 Problems Landlords Experience with Dry Cleaner Tenants
By Liz Davis
Environmental Waste Management Associates, LLC
Director, Site Assessment – Remedial Investigatory Services
For many owners of strip malls and small commercial buildings, one of the most common tenants is a dry cleaning establishment. The majority of dry cleaning establishments are cash-only, family-owned businesses and their tenancy represents a reliable, long-term source of income for the landlord.
However, it has become increasingly apparent that, due to the nature of their operations, these types of businesses can present an unexpected environmental headache, delaying potential property transfers and refinancing actions. The majority of these family-owned dry cleaning establishments generally fall below the environmental radar screen due to little regulatory oversight because they are considered small quantity generators due to the small quantities of hazardous chemicals currently used in dry cleaning operations and the small quantities of hazardous waste generated during the cleaning operations.
With advances in dry cleaning equipment technology (secondary containment and limited access to chemicals), one might ask, how can my tenant have operated in a manner to have adversely impacted the environment? Odds are that if you own a property occupied by a dry cleaner, a discharge has likely occurred. The State Coalition for the Remediation of Dry Cleaners estimates that 75% of dry cleaners have discharged contaminants to the environment.
Therefore, owners of properties with a dry cleaning tenant should give serious consideration to investigating the environmental quality of the subsurface environment to ensure that current and past operations have not resulted in contamination. If the owner decides to embark on such an investigation, they will need to retain an environmental consultant. However, there is certain information that the landlord can gather, prior to retaining a consultant, to increase the efficiency and potentially reduce the costs of any investigation. This information includes, but is not limited to:
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Determining the length of time a dry cleaning establishment has operated at a property will dictate the type of equipment and quantities of hazardous substances utilized. In general, the longer a dry cleaning establishment operated, the greater the likelihood of adverse impact to the environment.
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Determining changes in ownership of the dry cleaning establishment. If ownership has changed hands the historical location of the dry cleaning equipment may have changed over the years. Additionally, if the facility’s equipment has been updated, the location of the current operations may be different than historic operations.
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Identifying if dry cleaning establishments were located elsewhere on the property. Prior to starting the actual investigation, (i.e., conducting sampling to determine if a discharge has occurred,) it is also important to identify the possible conduits for release to the environment, such as slop sinks, filter storage areas, sewer pipes (septic system or dry wells) or cracks in the cement under leaking machines. An accurate identification of these conduits will allow for a more focused investigation.
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Determine if there were/are any dry cleaning establishments located on nearby properties.
Once the nature of current and historic operations have been evaluated and potential conduits have been identified, a site assessment plan can be developed to determine if dry cleaning related chemicals have been released to the environment. While developing the assessment plan, one must remember that chlorinated solvents heavier than water can sink and migrate in soil and ground water depending on how they were released and site conditions.
When soil and ground water samples have been collected and analyzed, the results can be compared to the applicable (Federal or State) standards. If no contamination exists above the applicable standards a No Further Action (NFA) is issued. However, do not assume that the issue will not have to be revisited at a later date. In the meantime, there are steps that can be taken to reduce the likelihood of a future discharge. The New Jersey Small Business Environmental Assessment Program (SBAP) publishes a “Dry Cleaner Checklist” which can be utilized by property owners and dry cleaner operators to determine minimal regulatory requirements. This Checklist also provides housekeeping and material storage suggestions aimed at reducing the likelihood of a discharge. On the Federal level, the US Environmental Protection Agency has published a step by step guide to understanding Federal environmental regulations titled “Plain English Guide for Perc Dry Cleaners”.
(http://www.epa.gov/opptintr/dfe/pubs/garment/perc/part1.htm).
If contamination is detected in either the soil or ground water at concentrations above the applicable standards, a discharge has occurred and the appropriate regulatory agency must be notified. In New Jersey, notification of the existence of contamination must be reported to the NJDEP at the time of the actual discovery. How the investigation proceeds from this point, will be dictated by Federal and/or State regulations. In New Jersey, the investigation and remediation of dry cleaner discharges must be conducted in accordance with N.J.A.C. 7:26E, Technical Requirements for Site Remediation (TRSR).
Under the TRSR, the investigation will require the horizontal and vertical delineation of all identified soil and ground water contamination and will require an evaluation of potential vapor intrusion hazards. The nature of the remediation will be dictated by the media impacted, severity of the contamination, extent of the contamination and risk the contamination poses to human health and the environment. In general, the more factors that necessitate the remediation, the higher the remedial cost.
Oversight of the investigation in New Jersey will be handled under the Memorandum of Agreement (MOA) program with the burden of the investigation and remediation costs, in most cases, often borne by the property owner. Dry cleaners are not subject to New Jersey’s ISRA transaction trigger law. In some instances, costs may be recovered through arbitration with insurance companies, requiring the involvement of legal counsel.
Recently, there have been proposals concerning the establishment of a state-funded dry cleaner remediation program. How and if, New Jersey elects to proceed with this issue should be monitored closely by any property owner that leases to a dry cleaning establishment. Usually small businesses cannot afford the clean-up and vacates the property which saddles the landlord with the costs. The average dry cleaner remediation costs $150,000 and up.
Ms. Davis is with EWMA’s Mid-Atlantic Regional Office in West Windsor, NJ. She specializes in environmental assessments and remediation. For additional information or to discuss your concerns please contact Ms. Davis at 609-799-7300 ext. 107 or Liz.Davis@ewma.com.
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