Publications

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New York Governor David Paterson has signed into law new environmental reporting legislation that may affect all landlords of New York properties.¹ Beginning December 3, 2008, New York landlords will be required to notify all tenants if air contamination risks are discovered on their property.

The law—vetoed by two prior governors—is brief but far reaching, and both commercial and residential landlords should take note and prepare to implement the new requirements. This is especially the case for landlords of properties with ongoing air-contamination issues. The law will require certain notification actions to be taken for such properties, including inserting specified notice language in all new leases.

The law contains several significant ambiguities (summarized at the bottom of this alert) which will need to be clarified by the New York Department of Environmental Conservation (the NYDEC) and the New York Department of Health (the DOH) and/or clarified through judicial interpretation and case law. Property owners will be watching closely to see how this new statutory provision will be applied by the NYDEC and the DOH to situations not adequately anticipated under it.

Key Points

If a landlord receives test results from an “issuer” (defined below) showing contamination above applicable indoor air quality thresholds, the landlord must notify the tenant(s) and, if requested, forward the test results to tenants. No exceptions are permitted, even if a tenant is or should already be aware of the contamination.

Both commercial and residential landlords must comply.

The notice applies to test results that demonstrate indoor or ambient air contamination, as well as subslab (i.e., beneath the building) vapor, soil or groundwater contamination that exceeds guidelines set for protection of indoor air quality.

If a property is subject to ongoing indoor air remediation, a landlord must notify prospective tenants and include specific notice language in new lease agreements.

Who Must Notify?

The party required to notify is “any owner of real property or any owner’s agent to whom indoor air contamination test results have been provided by an issuer.”² Sublandlords likely have no obligation (unless considered the “owner’s agent”).

The triggering event is receipt by the owner or owner’s agent from an “issuer” of test results for “indoor air, subslab air, ambient air, subslab groundwater samples, and subslab soil samples”³ which exceed either (i) the DOH’s indoor air guidelines⁴ or (ii) the federal Occupational Safety and Health Administration (“OSHA”) guidelines for indoor air quality.⁵

Notice is required only when test results were provided by one of the following “issuers”:

• the NYDEC;⁶
• a municipality in connection with an environmental restoration project with the NYDEC;⁷
• a “participant” under the Brownfield Cleanup Program (i.e., an owner or operator at the time of contaminant discharge or disposal or other party responsible for pollution and/or site remediation);⁸ or
• a “person subject to an order issued pursuant to” New York’s hazardous waste and spill cleanup laws.⁹

Notice is not required for test results received from someone who is not an issuer (even if the results exceed applicable guidelines), including, for example, test results from the landlord’s own due diligence or from a “volunteer” under the Brownfield Cleanup Program (i.e., a bona fide purchaser).¹⁰

Who Gets the Notice and What Does It Say?

Landlords must notify “all tenants and occupants”¹¹ (and, in limited circumstances discussed below, prospective tenants).

The notice must include (i) a “fact sheet” identifying the compound of concern, the applicable reportable detection levels, the health risks associated with exposure to the compound and where to obtain additional information;¹² and (ii) “timely notice of any public meetings required to be held to discuss such results.”¹³ Landlords must also send the actual test results and any applicable closure letter upon request.¹⁴
For properties where indoor air contamination is being mitigated with an “engineering control” or where “ongoing monitoring” is being conducted under an “ongoing remedial program,” landlords must notify prospective tenants, and the first page of the lease agreement must contain the following text in at least twelve-point bold type:

NOTIFICATION OF TEST RESULTS
The Property has been tested for contamination of indoor air:
test results and additional information are available up request.¹⁵

When Must Notice Be Sent?

Notice must be “provided” to existing tenants and occupants not more than fifteen (15) days after receipt of the test results.¹⁶ If public meetings are scheduled in fewer than fifteen days, earlier notice may be required.

When notice to prospective tenants is required, it must be given prior to signing a binding lease.

Ambiguities and Potential Sources of Litigation

Although the intent of the new law seems clear, it leaves numerous issues open to question and contains some significant ambiguities. Some of these potential problems are summarized below.

Is the law retroactive? One of the most pressing ambiguities is the law’s applicability to test results received before the law’s effective date. Read literally, the law could require any landlord who has ever received applicable test results to now notify its tenants, even if there is no longer any indoor air contamination.

When does the obligation end? Equally important and related to retroactivity is ambiguity regarding ongoing site remediation and site closure. The law only describes when notice obligations commence—when applicable test results are received. The law is ambiguous as to whether and how long the obligation continues. For example, if a property is tested monthly under a remediation program with the municipality and/or the NYDEC, must landlords keep sending identical fact sheets to tenants each month? And if the NYDEC and the DOH agreed that a problem is fully and permanently remediated under an engineering control, must all future leases nevertheless contain the obligatory notice on the first page?

Who may request test results and closure letters? The law merely says the landlord must provide such information “upon request.” Although it is implied that a tenant would be the one so-requesting, this is not explicit. Can co-owners, subtenants, or even the general public claim a right to such information—all at the landlord’s expense? Also, if one tenant requests further information, must the landlord distribute it to all tenants and occupants?

Exactly which test results must be reported? Note that even though the title of the new law is “Tenant Notification of Indoor Air Contamination,” the law also encompasses test results of ambient air and certain subslab samples. Key terms are undefined, leading to confusion about which, if any, test results are exempt from notification. Does “ambient air” include testing of parking lots, atriums, terraces and undeveloped tracts of leased land? Does “subslab” include testing under abandoned buildings and sidewalks? Further, if a tenant requests copies of the test results, may a landlord redact the compounds and measurements which did not exceed applicable thresholds?

What about duplicative reporting and notification? The law is silent regarding whether multiple notices must be sent if the landlord receives identical test results from multiple issuers. The law is also silent as to whether individual notice must be provided to each “occupant” even if all occupants have the same address.

Who is obliged to notify in certain circumstances? The law is silent regarding special circumstances such as when a property is in receivership pending bankruptcy or held by a trustee pending foreclosure. Who is obliged to give notice during such proceedings? If contamination is detected in the common areas of a large residential co-op or condominium with leased units, who must notify whom? Must each owner notify the tenants in the building? Does a condominium board have any obligation?

Which tenants at multi-tenant properties must be notified? The law as drafted does not appear to have contemplated multi-tenant properties at all, and thus it is unclear whether tenants of distinct leased tracts must be notified whenever any one of such tracts is reported to have indoor air contamination. Must the landlord of a high-rise apartment building notify all tenants for isolated air contamination on a single floor or even in a single unit? Must the landlord of a multi-tenant commercial complex (such as a strip-mall or multi-acre office park) notify each individual business or only those whose leased space was tested?

When does the clock start ticking, and how must notice be served? The law does not specify what “receipt” of test results means. If an independent lab was ordered to test the air by the DOH, does the 15-day obligation begin when the lab gives verbal preliminary results to the landlord, or not until the landlord receives the full results forwarded by the DOH or the NYDEC? Further, the law does not define “notice,” nor does it specify how the landlord must “provide” the notice. Does a fact sheet posted in the lobby of an apartment building constitute “notice”? If a landlord mails the notification, is notice “provided” upon mailing or upon the tenant’s receipt?

What are the penalties for failure to notify? Although the new statute is silent regarding penalties, the DOH reportedly intends to assess fines of up to $500/violation plus $500/day-in-violation.¹⁷ Even if this is accurate, there are still many outstanding concerns: Is that $500 per tenant, per unit, or both? If test results include multiple measurements at reportable levels, is each individual measurement considered a violation?

Landlords with properties in New York State should swiftly seek counsel to ensure that they do not inadvertently violate this important new legislation, which goes into effect in early December.

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