Dirty Industries: Controlling Environmental Problems at Industrial Properties

Industrial properties have the highest level of environmental risk in commercial real estate, except for maybe pharmaceutical facilities. However, these labs are typically staffed with highly trained personnel and have a high level of regulatory scrutiny.

Industrial properties that store, use and discard hazardous materials are governed by several federal laws. The basic one is the Resource Conservation and Recovery Act (RCRA), which is the principal federal law in the United States regulating the disposal of solid and hazardous waste. In addition, Title III of the Superfund Amendment and Re-authorization Act (SARA) requires operations that have hazardous materials on site to share information with state and local emergency planning authorities. It sets regulations for the right of the public to access information on chemical hazards in their community, and the reporting responsibilities for facilities that use, store, and/or release hazardous chemicals and keep Material Safety Data Sheets (MSDS) (see this sample MSDS) of the materials on site for employees’ response.

In order for a material to be covered under the RCRA it has to exhibit one of the following characteristic: ignitability (i.e. flammable); reactivity (think explosion); corrosiveness (think acid); and toxicity. The requirements of the RCRA apply to all companies that generate, store or dispose of hazardous waste in the United States.

A hazardous waste, which may be found in different physical states such as gaseous, liquids or solids, is a special type of waste because it cannot be disposed of by common means like other by-products of our everyday lives. Depending on the physical state of the waste, various treatment and solidification processes might be required.

The amount of hazardous waste that can be stored as well as the time allowed for storage is regulated by RCRA. The owner (or in legal terms the “generator”) of the hazardous waste is the tenant. Sound hazardous materials management includes the proper storage of waste (typically in 55 gallon drums that contain a hazardous waste label), and transportation by a licensed hazardous waste hauler to a certified landfill. The paperwork for this task is the Hazardous Waste Manifest, which must be filled out by tenant, the hauler and eventually the disposal site operator with a fully executed copy returned to the generator.

A Case Study – Managing Industrial Tenants

In 1992 I headed up a small environmental management group at a full service property management company (management, leasing, engineering, construction) whose parent company was a pension fund real estate advisory group. The PM company managed all of the properties in the advisory’s portfolio. There were 40 industrial properties, from Washington State to Florida.

Although there were a large number of industrial properties, no one knew anything about which tenant operations posed environmental risks. When one of the industrial properties in the portfolio had a bad fire with both the fire department and the hazmat team being called to the site, the need for appropriate hazardous materials management strategies became apparent. Since the properties were owned by pension funds, the parent company was very concerned about the publicity that an event like this could create, and were keen to explore ways to prevent something like this happening in the future.

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