On January 27, 2009, the front page of the Columbus Dispatch read, “44,000 Jobs Gone.”Other articles report of companies shuttering their facilities or filing bankruptcy. As one affected employee interviewed for the Dispatch article succinctly stated, “It’s scary.” And it’s no less scary for landowners and lenders dealing with properties that have been abandoned.  Landowners whose tenants have abandoned their facilities are trying to recover past rent due and expenses related to cleaning up the equipment, products and chemicals remaining at the facility. Banks are foreclosing on property or are working within the bankruptcy court to recover their money. 

Landowners and first mortgage lenders in these situations should also be aware that they may be subject to environmental clean-up obligations under the Cessation of Regulated Operations (“CRO”) program. CRO was created to protect the public against exposure or pollution from hazardous chemicals left at abandoned facilities. CRO requires the owner or operator of the facility to secure the facility from trespass or vandalism and to comply with 30-day and 90-day deadlines in removing regulated substances and reporting on the progress. If the owner or operator of the facility fails to perform its CRO obligations, then the landowner or first mortgage holder may be responsible to perform certain CRO activities. 


Here are two situations in which a landowner or first mortgage holder may become responsible for the CRO obligations. In the first scenario, Landowner, LLC has leased its land and buildings to Tenant, Inc., who operated a manufacturing facility that used hazardous chemicals in excess of the CRO threshold quantities. Tenant, Inc. abandons the facility and leaves the hazardous chemicals in drums and storage containers throughout the facility. If the facility is subject to CRO and Tenant, Inc. does not perform its CRO obligations, then Ohio EPA will turn to Landowner, LLC to perform the CRO activities, which includes securing the facility and removing all regulated substances from the facility.

In the second scenario, Owner, Inc. is the owner and operator of the manufacturing facility. The land and facility are subject to a first mortgage held by Bank, N.A. Owner, Inc. abandons the property and fails to perform its CRO obligations. The mortgage becomes in default and Bank, N.A. tries unsuccessfully to contact Owner, Inc. regarding the default. In this case, Bank, N.A. must notify Ohio EPA of the abandonment. Bank, N.A. is not required to perform all of the CRO obligations but must secure the facility, which may include boarding windows and doors and posting warning signs.

In its 2008 Annual Report, Ohio EPA noted that it had inspected forty-one closed facilities to verify that all regulated substances were removed and had received fifty-two certifications that CRO activities had been completed. Ohio EPA maintains a list of all CRO facilities and has the authority to seek penalties for violations of the CRO requirements. Thus, landowners and lenders should familiarize themselves with the CRO program.