New York Law Requires Landlord Disclosure of Environmental Test Results to Tenan

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United States: New York Law Requires Landlord Disclosure of

Environmental Test Results to Tenants

by S. Oleszkiewicz- mondaq.co, 26 January 2009m

Tenant Notification of Indoor Air Contamination

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New York has passed a law, effective December 3, 2008, which

requires property owners and landlords to provide current and

prospective tenants the results of environmental sampling conducted

on the leased property [N.Y. Envtl. Conserv. Law (ECL) Section 27-

2405]. The law requires notification of sampling results conducted

on indoor air, as well as sub-slab groundwater and soil, when the

test results exceed federal Occupational Safety and Health

Administration ( " OSHA " ) or New York State Department of Health

( " NYSDH " ) indoor air guidelines. This law is intended to address the

issue of vapor intrusion into tenant-occupied commercial and

residential property in situations where contaminated soil or

groundwater, located beneath a building slab or foundation, releases

evaporated organic vapors that may enter and compromise the indoor

air quality of any above grade enclosed structure.

New Law Applicability

1. Applicable to " Test Results "

Notification of test results must be provided by the landlord to the

tenant. The new law defines " test results " to include not only

actual indoor air sampling results, but also sample results from sub-

slab air, sub-slab soil and groundwater. If sub-slab soil or

groundwater results indicate concentration levels that would create

indoor air quality issues, the landlord should consider these

results to fall under the new law's definition of " test results. "

2. Applicable Only to Test Results Provided by an " Issuer "

The requirements of the new law apply only to test results that have

been provided to the property owner by an " issuer, " which is defined

to include:

(a) The New York State Department of Environmental Conservation

( " NYSDEC " );

( A municipality that has entered a contract with NYSDEC to

undertake an environmental restoration project;

© A person subject to an order issued pursuant to New York's

hazardous waste and oil spill clean-up laws; or

(d) A " participant " in New York's Brownfield Cleanup Program ( " BCP " ).

The definition of participant under the BCP is an applicant into the

program who is liable for contamination as an owner or operator.

A " volunteer " under the BCP is an applicant not liable for the

contamination as a " bona fide " purchaser (i.e., an owner whose

liability arises solely from ownership after the contaminants were

released). In addition, the new law would not cover test results

gathered during due diligence on a purchase or lease.

3. Applicable Only to Test Results Provided by an Issuer That Exceed

OSHA or NYSDH Indoor Air Guidelines

The new law also applies only to test results that exceed NYSDH

indoor air guidelines or OSHA guidelines for indoor air quality. In

general, the NYSDH guidelines for certain chemicals of concern are

more stringent than the OSHA guidelines. Under any circumstances,

the indoor air quality test results must exceed either the NYSDH or

OSHA guidelines in determining whether the owner or landlord must

provide notice of the test results under the new law.

Requirements for Landlord Disclosure of Indoor Air Contamination

Test Results

If there is a determination that the test results require tenant

notification, property owners must provide " all tenants and

occupants " with a fact sheet and notice of any public meetings to be

held to discuss the test results. Test results shall be provided if

requested by the tenant. Property owners have 15 days from receipt

of the test results to provide the required notice. Fact sheets for

specific contaminants of concern are being prepared by the NYSDH to

identify reportable detection limits, health risks associated with

exposure to the contaminant and a means to obtain more information

on the contaminant. NYSDH currently has fact sheets prepared only

for TCE, PCE and Radon.

In situations where a site has: (a) an engineering control in place

to mitigate indoor air quality contamination (e.g., passive vapor

barrier; active vapor capture system); or ( if the site is subject

to monitoring under an ongoing remediation program, property owners

shall provide the following to prospective tenants prior to signing

a lease agreement:

(i) fact sheets regarding the contaminant of concern;

(ii) test results upon request;

(iii) any site closure letter received; and

(iv) notice in the lease agreement.

The notice to prospective tenants to be included in the lease

agreement must contain the following language in at least 12-point,

boldface type on the first page:

" NOTIFICATION OF TEST RESULTS. The Property Has Been Tested For

Contamination Of Indoor Air; Test Results And Additional Information

Are Available Upon Request. "

Penalties

While the law is silent on the issue of penalties, a property owner

who violates the disclosure requirements could face general criminal

or civil penalties under New York statutes ECL §§71-4001 and 4003,

which provide for imprisonment, injunctive relief and $500 per

violation and $500 per day for each day the violation continues.

Uncertainty Regarding the New Law

Does it apply retroactively? If the law applies retroactively, then

there would be a requirement placed upon landlords to research and

review whether a site has historic indoor air quality test results

and whether those test results (if they exceed applicable NYSDH or

OSHA guidelines) must be reported to current tenants and building

occupants. Theoretically, there would be no limit on a search back

in time for potential test results.

The law requires notification of test results to " all tenants and

occupants. " There is likely to be uncertainty as to who

the " occupants " are that the law refers to as requiring

notification. Would " occupants " be considered customers who enter an

establishment? Would employees working in a retail setting be

considered " occupants " ? Further clarification of this issue should

be sought through pronouncements from NYSDEC.

The definition of " test results " not only includes tests performed

on indoor air, but also tests performed on sub-slab air, ambient

air, sub-slab groundwater and sub-slab soil samples. If an owner has

only sub-slab soil or sub-slab groundwater results, how is the

determination made that indoor air quality exceedances exist

requiring disclosure under the new law?

Conclusion

Owners/landlords are required to provide tenant notification of test

results from sites in New York that qualify under the terms of the

new law. The first step in this process is likely to be to gather

available environmental sampling information from owned sites in New

York and evaluate that information to determine if disclosure is

required. In addition, for future or pending leases in New York,

appropriate notice should be provided to prospective tenants,

including written notice on the first page of the lease as required

by the new law. Tenants in New York may want to evaluate any notice

received from the landlord regarding environmental test results,

determine whether indoor air quality has been compromised and take

steps to potentially mitigate vapor intrusion effects. Ongoing

review of pronouncements or amendments regarding the new law by

NYSDEC is necessary for clarification of certain ambiguities that

may exist in the new law.

If you have questions regarding the topic discussed in this Alert or

would like more information, please contact S. Oleszkiewicz,

any member of the Energy, Environment and Resources Practice Group

or the attorney in the firm with whom you are regularly in contact.

This article is for general information and does not include full

legal analysis of the matters presented. It should not be construed

or relied upon as legal advice or legal opinion on any specific

facts or circumstances. The description of the results of any

specific case or transaction contained herein does not mean or

suggest that similar results can or could be obtained in any other

matter. Each legal matter should be considered to be unique and

subject to varying results. The invitation to contact the authors or

attorneys in our firm is not a solicitation to provide professional

services and should not be construed as a statement as to any

availability to perform legal services in any jurisdiction in which

such attorney is not permitted to practice.

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