How drycleaners can maximize value in real estate transactions


Drycleaner sitting at table negotiating real estate transaction of property and business

As environmental consultants, we keep a close eye on commercial real estate trends, and we’ve recently seen indicators that the commercial real estate market is experiencing a recovery and transactions are on the rise in response to falling interest rates. We’ve also seen an increase in the buying and selling of businesses, as investors look for strategic opportunities to pick up a struggling business for cheap. 


The current economic downturn and the associated market disruptions will be another catalyst of change for the drycleaning industry. Drycleaner owners need to consider if now is the right time to buy, sell or refinance their business or property. 

All three of these options will likely prompt environmental due diligence activities like Phase I and Phase II Environmental Site Assessments (ESAs) as businesses change hands, properties are sold, or banks re-evaluate loans. Environmental contamination problems could be identified during this process, so now’s a good time to evaluate your options, strategy and environmental preparedness.    


It’s important to consider the legal implications of these real estate transactions and the environmental due diligence through your strategy – so it may be wise to consult a real estate attorney to help navigate your deal. Simply taking advantage of the low-interest rates can trigger the need for more collateral to secure bank loans. A few examples for drycleaners include:    

  • Selling your business or merging with another drycleaner 
  • Refinancing your bank loan for a better interest rate 
  • Acquiring new machines or a vehicle 
  • Adding on a new addition or remodeling the business 
  • Buying a new location like a drop plant 

Any time a lending activity in the commercial sector involves the use of an owned property as collateral, there is going to be a reassessment of the property’s value, and that is going to include an evaluation of its environmental condition. Especially if it’s a property with a history of drycleaning operations. It’s an unfortunate truth that drycleaners typically will be required to do a phase II just because they are a drycleaner. Sometimes it’s inevitable and unavoidableespecially when you’re not in control of the due diligence like in the case of a neighbor or landlord selling or refinancing 

A lot of times people wait until after they are facing an environmental contamination issue head-on to look for funding options, maybe they are being sued or have received a letter from their regulatory agency, but either way, now they’re in a reactive position trying to find a way to pay for the hefty cost of cleanup. 

There are funding options available to drycleaners that include insurance options to buffer risks like historical commercial general liability (CGL) insurance policies or purchasing Pollution Legal Liability (PLL) insurance if you don’t already have it. You can add value by purchasing PLL policies, especially if you are unable to locate historic CGL policies or are interested in an extra layer of protection. Pollution policies can cover new conditions at a site from the inception of the policy and onward or for unknown pre-existing conditions. PLL policies focus on the costs and risks associated with potential contamination both on and off the property, as well as unanticipated contamination found during site cleanup and/or redevelopment. These policies can be used as a nice addition to your funding strategy to save deals and manage legal liability. 


CGL insurance policies protect the policyholder from third party liability. For a drycleaner, historical CGL policies directly from the policyholder or from predecessors that pre-date any absolute pollution exclusions can be used to help pay for environmental investigation and cleanup costs. These policies should typically pay for the site investigation to determine the nature and extent of the contamination, legal defense fees, contamination remediation, locating any other responsible parties who should also be held liable for the contamination and interfacing with the regulatory agency on your behalf 

There are three different ways that CGL insurance policies can add value to your drycleaning business.  

1. Be proactive and pull together insurance information to create a safety net in case environmental issues are uncovered down the road.  

These policies can be worth millions of dollars. Add value to your business by giving yourself that cushion. If you’re prepared for the future, it’ll be less stress and less money out of pocket to formulate a strategy if you know what kind of coverage you have available to you. This first scenario is really the most ideal to pull together your policy information without a deadline – and if you’re unable to locate it yourself, you can hire an Insurance Archeologist to help you track it down.  

2. If you’re already in the environmental due diligence, it’s time to pull together a team of experts to formulate a strategy.  

When you’re unprepared, environmental contamination is going to be a disruption. It can cause a business or property owner substantial stress about how they are going to react to the news of contamination. But this stress can be avoided with the right team in place to help you weather this storm. Addressing the environmental contamination by cleaning it up will add value back to your property, so it’s a win-win situation. Plus, you’ll be off the hook with the regulatory agencies. 

3. If you’ve already spent money out of pocket for environmental investigation and cleanup costs, you may be able to recoup the money.   

You may not be able to recover all that has been spent but you’ll be able to put money back in your pocket. That is certainly more valuable than being out whatever was spent on cleanup efforts in the first place. 

As you can imagine, as we get further away from the 1985 Absolute Pollution Exclusion (APE) timeframe, the more difficult it can become to track down usable policies that can protect you from environmental liability. And this is exactly what insurance archeology is for, but the further you get from the APE, the more likely it is that the records have been destroyed and potential leads are diminished 

Now is a good time to look at pulling together your own policies, and if you find that you’re having difficulty locating policy information on your own, don’t give up. Consider hiring a professional insurance archeologist to be a part of your team.  


So, whether you’re the buyingselling, or refinancing a dry cleaning businesspulling together any applicable insurance policies to address any unwelcome environmental contamination can not only save a real estate transaction or lending deal, but it can add value to the property. For the seller it will show there is a funding source to address contaminationwhich would otherwise devalue the property. And for the buyerwho knows that the property’s environmental issues are being addressed now, so that if later down the road they want to sell, they have peace of mind that its free and clear of contamination. Call an environmental consultant who can coordinate your team to maximize your business value 

Watch to the webinar recording to hear what fellow drycleaners asked during the Q&A portion.

Special thanks to DLI and Rubin & Rudman for their partnership on this webinar. 

What are PFAS compounds and how can we test for them?


Water droplets pooling on blue surface treated with water resistant PFAS product


Perfluoroalkyl and polyfluoroalkyl substances (PFAS) are part of a broad chemical group that were first developed in the 1940s. Since then, there have been nearly 5,000 different PFAS compounds that have found their way into commercial use. Some of these compounds are now being phased out due to toxicity concerns, however new fluorinated compounds like Gen X and ADONA are being developed to replace them.

PFAS are well known for their unique chemical properties that repel oil and water and resist temperature, chemicals, and fire. They also have electrical insulating properties. These are the attributes that make PFAS attractive and are why they are found in many durable industrial and everyday products and materials like non-stick surfaces, firefighting foam as a flame retardant, stain resistant materials, water repellent coatings and plating demisters to name a few.


PFAS chemicals are everywhere and they don’t break down. This is why PFAS chemicals are known as “forever chemicals” because they never go away.

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 however they vary widely by their size, structure, toxicity, and mobility in the environment.

The carbon to fluorine bond is one of the strongest bonds in organic chemistry, making PFAS compounds particularly resistant to degradation. Since they do not break down and they were used in lots of materials, they are being found everywhere in the environment. States like Michigan have made the effort to test public and private potable water supplies for PFAS and have found them to be more widespread than previously thought.


A lot has yet to be learned about even the more commonly encountered of the PFAS compounds. Despite their size, these compounds have relatively high water solubility and are surprisingly mobile in the environment, especially in groundwater.

PFAS are resistant to treatment and degradation, and typically go through water and wastewater treatment plants untouched and end up in discharges to surface water and to the land. Since they persist and go largely untreated, they often cycle through the environment and create widespread impact as shown on the graphic from the Michigan Department of Environmental Quality.

PFAS cycle showing the many different methods PFAS can enter a household through consumer products, food, and drinking water, and then into the environment.
This graphic describes the PFAS cycle and how PFAS can move from one location to multiple locations with the potential to impact communities. Source: Michigan Department of Environmental Quality

The concern for human health is due to the PFAS compounds tendency to have long residency time in the human body, which is known as bioaccumulation. This combined with their largely unknown human health toxicity, means that we do not currently understand how big of a health concern this is at the moment. The lack of toxicity studies along with the fact that it is being found everywhere, poses a significant concern for regulators in charge of human health and the environment.

Currently, regulators are trying to establish criteria for PFAS compounds while at the same time scientist are trying to establish the different compound’s toxicities. The situation is very fluid and there will be a lot of changes to the science and regulations.


PFAS were used in a variety of industries. There may be PFAS contamination in the groundwater or soil at manufacturing sites of the following products:

  • Textiles and leather with coatings to repeal water, oil and stains
  • Paper products with surface coatings to repel grease and moisture
  • Metal plating to prevent corrosion, suppress fume and reduce wear
  • Wire manufacturing through the coating and insultation processes
  • Industrial surfactants with plastics, mold release coatings and flame retardants
  • Photolithography for anti-reflective coatings and wetting agents
  • Along with ski waxes, cookware, fabric softeners, pesticides, windshield wipers, medical products, personal care products and dental floss

Or businesses that use Class B firefighting foams, such as:

  • Airports
  • Military bases

Source: ITRC

To date, the majority of the PFAS cleanup sites have been at large chemical manufacturing plants and military properties where aqueous firefighting foams (AFFF) have been used.


It’s very difficult to remediate PFAS. PFAS compounds are very resistant to biological, chemical and heat degradation; therefore, many of the remediation techniques that are used for petroleum and chlorinated solvent sites are largely ineffective on PFAS. Since they cannot be easily degraded, they need to be removed.

Most remediation technologies to date have focused on pumping water from the ground and treating it through either reverse osmosis systems or filtration (carbon or ionic) media. However, this simply concentrates PFAS onto a different media that now needs disposal. Soil impacts are typically excavated and disposed of at off-site disposal facilities. As this issue comes to light, more disposal facilities may reject these waste streams.

Currently, there is a lot of on-going research on innovative methods to either remove or stabilize PFAS in the ground to decrease its mobility or to destroy it with thermal or chemical methods. These technologies are a long way from being proven and time tested. Like everything with PFAS this an ever-changing playing field.


The United States Environmental Protection Agency (US EPA) has yet to define PFAS as a hazardous substance; therefore, it is not yet subject to all of the CERCLA regulations. This lack of hazardous substance designation also means that there is somewhat of a grey area for whether PFAS should be considered a Recognized Environmental Condition (REC) during real estate due diligence process. Buyers should be cautious when doing Phase I Environmental Site Assessments (ESAs) and should consider State designations and the most recent US EPA updates.

PFAS aren’t widely regulated yet in the United States on a Federal level. Some states like Michigan, Wisconsin and New Jersey have gotten out in front of the US EPA and have established state regulatory limits for a small number of the more commonly used compounds. At this moment, PFAS regulation is primarily state specific, so it’s important know what a state’s status is on PFAS regulations.

In late 2019, the US EPA established a PFAS Action Plan to study and formulate regulations ranging from adding PFAS to Toxic Release Inventory (TRI) toxic chemical list to recommendations for addressing contaminated groundwater and preliminary drinking water regulations for Perfluorooctanoic acid (PFOA) and Perfluorooctanesulfonic acid (PFOS). A more thorough examination of the Federal and State regulations can be found on the Interstates Technology Regulatory Counsel (ITRC) Basis of Regulations website.


For now, the US EPA has established a drinking water Health Advisory Limit for just two out of nearly 5,000 PFAS compounds but is deep into a long regulatory process of establishing enforceable limits. Some states have expanded on this and are regulating additional PFAS compounds.

The EPA has provided PFAs measurement methods, health advisories, state level-support, and regular updates on their website
The EPA has established PFAS measurement methods, issuing drink water health advisories, supporting site-specific challenges and providing tools and information so communities can better understand processes and procedures. Source: EPA PFAS Page

Testing for PFAS is a complicated proposition because:

  • The testing methods are still evolving (currently focused mainly on drinking water)
  • Laboratories are still investing in equipment and training to perform the testing
  • The detection limits established so far are very low (70 parts in a trillion parts or ppt)
  • These compounds can be found in a lot of background sources in both the field sampling equipment and the laboratory equipment (high potential for false positives)
  • Tests currently only look for a small number of the more common compounds

The most important thing to establish if a regulator asks you to sample for PFAS is which compounds are required and at what detection levels. Then discuss with your laboratory if they can detect those same compounds at those same low levels. It is very important to vet your lab’s experience with analyzing for this emerging contaminant. You will also want to be sure that your samplers have taken precautions to limit the potential for contamination of the samples from everyday products (plastics, coatings, sunscreens, stain proof fabrics). 


Michigan is one of the pioneering states in the race to test drinking water supplies for PFAS. They sampled over a thousand community water supply wells and non-community water supply wells and found that the drinking water had low levels of PFAS chemicals. They’ve also tested wastewater from treatment plants and streams.

As already mentioned, other states that are working hard to develop the regulations are Wisconsin and Minnesota.


In a lot of ways PFAS are the perfect storm of an emerging contaminant. They have widespread use, they are not easily treated, they persist in the environment, they bioaccumulate and they are thought to have health effects down in the low parts per trillion (ppt) levels.

The science and the regulations are evolving as we speak, and much will change in the next couple of years. If you are faced with the proposition of sampling your site for PFAS, take a deep breath and do not be in a rush to charge forward. Take time to understand what you are being asked to do and what are the applicable standards to which you will be held. What applies today may be very different from what applies tomorrow.

Contact us to learn more about environmental contaminants like PFAS.

Brad Lewis, CHMM, Principal Scientist at EnviroForensics

Brad Lewis is a detailed-oriented and collaborative leader with 30+ years of environmental consulting experience that covers a variety of projects ranging from due diligence, environmental compliance, landfill, Brownfields, underground storage tank, and chlorinated hydrocarbon investigations and cleanups. As Principal Scientist, he oversees investigations and cleanups. He helps project teams set the technical and regulatory strategies that will meet their client’s goals. Lewis has implemented many innovative site investigation strategies including the use of down-hole sensing equipment, mobile laboratory, and an immunoassay to characterize sites.

He has consulted on many high-profile projects dealing with petroleum hydrocarbons, polychlorinated biphenyls, hexavalent chromium, chlorinated solvents, bedrock impacts, vapor intrusion investigations, and vapor mitigation.

Understanding remediation strategy: Environmental contaminant removal vs environmental risk management

A shortsighted view during environmental remedial planning can make it tempting to favor short-term over long-term savings for dry cleaner cleanups. However, when looking at the entire cleanup process and all associated costs, the need to balance present-day cleanup efforts with anticipated future costs becomes far more important.

With perchloroethylene (Perc; PCE) and other chlorinated solvents, the threat of future exposure does not readily go away. These lingering contaminants may present serious problems for future environmental cleanup costs and long-term environmental liability.

In this article, I’ll share why it’s important to work with an environmental consultant who understands the value and significant cost savings that can be realized by choosing a more active remedy instead of long-term stewardship.

The strategic options for eliminating contamination exposure pathways and attaining regulatory closure can have vastly different costs when it comes to future liabilities and long-term stewardship that will be required following regulatory closure. For example, source removal can be a relatively large short-term expense compared to a vapor mitigation system. In fact, that same vapor mitigation system might end up costing far more over time than source removal if the system is not properly maintained or the building on which it has been installed remains in use for a long time without any meaningful remedy to the contaminant source.

Look at the total lifecycle cost when planning your remedial strategy

Post-closure monitoring, legal risk, and administrative costs really add up over time. When dealing with environmental issues, regulatory closure is often seen as the end goal. While regulatory closure can be attained through various strategies, most revolve around the elimination of exposure pathways, at least in part. Regulatory agencies typically prefer a remediation strategy where a large amount of contamination is removed, but when push comes to shove, they usually will approve remedies with little or no contaminant reduction if the risk of exposure to people is controlled. Because of this, it has become increasingly clear that regulatory closure should be viewed as only an interim milestone when dealing with contaminated properties.

Proper cost-analysis that takes all these factors into account can help you find a balance between short-term and long-term costs and make decisions that are right for you. There is a reverse relationship between money spent on immediate cleanup versus the costs of stewardship and the often-overlooked component of potential legal damages resulting from dry cleaning contaminants left behind. The demand of cash-flow considerations in most businesses, especially small businesses like dry cleaners, can really drive decisions regarding remedial planning. By looking at the total lifecycle cost during the decision-making process and attempting to keep your sights on the longer game, it could save hundreds of thousands of dollars over time.

Whether we’re treating the contaminants in soil, groundwater, or vapor directly or implementing a mitigation system to cut off the pathway, the goal of any environmental remedial strategy is to eliminate exposure.

Understanding the decisions in selecting an environmental remediation strategy

The following case studies provide a helpful guide for property owners, developers, and environmental professionals to consider when evaluating remedial efforts vs. long-term stewardship. The cases outlined are actual sites where EnviroForensics was involved in recommending and then implementing an effective remedial plan and ultimately saving both time and money in addressing the environmental contaminants of concern.

The costs of future legal liability included in our case studies below were estimated by experienced attorneys who performed an analysis taking court cases nationwide and assigning a higher cost component for prevalent claims in similar cases. Alternatively, in a situation where claims were not made, they assigned estimated damages to parcels that may be potentially affected. The cost examples presented are case-specific and subject to margins of variability.

Case Study 1: A Dry Cleaning Site Uses Enhanced Reductive Dechlorination (ERD) Approach to Achieve Site Goals and Lower Lifecycle Costs and saves $420,000

This dry cleaning site had PCE contamination that extended beneath several buildings, including residential property impacts that were present in the soil, and exceeded direct contact thresholds and the migration groundwater standards. The groundwater plume was also expanding and contributed directly to vapor intrusion (VI) exposure issues. VI mitigation was necessary for both the source area and at downgradient residential structures.

These were the two remedial strategies considered.

Remedial Strategy A:

  1. Impacted soil would be excavated to promote future contaminant plume stability
  2. Institutional controls would be implemented to cut off exposure pathways from the groundwater. Institutional controls typically consist of groundwater usage restriction (i.e. no drinking water wells allowed) but requirements vary from state to state
  3. VI mitigation would be installed and maintained

Remedial Strategy B:

  1. Impacted soil would be removed
  2. Groundwater plume would be treated in situ via amendment injections

Comparing the two strategies, the upfront cost of Strategy A is lower as there is no cost associated with groundwater treatment. However, as can be seen in the cost analysis of Strategy B, by removing the groundwater contaminant reservoir, the cost of groundwater monitoring and VI mitigation are eliminated. Future liability is also significantly reduced because exposure pathways to outlying properties would be cut off.

The Results

Based on projected cost savings, the client chose to implement Strategy B and long-term VI issues were eliminated by virtue of removing the groundwater impacts, and short-term VI mitigation implementation where there were known exposure pathways. Shortly after the remedial injections, PCE concentrations across the site sharply decreased while, as expected. While remediation is ongoing, post-injection PCE concentrations have remained at non-detect.

The total cleanup costs, including investigation and remediation efforts, was $1,450,000. By spending $200,000 upfront to remediate the groundwater, the client avoided long-term expenditures and achieved a lifecycle cost savings of $420,000.

Case Study 2: A Multi-Residence Site’s Remedial Approach Mitigates Vapor Intrusion and Saves $250,000

This multi-residence site had a large soil gas plume located deep in the soil. The contaminant plume was under a seven-story multi-family residential unit onsite and several residential buildings offsite. There was significant contamination onsite and the soils held very high vapor concentrations. There were complete VI exposure pathways at numerous offsite properties with basements, so interim measures were installed to mitigate risk during the investigation process.

Read more about vapor intrusion exposure pathways in “5 Things to Know about Vapor Intrusion, Your Home and Your Health”

These were the two remedial strategies considered:

Remedial Strategy A:

  1. The onsite building would be demolished
  2. Shallow soils would be excavated
  3. Institutional controls would be implemented to restrict groundwater usage
  4. VI mitigation would remain in place

Remedial Strategy B:

  1. The onsite building would be demolished
  2. Shallow soils would be excavated and stabilized with a chemical oxidant
  3. A soil vapor extraction (SVE) system would be installed

Neither remedial strategy included groundwater treatment since the primary concern was the vapor intrusion. With Strategy A, the costs are deferred, leaning towards keeping present-day dollars and instead opting to gamble on the costs of long-term liabilities and stewardship costs. With Strategy B, the upfront costs are significant, due primarily to the capital expenditure required for the installation and operation of the SVE system. The payoff is that the cost of long-term stewardship, VI mitigation, and potential future liabilities would be greatly reduced or eliminated altogether because the contaminant mass, and therefore the risk, would be removed.

The Results

Favoring a more aggressive remedial approach, the remediation plan that was implemented was Strategy B. The costs of the anticipated long-term stewardship program were significantly reduced from an estimated $195,000 to $15,000, requiring only occasional institutional control monitoring for groundwater usage. While the initial costs of the SVE were high, the system was well-engineered and achieved a remarkable radius of influence, successfully eliminating the liability posed by the vapor in the deep soil reservoir. Because the treatment removed the vapor, any VI concerns were alleviated.

The total cost of cleanup including investigation and remedial efforts came to $1,650,000. The major difference between the two strategies was the implementation of the SVE system which cost $450,000 in the short-term but garnered $250,000 in lifecycle cost savings by reducing the cost of long-term stewardship, VI mitigation, and potential legal damages.

Note that although strategy B is much cheaper, almost all of the money gets spent in the first two years, whereas in strategy A half the costs get deferred.

In these two case studies, you can see that there are situations when dry cleaners and real estate developers should take the full picture of risk management and future liability into consideration when planning for cleanup. It’s not always the wisest decision financially to do as little active cleanup as possible. Your environmental consultant and attorney should be showing you the whole picture and looking out for your best interests. Make sure they have the vision to do it for the long haul.

No matter your situation, we’re ready to find the best solution for you. Contact us today.

As seen in Cleaner & Launderer

Jeff Carnahan, President at EnviroForensics
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.

What is a Phase I and a Phase II Environmental Site Assessment?


Environmental consultant conducting phase I inspection of property


A Phase I Environmental Site Assessment (ESA) or Phase I ESA, is short for a study conducted on a property to evaluate the likelihood of environmental contamination. There is a standard that must be followed under the American Standard for Testing and Materials (ASTM) to satisfy an All-Appropriate Inquiry (AAI), which is the process of evaluating a property’s environmental condition and assessing potential liabilities for any contamination. This is also under Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).

The Phase I ESA process in five steps.

The thing about conducting a Phase I ESA on real estate that has a dry cleaner is that invariably, because of the history of dry cleaning operations, a Phase II ESA is nearly always required as follow-up. In other words, one can be certain that if a property has an active or historical dry cleaner on the site is being considered for refinancing or purchasing, follow-up soil, soil gas or groundwater samples will likely be required.

Download a questionnaire to begin collecting helpful information about your dry cleaning property.

This is a follow-up sampling called a Phase II ESA. While this common terminology is not accurate, it does convey a step further in the process of determining whether a dry cleaner has affected a piece of property. The Phase II ESA, also referred to as a “subsurface investigation” or more commonly “site investigation,” typically consists of collecting a series of soil, soil gas, which includes sampling for vapor intrusion, and groundwater samples and sending the samples to a laboratory to determine if dry cleaning operations have impacted the property negatively through environmental contamination.

Phase II ESAs initial soil and groundwater samples are collected at a few locations where the highest likelihood of releases has likely occurred. These samples can be collected by hand using hand-held equipment, or by small to large drilling rigs. The type of equipment used depends on the types of soil and depth of groundwater at the site, and whether the samples are collected from underneath the building or outside. These areas are typically current and former dry cleaning machine locations and/or dry cleaner solvent transfer locations. Once collected, the samples are then sent to a laboratory to determine how much, if any, dry cleaner solvents are present in the soil and groundwater. If impacts are present, additional soil and groundwater samples are collected at more locations until the entire area of soil and groundwater contamination has been determined. This process may take several months. Once the extent of soil and groundwater contamination has been determined with Phase II ESA activities, remediation activities can begin.

While a Phase I ESA costs are generally low and predictable, Phase II ESA costs vary by many factors. Some of these factors are “site specific.” For example, the types of soil and depth to groundwater at the site, the length of dry cleaner operations, and even prior operations will influence the cost of a Phase II ESA. Other factors include the reason for conducting a Phase II ESA. For example, if the dry cleaner is thinking about refinancing, the Phase II ESA may consist of the fairly simple question, “Is my site affecting the environment?” If the desire is to know the costs to reach site closure, the cost of a Phase II will be higher than the first question.

The biggest cost factor associated with a Phase II ESA relates to the experience of the consultant chosen and their attention to the needs for the Phase II. One of the first needs is to consult with the dry cleaner on what the goals are, what the needs could be, and the costs associated with the range of possibilities for an initial Phase II ESA. The dry cleaner needs to understand what will be completed and for what cost, what the potential downsides are, and what makes the most sense for their situation. In order to do that well, your consultant needs to have experience with your business, business and technical savvy to understand the situation, and finally, the sense to know if there are other sources of funding that can eliminate or, at least, ease the cost burden.

Phase I ESA costs generally range from $1,000 to $2,500 while Phase II ESA costs vary as summarized above. Typically, a Phase II ESA can cost anywhere from $5,000 to well over $100,000. Phase II ESA initial sampling activities (to determine if there is a problem) usually cost around $5,000.

The success of the experience is tied to communication of needs and matching effort to the needs. The most important variable under the control of the owner is to pick a qualified, responsive consultant.

No matter your situation, we’re ready to find the best solution for you. Request a quote today.

As seen in Cleaner and Launderer

Stephen Henshaw, Founder at EnviroForensics & PolicyFind  has over 30+ years of experience and holds professional registrations in numerous states. Henshaw serves as a client manager and technical manager on complex projects involving contaminated and derelict properties, creative litigation, deceased landowners, tax liens, non-performing banknotes, 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.

Has Environmental Contamination Cracked Your Nest Egg?

How the value of your dry cleaning business can be affected after contamination is found.

Written by Jeff Carnahan, LPG, President, EnviroForensics
As seen in the April 2019 issue of Cleaner & Launderer

At the threat of mixing metaphors right out of the gate, I’d like to start this article by referencing a fable we all know; that of the ant and the grasshopper. While the care-free grasshopper chirped away and enjoyed times of plenty, the industrious and hard-working ant busily labored to store food for winter. When readily available food became scarce as winter fell, the grasshopper starved but the clever ants remained well-fed from their stockpiles. I have had the pleasure of meeting and working alongside many dry cleaners throughout my career, and their work ethic and wisdom have consistently impressed me. Without fail, I’ve heard it told by them that the hard work they’ve put into their business is intended to help build-up winter stores for lean times, their retirement, or to pass on to their children. A lot of people refer to this as building a nest egg. Regardless of what you call it, the monetary value of the hard work, blood, sweat, and tears that you’ve invested in your business is held in the potential sales price of your business assets and potentially, your property.

The Good Old Days are Over

During all the years of doing business, the fact that your future nest egg could be potentially devalued by an environmental contamination problem was probably not part of the equation. Decades ago, it didn’t need to be. Back then, when businesses and properties were bought and sold, it wasn’t standard practice to even consider the environmental condition of the land. As such, the value of the sale wasn’t affected. The business owner could cash-in for a fair price and go on to enjoy their retirement.

Today, however, nearly every commercial property and business acquisition involves a real estate and environmental due diligence process intended to specifically and thoroughly find out whether environmental contamination has occurred. The days of expecting someone to buy your business without determining if they would be buying environmental liability, or your property without finding out if its value has been impacted by contamination, are gone.

Don’t let environmental contamination crack your nest egg. Download our questionnaire to review your real estate due diligence situation.

Let’s talk for a minute about the environmental assessment process during sales transactions, and then we can go over a couple of things that you can do to help yourself out and minimize the damage to your nest egg when the time to retire comes. For those who may be in the mode of buying business and properties, this may come in helpful for you as well.

What Happened?

A short discussion about the environmental due diligence process was presented in my February article, How Clean is Clean Enough? Regulatory Closure vs. Environmental Cleanup, but I’ll breakdown the process step-by-step. Back in the late 70s and 80s, a series of laws were passed by Congress that put into place two major facts:

  1. Certain chemicals were determined to be hazardous and had to be managed in specific ways; and
  2. As a generator of wastes containing these certain hazardous chemicals, businesses or individuals would forever carry any associated liabilities resulting from these chemicals.

The laws were comprised primarily of the Resource Conservation and Recovery Act (RCRA) and the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). Some of you may remember these days because suddenly you had to manage your solvent waste differently and you had to ramp-up your record keeping.

It may have even seemed unfair that the federal and state governments were going to be holding you responsible for what contamination may have happened as a result of your business, or on your property, regardless of if you had anything to do with it. The fact was, and is, that RCRA and CERCLA ended up causing a standard of practice in the property and business transaction world that was intended to avoid those environmental liabilities from being transferred along with what was being sold.

How it Works These Days

When a business entity buys a property, if a series of environmental inquiries aren’t performed properly, they could accidentally be held responsible for contamination in accordance with CERCLA. If the inquiries are performed correctly, the buyer may qualify for an exemption from those CERCLA liabilities. The first inquiry that is needed is called a Phase I Environmental Site Assessment (ESA). The Phase I ESA needs to be performed by a qualified Environmental Professional (EP), like an environmental consultant. Your consultant will follow a specific set of due diligence standards to look at environmental records and databases to determine what the sale property has been used for in the past, and what has gone on at surrounding properties to see if those activities could potentially have impacted the sale property. They will also come to do a site visit to walk around the property and buildings to see if any present operations may be potentially causing a problem. They’ll also need to do an interview to ask some standard questions about knowledge of environmental issues, etc. If they do find something during this process, they may have to put in their report that a Recognized Environmental Condition (REC) has been identified. If a REC is identified during the Phase I ESA process, then there need to be samples of soil, groundwater and/or vapor collected from the sale property to determine if an actual environmental release has occurred.

The subsurface investigation process is called the Phase II ESA. If an environmental release is identified at the property, there will be additional investigations to gather more data. There needs to be more data to gain insight into the potential cost of cleanup so that the buyer and seller of the property can start talking about how the price is impacted, or even if the buyer wants to still buy the property. The cost estimating process will also need to take into consideration that the cleanup would be performed in a state agency program so that a regulatory closure can be received afterward.

The Challenge for Dry Cleaners

Here is the tricky part; due to the prevalence of environmental issues related to use of perchloroethene (PCE, Perc) in the dry cleaning industry, just the fact that a dry cleaner exists, or used to exist, at or adjacent to the sale property, is enough to trigger a Phase II ESA per the due diligence standards. At this point in the property transfer process, if you want to continue with the sale, there will definitely need to be sampling. The process can be stopped right after the Phase I ESA without any liability to the property owner, but that won’t get the property sold. This is a very uncomfortable spot to be in, I’m sure. Many of you know this for a fact.

Putting the property sale process aside for a minute, when a business is being sold, a similar due diligence process is undertaken by the potential buyer. They will want to make sure that the business they are acquiring doesn’t have a current or hidden environmental liability that could hit the new owners at some point in the future and affect the value of their investment. Businesses are usually sold either as asset-only acquisitions, or stock plus assets acquisitions. The CERCLA liability that we are talking about is tied to the stock of the company and its owners. Because of this, many times business buyers will want to purchase just the assets (equipment, customers, brand, goodwill, etc.) of the company, and not acquire the property or stock. That allows the buyer to skim the cream off the top of the business, and leave the junk at the bottom, like the environmental liability, for you. This is a way, however, of getting the job done and keeping a good bit of value for your nest egg.

Preserving Your Nest Egg

Let’s talk about a couple of ways that you can preserve the integrity of that nest egg in preparation for the time when you are ready to cash-in and move on.

Read how a prominent second generation dry cleaner proactively prepared their exit strategy


First, there are a variety of insurance products available that you can purchase as protection against environmental liability. The insurance industry started specifically excluding coverage for environmental pollution from their general liability policies back in the mid-80’s, right around the time that the CERCLA responsibilities were being formed. However, environmental pollution liability can still be insured today as specific policies or riders if it needs to be a part of your calculation. If you think that these may be of interest to you, I encourage you to reach out to your agent or a representative for a carrier that is involved in the dry cleaning industry. An insurance company with a long history and knowledge of dry cleaners would probably be best.

Another way to help preserve your nest egg against devaluation from contamination issues is, of course, those old general liability policies from before the mid-80s, when there weren’t specific exclusions. From my experience, this is usually the time period when environmental releases actually occurred anyway. Find them and assess their value. Even if there are no known environmental releases associated with your dry cleaning business, having these old policies in hand may be what is needed to convince a potential business or property buyer that they won’t be stepping into a problem that can’t be paid for if they close the deal with you. Those old policies are an asset to your business, so they should be part of your nest egg calculation.

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.

Contact us so we can help you protect your nest egg.

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.

Having All of Your Bases Covered During a Phase I Assessment

When conducting a Phase I Environmental Site Assessment for a property transaction, it’s important to understand what your client wants to do with the property. A solid grasp on their project and objectives can go a long way in identifying all environmental due diligence topics that may apply. Many people don’t realize there are Out-of-Scope topics not covered by the Phase I Assessment reporting standard, and if overlooked, they could present environmental liability issues to a prospective purchaser.  These include:


•      Wetlands – For properties undergoing development, assessment is ESSENTIAL.  Regulated federally by the Army Corp of Engineers and by IDEM in Indiana.

•      Mold – Can pose health concerns.  No state or federal regulations on mold assessment in Indiana but guidelines are in place by several trade associations.

•      Asbestos – Can pose health concerns and can be costly to abate.  Regulated by EPA federally and IDEM in Indiana.

•      Lead Paint – Can pose health concerns and might apply to any project involving painted surfaces: multi-family residential, child care, bridge repairs, and commercial structures.  Regulations vary by project.

•      Environmental Compliance – Is the business following all federal, state, and local environmental laws and regulations?  Could be relating to permitting, reporting, waste disposal, etc.

•      Air Quality – Can pose health concerns.  In addition to vapor intrusion (covered by the Phase I standard) indoor air quality from an indoor source may be a concern.  Regulations may include OSHA, but vary by source.


If you are hiring an environmental consultant to conduct due diligence investigations at a commercial or industrial property, be sure to discuss your specific needs and not assume that all topics will be covered in a Phase I Assessment report.  Communication is the key to success!


Putting the Forensics in EnviroForensics

When you hear the word “Forensics”, often times it conjures up images of television detectives. You imagine a hard-boiled cop working on his second cup of coffee, lifting up the caution tape on the police perimeter, so he can walk onto the crime scene and begin to reconstruct what happened. He collects clues like patches of fabric, hair and blood samples. Talks with witnesses and potential suspects; interrogating the shifty ex-con whose fingerprints are all over the crime and whose past won’t afford him the benefit of the doubt. It all invariably leads to the climactic finish with the unlikely perpetrator being caught in the final ten minutes of a neatly wrapped 60-minute serial. Environmental Forensics is kind of like Hollywood forensics – we reconstruct the past to answer questions like “who done it?”, and its application can assist in a multitude of ways when dealing with an environmental liability.

Environmental forensic investigations differ from traditional environmental investigations in that the objective is not to identify human health exposure pathways or answer remedial feasibility and design questions, but rather to answer specific questions about historical contaminant release scenarios.  The leading question is typically, “who is responsible?”  To answer this question, it is often instructive to determine where and/or when the release occurred.  Other potentially useful information may include contaminant type and indicator parameters detected with the contamination.  The need for a forensic investigation often comes about through environmental litigation proceedings, but forensic evidence can also be used to support insurance claims, out-of-court settlement proceedings, or other questions that may be aided by understanding the contaminant release and migration history at a site.  We have many tools to use for this purpose, including Fate and Transport Modeling (most common), Compound Specific Isotope Analysis, Principal Components Analysis, and Chemical Ratio Analysis, to name a few.

Just like our Hollywood example, forensic evidence in an environmental case also plays a huge role in the legal side of things.  We deal with the question of “who-done-it” a lot.  After all, figuring out who’s responsible/liable is what sets this whole thing into motion in the first place.  Often times, there are multiple, overlapping plumes with more than one potentially responsible party.  Forensic evidence can help us determine who is at fault, if there are any other responsible parties, and if a suit or claim is defensible.

It may not be as dramatic or as glamorous as the criminal forensics you see on TV, but environmental forensics is still a very important and useful practice.  The tools involved allow us to determine the nature of a release of a chemical contaminant, the timing of release, and perhaps most importantly, the source of release.  These facts not only help us better understand the site and recommended courses of action, but also aid in cost allocation, identify responsible parties, and support litigation proceedings.



Taking on an Environmental Challenge Thousands of Miles Away

EnviroForensics is based in Indianapolis, but we don’t let our central location get in the way of addressing environmental issues across the country. Our project managers are equipped with years of experience leading investigations and remediation projects from both out in the field and behind a desk. In that time, we have also cultivated trusting relationships with outside vendors from all over the country, and have a keen understanding of individual state environmental regulations, making geographic proximity virtually irrelevant.

Recently, EnviroForensics did a project on the West Coast with an unusually tight deadline. A client in California needed soil and groundwater data collected, analyzed, and reported within a week. We received the phone call late on a Friday afternoon. Ordinarily, coordinating the logistics for a such a project would be a Herculean task, but due to the hard work of our staff and connections we have built in the Bay Area, we were able to line up a private utility locate contractor, a drilling contractor, an environmental equipment vendor, and a California-certified analytical laboratory by the end of business that same day. Our personnel caught a flight early the next week and we were well on our way.

EnviroForensics was founded in California in 1996, so we understand the unique regulatory challenges regarding permitting and sample collection. We worked with our partners in the Bay Area to ensure all appropriate permits were obtained prior to the start of work. Our field team advanced hand augers in a tight space within the site building and direct push borings within the site parking lot. Soil and groundwater samples were collected within one (1) day, minimizing the disturbance to the property owner’s on-site business. The samples were hand-delivered to the laboratory and the testing results were received and reported to the client on-time, within one week of his initial request.

When taking on a project, whether it’s right around the corner, or thousands of miles away, a steady, well-seasoned team is needed to lead the operations. Additionally, a knowledge and familiarity with the local rules and regulations and trustworthy partnerships in the area make a big impact. For this project and countless others, our project managers have proven they possess the ingenuity and the expertise to effectively manage environmental investigations and cleanups both locally and nationally.