Fear, Hope and Determination: A Tale of Two Dry Cleaners

MANAGE YOUR ENVIRONMENTAL ISSUES, DON’T LET THEM MANAGE YOU.

BY: JEFF CARNAHAN

The evolution of environmental laws and regulations over the past few decades have resulted in the reality that operators of drycleaners, owners of property where drycleaning has occurred, and chemical suppliers or waste haulers can all be held responsible for an identified release of solvents to the ground, no matter how long ago it happened. I’ve worked with hundreds of drycleaners when the time has come to approach their environmental concerns, and I’ve seen the reasons why they made the decision to do so.

CASE #1 – PROACTIVELY MANAGING ENVIRONMENTAL CONTAMINATION
We have a client who came to us and was interested in addressing their fear that past dry cleaning operations had caused a contamination problem at their property. Let’s call them Happy Cleaners. The business had owned the property since the 1960s, and they had operated a Perc plant until the early 2000s, when they switched to a hydrocarbon solvent. Business was going well, so they wanted to take out a loan to expand operations, using the property as collateral.

When a property is used as collateral for a commercial loan, the lending institution requires that a Phase I environmental assessment be performed, and if the property has a history of dry cleaning operations, a Phase II subsurface investigation will also be required that includes below ground sampling. If contamination is identified during this process, lenders will most likely not allow the property to be used as collateral due to a presumed reduction in property value and the potential that environmental liability could transfer to the lender if a worse-case loan default situation were to arise.

Happy Cleaners understood these facts and they wanted to find out if contamination existed before they approached their lender so that if a problem existed, they could address the issue and get a regulatory closure before they approached their lender. This showed ambitious planning by our client, because if they had rolled the dice with the question of contamination, they could have wasted a lot of time and money dealing with the lender prematurely and potentially upset their business relationship, if things didn’t turn out well.

Happy Cleaners also had fears about how they were going to pay for the environmental contamination issue if one was identified. Fortunately, we were able to consult with Happy Cleaners and we were able to reconstruct their past general liability insurance coverage portfolio, which was worth more than 20 million dollars in coverage that could be used to pay for any environmental issues that may be discovered during due diligence.

With a solid plan in place, along with a healthy portfolio of known insurance assets lined up, Happy Cleaners performed some limited subsurface sampling to determine if a release of Perc had occurred at the property at some point in the past. True to expectations, Perc was identified in soil, groundwater and soil gas samples collected from the property and an adjacent property owned by others. The state environmental regulatory agency was notified of the problem, and the investigation process was started. I’ll spare you the gory details of the environmental investigation process for now, but after a little more than a year, Happy Cleaners was able to estimate the cost of future cleanup, verify that their insurance assets were adequate to cover the cost, and approach their lender about the loan. Once a remediation work plan had been approved by the regulatory agency, the loan was closed and Happy Cleaners was able to perform their expansion.

In the case of Happy Cleaners, they approached their fear of environmental contamination in an ambitious and calculated manner. They were fortunate in that they were in control of the process the entire time. Not everyone has that opportunity, like my second client example who we will call Scrappy Cleaners.

CASE #2 – DON’T LET ENVIRONMENTAL CONTAMINATION MANAGE YOU
Due to a series of hard knocks, Scrappy Cleaners was in the process of winding down their business. They had a thriving business back in the early 1980s when they opened, but they had been trying for years to sell their operations. Finally, they had decided just to close shop. During this time, however, an adjacent commercial property was undergoing a re-financing process and a Phase I and Phase II environmental site assessment identified Perc contamination. The source of the Perc appeared to be Scrappy Cleaners, and it had migrated to the adjacent property in soil and groundwater. The adjacent property owner notified the state regulatory agency of the issue, who in turn sent a letter to Scrappy Cleaners demanding that the contamination be investigated and cleaned up. The adjacent property owner also applied pressure.

Once their fear had transformed into determination, Scrappy Cleaners set to the effort of getting themselves out of harm’s way. They knew that they had always purchased the required general liability insurance coverage to do business, but they had thrown away a lot of files and records during the winding down process. They hired our insurance archeology division who was able to find evidence of a few policies. Although their entire portfolio of insurance coverage couldn’t be identified, there was enough evidence to compel the insurance carrier to start paying for the environmental investigation work being demanded. Ultimately, the insurance carrier looked at their own records and identified additional policies that they had written, and enough coverage was identified that the entire onsite and offsite cleanup was funded per the regulatory agency demands.

Now, obviously, business owners would much rather be in the position of Happy Cleaners rather than Scrappy Cleaners if possible. These were two examples, however, that demonstrate that whether you start out in complete control and systematically walk through evaluating and managing your environmental liability, or you are quickly forced into dealing with them; fear doesn’t have to be the driving emotion. Call someone who has been through this before to get perspective, become determined, and put these issues behind you because they aren’t going away. Also, find yourself a qualified environmental consultant who knows your business concerns, as well as your technical needs. Remember, they work for you and you are in charge.

For more information, please fill out our contact form.

As seen in Cleaner & Launderer


Jeff Carnahan, LPG, has 20+ 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 focused on being a partner with the dry cleaning industry for the past decade, and he’s a frequent contributor to the national dry cleaning publication Cleaner & Launderer. He is an industry leader in understanding that environmental risk includes not only cleanup costs, but also known and unknown third-party liability.

Does Your Portfolio Have Liability Issues?

Environmental liability can complicate and even derail acquisitions while unexpected liabilities can significantly affect a company’s bottom line. But old insurance policies may hold hidden assets and could remove your unwanted liability issues.

To get started, first answer the following questions to determine if your portfolio has liability issues.

  1. Are contamination issues preventing an acquisition or land purchase?
  2. Have you considered using the old insurance owned by companies that you’ve purchased or are considering?
  3. Does your portfolio include old manufacturing sites?
  4. Are any of your companies paying for environmental investigation and cleanup?
  5. Are environmental liabilities impacting the balance sheet of any of your portfolio companies?
  6. Is environmental work being delayed or dragged out to preserve the EBITDA of any of your portfolio companies?

For an explanation of commonly used environmental terms in M&A, visit our Common Environmental Terms in Mergers and Acquisitions post.

If your portfolio has deals which involve environmental liabilities, we can help you save them. We’ve found over $5 billion in usable assets for clients since 2008. Through our unique insurance archaeology division, PolicyFind™, we reconstruct historical insurance coverage, locate funding for cleanup costs and legal defense against third-party liabilities. We manage environmental claims, provide remediation services and offer guaranteed cost-cap cleanups to effectuate a transaction.

Fill out our contact form for a confidential consultation.

Common Environmental Terms in Mergers and Acquisitions

Known or unknown environmental liabilities are major risks when executing mergers and acquisitions. When contaminated property is involved in a transaction, the buyer typically wants no part of the associated liability. Here’s an explanation of common environmental terms you’ll encounter in the M&A world.

What is environmental liability?

An environmental liability, in context of a purchase or sale of a company refers to potential environmental costs that may be incurred post-transaction related to some or all of the assets being acquired or leased, including real estate where there’s possibility of contamination. Buyers will search for potential environmental issues during due diligence, particularly in shares purchased where they are not just the assets of a company, but also the liabilities. Sellers must be prepared for buyers conducting environmental assessment during the due diligence process. An environmental assessment should be conducted whereby a review of all potential hazards and a quantification of remediation costs are completed. If land and a building are purchased, buyers will look to reduce the purchase price for the estimated remediation costs. Buyers will also require seller indemnity for any environmental costs that are incurred post-transaction related to pre-transaction activities because environmental liability is retroactive.

 

What is real estate due diligence?

Real estate due diligence is the evaluation of a property’s potential petroleum or hazardous materials impacts to the environment. It is used to assess environmental liabilities and risk and to satisfy all appropriate inquiries to allow the user to qualify for landowner liability protections. Due diligence on a property is performed through Phase I and Phase II Environmental Site Assessments (ESAs).

Due diligence is required during business and property acquisitions to determine if the business operation and/or associated properties carry any potential environmental liabilities including hazardous waste contamination, lack of permits, permit violations, and compliance deficiencies.

 

What is an environmental assessment?

It’s the assessment of the environmental consequences. It is defined by the International Association for Impact Assessment (IAIA) as the “process of identifying, predicting, evaluating and mitigating the biophysical, social, and other relevant effects of development proposals prior to major decisions be take and commitments made.” This may include Phase I and Phase II Environmental Site Assessments (ESAs) and site characterization and investigation. Phase I Environmental Site Assessments (ESA) incorporate historical documentation, records review, site reconnaissance, interviews, and government records to determine if a Recognized Environmental Condition (REC) exists for the site. Phase II ESAs and site characterizations include sampling media for laboratory analyses. The purpose of these steps are is to ensure that decision makers can accurately consider the environmental impacts, risk, and liability when deciding whether or not to proceed with a project.

 

What is Insurance Archeology?

Insurance archeology is the process of recovering historical insurance policies that covered individuals and businesses. Organizations with a history of providing product or processes that have the potential of causing harm or accident to others must make sure that their liability is mitigated. Historical insurance can be a huge benefit for these organizations because old insurance policies can be used to pay for costs associated with environmental contamination investigations, legal representation, and even the cleanup of contaminated sites.

 

Why are historical Commercial General Liability (CGL) policies valuable?

CGL insurance policies can be worth millions of dollars and can help pay for environmental investigation and due diligence, cleanups, legal fees, cost recovery and policy buyback. They also protect the policyholders from lawsuits and administrative orders. CGL insurance policies are purchased by business owners to cover them against their business’ liability exposure. This is very important in determining whether an individual or business’ old insurance policies can be used to pay for environmental investigations and cleanups.

 

Learn more about our mergers and acquisitions services.

5 Things to Know about Vapor Intrusion, Your Home, and Your Health

LEARN HOW VAPOR INTRUSION CAN IMPACT INDOOR AIR QUALITY IN BUILDINGS AND THREATEN HUMAN HEALTH, AND FIND OUT WHAT CAN BE DONE TO MITIGATE THIS RISK. 

Vapor Intrusion, or VI, occurs when contamination beneath the ground emits toxic vapors that can travel through the soil and enter the interior spaces of houses and buildings. The types of contamination most commonly associated with VI concerns are industrial solvents like chlorinated volatile organic compounds (CVOCs), and petroleum products like gasoline.  The Environmental Protection Agency just released final guidance on vapor intrusion issues, which regulates how inhalation exposures from VI are assessed and controlled.

There has been a great deal of concern in recent years about the potential for harmful health effects related to VI exposure, and many people are unintentionally involved.  In turn, there has been a lot of concern from those who hold legal liability for the contamination, even if they didn’t cause it.  Every day, it seems, a new VI case emerges where one or more homeowner learns that they and their family may have been exposed in the past, or are now being exposed, to harmful vapors from contamination.  Even commercial buildings and strip malls can be subject to VI.  The affected buildings are typically located near, but not necessarily adjacent, to current or historical drycleaning facilities, factories, or gas stations.  If you own a home or building located near a commercial corridor or close to a manufacturing area, you may wonder if VI is a problem at your home.  Here are 5 things to consider when you ask that question and contemplate the potential answer.

1. SUBSURFACE VAPORS CAN TRAVEL A SIGNIFICANT DISTANCE FROM ITS SOURCE
When looking around your home or building to determine if it’s located near a potential source of harmful vapors, keep in mind that vapors travel in the subsurface.  They move within the open, air-filled spaces in the soils above the water table.  There are many scientific factors and variables that affect the direction and extent to which vapors move.  As such, it’s problematic to predict.  Generally, many regulatory agencies use a rule of thumb whereby if a structure is within a 100-foot radius of a release of volatile contaminants, it should be further assessed for potential VI issues.

2. PAST SOURCES OF VI MAY BE HIDDEN FROM VIEW BY PROPERTY REDEVELOPMENT.
Just because there isn’t a gas station or dry cleaner near you now, it doesn’t mean that one didn’t used to be there. Commercial and industrial properties are being bought and sold on a daily basis, and individual commercial tenants come and go. Especially in busy traffic corridors that pass through residential parts of town. As a result, there may be no indication that a dry cleaner operated in your corner strip mall for 20 years, and then moved out 10 years ago. Also, you can probably expect that in older parts of town, just about every corner of a busy traffic intersection accommodated a petroleum gas station at some point in history. There are ways of learning about the commercial history and land transfer records at local libraries. An individual can go find the City Directories and look it up.  There are also commercially available sources of this data for wider real estate uses.

3. WHEN A SOURCE OF VI IS FOUND BY ITS RESPONSIBLE PARTY, THEY ARE REQUIRED TO FULLY INVESTIGATE AND ADDRESS ANY POTENTIAL EXPOSURE. 
Although the scientific study of how vapors of different industrial origins move within the subsurface is still developing, and the health effects related to breathing them are still under evaluation, the federal, state and local environmental regulatory agencies are very keyed-in to identifying sites with potential VI issues. If a commercial property transaction results in the knowledge that past use included an activity that may have potentially resulted in contamination, it is most often confirmed or denied through the collection and analysis of soil and groundwater samples. If contamination is identified, the state environmental regulatory agency is notified.  The responsible party for the contamination then is required to begin the process of investigating the extent of the impacts and finding who may be exposed to the contamination. The potential for VI is being watched very closely by the agencies. So it is possible, and probably a good idea, to contact your state environmental regulatory agency to inquire if there are any active contamination investigations or cleanups occurring in your vicinity. Their websites may actually have interactive maps or searchable databases where you can find this information on your own. If there is a site in your neighborhood and your structure is within 100 feet of it, you can likely expect a request to for sampling. The best way to know if there is a concern is to let the environmental professionals do their job.  Be sure to put in your access agreement that they’ll let you have the results.

4. THE NEED TO INTERVENE IF VI IS OCCURRING AT YOUR HOME OR BUILDING IS ASSESSED BY THE REGULATORY AGENCIES USING CONSERVATIVE SCREENING LEVELS.
The health effects related to the inhalation of vapors from industrial contamination are still being evaluated.  The exact amount of individual chemicals that are “safe” to breathe is not yet known.  By using overly conservative toxicological factors, and by overestimating the amount of chemicals that individuals may be exposed to, the agencies have developed a set of “screening criteria” to frame exposure.  The goal is to overestimate the potential for harmful effects of VI exposure, and therein addressed and eliminated every actual exposure scenario. The reality for occupants of commercial or residential buildings who are breathing contaminated air, is that the health-based screening level communicated to you is not actually the level at which your health will be immediately harmed. That doesn’t mean that you have to continue breathing it, but there is no need to panic.

5. EXPOSURES IN THE HOME FROM NATURALLY OCCURRING RADON GAS AND VI FROM CONTAMINATION ARE ELIMINATED IN ESSENTIALLY THE SAME FASHION.
In many parts of the country, radioactive radon gas is constantly emanating from decaying rocks and soils. Radon comes into contact with occupied structures and is subsequently breathed by people. This is exactly the same process as VI from contaminant sources. The process of determining if radon is present in private homes has been part of the residential real estate process for many years.  As such, many more people are familiar with radon than VI. The good news is that if your home or commercial building has a radon mitigation system already installed and in operation, you may be protected from subsurface VI concerns. Typically, however, mitigation systems designed for VI from industrial chemicals are more robust.

For more information on Vapor Intrusion and Mitigation, contact us for a confidential consultation. 

 

EnviroForensics Team Members Taking on MSECA And NAWIC Leadership Roles

We’re proud to announce that two of our team leaders, Morgan Saltsgiver, LPG, Director of Brownfields and Agribusiness, and Megan Hamilton, Director of Vapor Intrusion and Mitigation Services, have accepted leadership roles with professional industrial associations.

Morgan saltsgiver headshot

Saltsgiver who leads our Brownfields Development and Agribusiness efforts has been elected as Treasurer of the Midwestern States Environmental Consultants Association (MSECA) and is taking on the same role with the Indianapolis Chapter of the National Association of Women in Construction (NAWIC) Board.

 

Megan Hamilton headshot

Hamilton, who heads our Vapor Intrusion and Mitigation efforts, is retaining her position with the MSECA Board of Directors as Consultant Member Director.

 

 

We’re leaders in cutting edge environmental consulting and advancing the scientific technological practices of our industry. We believe our continual involvement in these groups will further strengthen our company and holistically push the environmental community forward. 


Learn more about the two organizations:

 

midwestern states environmental consultants association logoMidwestern States Environmental Consultants Association (MSECA)

The Midwestern State Environmental Consultants Association is an organization that works to advance the field of environmental consulting by providing professional development opportunities for its members through education and industry updates related to technical                                         developments, regulations, training and codes.

national association of women in construction logoNational Association of Women in Construction (NAWIC)

The National Association of Women in Construction works to advance educational and professional development opportunities for women in construction through a nationwide network.

 

 


With a passion for storytelling, Alex Miller is EnviroForensics’ Marketing Coordinator leading social media and news reporting. Before joining EnviroForensics, Alex spent four years in television news where he worked for local ABC and NBC affiliates in Fort Wayne and Indianapolis producing morning and weekend newscasts. He loves keeping up with politics, pop culture, graphic design, photography and community enrichment.

The Brownfields Redevelopment Glossary

In the Brownfields redevelopment world, there’s number of keywords and acronyms used throughout the process–from the planning stage to ribbon-cutting stage. We’ve compiled an extensive glossary of commonly used words, so that you can know the industry lingo and can be a Brownfields redevelopment pro.


Use the links below to navigate throughout the page.


All Appropriate Inquiry (AAI) – A process of evaluating the historic and current usage and environmental conditions of a property to assess potential liability.  This is usually completed during the purchase or sale of a property.

Abandonment – This happens when a property owner suddenly stops using the property, leaves it vacant, and doesn’t sell it or give it to anyone to resume use.

“As is” Sale – The transfer of a property to a buyer with no promises, assurances, or representations by the property owner about the conditions of the property.

Aboveground Storage Tank (AST) – A tank that commonly stores chemicals like petroleum and is subjected to strict spill prevention regulations due to the potential danger of its contents to affect human health and the environment.

Activity and Use Limitation (AUL) – This institutional control is intended to reduce the time a human comes into contact with a contamination by putting restrictions on how the contaminated property can be reused.

Brownfields Advisory Committee (BAC) – This is a group of stakeholders, including members of the municipality, the community, and the developers  who work to provide grant funding to Brownfields redevelopment sites in their area.

Bluefields – Real estate term to describe a property that is either itself a body of water, or is directly adjacent to a body of water.  

Bona Fide Prospective Purchaser (BFPP) – A landowner that knowingly or has reason to know purchases a contaminated property and through the process of the environmental due diligence process (Phase I ESAs, etc.) can establish liability protection from being responsible for the contamination.  A very stringent set of steps are required to establish BFPP status and there are ongoing requirements to maintain this status even after environmental cleanup is complete.

Brownfield –  An industrial or commercial property that is either abandoned, unused, or underused due in part to the presence or perceived presence of environmental contamination.

Certificate of Completion –  This is written verification from a state regulatory agency stating the site has been remediated to satisfactory standards. In some states, this certificate provides the property owner with protection from being sued; however, in most states, a property owner will need to obtain a covenant not to sue to protect them from legal liability.

Cleanup Approval LetterSee Certificate of Completion

Clean Water Act (CWA) – This law was enacted in 1972 and regulates the amount of pollutants permitted to be discharged into US waterways.

Community Advisory Group (CAG) – A group of people who live in or close to a Superfund site and are involved in decisions regarding the cleanup. See Superfund Site

Community Development Block Grant (CDBG) – A type of grant that provides money and other resources to address a variety of community development needs, including upgrading building facades, creating public spaces, and addressing infrastructure needs. The CDBG is one of the longest running programs at the Department of Housing and Urban Development.

Comfort Letter – A letter issued by the state regulatory agency to a property owner who is affected by, but is not responsible for environmental contamination on their property. The letter establishes liability protection for the property owner. This letter does not typically provide protection from legal suits.

Commercial General Liability (CGL) Insurance Policy – This insurance policy provides coverage to businesses and can defend and indemnify policyholders against claims, such as environmental property damage claims, product liability claims, and claims against employees. See how Commercial General Liability (CGL) Insurance policies work.

Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) –  This Act provides federal funding to state or local agencies to clean up large contaminations in particular areas. It also empowers the EPA to seek out Potentially Responsible Parties (PRPs) and assure their cooperation in the cleanup. Notifications from the EPA under CERCLA can trigger an insurance carrier’s duty to defend.

Confidential Insurance Archeology® – This is a service provided by PolicyFind, a division of EnviroForensics, that restores financial viability to contaminated properties by conducting searches for historical insurance that may cover costs associated with contamination. See Historical Insurance

Contaminated Media Management Plan (CMMP) – This documentation, prepared by an environmental consultant, provides information needed to identify and properly manage impacted media at a particular site.

Contaminant of Emerging Concern (CEC) – This is a chemical that may cause harm to human health, but effects are not fully understood yet. The EPA typically takes the lead on the evaluation of these chemicals to establish cleanup levels if necessary.

Community Development Corporations (CDCs) – These are local non-profit groups that work to promote and advocate for urban redevelopment projects.

Eminent Domain Condemnation – This is a legal process that allows the government to acquire the title of a property in order to do something with it for the public good. Condemnation can lead to demolition, environmental cleanup, or a number of other solutions that move the property closer to reuse.

Contractor Certification – This process ensures that contractors meet a certain set of standards and are approved to perform specific tasks.

Contractor-Certified Cleanup – When a state allows private contractors to make cleanup decisions on behalf of the state. Only a small number of states have this cleanup process in place as of June 2018.  

Contribution Action –  When the person or persons identified to be responsible for a contamination take legal action against other liable parties to pay for their share of an environmental cleanup.

Corrective Action – This is the process used to clean up contamination at hazardous chemical treatment, storage, and disposal facilities. This is regulated under the Resource Conservation and Recovery Act (RCRA).

Covenant Not to Sue – This is a written promise by a state government that it will not sue or require further cleanup efforts from a party that has satisfactorily cleaned up their property under a state Brownfields or voluntary cleanup program.

Deed Restriction – This puts limitations on how a property can be used. It appears on the deed to the property.  

Due Diligence – This is a thorough evaluation of the environmental conditions of a property. Banks require this during a real estate transaction to ensure they are protected from taking on the liability of a potential existing environmental issue.

Easement – This is the right to use or limit the use of someone else’s property.

Emergency Planning and Community Right to Know Act (EPCRA) – This act requires companies that handle hazardous chemicals to have contingency plans for emergencies, and increases public access to information about chemicals at individual facilities

Engineering Controls – These are physical barriers that are put in place to prevent people from coming in contact with a contamination. Examples: Fences, pavement, clay caps on contaminated soil.

Enforcement of Compliance History Online (ECHO) – This is a directory managed by the EPA that provides compliance monitoring, enforcement, and demographic data on thousands of actively regulated sites across the country.

Environmental Protection Agency (EPA) – Federal agency responsible for the protection of  human health and the environment.

Environmental Assessment – A site investigation conducted to determine the extent, if any, of contamination on a property. They consist of two stages, including Phase I and Phase II.

Environmental Insurance –  This is a type of insurance that a person can buy to protect themselves from the financial costs that can come from a lawsuit related to an environmental issue on their property.

Environmental Liability – A probable, measurable, and reasonably estimable future expenditure of resources for environmental investigation and cleanup costs resulting from past transactions or events.

Environmental Remediation – This step in the environmental clean-up process removes pollution or contaminants from soil, groundwater, sediment, and/or surface water.

Exaction –  When a local government asks a developer for payment or some sort of concession on a project that serves the public good, like the construction of a sidewalk on land that will be developed.

Foreclosure – This happens when a mortgage lender takes possession of a property because the borrower can’t keep up with their payments.

Feasibility Study (FS) – This is a summary of a site’s contamination, remediation recommendations, and potential reuse.

Greenfield – A property that has no previous development, and therefore does not have an institutional restrictions placed on it.

Heating Oil Tank (HOT) – This is either an aboveground storage tank (AST) or an underground storage tank (UST) that stores oil that powers the furnace of a home.

Hazardous Substance Data Bank (HSDB) – This is a database of chemicals that can cause harm to human health.

Hard Costs –  In a construction project, these are the costs associated with the physical construction of the building and any equipment that is fixed.

Historical Insurance – This is a former policy or evidence of a former policy. See Commercial General Liability (CGL) Insurance Policy

Hot Spots – Specific areas at a project site where the level of contamination is very high.

Indemnification – What a commercial general liability policy does for its policyholder. It’s an agreement between the insurance carrier and the policyholder that the carrier will bear the costs for damages or losses incurred by the policyholder.

Independent Cleanup Program (ICP) – A state regulated program where the consultant provides oversight and certification of the cleanup of environmental contamination to expedite the process. This type of program is not available in all states.

Integrated Data for Enforcement Analysis (IDEA) – The environmental performance data for EPA-regulated sites.

Infill Development – The process of developing a vacant parcel in an urban setting surrounded by development.

Infrastructure – The streets, sidewalks, electrical and water utilities, and other public amenities that allow a society to function

Institutional Controls – The legal restriction put in place to reduce human interaction with an existing chemical contamination by limiting the use of a property. Examples include: Deed Restrictions, Easements, Warning Signs and Notices, and Zoning Restrictions.

Insurance Archeologist – An expert at identifying and locating lost liability insurance policies and assets that can be used to defend or indemnify policyholders against claims.

Insurance Archeology – The practice of retracing historical insurance coverage to identify past owners and operators of companies. See Historical Insurance

Insurer – The person or entity that enters into an agreement with a policyholder to protect the policyholder from potential expenses associated with injury.

Land Disposal Restrictions (LDR) – An EPA program that sets guidelines treating hazardous waste order for it to be safe enough to discard in a landfill.

Landowner Liability Protection (LLP) – Legal protections for people who own Brownfields properties.

Liability Relief or Liability Release – This is an official document that prohibits a lawsuit against a company responsible for environmental contamination. This order can be used as an incentive to compel the responsible party to clean up the contamination. Examples include: Covenant Not to Sue, No Further Action (NFA) Letter

Long-term Stewardship – This is a long-term view for environmental remediation on sites, which brings financial and environmental stewardship into the remediation planning stages.

Maximum Allowable Soil Concentration – Standard for the highest concentration of heavy metals in soil that’s still safe for human exposure.

Maximum Contaminant Level (MCL) – The maximum amount of a contaminant allowed in public drinking water as set by the EPA and regulated by the Clean Drinking Water Act.

Monitoring Well (MW) –  This is a hole in the ground from which environmental professionals can collect groundwater samples.

National Pollutant Discharge Elimination System (NPDES) – This is a program under the Clean Drinking Water Act that regulates chemical discharges from the source area.

National Priorities List (NPL) – This is the Environmental Protection Agency’s (EPA) list of the most serious hazardous chemical releases. It’s a guide for the agency to determine which sites need further investigation and more resources dedicated to address the contamination.

Natural Resource Damages – This is contamination that causes harm to any natural resource including land, fish, wildlife, air, water, groundwater, drinking water supplies, and other resources.

No-Further-Action (NFA) Letter – This is a letter from a state regulatory agency  that says it will not pursue any further legal action against a party because that party has satisfactorily cleaned up their property.

No Further Remedial Action Planned (NFRAP) – This is a declaration from the EPA that no further remediation efforts are needed at a site under CERCLA.

Notice of Violation (NOV) – This is a notice that informs the recipient that the EPA believes they have committe one or more violations, and directs them work towards compliance.

Nonresidential Use Standard – This is the amount of a chemical that is considered safe for human exposure at a nonresidential property. Nonresidential standards tend to be more relaxed because people are only inhabiting these buildings for a small portion of the day during business hours.

Oil Pollution Act of 1990 (OPA) – A law that works to prevent oil spills by enforcing the removal of the oil from the contamination site and assigning liability to the responsible party.

Office of Superfund Remediation and Technology Innovation (OSRTI) – This is the office at the EPA that manages the Superfund program.

Office of Solid Waste and Emergency Response (OSWER) – This office provides policy, guidance and direction for the EPA’s emergency response and waste programs.

Office of Underground Storage Tanks (OUST) – Office at the EPA that manages the guidance and direction for oversight of Underground Storage Tanks.

Preliminary Assessment (PA) – A very elementary review of a known or suspected contamination site.

Phase I Environmental Site Assessment (ESA) – A site investigation conducted by an Environmental Professional to learn the current and past history of a property, and determine the possibility of a Recognized Environmental Condition (REC).

Phase II ESA – If it is determined that a REC may be present on a property, a Phase II Environmental Assessment is recommended. This involves soil and groundwater sampling at the property to confirm the presence of contamination.

Policyholder – Person or entity that enters into an agreement with the insurer that says the insurer will protect the policyholder from expenses associated with injury.

Potentially Responsible Party (PRP) – People, companies, or any other organizations that may be responsible for a chemical release at a Superfund site, and may be liable to pay for cleanup costs.

Preliminary Assessment (PA) – This is a very elementary review of a known or suspected contamination site.

Preliminary Remediation Goal (PRG) – Goal to bring concentration of a chemical down to the point that any residual impacts will be within an established standard of acceptability.

Tetrachloroethylene (PERC or PCE) – This is a manufactured chemical commonly used in dry cleaning and in degreasing mechanical equipment.

Polychlorinated Biphenyl (PCB) – A toxic chemical that was once used to insulate electrical transformers, capacitors, and other utility lines. The use of PCB was banned in 1979.

Potential Responsible Party (PRP) – These are the individuals, companies, and organizations that may be responsible for a chemical contamination, and may be compelled to pay for cleanup efforts.

Pro Forma – In a real estate project, this is a carefully calculated estimate of the financial return that proposed real estate project is likely to generate.

Prospective Purchaser Agreement (PPA) – This is an agreement between the government and a prospective buyer of a Superfund site that protects the prospective buyer from certain liabilities for contamination that is already on the site. This agreement normally comes with a promise from prospective buyer to provide something of substantial public benefit.

Quality Assurance Project Plan (QAPP) – This is an outline written up during the due diligence and environmental cleanup process  that states the project objectives and monitoring parameters.

Remedial Action (RA) – This phrase encompasses all efforts to clean up a site including the construction of systems and/or in situ exercises.

Remedial Action Operation (RAO) – Any operation, maintenance, or monitoring in support of the Remediation Action.

Risk Based Corrective Action (RBCA) –   The strategy of cleaning up based on the risk to human health and pushing towards closure using appropriate levels of action and oversight.

Reopener Provisions – These agreements allow the government the right to require further cleanup if a previously unknown contamination is discovered or the remaining contamination is more toxic than originally believed.

Representations and Warranties – Representations are the basic underlying facts in contract law. The Warranties are the promises that a seller makes to a buyer assuring the factuality of the representations about the good being sold.

Request-for-Proposals (RFPs) – This is a document that is put out by a state agency asking developers for their qualifications and credentials and as well as project-specific plans.

Residential Use Standard – This is the amount of a chemical that is considered safe for human exposure in a residential building. Residential standards are the strictest use standards, and if a property passes these standards it can typically be reused for any purpose.

Resource Conservation and Recovery Act (RCRA) – This Act regulates the generation, transportation, storage, treatment and disposal of hazardous waste.

Restrictive Covenant – A specific type of deed restriction that prohibits the use certain parts of a property to reduce human exposure to existing contamination.

Risk Assessment – An evaluation of a property that identifies the potential harm an existing contamination will have on human health.

Running With the Land – The rights and obligations attached to the land that remain the same regardless of ownership.

Site Investigation – The practice of sampling soil, groundwater,  to determine the presence and extent of a chemical contamination.

Site Status Letter – A letter issued by the state regulatory agency to a party responsible for an environmental cleanup that the levels of contamination substantially meet screening levels and that the agency does not anticipate enforcement action against the responsible party.

Soft Costs – In a construction project, these are the costs associated with project planning, including architectural, engineering, administrative, legal, and design activities.

Superfund – Formally known as CERCLA, this fund was established by the US EPA to pay for large, long-term cleanup projects. The parties responsible for the contamination are ultimately required to either cleanup the contamination or reimburse the government for EPA-led cleanup work.

Tax Increment Financing (TIF) – This allows local governments to use future projected tax revenue to finance current infrastructure projects.

Tax Credits – This is an incentive for a large corporation to develop in a local municipality in exchange for a break on their property taxes.

Toxic Tort Action – A lawsuit brought against a company that seeks damages for an exposure to a hazardous substance.

Uncertainty Premium – The amount a buyer subtracts from the purchase price to reflect the risk of unexpected environmental assessment and cleanup costs.

Use Permit – A type of variance that authorizes an otherwise unacceptable use on a property without changing its zoning.

Variance – This is a mechanism that allows a property owner to use their property for something other than what the zoning ordinance permits.

Voluntary Cleanups – Cleanups of identified contamination that are not court or agency ordered. Most states have voluntary programs that encourage voluntary cleanups and that may provide benefits if volunteers meet specified standards.


It’s estimated that there are over 450,000 Brownfields across the United States, and while Brownfields redevelopment can be a lengthy and complex process, with the right team you can speed up the process and stay on track by turning environmental liabilities into assets®.

Contact us today.

Why Spending More Environmental Cleanup Dollars Now Is Smart for Business

When dealing with environmental issues, exposure control and regulatory closure are often seen as the end goals. After fully assessing current and future risk, it’s clear that regulatory closure should only be viewed as an interim milestone. When it comes to environmental liability, regulatory closure is seldom the end of the story. It’s often just an interim step in the process of protecting yourself from risk, communities from exposure, the environment from harm, and ensuring your new development is prosperous.

The various strategy options for eliminating exposure pathways and attaining regulatory closure can have vastly different costs when it comes to future liabilities, long-term stewardship (LTS), and Brownfields development.

This eBook Covers 

  • Why evaluating remedial efforts vs. long-term stewardship is smart for business
  • How point of exposure assessments helped identify where remedial and LTS program would be most effective
  • How spending more on active cleanup and relying less on long-term stewardship saved three business a combined savings of $1.595M

Download A Business Case Approach to Site Clean Up

picture of business case ebook cover

Takeaways

  • Too often environmental remediation strategies focus on short-term costs without factoring in requirements for proper long-term stewardship and the associated costs of implementation.
  • With recalcitrant compounds, such as perchloroethylene (PCE) and other chlorinated solvents, the threat of future exposure does not readily go away. If engineered or institutional controls fail, these lingering contaminants may present serious problems.
  • Proper cost-analysis takes all the factors into account so that you can find a balance between short-term and long-term costs and make decisions that are right for you.
  • By taking real costs into account it will be possible to find a well-informed balance between short-term and long-term expenditures that will help you maximize your potential savings.

 


Jeff Carnahan is a Licensed Professional Geologist (LPG) with over 20 years of environmental consulting and remediation experience and is currently serving EnviroForensics® and our clients as President. Jeff has contributed to the success and growth of EnviroForensics through strategic market analysis and corporate risk management, as well as encouraging and upholding the superior level of technical expertise found at EnviroForensics. Jeff focuses on controlling risk and costs to all of our clients. He has expertise in working with releases of chlorinated solvents and other industrial chemicals within voluntary and enforcement cleanup programs for various State agencies and the U.S. EPA. He has also been at the forefront of vapor intrusion exposure issues over the past 15 years by contributing to the scientific community nationwide, and by forming the EnviroForensics Vapor Intrusion Group of experts. Throughout his career Jeff has provided technical support to the legal community. He has served as a consulting and testifying expert regarding the cause, origin, timing, and cost of environmental releases, as well as cost-recovery claims on behalf of insurance policyholders. Jeff’s passion for redeveloping and re-using contaminated properties aligns with the company’s commitment to restoring environmentally impacted properties on behalf of our private and municipal clients.

Listen to Henshaw Talk With Local NPR Station About Investment in Northwest Indiana Community

For more than two decades, EnviroForensics has been helping dry cleaners and small business owners tackle their environmental liabilities while finding alternative funding sources to pay for cleanup, and now, EnviroForensics will be opening an office in Northwest Indiana.

CEO, Steve Henshaw, had the opportunity to talk about this exciting news with Lakeshore Public Radio, the local NPR station, and his vision to find new ways to fund environmental cleanups and stimulate economic development. 


Listen to the entire interview


“Our approach is to look and see if we can find some resources through old insurance policies, normal slip-and-fall type insurance policies, that didn’t have exclusions to these policies for contamination, or environmental pollution,” Henshaw told Chris Nolte, host of Regionally Speaking.

Learn more about CGL policies and how they can be used to fund environmental investigation and cleanup efforts.

While the majority of the company’s work has been with manufacturers and small business owners, Henshaw explained the practice of digging up old policies can also work for larger industrial sites and Brownfields projects that may be lying dormant in Northwest Indiana.

“A lot of these sites might be distressed, sitting there on the tax roll, but not in any kind of active productive use, so they aren’t really benefiting the community,” Henshaw said, referring to the underutilized or, in some cases abandoned, industrial facilities in Northwest Indiana.

“We can also assist municipalities at pursuing the same sort of options of finding these resources to pay for these very expensive long-tail liabilities.”

A large portion of the conversation centered on building a stronger relationship with the communities in the region. The goal isn’t just to have easier access to EnviroForensics’ current project sites. Henshaw says they’re also trying to become a more integral part of the community, by offering their services as a technical resource in good-faith to municipalities under budgetary restrictions, and staffing the office with a Northwest Indiana native who understands the ambitions and needs of the area.

“By having a local heading up that branch in Michele Murday, we’re very excited that this gives us a stronger foothold in the community itself,” Henshaw said.

To learn more about how EnviroForensics can help you revitalize your community visit Brownfields Development and fill out our form.


With a passion for storytelling, Alex Miller is EnviroForensics’ Marketing Coordinator leading social media and news reporting. Before joining EnviroForensics, Alex spent four years in television news where he worked for local ABC and NBC affiliates in Fort Wayne and Indianapolis producing morning and weekend newscasts. He loves keeping up with politics, pop culture, graphic design, photography and community enrichment.

 

EnviroForensics® Announces New Northwest Indiana Location in Hammond

ViewofDowntownHammond_Credit-HammondMan
View of Downtown Hammond, Indiana.
By HammondMan [CC BY-SA 4.0],
from Wikimedia Commons.
EnviroForensics®, an Indianapolis-headquartered environmental consulting, engineering and design remediation firm with offices in Wisconsin, Kentucky, and Southern Indiana announced today that they are opening a Northwest Indiana office in Hammond, Indiana. EnviroForensics specializes in Turning Environmental Liabilities Into Assets® through their insurance archeology, investigation and remediation, and legal support services. EnviroForensics is investing in the Northwest Indiana area by strategically launching this new office to clean-up environmental contamination left from historical manufacturing operations in the region and help make way for new site development.


Steve Henshaw
, Chief Executive Officer of EnviroForensics says, “We have conducted environmental remediation and oversight on dozens of projects in Northwest Indiana, including work on the Gary Chicago International Airport (GYY), the Indiana Harbor and Ship Canal, and the Gary Sanitation District. With this local presence, we will be able to work more closely with developers and municipalities to restore property values by cleaning up contamination and make them viable for financing by lending institutions, which will help bring increased investment dollars to the region.”

Northwest Indiana native and EnviroForensics’ newly appointed Northwest Indiana Branch Manager, Michele Murday will run the new office out of the HUB of Innovation, a cutting edge business incubator managed by the Hammond Development Corporation at 5233 Hohman Avenue in Hammond, IN. The office launch will be introduced at the Northwest Indiana Forum’s Summer Networking Event with local economic stakeholders on Wednesday, June 27th at 5:00pm.

###

For More Information:
Jackie Cabrera, Marketing Manager
jcabrera@enviroforensics.com
866-888-7911

How Does It Work? Insurance Archeology and CGL Policies

LEARN HOW POLICYFIND USES INSURANCE ARCHEOLOGY TO PUT THE POWER OF THE CGL POLICY BACK IN THE HANDS OF THE POLICYHOLDER


BY: KRISTEN DRAKE

Over 25 years ago, EnviroForensics and PolicyFind’s CEO Steve Henshaw, P.G. discovered the power contained within historical commercial general liability (CGL) insurance policies in the face of a lawsuit or an environmental issue. Henshaw discovered and has since proven, that using a company’s historical CGL insurance policy is an effective funding source to pay for the expensive cost of investigating and cleaning up environmental contamination.

WHAT ARE COMMERCIAL GENERAL LIABILITY INSURANCE POLICIES?

CGL insurance policies are purchased by business owners to cover them against their business’ liability exposures. This is very important in determining whether an individual or business’ old insurance policies can be used to pay for environmental investigations and clean-ups.

This makes CGL policies very important protection for corporate policyholders because they broadly provide defense and indemnity coverage against claims for bodily injury and property damage. Coverage includes products, completed operations, premises, and operations, elevators, and independent contractors, to name a few.

Tabs of old insurance files that can be used as evidence of historical insurance coverage
Hiring a proven Insurance Archeologist can help your company uncover millions of dollars in usable insurance assets to cover legal fees and pay for investigation and remediation of environmental contamination.

HOW DO “HISTORICAL” COMMERCIAL GENERAL LIABILITY INSURANCE POLICIES WORK?

In general, CGL policies have included and even excluded environmental pollution and contamination language like “unexpected and unintended releases.” Such unexpected and unintended releases mean accidental releases or accidental spills, not intentional releases, which would be better defined as dumping or disposing. CGL policies were not covering individuals and businesses for pollution or contamination associated with dry cleaning operations. A separate environmental policy would be required to cover environmental pollution and contamination.

So, if you or your business bought CGL insurance before the policies contained absolute pollution exclusion language, you are likely to have insurance coverage that can address environmental contamination, even if that contamination has only been recently discovered.

In addition, old policies provide a defense against a claim or suit. In some states, a claim or suit could be a letter from the regulatory agency or a neighboring property owner demanding a response to identified environmental contamination. In other states, the courts have determined that the insurers must only defend an actual lawsuit.

‘OK’, you might ask, ‘that sounds great, but what if I can’t find my old policies or policies that were bought by the former owners?’ Well, those old policies can still be found. While there is no guarantee, contacting an expert insurance archeologist increases your chances of finding old policies or evidence of old policies. PolicyFind, a division of EnviroForensics, boasts an 85% success rate at finding old insurance policies or evidence of old policies.

Insurance archeologist looking over old insurance files in front of sunlit window
Insurance archeologists have the knowledge-base to find evidence of CGL policies, and advise clients on how those policies can be used. Frequently clients say hiring an Insurance Archeology team was one of the best investments they’ve made and helped further their company’s success.

USING YOUR POLICIES FOR DEFENSE AND INDEMNIFICATION

After finding the old policies, it is then critical that you know how to use these policies to your benefit. Insurance law is different from state to state and not every state has good law for the policyholder. Insurance policies contain different language which can vary by carrier and by policy period.

In pulling this concept together:

  • A defense includes paying for lawyers dealing with the environmental contamination. A defense would also include quantifying an individual or business’ exposure and liability. The only way to quantify environmental liability is to collect environmental samples (e.g. soil, soil gas, indoor vapor, groundwater). It would also mean determining how expensive a cleanup would be, which means that, aquifer tests, feasibility studies and remediation technology evaluation should be covered.
  • Indemnification is the process where the insurer brings the insured back to where they were before the damages occurred, as stipulated within the insuring agreement. In other words, indemnification makes the insured ‘whole’ again by paying for damages or losses already sustained and expenses already incurred.

PRACTICAL APPLICATIONS OF YOUR CGL POLICIES

Historical insurance policies can be beneficial in providing coverage for a number of different situations. For example:

  • Plumbing and building supply companies defending product liability claims from exposure to products sold containing asbestos.
  • Municipalities involved in litigation.
  • Manufacturers of pumps defending product liability claims from exposure to asbestos gaskets.
  • Churches and schools defending personal injury claims.
  • Dry cleaners defending against environmental property damage claims brought by neighboring business property owners.
  • Business property owners defending property damage claims by state environmental authorities.
  • Insurance companies defending policyholders against environmental property damage claims and wishing to document insurance coverage of other potentially responsible parties.
  • Real estate developers, environmental consultants, attorneys and regulatory agencies.

WHAT YOU CAN USE CGL POLICIES TO FUND

Infographic illustrating the what commercial general liability policies can be used to pay for, such as environmental and defense costs.
Once triggered historical commercial general liability (CGL) policies may be used to for legal fees, defense against claims, site investigation, remediation/cleanup, interim remedial measures, building legal case, potentially responsible parties (PRP) search, interfacing with agencies and prior costs be may be retroactively recovered.

The process of using old insurance policies has many parts. There may be an insurance archeology component, a legal component and an environmental component and they all have to work together. Understanding all aspects of the process is not your job, that’s why you hire experts to uncover your insurance assets.

EnviroForensics and PolicyFind have successfully used the historical insurance of businesses, individuals and even defunct and bankrupt companies as sources of funding to pay for the investigation and cleanup of contaminated sites.

There are billions of dollars in unclaimed assets available to parties looking to defend environmental claims and personal injury claims. PolicyFind works diligently every day to put the power of the policy back in the policyholder’s hands – where it belongs.

Call PolicyFind’s insurance archeology experts today at 866-888-7911 or fill out our form.

PolicyFind clients commonly face immense challenges and deadlines, and they rely on our strengths to provide solutions for them. Our team understands the unique set of circumstances that businesses face when liabilities from past business operations arise. With our help, they can overcome their inevitable feelings of anxiety, powerlessness, and uncertainty.

 


 

Headshot of Kristen BrownKristen Drake brings more than a decade of research and managerial experience in broadcast journalism to the field of insurance archeology. Since joining the PolicyFind team in 2015, Mrs. Drake has successfully documented liability insurance programs on behalf of municipalities, manufacturers and dry cleaners. She continues to translate her expertise in source procurement and digital fact-finding, performing insurance research activities at a very high level, providing on-time execution of contracted performance goals.