Stuck with a Contaminated Site

Tenant Bought Industrial Site

BACKGROUND
A manufacturer of heavy metal liquid chemicals decided to cease operations at a property it was leasing. That cessation of operations triggered the Industrial Site Recovery Act (ISRA), in New Jersey, requiring detailed environmental disclosures and clean-up of the property.

PROBLEM
The tenant’s consultant failed to disclose that the company had been discharging highly acidic solutions into the local sewer through ductile iron pipe on site. Upon review of the operations, SAILE recommended that the soil surrounding the wastewater sewer be sampled for heavy metals. Upon uncovering the sewer line for sampling, it was discovered that there were not only numerous holes in the existing sewer line, but that there had been several replacements of that sewer line throughout the property. Soil sampling confirmed the widespread presence of heavy metal contaminated soil; as a result, the tenant spent more than $1.2 million to remediate the soils surrounding the sewer lines.

APPROACH
In another location of the property, there were discovered significant concentrations of heavy metal contaminated soil. The tenant’s consultant claimed that this contamination was the result of historic fill. SAILE noticed that there had been a wastewater sump in that area, connected to the plant sewer system. SAILE also was aware that the tenant was being represented by a very well-known environmental law firm, a firm that would challenge any charges that this contamination was anything other than historic fill. The property owner agreed to retain SAILE to conduct a detailed soil investigation in an effort to document that the contamination identified was the result of process-related discharges, and not historic fill, which would have required remediation. To ensure that all findings from this investigation would withstand any legal challenges, SAILE had an independent, licensed surveyor on site to ensure that all samples were collected at the same absolute depth (the property was very hilly). There was also an independent, third party, company present to decontaminate all sampling equipment between samples and between locations. Finally, at the end of each day, a New Jersey licensed laboratory arrived at the site to pick up all samples collected that day in a refrigerated cooler and to drop off sealed coolers with sample containers for the following day.

When the final report was prepared, there was clear, incontrovertible evidence that the soil contamination previously identified was, indeed, the result of process discharges.

SOLUTION
In the end, rather than remediate the property, the tenant agreed to purchase the property from the owner at a price reportedly more than $1 million above fair market value. With that outcome, the owner was able to retire in Florida, which was his desired intent from the start.