TROY: New law frees contaminated real estate from purgatory

February 20, 2010

Every city and town in Indiana has properties that have suffered in environmental purgatory. But that is no longer the case. A new law has potential to literally alter the landscape.

The Indiana Department of Environmental Management now must allow contaminated properties to be sold or redeveloped without a cleanup—as long as the contamination is contained and poses no health risk.

These brownfield storefronts and factories needed to be demolished and rebuilt for today’s businesses. They produced no property tax for their host towns, and their tumble-down edifices were a hazard.

Before the law took effect, real or suspected environmental contamination of soil and groundwater impaired their opportunity for redevelopment.

Property owners and would-be buyers were reluctant to redevelop the sites out of fear of environmental contamination, particularly during weak real estate markets.

Strong environmental laws required reports of toxic-chemical releases and due-diligence investigations of commercial property prior to sale. Properties were banished to environmental limbo: They could not be redeveloped until they were cleaned up, but the cleanup costs and risks were too expensive for their market value.

In 2009, the General Assembly passed legislation that dramatically shifted IDEM policy on soil-and-groundwater cleanup. The agency was directed to consider cleanup plans that specify leaving contamination in the ground as long as it doesn’t threaten health or the environment.

We now have lower-cost options to redevelop property and bring economic growth and vitality back to local communities. Property owners can close their IDEM property contamination files and move ahead with a sale or rebuilding on their properties.

Here’s a hypothetical scenario that illustrates how a property can escape from years in purgatory: The owner of a six-acre property removes a large underground heating oil tank and discovers it had leaked. Heating oil had contaminated the soil and leached into groundwater extending beneath an adjacent industrial property. The top 12 feet of soil is clean, there are no drinking water wells, and both properties are served by municipal water.

Previously, the owner of the leaking tank would have had to excavate all contaminated soil and clean the groundwater, if possible.

Under the new law, the tank owner could develop a plan to prevent long-term exposure to the contaminated soil (already safely 12 feet underground) and agree to monitor groundwater.

Historically, IDEM and U.S. EPA regulators favored removal—regardless of cost and practicality. When the process worked, property owners hired environmental engineers to excavate dirty soil and treat dirty groundwater.

The process was complicated by inflexible regulatory oversight that required each step in the cleanup process be repeated until approved.

As environmental science matured during the 40 years since the first Earth Day, technologies emerged to investigate contamination, assess its toxicology, and clean soil and groundwater.

With improving sampling and laboratory methods came environmental risk assessments to answer the question of how much contamination can be safely left behind.

The new law requires IDEM to consider plans to manage contamination rather than removing it, and to investigate the nature and extent of contamination. The law also allows property owners, or their consultants, to establish controls to prevent exposure.

The result of this law and regulatory policy change is that, if the contamination doesn’t present a threat to health or the environment, then the property owner can file a plan to manage the risk, and IDEM will not require the contamination to be removed.

The biggest benefit of this change? It just might be a philosophical policy shift by regulators whereby the actual risk posed by contamination is evaluated and addressed cost-effectively.

In addition, human health and the environment will benefit through the government’s encouraging cleanup where needed, and helping property owners demolish and rebuild. Communities also will benefit by reusing these properties that have been held in environmental purgatory.•


Troy owns Troy Risk Inc., an environmental consulting firm. Views expressed here are the writer’s.

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