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ClientAlert

Vapor Intrusion Update:  New Landlord Notification Requirements

By Ned Abelson and Joanna Giorgio Hilvert
October 2008
Offices: Boston, New York
People: Ned Abelson, Max Friedman
PDF

State laws requiring notices to tenants concerning environmental matters are a growing trend. Different states have enacted tenant notification requirements for lead paint, mold, asbestos and other hazardous materials.

Another trend in the environmental sector is the increased focus on indoor air issues. The U.S. Environmental Protection Agency has published guidance on evaluating vapor intrusion. In February, 2008, ASTM International published a “Standard Practice for Assessment of Vapor Intrusion into Structures on Property Involved in Real Estate Transactions.” The intent of this new ASTM standard (which we think does not work very well) is to provide a screening process for environmental professionals who wish to conduct vapor intrusion assessments as a supplement to Phase I environmental assessments.

In September, New York State combined these two trends by becoming the first state in the nation to enact a law requiring landlords of commercial and residential property to notify tenants and occupants of certain indoor air contamination.

The new law, which goes into effect on December 3, 2008, requires New York property owners who have test results indicating contamination levels above Occupational Health and Safety Commission (“OSHA”) or New York Department of
Health (“NY DOH”) guidelines for indoor air quality to give notice of the test results to current tenants. The notice must
include a NY DOH fact sheet that identifies the contamination along with the guidelines for indoor air quality and health risks associated with exposure, and must be provided within 15 days of the landlord’s receipt of the test results.

The types of results which are subject to this new law include those of any tests that are conducted on indoor air, subslab air (i.e., soil gas), ambient air, subslab groundwater samples, and subslab soil samples, so long as the results indicate indoor air levels above OSHA or NY DOH guidelines.

In addition, there are two specific points associated with this new law that New York landlords should keep in mind. First, landlords are only required to notify tenants of test results that the landlord has been provided by an “issuer.” Under New York law, an issuer is: 

  • A person or entity subject to an order issued pursuant to New York’s hazardous waste or oil spill cleanup laws; 
  • A “participant” (but not a “volunteer”) in the New York Brownfields Cleanup Program (“BCP”);
  • A municipality that has entered a contract with the New York Department of Environmental Conservation (“NY DEC”) to undertake an environmental restoration project; or 
  • The NY DEC.

Second, for real property for which an engineering control is in place to mitigate indoor air contamination, or if the real property is subject to ongoing monitoring pursuant to an ongoing remedial program, landlords must provide notice to
prospective tenants prior to executing a lease. In addition, the first page of the lease must include the following language
in bold face:

“NOTIFICATION OF TEST RESULTS THE PROPERTY HAS BEEN TESTED FOR CONTAMINATION OF INDOOR AIR: TEST RESULTS AND ADDITIONAL INFORMATION ARE AVAILABLE UPON REQUEST.”

Interestingly, several recent articles concerning the new statute referenced possible fines for failure to comply as being included in the new statute. However, the text of the statute as enacted does not include language providing for fines.

Based on our communications with the NYDEC Office of Counsel, we understand these references may be to general
provisions in the New York Environmental Conservation law, of which the new statute is now a part.

There are a number of questions which remain to be resolved regarding this new legislation. For example, presumably
test results that are obtained by the landlord as the result of a due diligence assessment (either by the landlord itself or by a tenant), or in pursuit of LEED certification, are not subject to the tenant notification requirements unless and until the person conducting the tests becomes an issuer, e.g. because they become a BCP participant. Also, will the notification requirement retroactively apply at that time and, if so, when does the 15 day period begin to run? In addition, once a landlord gives notice to a tenant, are there any additional obligations? If the tenant requests more detailed information, or periodic updates, is the landlord required to comply?

Finally, the new law states that a landlord must provide notice of test results not only to tenants but also to “occupants.” It is unclear, however, how broadly that phrase is meant to apply. For example, if the tenant is a daycare provider, will the landlord be required to provide notice to the parents? Similarly, how broadly will that phrase apply to a retail establishment? These and other related questions will need to be clarified as this new law goes into effect.

Similarly, while not explicitly set forth in a Massachusetts statute, Massachusetts regulations that were enacted more
than two years ago also may result in a requirement to notify tenants of indoor air issues. Here also, the requirements
apply based on whether specific test data indicate that certain health-related thresholds set forth in the relevant Massachusetts regulations have been exceeded, in which event notice must be provided to persons who may experience
significant health or safety impacts from the relevant contamination. The implementation of these regulations preceded
the more recent enforcement activities of the Massachusetts Department of Environmental Protection, which have focused intensely on vapor intrusion issues.

Conclusion

Landlords and any other parties involved with real estate should continue to monitor the rapidly evolving developments
that are occurring with respect to indoor air issues. Requirements due to new statutes and regulations, updated research concerning the relevant science, and what the market demands based on increased sensitivity to these issues all have resulted in changes concerning what is considered standard practice. If only due to the keen focus of state regulatory agencies recently, it is important for people involved with real estate to be aware of vapor intrusion issues.

For more information concerning the new New York statute, the analogous Massachusetts regulations, or vapor intrusion
issues generally, please contact:

Boston
Ned Abelson
617.574.4082
nabelson@goulstonstorrs.com

New York
Max Friedman
212.878.5124
mfriedman@goulstonstorrs.com

You may also contact any of the members of our Environmental Law Group or your usual Goulston & Storrs attorney.

Pursuant to IRS Circular 230, please be advised that, this communication is not intended to be, was not written to be and cannot be used by any taxpayer for the purpose of (i) avoiding penalties under U.S. federal tax law or (ii) promoting,
marketing or recommending to another taxpayer any transaction or matter addressed herein.

This client advisory should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer concerning your situation and any specific legal questions you may have.

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