In order to try to prevent major environmental issues at abandoned or closed factories, Ohio adopted a program known as the “Cessation of Regulated Operations” (CRO). While this program has been around since 1996, there are misconceptions among businesses and developers as to what it means when a property goes through CRO.
Ohio EPA’s fact sheet for the CRO program opens with an example of what the CRO program is intended to prevent:
“In 1987, vandals entered the closed Dayton Tire & Rubber facility to remove copper cores form several large transformers remaining at the facility. This vandalism resulted in the discharge of Askerol (PCB oil) from transformers to Wolf Creek. Cleaning up and demolishing the site took three years and cost approximately $8 million.”
At its core, the goal of the CRO program is to prevent releases of chemicals onsite after operations cease. CRO requires the owner or operator to remove chemicals and drain equipment after operations are terminated in order to prevent releases of those chemicals since the facility will no longer be operating.
What types of facilities must go through CRO?
Ohio EPA estimates there are 7,000 operating facilities in the State that if they ceased operating would have to complete the CRO process. Any facility that must submit annual chemical inventory reporting to the State Emergency Response Commission (SERC) is potentially subject to CRO with some limited exceptions.
Facilities that store “extremely hazardous substances”, “hazardous substances”, “flammable substances” and “petroleum” above certain thresholds (i.e. “Threshold Quantity” or TQ) trigger the SERC chemical inventory reporting requirement. The TQ for hazardous chemicals is 10,000 pounds. The Threshold Planning Quantity (TPQ) for extremely hazardous substances is 500 pounds. While there are TQs for gasoline and diesel fuel, if fuel is stored in underground storage tanks, such Bureau of Underground Storage Tank Regulation (BUSTR) regulated facilities are exempt from CRO.
What CRO requires
For any facilities covered by the CRO requirements, the owner or operator of that facility must notify the Ohio EPA, the local emergency planning committee and the fire department that operations have ceased within thirty (30) days. In addition to filing notice, the owner or operator that has permanently ceased operations must perform a number of other steps.
- Within 30 days they must do the following:
- Designate a contact person
- Secure the facility-
- Secure all windows and doors
- Provide fencing
- Provide lighting and a surveillance system
- post warning signs around where chemicals are stored
- Within 90 days the owner or operator must do the following:
- Submit its most recent chemical inventory to Ohio EPA
- Submit the current OSHA chemical list or MSDSs for all hazardous substances at the facility
- Describe where each stationary vat, tank, electrical transformer, or vessel is located and what chemicals are stored within
- Drain and remove regulated substances from vats, tanks, electrical transformers and vessels, including the piping
- Remove off-site to another operating facility or to a licensed disposal facility all debris, non-stationary equipment, furnishings, containers, motor vehicles and rolling stock that contain or are contaminated with regulated substances
- Certify to Ohio EPA that the actions above were performed
Misconception #1- A property is not “clean” just because it went through CRO
In performing due diligence for transactions, I have had multiple clients state that they understood certification of completion of CRO by the former owner or operator to mean the property is “clean.” This is one of the major misconceptions regarding the program. All certification of completion of CRO means is that chemicals stored onsite that had the potential to be released have been removed. It does not mean the property is free of contamination. Historical releases could have occurred that contaminated soil or groundwater even if the former owner/operator certified completion of CRO requirements. Any party contemplating purchasing a property that was subject to CRO should still obtain a Phase I environmental assessment to evaluate whether there are any indications that releases historically occurred onsite.
Misconception #2- Upon certifying completion of CRO a facility has completed all its regulatory obligations
Simply because a company has completed the CRO process does not mean that it has completed all regulatory obligations associated with the property. The most common regulatory obligations for a facility outside of CRO include:
- Hazardous Waste Units (RCRA Units)- Any property that operated a hazardous waste unit is subject to investigation and cleanup requirements referred to as RCRA Closure.
- Underground Storage Tanks- Any property that had underground storage tanks must complete proper closure of those tanks through the Bureau of Underground Storage Tank Regulation (BUSTR).
- Environmental Permits- The owner or operator should terminate any permits applicable to the facility, including but not limited to: air permits, indirect discharge permits, NPDES discharge permits, NPDES stormwater permits, etc. Each permit should be reviewed to determine the process necessary to terminate its effectiveness. Terminating permits is in the owner/operators interest to stop reporting and record keeping obligations that may apply under such permits.
Misconception #3- CRO only applies to owners/operators
CRO also applies to the holder of the first mortgage or the fiduciary for the facility. The holder or fiduciary has the obligation to secure the facility, including posting warning signs if the operator fails to perform those tasks. The holder and/or fiduciary must also submit a notice of abandonment to Ohio EPA and the local emergency planning committee.
Misconception #4- CRO ensures all hazardous substances are removed once operations cease
While CRO is an important tool that has reduced risks of releases of chemicals at numerous sites, it is not a guarantee such environmental problems do not exist. Unfortunately, owners/operators may run into financial problems and do not have the funds to comply with the CRO requirements. As a result, the building may simply be abandoned with chemicals stored onsite or left in equipment. In such instances, U.S. EPA may have to step in and remove hazardous wastes using its Superfund (CERCLA) removal authority.