A D e p a r t m e n t o f E c o l o g y R e p o r t Hazardous Waste Considerations In Real Estate Transactions

Public awareness of also have significant hazardous waste problems contamination problems. Hazardous Waste Laws: and environmental laws has You could be potentially created both obvious and liable for the cleanup of You Could Become Liable unexpected liabilities in real hazardous substances estate transactions. To regardless of the type of In the 1980s, laws were Liability Under the minimize risk, purchasers are property you buy or lease. passed requiring identifica- Laws Is Far-Reaching advised to conduct an appro- This report is directed tion, investigation, and ❖ You do not have to be priate investigation into the toward anyone involved in cleanup of sites contami- responsible for all the history of activities and real estate transactions; nated with hazardous contamination on your business practices associated individual citizens, real substances. These laws property to be required to with a piece of property estate brokers and agents, impose potential liability on pay all or part of the cost of before buying or leasing it. appraisers, lenders, property owners, lessors, cleaning it up. lessees, and others involved Otherwise, you could be attorneys, consultants, and ❖ If you buy or lease a in the management or accepting responsibility for developers. It identifies some piece of property knowing it purchase of properties that hazardous waste contami- common concerns regarding is contaminated, or do not are contaminated and require nation caused by someone hazardous waste liability as it conduct an adequate cleanup. else and you could be relates to property environmental site assess- Most hazardous waste required to pay for cleaning transactions and outlines ment before buying or cleanups in Washington are it up. investigative techniques leasing the property, you governed by two laws: Although commercial commonly used to assess the may be found liable for and industrial properties are potential for hazardous cleanup. Federal: Comprehensive more likely to be contami- substance contamination at a Environmental liability can nated than residential or rural site. Environmental Response Compensation and Liability be costly. Before entering properties, many rural and into a purchase or lease agricultural properties can Act (CERCLA), commonly known as Superfund. agreement on property that could be contaminated, Washington State: Model Ecology recommends that Toxics Control Act you seek the advice of Caution! (MTCA), Ch.70.105D professionals experienced in This report does not, and is not intended, to state the RCW, passed by voters in conducting environmental circumstances under which liability will be imposed 1988 as Initiative 97. site assessments. The under state or federal law, nor does it establish a information contained in standard of due diligence or define appropriate this report should not be used to replace the advice inquiry for environmental site assessments. and expertise of legal or “Due Diligence” and “Appropriate Inquiry” are technical specialists who terms used to designate the nature and extent of an have proven experience environmental property assessment for a given site. with environmental To establish that a purchaser or lessee should not be site assessments. liable for cleanup costs, that person must be able to show that they investigated the property fully before its purchase or lease and in doing so did not find any contamination. If the property inspection was not conducted with “due diligence” or if the purchaser did not conduct an “appropriate inquiry”, he or she may be held liable for cleaning up the property.

Ecology Report R-TC-92-115 Revised September 1999 Page 1 Why An Environmental Site Assessment Is Needed: LIABILITY

An environmental site Who Is Responsible ? Hazardous Waste To meet the standard of assessment of real property ❖ Current owners or Liability Affects proof required to qualify for prior to transfer of title is not operators of facilities Financing this “innocent purchaser’s” required by Washington state ❖ Any person who owned Banks may be less willing to defense, the person must be or federal law. In Washing- or operated the facility at the lend money on property able to show that before ton state, environmental site time of disposal or release of contaminated with hazardous buying the property they assessments are being a hazardous substance substances. The property made “. . .all appropriate conducted by private inquiry into the previous ❖ Any person who brought could have diminished resale individuals and companies in ownership and uses of the or caused a hazardous value or the entire value of response to the strict liability property, consistent with substance to be located at the the property could be lost. In imposed by hazardous waste good commercial or facility extreme cases, laws. contamination might make customary practice in an The buyer of a piece of effort to minimize liability.” Liability Is Strict, Joint the property unsaleable or property assumes the rights could result in a financial No person can escape and responsibilities of and Several liability by knowingly selling According to state and liability greater than the property ownership. Failure original cost of the property. contaminated property to look into the environ- federal laws, persons liable without first disclosing for sites where a release of The potential causes of mental status of property reduced market value for knowledge of the prior to its purchase will be hazardous substances has contamination to the buyer. occurred or threatens to contaminated properties interpreted to mean that the include: Nor can anyone escape buyer is willing to accept the occur are strictly, jointly, and liability who caused or ❖ Cleanup costs property “as is”. For the severally liable for the contributed to a release of a ❖ unwary buyer this could cleanup of those sites. Damage to natural hazardous substance. include the cost of cleaning Strict liability means that resources (such as wildlife) To determine if a person up contamination from liability may be assigned ❖ Liability to surrounding is an “innocent purchaser” hazardous substances. regardless of who is at fault properties and affected the courts will consider: for the release. This means individuals ❖ The specialized that if your property is ❖ The stigma attached to knowledge or experience of contaminated you may be property that was once the buyer held legally responsible for “dirty” Definition of cleaning it up even if you did ❖ The relationship of the ❖ Hazardous not cause the contamination. Difficulty in acquiring actual price paid to the value Joint and several mortgage loans or insurance of uncontaminated property Substance and liability means that each and ❖ Whether the buyer used Hazardous Waste every potentially liable Defenses to Liability? commonly known or person can be required to pay Although not easy to reasonably determined Under the Model Toxics establish, some defenses to Control Act definition, all or part of the cleanup information consistent with costs and environmental liability are provided in the good commercial or “hazardous substances” damages resulting from any Model Toxics Control Act. customary practices could be almost any Among the persons who are release. If 100 people ❖ The obviousness of the chemical or waste that not liable for a release is any brought drums of chemicals presence or likely presence person who can establish could threaten human to a dump, and hazardous of contamination at the that, at the time the facility health or the substances leaking from property environment. those drums were later found was acquired, the person had ❖ The buyer’s ability to to be a threat to human no knowledge or reason to “Hazardous substances” detect the contamination by health or the environment, all know that any hazardous include those substances appropriate inspection that are “hazardous 100 of them or any subgroup substance had been released at the site. The burden of The courts may hold the wstes.” of them could be required to pay for cleanup. proof lies with the purchaser. buyers of industrial or However, for the commercial property to purpose of this document higher standards of review these terms are used than persons buying interchangeably. residential property.

Page 2 Revised September 1999 Ecology Report R-TC-92-115 Environmental Site Assessments

A thorough environmental What Is An But don’t be deceived by the You Must Be Thorough! site assessment can minimize Environmental Site size of the property, its Environmental site assess- potential liability under the Assessment? location or use. A few 55- ments contain several Model Toxics Control Act. An environmental site gallon drums of chemicals common elements, including Since one of the primary assessment evaluates the can be stored anywhere, and a site history, comprehensive defenses to liability is the historical uses and they can contaminate thou- review of records, inter- “innocent purchaser” succession of owners or sands of gallons of ground views, and a physical site defense, you must be able to occupants of a site. It helps water and/or hundreds of inspection. Soil and water show that you looked into to identify the possibility that cubic yards of soil. sampling will be needed if the previous ownership and past practices at and around Due to the unique any of the other investigative uses of the property the property have left it history and circumstances methods identify a “consistent with good contaminated with hazardous surrounding every piece of possibility that contami- commercial or customary substances that will have to property, the scope of an nation could exist. practice . . .” be cleaned up. environmental site assess- Although valuable The courts have yet to The scope of the ment should be determined information may be obtained determine what constitutes environmental site on a site-by-site basis. This is from federal, state, and local “appropriate inquiry” or assessment is determined by why it has been so difficult regulatory agencies, you or “good commercial or the nature of the property to establish a standard of due your hired consultant will be customary practice”, and and any unique circum- diligence for environmental responsible for acquiring, there is no universally stances surrounding it. site assessments. It’s hard to analyzing, and compiling the accepted industry standard to Properties near existing say how much investigation information as well as clarify how indepth an hazardous waste sites and will be adequate when every justifying the results. investigation must be to properties on or near heavy site is different. If you do an Remember, you have the satisfy this requirement. As a industrial land are the most environmental site burden of proving that you result, there is no way to be likely to be contaminated. assessment and don’t find did everything possible to completely sure you will be The greater the chance that a contamination until after you discover potential free of potential liability for a site is contaminated, the buy the property, you may contamination. hazardous waste cleanup more detailed the analysis of still be required to pay for its Always keep in mind: when you acquire commerc- site conditions should be. cleanup. The more likely a site is ial or industrial property. Commercial sites that There are a variety of contaminated, the more However, one way to are or have neighbors known guidance materials and detailed the environmental minimize your chances of to be on federal or state publications available on site assessment should be. being liable for cleanup of hazardous sites lists should conducting property assess- Remember to keep the contamination caused by a be carefully evaluated. Also, ments. Although these results of your environmental prior owner is to do an existing or past businesses publications may provide site assessment. The environmental site known to store or use chemi- some of the basics of a information may be useful in assessment. cals should be carefully property assessment, there is the future (i.e. future pro- evaluated. no replacement for the perty transfers, liability Small commercial experience of a thorough and issues). properties typically require a reputable professional who is less extensive environmental competent in conducting investigation, and residential environmental site properties usually even less. assessments.

Page 3 Revised September 1999 Ecology Report R-TC-92-115 What Makes Up An Environmental Site Assessment?

Check Site Lists until it has gone through a Personal Interviews Ecology’s Toxics Cleanup preliminary study in the state Interviews can provide Program maintains a data Do not assume that there cleanup process (called a Site useful information about a base of all currently known are no hazardous waste Hazard Assessment) and has site. As appropriate under hazardous waste sites. A problems at a site just been ranked. the circumstances, the report entitled The because the property is In addition to the state’s following individuals could Confirmed or Suspected not on one of Ecology’s Hazardous Sites List, the be interviewed: Contaminated Sites Report lists. It is possible that U.S. Environmental ❖ Present and former Protection Agency (EPA) lists potential and contamination has gone owners, operators and confirmed hazardous waste has a list of all known federal undiscovered or hasn’t employees of a facility sites in Washington and is sites being cleaned up under ❖ Regulatory agency available to the public. been reported. Comprehensive personnel In addition, Ecology Environmental Response, ❖ publishes the Hazardous Compensation and Liability Neighboring residents Sites List twice each year. by Ecology to help prioritize Act of 1980 (CERCLA - also or businesses This list contains sites that sites for cleanup. It does not known as “Superfund”), as have been assessed by the determine the actual risk at a well as sites that could be Review of Regulatory Washington Ranking site. A state-wide list of sites contaminated due to the Records Method (WARM), in which with leaking underground handling of hazardous Regulatory agencies such a rank of “1" is used for storage tanks is also substances that are Resource as EPA, the Department of sites with the highest available from Ecology. Conservation and Recovery Ecology, county health potential for risk to human All of the sites on the Act (RCRA) facilities. You departments, and local health and the environment Hazardous Sites List will can write the Region 10 EPA planning offices can and ”5" is the lowest. The also be on the Confirmed or office and request provide useful information WARM ranking is a Suspected Contaminated information about known or regarding potential liability comparison between all Sites Report , but the reverse likely contamination at the at a site. The following sites on the list and is used is not true. A site doesn’t go property you are considering. types of information is on the Hazardous Sites List often available in the files at federal, state, and local regulatory agencies. It can Information be viewed, or copies obtained for a fee, by Call (360) 407-7170 (voice), (360) 407-6006 (TDD) or contacting the regulatory toll-free 1-800-826-7716 to receive: agency. ❖ Environmental permits The Confirmed or Suspected Contaminated Sites Report - A list of all known sites (air, water, discharge, where hazardous substances have been released or a release is suspected and further septic, etc.) testing is needed. ❖ Hazardous waste Hazardous Sites List - (A subset of the Affected Media and Contaminants report) A manifests, storage notices, list of ranked sites where some kind of cleanup action is likely to be required. and waste generator reports ❖ Inspection reports Site Register - An update on cleanup activities at hazardous waste sites in Washington ❖ state (published every two weeks). Spill reports ❖ Violation notices, Leaking Underground Storage Tank List - A list of all known sites with leaking administrative orders, underground storage tanks. compliance schedules, or Call (425) 553-1200 (voice), (425) 553-1698 (TDD) to receive: other enforcement actions Site Information from EPA on actions related to the Resource Conservation and regarding the site Recovery Act (RCRA), the Comprehensive Environmental Response Compensation ❖ Correspondence related and Liability Act (CERCLA) and the master database of facilities being investigated to the site by all EPA programs and many state programs (Facility Index Data System - FINDS). ❖ Zoning, comprehensive Or write: EPA, 1200 Sixth Avenue, Seattle, WA 98101 plans, and business licenses

Page 4 Revised September 1999 Ecology Report R-TC-92-115 Questions A Prudent Purchaser Should Ask Review of Other Public Site Inspection The following questions may What are the results of any Records All environmental site help identify site activities or Discharge Monitoring A variety of other public assessments should include materials that could contri- Reports (DMRs)? bute to environmental records can provide useful an on-site inspection of the ❖ What is the compliance liability at a site. This is not information about a site. property. No defense to record with environmental an all-inclusive list, but will This information can be liability will be possible laws for the current and past give you a good start: found in local newspapers, without a physical inspec- facilities at the site? the county auditor’s office, tion of the property in ❖ What are the past uses of ❖ What is the condition of and the superior and district question. Many indications the property? existing pollution control courts. The following types of environmental problems ❖ What hazardous sub- equipment? of information may be can be easily identified by stances has the owner/ ❖ Are there any currently obtained: walking around and operator generated, known environmental ❖ Title records visually inspecting the manufactured, managed, property. Any of the liabilities? ❖ Existing environmental treated, stored, disposed of, following may signal the ❖ Is the site on or near any liens released, or sent off-site? presence of hazardous sensitive environments ❖ ❖ Have chemicals, Surrounding property substance contamination: or habitats, wetlands, owners and zoning of pesticides, or fertilizers been ❖ Lack of vegetation, sick streams, archeological sites? properties used, treated, stored, or or dead vegetation disposed of at the site? ❖ Aerial photographs ❖ Unusual or noxious ❖ Are there any under- ❖ Sanborn Fire Insurance odors What To Do If Maps, Polk Directories ground storage tanks, dry ❖ Stained soil wells, or other buried struc- ❖ Historical records and Contamination Is ❖ Settling ponds or tures where chemicals have photos, including: Archival unnaturally colored surface been stored or disposed of? Discovered records, business records, water ❖ manuscripts (personal Is the site served by city If an environmental site ❖ papers) Indication of current or sewer or septic tank? (Note: assessment indicates past storage of fuel, chemicals dumped in a septic contamination may be ❖ Books on local history chemicals, or hazardous tank could be a source of present that could threaten ❖ Local newspapers and substances pollution). human health or the clipping files ❖ The presence of fill ❖ Is the site on fill land environment, this must be ❖ Periodicals/Journals on consisting of waste and what type of fill was reported to Ecology. Further local history materials used? testing of surface and subsurface soil and water ❖ Historical society ❖ Containers or drums ❖ Are there any materials should be conducted to records with unknown contents or structures containing determine the extent of the ❖ Historical museum asbestos? ❖ Proximity of property contamination and potential records ❖ to known or suspected Is there electrical scope of cleanup needed. ❖ Litigation regarding the hazardous waste sites or equipment with PCBs? If you wish to purchase property or owner sources ❖ Does the facility have the property in spite of ❖ Proximity of property the required environmental finding contamination, you to industrial or commercial permits to operate in its may want to work jointly areas current capacity? with the current owner to ❖ Proximity of property ❖ Have any discharges arrange for appropriate soil to a major highway or surpassed permit require- and/or water testing. railroad line ments? What is the result of any state or federal Class 2 inspections of the facility in regard to National Pollution Discharge Elimination System (NPDES) permits?

Page 5 Revised September 1999 Ecology Report R-TC-92-115 Property Contracts: For More Information Written Protections When industrial or com- Contact Ecology’s Toxics mercial real estate is being Cleanup Program Head- acquired, potential liability can quarters Office at (360) be lessened by including 407-7170 (voice), 407-6006 specific disclosures and written (TDD only) or 1-800-826- protections in the purchase 7716, or contact the regional contract. Such a contract could office nearest you. include: Northwest Region: ❖ Disclosure of all 3190 160th Avenue SE hazardous substances or Bellevue WA 98008-5452 materials associated with the (425) 649-7000 (voice) or property (425) 649-4259 (TDD only) ❖ Disclosure of hazardous Southwest Region: substance release/spill 5751 6th Ave SE Olympia reports to local, state, or WA 98504-7775 companies filing notifica- information they have about federal agencies (360)407-6300 (voice) or tions of dangerous waste a piece of property. activities. ❖ Disclosure of the (360) 407-6306 (TDD only) Local Fire Districts or facility’s environmental Central Region: Ecology’s Hazardous Emergency Response compliance record 15 W Yakima Avenue Substance Information Agencies, check your local Office, 1-800-633-7585, for directory, for information ❖ Disclosure of all Yakima WA 98902-3452 information on land, air, and on sites of chemical or toxic environmentally-related (509) 575-2490 (voice) or water emissions reported substance fires, explosions, investigations, studies or (509) 454-7673 (TDD only) under Community Right-to or spills. reports prepared about the Eastern Region: Know; hazardous substances facility N 4601 Monroe Suite 100 Local Health Department, present at a site subject to check your local directory, ❖ Warranty that the seller Spokane WA 99205-1295 Community Right-to Know for information about solid has used due diligence to (509) 456-2926 (voice) or laws; and information on waste, moderate risk waste discover the existence of all (509) 458-2055 (TDD only) pesticide use. facilities, or contaminated information requested Ecology’s Toxics Cleanup U.S. Environmental drinking water systems in ❖ Program Headquarters An agreement on who Protection Agency Region your area. Office, 1-800-826-7716 or will assume any environ- 10, (425) 553-1200 (voice) (360) 407-7170, for copies Local City and County mental liability should or (425) 553-1698 (TDD of the Hazardous Sites List, Planning Departments, problems be discovered in only), for further site specific Site Register, Confirmed or check your local directory, the future. (Caution! This information about federally Suspected Contaminated for information regarding may not provide much managed hazardous waste Sites Report, or the MTCA local land use plans and protection if the person (RCRA) sites in Washing- law and/or regulations. zoning. assuming liability has ton, or a CERCLA (Super- Ecology’s Toxics Cleanup Local City and County insufficient assets to fund) sites list. Through Program, Underground Building Departments, complete a cleanup.) EPA’s Freedom of Informa- Storage Tank Unit, 1-800- check your local directory, tion Act officer, you may Any agreement or property 826-7716 for information for information about site request all the information contract that assigns liability about the registration of use information. EPA has on the property for contamination that underground storage tanks. you’re considering, and Local library and Histor- occurred at a site before its Contact the regional office surrounding properties if you ical Societies for informa- purchase exists between the for information about sites specifically request it. They tion on historic land uses, contracting parties only. contaminated by leaking prefer that you submit your industries, and individuals. Once you accept control of underground storage tanks. property you become request in writing. Within Ecology’s Hazardous Ecology is an Equal Oppor- potentially liable under state ten days, EPA will respond Waste and Toxics tunity employer. If you have law. to your request for informa- special accommodation needs, Reduction Program, tion. Using zip code they can (360) 407-6700 (voice) or please contact the Toxics search each EPA data base Cleanup Program at (360) 407- (360) 407-6006 (TDD only) (RCRIS, CERCLIS, FINDS) 7170 (voice or (360) 407-6006 for information on the and will ask each of their (TDD only). historical record of programs to identify all the Page 6 Revised September 1999 Ecology Report R-TC-92-115