Although more often associated with large-scale industrial or manufacturing operations, numerous small businesses that occupy commercial and light-industrial buildings also use hazardous materials and generate hazardous waste. Some tenants, such as machine shops, waste sorting companies and automotive repair garages might be obvious; others, such as dry cleaners, printing companies and logistics operations with on-site truck fueling, might be less so.
These businesses often use underground or aboveground tanks to store fuel or manufacturing fluids; use and store hazardous materials, such as solvents for degreasing or parts cleaning; maintain unique waste water treatment systems; or accumulate hazardous waste, such as spent batteries and waste oil.
Improper, haphazard or illegal hazardous materials and waste management practices by these tenants can be dangerous and result in injury or death, environmental pollution and damage to a property. Properties damaged by fire, toxic release or explosion may be evacuated for several weeks or months as agencies and insurance companies conduct inspections and property repairs are completed. Business interruptions and lawsuits related to an incident can put smaller tenants or already strained operations out of business, resulting in a lease default.
Improper environmental management also can affect the subsurface beneath a property. Release of hazardous materials or waste at the surface, from underground storage or from waste drains may require expensive and time-consuming environmental remediation. The California Department of Toxic Substances Control estimates 90,000 properties in that state alone are contaminated or believed to be contaminated with toxic substances, and the agency identifies small businesses as substantial contributors to environmental impacts.
Although commercial leases may require tenants to disclose their use of hazardous materials, tenant-generated inventories may be inaccurate or incomplete depending on the tenant’s sophistication. Many smaller businesses lack dedicated staff or proper training for environmental management, a process that includes the early identification and correction of environmental issues to minimize damage to a property.
And commercial building owners and managers cannot rely solely on local fire departments or other oversight agencies. Although those agencies perform periodic business inspections and may maintain records regarding hazardous materials use and storage for fire prevention or response purposes, recordkeeping and inspections are infrequent, and business operations and hazardous materials uses may change over time.
This is where a vigilant property manager can make all the different. A property manager is not expected to replace a qualified environmental inspector or consultant, of course. However, while interfacing with tenants during property visits or meetings, property managers are the eyes and ears for the property owner and have a unique opportunity to identify potential environmental issues early. So, what can a property manager do to mitigate risk?
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Understand a tenant’s business and ask questions: A property manager should understand the nature of the tenant’s operation (e.g., manufacturing, warehousing, fueling) and whether the operation is chemically intensive. Walk through site operations with a tenant following the path of hazardous materials from receiving to storage and use. Ask to see the hazardous waste generating and storage areas. Does the tenant dispose of waste frequently? Do they keep good records? Do trained employees oversee environmental matters? Ask the tenant to explain any piece of equipment, process or stored material you don’t recognize.
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Recognize obvious concerns: Look for obvious issues with the storage and handling of hazardous materials during routine site walks, such as releases to the ground or building floor, unlabeled drums and tanks, leaking equipment and haphazard hazardous materials or waste storage areas. Are chemical inventory records poorly maintained or missing? Is the site operation disorganized? Are battery charging stations leaking acid to the building foundation? Do drums have appropriate secondary containment or are they on bare floor or ground? Are hazardous materials and hazardous waste storage areas secure and removed from high traffic areas, such as forklift activity?
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Communicate concerns to owners and experts: Take photographs of any concerns and communicate them to property owners per corporate procedures. Owners may need the property manager to assist in communicating issues to environmental consultants, experts or counsel. Discuss with the owner whether a third-party inspection should be performed.
Property managers have an important role to play in working with both tenants and owners to protect an asset. Assisting in the early identification and correction of problems with hazardous materials and waste can prevent these problems from becoming larger environmental contamination issues or causing injury to building occupants and damage to the property.
ABOUT THE AUTHOR: Sarah Denton is a licensed professional geologist, hydrogeologist and environmental manager who has worked as an environmental consultant for nearly 20 years. Denton manages the Specialty Environmental Team for Blackstone Consulting LLC and specializes in site characterization, environmental remediation, fate and transport evaluation, property redevelopment strategies, litigation and environmental permitting.