What is a Business Environmental Risk and Should You be Concerned?

When purchasing land, there are a lot of things you need to consider, such as the location and suitability of the site for your project.

In brownfield construction, there’s another thing to consider, and that is “Business environmental risk.” Understanding what this phrase means and how it might affect your project is vital.

What is a Business Environmental Risk?

When constructing or renovating a brownfield site, there may be environmental concerns. “Business environmental risk” refers to any risk which is driven by material or environmental factors and may affect the current or planned use of the site.

Typically, this means that there is a risk that you may have to engage in expensive mitigation or, worse, find yourself unable to use the site as planned, due to the presence of contaminants or other factors.

What is the Difference Between Business Environmental Risk and Recognized Environmental Condition?

The line between the two can be fuzzy. But a recognized environmental condition (REC) is the actual or likely presence of hazardous substances. The key difference is that a BER does not generally trigger a Phase II investigation as it is not typically associated with soil or groundwater contamination. This might indicate that a BER is a lesser problem, but this does not mean it should be overlooked. Instead, it should be taken into full account when developing the site and designing mitigation systems.

Even though it may not trigger a Phase II, it might warrant some further investigation, such as taking indoor air samples in existing structures.

As the line is so fuzzy, some assessors might call the same thing a BER or a REC, depending on how seriously they take it. Anything mentioned as a BER in your report, thus, needs to be taken seriously and treated as a very real concern that needs to be dealt with.

What are Some Common BERs?

So, what kind of thing is considered a BER? There are a variety of things that can make it onto this list, but here are some of the most common:

1. Asbestos-containing material. We all know that asbestos is pretty much ubiquitous in buildings constructed before 1990 when the risks started to become known. Undisturbed ACM is not a problem, but demolition or renovations can result in the release of asbestos fibers into the air, with potential health risks that are primarily to the construction workers. Specialist asbestos removal is typically required when asbestos is disturbed. Undisturbed asbestos can be left in place but should be recorded on plans.
2. Lead-based paint. LBP was banned in 1978 but still shows up in older buildings and commercial structures. It’s particularly common in things like water tanks and antenna towers. As with ACM, LBP is not a problem until it is disturbed but also needs to be professionally removed.
3. Soil vapor intrusion. SVI issues often do trigger a Phase II assessment, but not always. It’s worth noting that some SVI issues may in fact be natural, and testing should also be done based on the underlying geology. Radon is the best known of these, but methane and hydrogen sulfide can also naturally occur in soil. This may require the installation of expensive vapor mitigation systems, such as a sub-slab depressurization system (SSDS).
4. Historic fill. Prior to 1962, it was very common to use all kinds of random material to fill water bodies, wetlands, or depressions. This might include household waste, wood and coal ash, construction debris, etc. If you are not excavating on the site, historic fill is not a problem. But if you are, such as for new construction, then you might need to worry about properly disposing of this material, which can include toxic materials.
5. Emerging contaminants. This means things that are only now being recognized as toxic. Right now, this includes per and polyfluoroalkyl substances (PFAS), which are used in firefighting foams and non-stick materials, and 1,4-dioxane, used in detergents and cosmetics. At any time, limits on these substances might be tightened, affecting your project.

These are only examples but should give you some idea of what kind of thing might constitute a BER. Another issue that can come up is inheriting compliance issues from the seller. Don’t close until you know all of those issues have been addressed.

Should You Walk Away from a Purchase?

The answer to this depends on the nature of the BER and the cost of mitigation. If you become aware of a BER before purchase or during site assessment, you need to calculate what mitigation will cost and determine if it is still worth it.

There are no hard and fast rules, but remember that in addition to the cost of mitigation you may have to face liability. It’s vital to ensure that any issues addressed with the site are dealt with appropriately. This might include specialist soil removal to deal with historic fill, internal air quality testing, etc. If the building is older, we recommend doing testing for asbestos and lead-based paint as part of Phase I if you are planning demolition or any significant remodeling.

Many of these problems are also project specific. Historic fill is not an issue if you plan on using and renovating the existing buildings and will not be doing any large scale excavation. However, if you are, it can increase the cost of soil removal by as much as double.

Another option, of course, is to use these BERs when negotiating with the seller. If you are going to have to spend a lot of money on mitigation, then it is worth trying to get a lower price.

As already mentioned, make sure any open compliance issues are resolved by the seller, and it is generally best to walk away if they refuse to do so.

A business environmental risk is less of a concern than an REC, but should not be overlooked or ignored. If you do, and there are later problems, you may face compliance issues and/or lawsuits. Make sure that the assessment company you use is transparent about any risks they find and that you are ready to work to mitigate them, and that you know at what point you would walk away from the transaction.