MEbiz Real Estate Insider – Beware of LUST

Kat Joyce

Today, we’re talking about LUSTs: Leaking Underground Storage Tanks. Not what you were expecting? Well, if you are in the market for commercial real estate, I can assure you that you will be even more disappointed if you unwittingly purchase property on which a LUST is located. Ownership of a facility any time after oil arrived there can put you on the Department of Environmental Protection’s radar as a responsible party. While the presence of a UST or LUST does not have to tank your deal (pun intended), you do not want to be in the chain of title until you have some questions answered:

Are there USTs on the site?
It may be obvious to you that USTs are on the site, if, for example, you are purchasing a gas station. Alternatively, the seller may disclose the presence of USTs. Whether or not you know of USTs, as discussed in the last article, you should perform a Phase I Environmental Site Assessment. A Phase I ESA will tell you whether any USTs have been registered with the DEP, and can often inform you whether USTs are likely to be present based on a review of old maps or aerial photographs.

Are the UST’s leaking?
If they are modern, compliant tanks, it should be relatively easy to determine if they are leaking. Your Phase I ESA will uncover any reported spills at the site, and modern tanks are double-walled with leak detection, so any current leak should be immediately detectible. Immediate reporting of a leak from a modern, active tank may result in eligibility for coverage under the ME Groundwater Oil Clean-Up Fund. If the tank is an old, single-walled tank, detecting leaks requires some additional inquiry:

• Is the tank currently in use (it shouldn’t be!)
• When was the tank taken out of use? If taken out of use before ME’s abandonment regulations, it may be possible to leave it in place as a grandfathered “closure”.
• What was stored in the tank?
• Is any remaining material left in the tank mixed with water? Typically, if there is water in the tank, there is a leak.

What now?
If the tank is active, repair or replacement may be necessary, in addition to addressing any contamination from the leak. If it is an old tank, it must be removed. Be sure to consult a lawyer and a reputable environmental consultant to ensure that the handling of a leak and any requisite remediation is done in accordance with the law and in the way that best protects the property’s value.

For more information, contact Kat Joyce, environmental and land use attorney.