Re-development of the SYSCO site will require new businesses and agencies to establish and take ownership (either through lease or property transaction) of the land. In any property transaction, the various parties have a need and desire to be protected from unearned liability.

Depending on the type of transaction, lease or sale, an environmental liability assessment can take different forms. In Nova Scotia, as in most other jurisdictions, the process does not tend to be driven by regulation. Rather, it is driven by the need of one or both of the transacting parties, or a third party such as a lending institution, to gain a comfortable understanding of any environmental concerns and their associated costs and risks. The reason for this is that most major financial institutions and insurance providers are extremely risk adverse. In most jurisdictions their standards to provide capital and/or coverage will be the most stringent. The following sections explore how environmental liability assessments relate to leases and sales, and the standards and procedures commonly employed in their execution.

Property Leases

The key aspect of a land lease arrangement, from an environmental liability point of view, is that the owner is ultimately responsible for the environmental condition of the property. It is therefore critical that the owner be aware of the environmental condition of the property prior to tenant occupancy. Likewise, a tenant desires knowledge of pre-existing environmental concerns in order to avoid being held liable at the end of the lease period and to ensure safe working conditions.

The environmental liability assessment conducted at the start of a lease usually takes the form of an Environmental Baseline Study (EBS), intended to document a “snapshot” of the environmental condition of the property at the time that control of the property is transferred. The execution of an EBS usually involves a variety of assessment techniques, including intrusive testing, groundwater and surface water testing, waste management reviews, and monitoring of environmental control systems.

As part of the EBS, current practices on the site are audited for compliance with applicable environmental regulations and guidelines in order to assess the potential for activities to cause future liability. The audit process also serves to identify opportunities for the development of management practices that reduce the risk of future environmental impacts.

At the end of the lease period, a similar study is undertaken to produce an “exit snapshot” of environmental issues, and a basis for determining if significant changes have occurred to the environmental condition of the property through the course of the lease.

No specific regulations are in place to dictate the form of an EBS. The scope of the study is based on industry standards, as well as the specific requirements of the affected parties, their financial institutions and insurance providers.

In the case of a property sale, the priority for the purchaser is to understand the magnitude of any remaining environmental liabilities associated with the property. This is accomplished through the execution of a standard phased Environmental Site Assessment (ESA). The study focuses on environmental contamination, waste disposal and hazardous building materials as opposed to an EBS that also audits ongoing operations.

Often with ownership changes, the purchaser is associated with a lending institution. Most lending institutions require not only an assessment of environmental liabilities, but also confirmation that the liabilities have been addressed to the satisfaction of the regulator. In Nova Scotia, such confirmation takes the form of a Certificate of Compliance (CoC) issued through a voluntary process prescribed by the NSDEL Guidelines for the Management of Contaminated Sites in Nova Scotia (http://www.gov.ns.ca/enla/pubs/contam.PDF). A CoC is issued by an Environmental Site Professional, and accepted by NSDEL