Last month, Gravel & Shea associate Jeff Polubinski presented a session on environmental due diligence at the White & Burke Development Conference. Attended by lenders, developers, environmental consultants, and attorneys, the session provided an overview of environmental protections for owners and operators — with a specific emphasis on recent legislation that impacts tenants.
Since 1986, a variety of legislative actions have been taken to encourage property developers to purchase and rehabilitate potentially contaminated properties. These laws have provided safe harbors for purchasers who take certain actions, such as completing a Phase I Environmental Assessment.
But the legal landscape for tenant operators has been murky, especially since strict liability prevails at both the state and federal level — meaning operators can be held liable for contamination regardless of their culpability.
Tenants often enter into decades-long leases and spend hundreds of thousands of dollars outfitting a space to meet their needs, says Polubinski. “Many think the liability protections under state and federal law just pertain to owners, but there are protections available to tenants. Just like owners, tenants can take a number of steps to mitigate the risks. But they have to know about them in order to take them.”
Polubinski highlighted recent Vermont legislation known as the BUILD Act, which provides clarity about the steps tenants can take to qualify for environmental protections. Tenants who want to take advantage of the law must sure certain actions have been taken at the time of the contract signing.
Polubinski acknowledges that fully understanding the hazardous waste provisions in a contract can be tedious and boring for a potential tenant, but he says, “tenants have to be very careful about the lease they’re signing and potential liability exposure.”
Polubinski joined Gravel & Shea in 2013 after almost a decade working as a geologist at an environmental consulting firm and co-authoring over 100 Phase I Environmental Site Assessments.