring tube into the ground, and then the tube is retrieved, and the soil within is collected. The drilling equipment is either mounted to the back of a truck or a track-driven, remote-controlled unit. This process sounds like a large jackhammer, and it’s loud enough that hearing protection is necessary when near the equipment. The noise can certainly be annoying to nearby people, especially when the sampling event takes all day or multiple days. A heads-up to your neighbors that some temporary noisy construction is on the way before drilling day could help ease any potential problems.

An experienced consultant makes a huge impact during this process. Find out what other things you should consider when looking for a consultant.

Another common drilling method is rotary drilling, in which sections of hollow augers are spun into the ground using a dedicated engine mounted to a large vehicle. Drilling with this method can be loud when the engine RPMs are high, and the drilling units have tall masts and are typically quite a bit larger than the direct-push equipment. Again, the neighbors will be curious about what’s going on, and they could be concerned, so some advance notice could keep tensions low. It’s important to be empathetic to your neighbors early on in the investigation process because future activities could be even more invasive as you learn more about the size of the contaminant plume. It is not uncommon for environmental releases from drycleaning operations to create soil or groundwater plumes that extend beyond property lines. That means that at some point, you may be faced with the reality that you will need to ask your neighbors for a favor.

When the need arises to advance the investigation of your contamination across property lines, you’ll work with your environmental consultant and perhaps your environmental attorney to create a plan for approaching your neighbors. There could be a need to have access to their property for one of several types of sampling, and they’ll need to permit you in a written access agreement. Getting permission is an important step of the process that can’t be skipped. Once signed by the property owner, a written access agreement is their permission for you to be on their property doing the sampling described within the document. Sometimes the required sampling is simply collecting some soil samples outside, close to the property line. Sometimes there is a need to install groundwater monitoring wells in their parking lot or yard, which is a bigger deal. It is not uncommon to need to enter someone else’s home or building to collect air samples from within the structure or beneath the floor. These can be tenuous situations, so pay close attention to the advice from your professional team. There is a lot of risk for you when you need to sample on someone else’s property, so a smile and a handshake alone won’t cut it, but hopefully, they’ll help.

Beyond the investigation process, cleanup activities can create another set of potential annoyances for your neighbors. If your contamination is identified on their property, it will need to be addressed. Even if the contamination doesn’t cross onto their property, on-site activities can be large and noisy, which could create tensions. Some soil and groundwater remediation technologies use large electric motors to remove contamination. They need to run as often as possible, preferably 24 hours a day. Timers can be employed to turn them off at night or over the weekend when residential neighbors may be the most sensitive to noise. However, every minute the remediation system is turned off adds to the total length of time the cleanup will take.

Learn more about the different methods of remediation that environmental consultants have in their tool belt.

Aside from temporary noise and ugliness, there are more significant concerns that might arise with your neighbors. For example, we know that perc vapors can migrate through the soil from environmental releases, which could seep into nearby structures, and this is called vapor intrusion. Suppose those vapors are present in the breathing air inside your neighbor’s building or home. In that case, there is a very strong probability that vapor intrusion will need to be stopped with the installation of a mechanical system. So, the conversation could go something like this, “Hi, neighbor. The regulatory agency is telling us that it is necessary to install a vapor mitigation system on your home to protect you from vapors emanating from our contamination problem.” Hopefully, you can see how good neighbor relations at the very beginning of the investigation process could help you build up some good rapport with them to help with these difficult conversations.

The environmental investigation and cleanup process is not a fun one for the responsible party, it can be costly, and neighbor relations can be strained. However, the good news is that when you take on the challenge of addressing contamination, you are solving problems. Your neighbor might not want to listen to a drill rig for a couple of days or let you into their building to conduct sampling, or even work with you to develop a long-term remediation schedule that they can live with. However, the fact remains that you would rather tackle these problematic challenges than allowing the contamination to remain in place and cause further harm. When you take that mindset, you have the most reasonable, forthright, and virtuous position possible.

Learn more about how we can help you keep a good relationship with your neighbors during your environmental cleanup activities.

As seen in Cleaner & Launderer

How much environmental cleanup will your insurance cover?



Unearthing old insurance coverage during an insurance archeology search can trigger a feeling of immense relief for a drycleaner or small business owner looking for financial assistance to cover their environmental services. It is, however, the first step in a series of steps towards getting those critical funds. Grappling with the language of the policy and the state-by-state caselaw which dictates what the insurance carriers are obligated to pay out will help set reasonable expectations and help you chart out your larger environmental cleanup plans. 

With the inherent complexities of insurance archeology and claims tendering activities, it is always recommended that you have experts by your side through this undertaking. This article will give you a basic understanding of how an experienced insurance archeologist combined with a skilled attorney with experience in insurance law, can find your old coverage and use it to pay for defense against environmental claims. 

Watch the webinar “How much environmental cleanup will your insurance actually pay for?” 

The sole purpose of understanding how much environmental cleanup your insurance carrier will cover depends on finding those old policies first. When we are approached by drycleaners who are facing environmental contamination issues, we prioritize looking into insurance as a means of funding environmental investigation and remediation. This is the case, no matter what part of the process a drycleaner is in. It is possible that they just found out that they have an issue, or they are getting their ducks in a row and are looking to be proactive, or they are in the middle of addressing environmental concerns. Once that can of worms has been opened, it is nearly impossible to close it again. The goal is to minimize out-of-pocket expenses because environmental cleanup is expensive.  

Through historical insurance archeology we reconstruct your historical insurance coverage or your predecessor’s historical insurance coverage. The definition of insurance archeology is tracking down the proof that policies existed. We want to know the terms and conditions, the limits of those policies, and many times we do not find full policies, but we need formal proof of their existence. This could be through canceled checks, declaration pages or cancellation notices. In those instances, when we do not have a full policy, but we have secondary proof like this, we usually partner that proof with specimen policies to back up those existing pieces. We look for Commercial General Liability (CGL) policies, which are your standard slip-and-fall policies that would have protected the policyholder against claims for property or bodily damage.  

When it comes to finding your historical insurance policies, it is a common misconception that there is some sort of database or website where insurance archeologists just type in a person’s information, and it will pull up that person’s historical information. Unfortunately, that is not the case. If it were, insurance archeology services probably would not exist. Many times, the first step to reconstructing your insurance coverage is by reviewing a business owner’s old business files and old personal files. We always recommend that a business owner holds onto everything they have. Information held within old business records—no matter how inconsequential they seem to you—could hold information that an insurance archeologist is going to find valuable in their search from tracking down leads to coverage.  

That said, it is common for a drycleaner to throw out all their old records, and in these cases an insurance archeologist is going to dig deeper. Insurance archeologists look everywhere for proof of insurance, and it usually is a bit more involved than digging through old files. They conduct personal interviews, review public records, and review any available business records to look for leads in addition to proprietary methods. Understanding the full scope of coverage available to a business is really the first key to understanding how much environmental cleanup is going to be covered by insurance.  

At the end of the insurance archeology process, we produce a comprehensive coverage chart with the available evidence from the search. In an ideal situation, the coverage chart will look something like this:

In this example chart, the client has provided the insurance archeologist with evidence of 30 years of continuous coverage at both the primary and excess level. It is generally more typical to find evidence of coverage for just a year or two with lower primary limits under $1 million to under $500k level. As these policies aggregate over the coverage period, that is enough to pay for some environmental cleanups. However, even if you can only unearth evidence of coverage for a year and at a lower limit, any dollar that the insurer would fund a cleanup is a dollar saved from the responsible party’s pocket.  

Once we trigger historical Commercial General Liability (CGL) coverage, there is a variety of tasks that insurance can cover. “CGL coverage for cleanup” is probably the phrase that brought you here to this blog post, but cleanup also includes environmental investigation tasks and technical fieldwork to determine the nature and extent of the problem in the soil and/or groundwater.  Cleanup tasks that are part of the regulatory closure process under the umbrella of “environmental cleanup” can be paid for using CGL policies. That list includes: 

Interfacing with the regulator
It’s not a one-and-done meeting or letter. In many cases, this “interfacing” includes reports, negotiations, and agreements with a regulatory body that can last for years.  

Responsible Party Search
If there was a prior owner-operator at the facility or there is an off-site contributor to a larger contaminant plume, they can be compelled to shoulder some of the environmental liability. 

Legal Defense
Legal fees that go into defending a responsible party against a regulatory claim or a third-party claim. 

It takes a trained eye to look at an insurance policy, but more importantly, to resolve the differences in interpretation. Differences in interpretation are where experts on your team come in to discuss the coverage aspect of that actual policy contract. The coverage/interpretation of those contracts varies from state to state. Several defenses can be raised by an insurer, so it takes a trained eye to interpret and to resolve those differences.  

There are the fundamental questions that you must ask on any claim to determine the likelihood of coverage: 

  1. What are the risks that you want to litigate coverage on?
  2. What do you think you are going to get at the end of the day?  

The starting point on all these projects is the “insuring language” in the policy, which is normally some variation of the following: 

The insurer is obligated to pay on behalf of the insured all sums which the insured will become legally obligated to pay as damages because of property damage to which the insurance applies caused by an occurrence, and the Insurer shall have the right and duty to defend the insured against any suit seeking damages, even if the allegations in the suit are groundless. 

Within that language, we focus on how the following key terms are interpreted: 

Courts differ in jurisdictions as to whether government demands to conduct environmental investigations and cleanups are considered “damages.” There are older cases that have characterized a government demand as a request for injunctive relief against the insured versus a claim for damages. Some courts have found that government demand letters are not “damages.” However, more courts are finding that damages of the environmental cleanup costs themselves are “damages” as an impairment or a liability. They broadly construe that language to cover environmental cleanup costs. That said, the jurisdiction where you are is a particularly important variable in figuring out if you are covered for the claim that is being made against you.   

There are two types of General Liability policies: “occurrence-based” policies and “claims-made” policies. The latter of which does not really help you in this instance because “Claims-made” policies require that you make the claim within the policy period. So, that means that if you have a policy from 1980-1981, you need to have made the claim to your insurance carrier between 1980 and 1981. The majority of older CGL policies are “occurrence-based,” which means there must be something that happened during the policy period that gave rise to potential damages and potential liability. The trouble is in an environmental context, we do not often have an acute incident that we can point to and say, “that happened then,” although sometimes we do. Sometimes there are recorded spills like, for example, your perc supply company came to your store in 1981 and did not attach the hose right. It fell off as it was filling, and 15 gallons of perc came onto your driveway. It will raise the question of when the occurrence happened so it can become more central to the litigation.  

Occurrence-based policies under the “Continuous Trigger Doctrine”
If you bought your drycleaner in 1975, but there was a drycleaner there from 1965 to 1975 operated by someone else, and it’s likely that there was some contamination that occurred before you got there, you can still make an argument that your 1975-1977 policy may be on the hook under the “continuous trigger” doctrine. What that doctrine says is instead of defining an occurrence as a limited specific act that occurred at one point in time, the damage the contaminant has done continues through the entire period that it is present in the ground: the soil and the groundwater. That contamination constitutes one trigger that can span multiple policy periods, which is helpful to drycleaners for getting coverage because you do not have to point to one specific occurrence. If we can prove contamination existed prior to a policy period, and nothing was done to clean it up, under the continuous trigger doctrine there is a particularly good argument that there has been an occurrence during the policy period. So, if you start from where you think the first release happened and work back to the point where some sort of cleanup occurs, there is a good argument that there is an occurrence, and the policies throughout that period become triggered.  

Therefore, one of the first things we look for is if there were any first-generation drycleaning machines used on the property. Transfer machines have an inherent opportunity for drips and dribbles and little amounts of drycleaning solution to fall off and hit the concrete floor and move through. It is understood by the insurance carriers that first-generation drycleaning machines operating with perc were likely to have caused contamination. Insurance carriers sort of tacitly acknowledge the fact that these machines were not as tight as they needed to be. When we started to get the third-generation machines with the dry-to-dry functionality and a pan underneath it, that made a significant difference into whether there was a likelihood that contamination occurred. So, if you cannot pinpoint the occurrence, you can often at least point to when there was a first-generation machine in use which will help in making the argument to the insurance carrier that there was an occurrence and property damage during that policy period.  

Does a responsible party letter constitute a suit? In many of these cases, there is not an actual lawsuit by a neighbor or a third party making a claim against the drycleaner to recover their own costs. It is normally either the drycleaner discovering the contamination themselves or it is discovered some other way, in the “right of way” during municipal work or during a property transaction. When that information is discovered, there is an obligation on behalf of the property owner to report that to their state agency. The state agency, or sometimes the federal government, will issue a “responsible party letter” to that entity saying, “you are obligated to investigate and remediate this site within accordance with your state regulations and statutes.”  

The question that needs to be answered after receiving this letter is whether it is the functional equivalent of a suit in that state, which will determine the scope of coverage. Some states where this meets that standard are Maryland, Arizona, Wisconsin, Alabama, Minnesota, New Jersey*, and Indiana. However, most states have interpretation of the law where a responsible party letter constitutes a suit because it does have real consequences for the insured. So, that may trigger the obligation to defend on behalf of the insured to defend that lawsuit or that claim.  

What is the duty to defend? Think about a car accident where you rear-end someone at the intersection, and you cause damage or personal injury, and that party sues you. You tell your insurance company and give them notice of the suit and they take over. They activate their panel of defense lawyers that they use to defend against the suit because they know that it is covered underneath the policy. You do not have to pay for the attorney’s fees since it is under the policy.  

In the context of a responsible party letter, it is a little more nuanced because the actual defense of the claim is interacting with the regulators on the responsible party’s obligation. You may be looking at what other responsible parties may be out there too. That is why we consider the responsible party letter as the equivalent of a suit and what it provides because there is a duty to indemnify the insured for all sums they are obligated to pay as damages, but there is also a duty to defend them from that claim. The duty to defend itself is broader because you do not actually have to be found liable for anything yet. Your insurance defends you from liability, so it is broader. Even if there is an arguable claim that is made against a party, that duty to defend may kick in, even though ultimately there may be no coverage for a particular component of that claim.  

When we look at Duty to Defend, we look at the “Four Corners Rule.” We look at what the policy says and what claim says, and compare those, and if there is any argument in favor of coverage for that claim, that normally triggers the “Duty to Defend.” Therefore, as soon as we get one of these letters or demands, we put the carriers on notice. Typically, the insurer’s obligations do not kick in until they are put on notice. It is the tender to that claim that triggers the duty to defend and starts that process.  

There is a pollution exclusion in all these policies issued after about 1970. Prior to that time, that exclusion did not exist.  

Sudden and Accidental Pollution Exclusion
The insurance carriers decided that they wanted to protect against intentional polluters, so around 1970 they added language in their policies that says, “any release or escape of pollutants isn’t going to be covered, unless that release is ‘sudden and accidental’”.  

What constitutes a sudden and accidental release? This is a hotly debated question. Some courts have found that “sudden” implies that there is some time, some temporal immediacy. For example, someone accidentally knocks over a drum. That is a sudden accident. Or the delivery truck’s hose broke. That is a sudden accident. For those examples, it is easy to say there is a clear sudden, temporal component.  

Over time, there has been litigation that looked at some of the insurers’ own records that found that their own definition of a sudden and accidental release was the equivalent to an occurrence, so some courts have found “sudden and accidental” to be ambiguous and have ruled in favor of the policyholder.  

Absolute Pollution Exclusion
Around 1986, the insurance companies started to notice the pattern that courts were finding the “sudden and accidental” language ambiguous, so they decided to make their language broader and clearer in what is now called the “absolute pollution exclusion.” This means there is no longer an exception for sudden and accidental releases. Any pollutant that is discharged would be excluded. All states, except Indiana, have found this language to be unambiguous, especially as it applies to a situation like a drycleaner. Indiana found it ambiguous in terms of a pollutant, and for good reason. The insurance companies are saying that what happens in respect to one of the most integral parts of your drycleaning business is not covered under your policy. So far, Indiana is the only state that has taken a broad view and said that the absolute pollution exclusion really does not apply to these types of contamination cases.  

Owned Property Exclusion
The “Owned Property Exclusion” says that any damage to a property that you have owned or leased in the past is not going to be covered by insurance. The insurance companies want you to cover your own loss of diminished property value. The scope of this exclusion has been litigated in several courts in several different states. Most have found in favor of the insured in cases where the contamination migrated to groundwater, because the landowner does not own the groundwater. It is owned by the state or held in trust by the state. That is considered damage to other property so that is not going to be excluded.  

Similarly, if contamination that started on your property migrated to a neighboring property, that is also considered damage to third-party property, which will not be excluded for coverage. Some states have found preventative measures where a businessowner cleans up their property to prevent damage to another property to be within the exclusion, while some may allow for that to still be covered as a part of the cleanup costs. If the government is requiring you to clean up your property to restore the environment, some courts have considered “the environment” to be the damage in general, and since states have the right to compel you to undertake that investigation and cleanup, that has been found to not be excluded for coverage.  

We have not seen vapor intrusion directly litigated under the owned property exclusion yet, and we have not had conversations with insurers about that issue and risk. However, if you keep in mind that vapor intrusion is another component of damage to the environment you must remedy as a responsible party, you may have a convincing case for coverage. 

After figuring all of this out: 

  1. If there is an initial grant of coverage under the language
  2. If there was a claim
  3. If there was damage  
  4. If there was a suit
  5. If there were any exclusions that would prevent coverage 

…and you have an RP Letter in an authority where it is considered a suit, your next step is to figure out if the insurance carrier has any other defenses based upon either the language or the caselaw that can allow the insurer to potentially get out of covering you. In almost every one of these cases, the primary defense they have is “Late Notice and Prejudice.”  

A good example of this is if damage happened in 1975, and it was found when you sold the property in 2015, that may be considered untimely notice. If the tender of the claim is late and lateness varies by authority, the insurer may try to get out. There is a statutory definition in a lot of jurisdictions that says if any claim is tendered to the insurance carrier more than two years after the occurrence (or another specified deadline), the insurance carrier can say that it is “late.” Some jurisdictions will hold that if the tender of the claim is “late,” by the statutory definition or within the contract, that is a complete bar to making a claim.  

Most jurisdictions take a slightly different interpretation to “late notice.” In most cases, if the tender is late, you can still make the claim, but it is now the insured’s obligation to convince the court that there has been no prejudice against the insurance carrier’s rights because of the notice being late. To explain prejudice, we will use a car accident as an example. After a car accident, if you do not tell the insurance carrier about the accident, the scene gets cleaned up, nobody took pictures, and you did not get all the witnesses’ information, the insurance carrier’s ability to investigate what happened is prejudiced. They do not have the ability to make a good coverage determination because of lost information and the failure to give them notice in time for them to do their investigation. 

But that standard issue of prejudice does not apply with the same force when it comes to environmental contamination because we know that the contamination may have occurred long before the insured was even made aware of it. When that happens, the ability to investigate was not there at the time of the occurrence, because the owner did not know that the contamination was there. Then, there is the question of when the insured got notice of the contamination  which is normally during a real estate transaction—when the insured did their own investigation of the contamination, and when they put the insurance carrier on notice.  

That is a more crucial potential period for “prejudice” because, during that time, the plume is migrating with the property owner’s knowledge. Was the insurance carrier and their failure to get notice an impediment to investigating and potentially remediating the extent of the contamination? And did the contamination get worse over the course of that period? If during that period between discovering the contamination and tendering the claim to the carriers, you were working with regulators and an environmental consultant to investigate and remediate the contamination, the insurance carrier has a solid argument that they were prejudiced. Therefore, you should always put the carriers on notice quickly. The insurance carrier’s claim that they were prejudiced is going to ring hollow if you put them on notice at the beginning of this process.  

Another important piece of this is the costs that you incurred for the investigation prior to tender of the insurance carrier are not recoverable. This means the longer you wait to put your insurance carrier on notice the bigger the expense that cannot be recovered. It is not completely impossible to recover these costs, but it is difficult. Most insurance carriers will say, “anything that occurred pre-tender—before you gave us notice – no chance.” That applies in respect to anything that falls within the scope of the “duty to defend.” If it is work that is done pre-tender, you really must make a good argument that it is part of the carrier’s “duty to indemnify,” and to reimburse you for that loss.  

What is Defense vs. Indemnity? The big issue is not paying the attorney’s fees. This is well understood as being part of the defense cost. It is whether the consultant’s costs to do the investigation of the site are covered by the policy as a part of the “duty to defend.” The reason this distinction is important is that the “duty to defend” is uncapped. There is no limit to how much an insurer may have to spend to defend a case. However, there is a limit on how much they would have to indemnify the insured for. 

You may have a million dollars in coverage for indemnity, and you also have a duty to defend, so many times, the investigation of a site itself can cost well more than that indemnity limit itself. Are the consulting costs to conduct the investigation part of the defense of the claim or are they a part of the indemnity limits? On one hand, the letter from the regulator says, “investigate this site and then remediate it,” and insurers argue that the investigation is being ordered by the government, so it is part of the indemnity obligation. Some courts have addressed this issue while many have not addressed it, so it is subject to discussion with your insurer in your state as to how they are going to handle it. Getting the consulting costs covered as investigation costs as part of the defense obligation allows you to learn about the environmental conditions of your site. Are there other responsible parties? When did the releases occur? How did they occur? How do you limit the liability that you are going to be obligated to pay for at your site? This is a critical issue in understanding how much coverage you will receive from your policies based on your state.  

Duty of Cooperation
You must cooperate with your carrier. If they ask you questions, you must answer them, and you must provide them with information. Otherwise, they can claim that you did not cooperate with them. 

Voluntary Assumptions of Liability
Another way of saying this is agreeing to everything before the insurance company is even on notice of the claim because that can be argued as a defense for them as an assumption of liability. This does not include reporting an environmental contamination to your state regulator. 

Lost Policies-evidence of insurance
This is a state-by-state consideration of what type of evidence you will need to show to prove coverage of insurance. What constitutes adequate secondary evidence of insurance?  

Private causes of action against other responsible parties
Were there other polluters on the property before you? What actions will your team need to take to find these other responsible parties and compel them to share in the liability costs?  

Participation in State Cleanup Funds
Some states have cleanup trust funds to help pay for environmental cleanup. Ask your environmental consultants and attorneys how to access these funds while also utilizing your old insurance.  

These are all things to think about as you enter this process of finding your old insurance. What we hope you understand is that locating this old coverage should be celebrated, but it is one battle in an even bigger war. Make sure you have experts by your side that can prove the existence of coverage, tender the claim with your insurers, and put together a compelling legal argument based on the language of the policies and your state’s unique interpretation of the law. The extent to which you utilize these resources will play a key role in deciding how much environmental cleanup your insurance will cover.  

Learn more about our insurance archeology services.  

*There is caselaw in New Jersey that the insurance carriers have used to argue that they do not have to pay for “defense” upfront. That has the potential to derail a project because there is a substantial difference between fronting the money for environmental investigation for the defense of a claim versus having the insurance carrier pay for it upfront. Getting reimbursed at the end after you have fronted what can sometimes be hundreds of thousands of dollars is a lot harder to deal with.  

Dru Shields, Director of Drycleaner Accounts
For over 10 years, Dru has helped numerous business and property owners facing regulatory action, navigate and manage their environmental liability. Dru has vast experience in assisting dry cleaners in securing funding for their environmental cleanups through historical insurance policies. Dru is a member of numerous drycleaning associations in addition to serving on the Midwest Drycleaning and Laundry Institute (MWDLI) advisory council and on the Drycleaning & Laundry Institute Board (DLI) as an Allied Trade District Committee Member. 


Andrew Skwierawski, Senior Attorney
Andrew Skwierawski has over 12 years of legal experience. He combines that with a background as a veteran software developer and small business owner with his technical and scientific-focused law practice that includes environmental litigation, e-discovery, complex commercial disputes and municipal compliance. Andy’s environmental litigation work for Davis|Kuelthau has included representing manufacturers, property owners, farmers and environmental organizations. Andy represents drycleaners at dozens of sites across the State to address historical site contamination with the Wisconsin DNR as well as resolving insurance coverage disputes with their insurers.  


Ted Warpinski, Shareholder
Ted Warpinski has over 30 years of experience working on a wide variety of environmental and litigation cases across Wisconsin. From the early years of Superfund litigation on sites like the Fadrowski Drum Disposal Site in Franklin, Wisconsin and the Moss-American Site in Milwaukee, Ted has been immersed in both the legal and technical aspects of environmental law. Ted’s litigation practice has grown to include environmental nuisance claims and toxic tort litigation, contract and property disputes, construction defects, insurance coverage litigation and enforcement actions. Ted also works very closely with the firm’s real estate and development lawyers handling due diligence investigations and environmental permitting. His experience includes addressing real estate deals that involve brownfield issues, where the risk of liability for historical contamination is a major consideration. Ted’s experience allows him to assist the Davis|Kuelthau team with understanding and managing these risks.