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How to save cleanup costs on contaminated sites.

How to save cleanup costs on contaminated sites

Supermarket operators don't have to know what CERCLA and SARA stand for, but they'd better be familiar with the provisions of these federal superfund laws enacted during the 1980s. The first is the Comprehensive Environmental Response, Cleanup and Liability Act. The second is the Superfund Amendment and Reauthorization Act.

CERCLA mandates that owners and operators of contaminated property are responsible for cleanup costs, regardless of who contaminated a site. SARA, among other things, says that they conceivably can get off the hook if they have done a due diligence investigation.

Super Valu, based in Eden Prairie, Minn., considers the topic of prime importance. Last March, the firm instituted a rule that it will not purchase or rent property without having a Phase 1 environmental survey conducted. If this indicates a possible problem, a Phase 2 audit must be done. Super Valu encourages retailers to retain attorneys and environmental experts before they buy, sell or lease property and expand or remodel a store.

The environmental surveys can be costly, but they are much less expensive than the price of a cleanup, which can run into six figures, says Paul Heckt, a Super Valu corporate attorney.

A Phase 1 audit should run between $2,000 and $4,000 and take between four and eight weeks, Heckt says. The price of a rush job can be double that. If the survey includes limited soil analysis, the price should be $6,000 to $8,000. A Phase 2 audit, which focuses on further identification of problems discovered in the initial survey, "can easily reach $15,000."

He assures retailers that most surveys will be routine and will not require further audits. In few cases will the audit reveal problems of sufficient consequence to "kill a deal," Heckt says. "I can count on the fingers of one hand the number of times Super Valu has had to walk away from a deal."

There are a number of potential contaminants. One is asbestos containing materials (ACMs), which are often present, but can be handled rather easily. This is an important consideration when remodeling or demolition will be done, Heckt says. No ACMs can be removed without giving the government a formal 20-day notice and getting a clearance, he cautions.

A sign of the possible presence of other hazardous substances is the type of business that occupied a site previously. "Red flags" include gas stations, dry cleaners and paint companies, Heckt says. He urges retailers to check on property titles.

Retailers must use outside consultants to conduct surveys since this is "a highly specialized field," Heckt says. There are hundreds of consultants in the field, and he advises retailers to check carefully before hiring one.

"There are a lot of fly-by-nighters doing asbestos removal," Heckt says. And he cites one instance where in the course of pumping water into a gas tank to pressure test it for leakage, "one idiot pumped the water and oil out on the parking lot."

Super Valu has sent out proposed contracts to 15 consultants. In about six months, the firm expects to draw up a standard contract and select three or four consultants that it will use regularly.

Should a survey reveal a problem, Heckt says a retailer can ask the seller to clean up the site or to put money in escrow for a possible cleanup. "It gives you some leverage and a bargaining position to protect yourself or to negotiate a better deal."

State pollution authorities, which also may be involved, can be helpful, Heckt points out. For instance, Minnesota will reimburse the entire cost of digging up and disposing of an underground storage tank.

Banks also are concerned about contamination, he says, and usually insist on a survey before providing financing. "Banks have become more cautious since they have been stuck with cleanup costs."

But while this can cause "real estate gridlock," Heckt notes that conducting a Phase 1 audit need not delay proceeding on a site. "While the survey is being conducted, the potential purchaser or leaser can go ahead on other aspects of a transaction."

PHOTO : What business occupied this site? To check for contamination, retailers are urged to commission an environmental survey before signing a lease to build a store.
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Title Annotation:planning a supermarket location
Author:Weinstein, Steve
Publication:Progressive Grocer
Date:Feb 1, 1991
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