Category: Phase I – Env Due-Diligence

McLane Middleton
Michael J. Quinn

August 8, 2019

This article originally ran in the Portsmouth Herald/Seacoast Online

The protection from environmental liability afforded by the Phase 1 Environmental Site Assessment (“ESA”) is well-known to purchasers of land who conduct ESAs before becoming the “owner.” These ESA derived protections now have expanded to cover tenants that were previously at risk.

First, some background. Although the public tends to think of the Superfund statute in connection with the worst hazardous waste sites (remember Love Canal?), it can apply to almost any property where hazardous waste requires remediation. Without causing the contamination, a new owner, a local government, a tenant or a charitable organization could each find themselves ensnared in the law’s strict liability framework by virtue of acquiring property or leasing property with preexisting pollution.

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Breazeale Sachse & Wilson LLP
John B. King

April 15, 2019

Due diligence conducted when acquiring assets in a commercial transaction, whether the assets include property with existing operating facilities or undeveloped property on which a facility is to be constructed, is absolutely essential to ensuring the property does not contain unknown environmental liabilities and is suitable for the buyer’s intended use. Of course, the level of due diligence and the time and money spent on it will vary depending on the size and nature of the acquisition. But it should never be less than enough to obtain sufficient information about potential liabilities and future uses so a buyer may make an informed decision.

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Spencer Fane LLP
Kathleen M. (Kate) Whitby

January 29, 2919

Lenders, borrowers, purchasers, sellers, and even contractors sometimes get annoyed with environmental lawyers when we insist on reviewing Phase I Environmental Site Assessment (ESA) draft reports, looking at the underlying regulatory files, checking title reports, real property records, and contract terms, counting days to make sure that the Phase I report is not stale or expired at closing, and documenting which parties do, should, or do not have reliance rights under that report.

A pair of court cases currently making their way through the New York federal district court system illustrate why environmental lawyers fuss so much over the “i’s” and “t’s” of Phase I ESA processes.

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Hunton Andrews Kurth LLP
P. Scott Burton

October 1, 2018

This article was originally posted in the Nickel Report, The Hunton Energy & Environmental Law Blog

Depending upon the assets being acquired or project being developed, a well-designed due diligence plan can be a critical component in managing transaction risk both before and after closing or commercial operation. Adeptly managing the due diligence process requires careful thought to appropriate timing and scope at both the front and back ends.

Among the most critical items in ensuring a successful outcome are consulting decision-makers who are driving the transaction and engaging professionals to provide appropriate support well in advance. Too often, key risks are overlooked or not adequately allocated or managed as a result of a rushed or improperly focused due diligence effort. Particularly for assets or projects with an inherently higher environmental, health and safety, or social (EHSS) impact potential, attempting to manage risk through the purchase and sale or development agreements alone also may not suffice. For example, avoiding a risk by carving out particular assets, employing third-party risk management strategies such as insurance policies, and post-acquisition integration or stakeholder engagement plans can be among the more effective means of managing EHSS risk—but these each require careful strategic planning by a team of professionals with the skills and experience to navigate a transaction’s complexities, particularly in a cross-border context.

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Beveridge & Diamond PC
James M. Auslander, Ryan J. Carra, Virginie R. Casey, Andrew C. Silton, Shengzhi Wang and Nicole B. Weinstein

October 1, 2018

 Liability

 Types of liability

 What types of liability can arise for environmental damage (eg, administrative, civil, criminal)?

There is no US generalised regime for environmental damages. Statutes, regulations and common law can impose various types of liability, including administrative, civil and criminal. Courts in turn establish precedent for liability in cases arising under various environmental laws. Alleged violators may face government administrative actions, civil suits or citizen suits. Only the government can prosecute criminal liability in court.

The government generally follows proportional enforcement. Minor offences may trigger administrative or civil sanctions; more serious and intentional violations trigger more severe sanctions or even criminal charges. The government’s burden of proof is highest in criminal cases.

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Spencer Fane LLP
Andrew C. Brought

August 10, 2018

This article was originally published in the fall 2015 SIOR Professional Report and written by Andrew Brought. The information remains extremely relevant to businesses making property transactions.

As someone who frequently helps businesses buy and sell commercial and industrial properties, I frequently encounter misunderstandings about Phase I Environmental Site Assessments (ESAs) and their role in a property transaction. Although not an exhaustive list, these 10 items are among the most important you should know about for your next property transaction.

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Thompson Coburn LLP
Crystal Kennedy

March 13, 2017

Virtually all business transactions involve some level of environmental risk. The key is to identify all of the potential risks and collect sufficient information about them early in the due diligence period of a transaction. This proactive approach to environmental due diligence will help the buyer determine whether the risks are acceptable in light of the overall transaction and develop a strategy for managing them, both in the contract negotiations prior to acquisition and after the transaction is complete.

How much and to what extent businesses should conduct environmental due diligence typically depends on the nature of the transaction and the anticipated use of the property after purchase.

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