It all started with the Love Canal.
William T. Love, a 19th Century entrepreneur, decided he was going to build a city from scratch. His plan was to generate hydroelectric power from the Niagara River. He built a one-mile long canal, ran out of money, and abandoned the project. The Hooker Chemical Company and other chemical companies used the canal between the 1920’s and the 1950’s as a toxic waste landfill. They sold the property for $1.00 to the Niagara Falls School Board in 1955. A school and a residential community were developed over the Love Canal. Numerous health problems accumulated and prompted Congress to pass the Comprehensive Environmental Response Compensation and Liability Act of 1980, better known as Superfund.
A New Era of Environmental Laws
Superfund imposed strict, joint, several, and retroactive liability for pollution on property within the United States. This essentially means that they could find almost anyone involved with the property, at any time, liable for remediation costs regardless of fault. This law, and similar state laws that are based on the same principles, have made commercial real estate transactions far more complex since Superfund criteria entered the process. Numerous court cases have exacerbated the impact of these rules to the extent that impacted properties are difficult to finance and sell.
Over time, however, things always seem to balance out.
We are now approaching a balance between environmental protection and economic progress based on recent legislative amendments, increased risk tolerance, environmental insurance, developing technologies, and other risk-management strategies.
As a result, impacted properties no longer represent the roadblock that they once did. Bottom line: the successful implementation of environmental risk-management strategies is critical to closing commercial real estate transactions—and has been since 1980.