Environmental strategist, between the lines: This competitive environmental intelligence is from Risk and Insurance Magazine, May 2007, and a special they ran on “The Nations Most Overlooked Risks.” Based on guesstimates that vapors impact 439,000 sites nationwide, this means in your state on average there are 8,780 impacted sites. This is not a NIMBY (Not In MY Back Yard) issue because these are already in your back yards. You can add value by taking a proactive approach and profiting at the same time.
439,000 sites is a conservative number.
Odorless Vapors: An Insidious Intruder
The foul smell of vapor intrusion is wafting through the environmental insurance world. Federal regulators say the problem affects 439,000 sites nationwide.
By Matthew Brodsky
The words “vapor intrusion” evoke images of creeping green clouds and vile smells of sulfur and rot, mildew and decay. Yet vapor intrusion, or VI, is an environmental, business and insurance issue far more insidious. There is no green cloud, just pollutants from old industrial sites, volatile solvents, pooling and dispersing in the groundwater. Their often odorless and colorless toxic vapor seeps up through the soil and into the air inside the schools, temples and homes of distant neighborhoods.
Such was the case with the Redfield Site, an old manufacturing property in Denver being redeveloped by a real-estate company. Leftover solvent spills at the site released vapor that intruded into more than 395 nearby homes. The new owner of Redfield in 2004 had to provide those properties with air testing and remediation, while facing a million-dollar class action.
Such was also the case in the town of Endicott, N.Y., at an old IBM facility. In 2004, it was discovered that vapor from solvents at the site had contaminated 300 acres south of the plant. Approximately 480 off-site properties in Endicott and the nearby town of Union were identified with VI issues. The New York Department of Environmental Conservation reclassified the IBM site as a Class-2 state Superfund site, defined as a site where hazardous waste constitutes a significant threat to the public health or environment. IBM accepted the responsibility for much of the contamination, according to the DEC, and Big Blue offered affected property owners ventilation systems, as well as $10,000 or 8 percent of property value, whichever was more.
These two high-profile cases of VI were not the “threshold” events that woke up environmental circles to the issues, says Henry Gold, technical service manager with AIG Consultants Inc. In fact, according to a new book on VI coming out from Capitol Press, the EPA claims more than 439,000 sites are affected by these surreptitious emissions.
But the Endicott and Redfield discoveries definitely reveal just how widespread the VI problem is now known to be, and why. First, they revealed that vapors have legs.
“The structure that’s being impacted doesn’t have to be very close to the source material,” says Gold. “You get a release, and the material flows with the groundwater, and then as the groundwater is flowing along, it releases contaminants into the soil as a vapor, and the vapors migrate themselves.”
Second, these VI cases reveal that what was once thought to be cleaned up might not be.
“We used to think that you needed a lot of material dissolved in the groundwater for it to migrate from the groundwater into the soil then ultimately into a building. And now, what we’re seeing from empirical observation is that that’s not the case,” says Gold. “The toxicity of certain substances is now thought to be greater than it used to be, and if it’s a volatile substance, well now–holy smokes–we have to think about this at a lower threshold than we did previously.”
When he says toxic, he means toxic.
“A lot of the material,” says Patrick Mount, assistant vice president of the Dedicated Engineering Program at AIG Consultants, “has the potential to be a carcinogen. So we do have known and suspected carcinogens.”
TCE, a solvent used to clean metal machinery and the source of most of the Endicott vapor, can cause headaches, lung irritation and difficulty concentrating if breathed in small amounts, according to the Centers for Disease Control and Prevention. Breathing it for long periods can cause nerve, kidney and liver damage.
What’s worse, solvents like TCE have widespread use in industry, Mount and Gold say. Seeping solvents can be left over from factories that make paint and electrical components, or do metal work or commercial dry cleaning.
“It really is kind of across the board,” says Mount.
They are often used, and perhaps not handled with as much care as necessary.
Kate McGinn, vice president of underwriting and industry relations at XL Environmental, says that smaller industrial operations especially could mishandle cleaning chemicals and other solvents, risking the spill that could cause a plume that could emit vapor.
“A lot of these smaller firms don’t have the knowledge or perhaps limited financial resources, less manpower and maybe less regulatory scrutiny on their operations as opposed to larger companies,” she says.
But if this problem is major, and environmental experts have known about it for the past decade, how can this risk of solvent spills and the resulting vapor intrusion still be overlooked?
Decision-makers in the real-estate and business worlds have not really gotten a good whiff of the problem.
“The knowledge or education of people that are purchasing properties–they just don’t have the background to decipher that,” says Mount.
That is, if they have even heard of VI.
“The other thing is, the state regulatory agencies are in different places along the knowledge curve themselves,” adds Gold. “If you’re coming from a state like New York and New Jersey, both of which have been fairly active in this area, you get smart quick.”
“Fairly active” could be considered an understatement if you are one of the companies tapped by the New York DEC to “knock on your neighbors’ doors,” as Gold puts it, and tell them you have to test their air quality, similar to what happened at the Redfield Site and in Endicott.
Or similar to what happened with IBM, the DEC could take it one step further and reopen your property as a Superfund site, as it is considering doing at more than 400 properties.
“New York is the shining example of potential reopeners,” says Gold. “New York’s not alone in this, but it seems to be at the forefront of this movement.”
The actual costs of VI remediation or prevention can be relatively inexpensive, says Gold and Mount.
But what businesses can lose if their site is reopened are the years and millions of dollars of effort that they poured into a project to reach a fully remediated state–to get the coveted “no further action” thumbs-up from state regulators.
“In our world, the NFA–no further action–is a huge accomplishment for a company to attain. They think they’re done with the problem,” says Mount.
“And even the levels might be low in the soil and groundwater, but these vapors can build up and get inside a building and potentially still trigger a problem,” he says.