vapor intrusion: evaluating and managing vi risk in
TRANSCRIPT
Vapor Intrusion: Evaluating and Managing
VI Risk in Commercial Contracts Using Negotiation and Drafting Techniques to Protect Interests in Real Estate Transactions
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Christopher M. Roe, Partner, Fox Rothschild, Exton, Pa.
Edward L. Strohbehn, Jr., Of Counsel, Bingham McCutchen, San Francisco
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Using Negotiation and Drafting Techniques to Protect Interests in Real Estate Transactions
STRAFFORD PUBLICATIONS WEBINAR
June 13, 2012
Edward L. Strohbehn Jr. Christopher M. Roe Bingham McCutchen LLP Fox Rothschild LLP Three Embarcadero Center 747 Constitution Drive, Suite 100 San Francisco, CA 94111 P.O. Box 673 (415) 393-2059 Exton, PA 19431-0673 (415) 307-2715 (cell) (610) 458-4987 (415) 722-2059 (cell) [email protected] [email protected]
Vapor Intrusion: Evaluating and Managing VI Risk in Commercial Transactions
6
Vapor Intrusion: Evaluating and Managing VI Risk in Commercial Transactions
Recent Vapor Intrusion Cases
Recent Federal and State Vapor Intrusion Regulatory Actions
Some Lessons Learned
Managing Vapor Intrusion Risks in Real Estate Transactions
7
Vapor Intrusion: Evaluating and Managing VI Risk in Commercial Transactions
Recent Vapor Intrusion Cases
8
Vapor Intrusion in a Growing Body of Cases
June 13, 2012
Presented by:
Christopher M. Roe, Esq., Fox Rothschild LLP
9
Vapor Intrusion in Various
Types of Cases Challenges to Generic Clean-up Standards
Challenges to Environmental Impact Analyses in Development Context
Clean-up and Cost Recovery RCRA Imminent and Substantial Endangerment;
preliminary injunction imminence Element of Remediation and 5 Year Review
Personal Injury and Property Damages Multi-plaintiff or class action Lease termination
10
Vapor Intrusion in Cases -- Personal
Injury/Property Damage
Potential claimants against responsible parties:
Occupants (employees/contractors)
Tenants
Owners
Neighbors
11
Vapor Intrusion in Cases -- Personal
Injury/Property Damage Causes of action
Negligence, Negligence Per Se Trespass Nuisance, Nuisance Per Se Strict Liability Fraudulent Concealment/Negligent Misrepresentation Statutes, RCRA, CERCLA, OPA, State Statutes
Damages/Claims for Relief Compensatory Damages Medical monitoring/Fear of cancer Diminution/Stigma Punitive/Exemplary Damages Injunction/mitigation
12
Challenges to Generic
Clean-up Standards Citizens’ Environmental Coalition, Inc. v. New York State
Department of Environmental Conservation, 57 A.D.3d 1279,
871 N.Y.S.2d 435 (Dec. 24, 2008)
petitioners contend generic standards violate statute
because they do not account for vapor intrusion
because even low levels of contaminants do not ensure
absence of vapor intrusion -- DEC requires evaluation of
vapor intrusion pathways at all sites, regardless of
magnitude of soil contamination.
13
Challenges to Environmental Impact
Analyses in Development Context Carson Coalition for Healthy Families v. City of Carson, 2007
WL 3408624 (Cal.App. Nov. 16, 2007)(CEQA)
Seeking to rescind certification of environmental impact report and approval of mixed use project on former landfill site
Methane concern, but raised residential units, methane detection, passive venting system, open air garage, membrane below slabs, building ventilation, and DTSC sign-off sufficient
Court House Plaza Company v. City of Palo Alto, 2010 WL 2625263 (Cal.App. Jun. 30, 2010)(CEQA); Hohbach Company Realty Limited Partnership v. Palo Alto (N.D.CA Jan. 2010)
Mixed use project; procedural deficiency re: vapor mitigation (MND)
Federal civil rights case dismissed
14
Clean-up and Cost Recovery RCRA and Preliminary Injunctions
State of Maryland v. US Dept. of Army, (DMd. 08-cv-3443)(resolved) Chlorinated solvents, alleged risks to indoor air of homes and businesses RCRA for continuing violation and imminent and substantial endangerment
United States v. Apex Oil, 2008 WL 7836308 (SDIll. July 2008); aff’d on appeal (Aug. 2009)(RCRA), Hartford, Illinois Petroleum -- Vapors . . . present or may present imminent and substantial endangerment to
health: Residents may suffer adverse health effects; may be harmed by fires or explosions; home sampling and mitigation part of injunctive relief
SPPI-Somersville v. TRC Cos., 2009 WL 2612227; West Coast Home Builders v. Aventis Cropscience, 2009 WL 2612380 (NDCA Aug. 21, 2009) (RCRA, CERCLA, and common law) Chlorinated solvents; Risk of VI, contingent on future development, insufficient to establish
imminent and substantial endangerment
Indiana Dept. of Env. Management v. Bulk Petroleum, 866 N.E.2d 120 (Ind.App. May 8, 2008)(Ind. Requirements) BTEX -- Irreparable harm not shown for preliminary injunction where no evidence of VI into
homes
ExxonMobil Oil Corp. v. Nicoletti Oil, 713 F.Supp.2d 1105 (EDCA 2010) (RCRA/common law) BTEX – “air filtration units” to residents among costs sought to be recovered under theories
including contractual indemnity and negligence
15
Clean-up and Cost Recovery RCRA and Preliminary Injunctions
Grace Christian Fellowship v. KJG Investments, 2008 WL 2412981 (EDWisc. June 12, 2008) 2009 U.S. Dist. Lexis 76954 (2009) BTEX – RCRA, common law; vapors entering church basement,
prelim. injunction proceeding, expert issues; no endangerment Newark Group v. Dopaco Inc., 2010 U.S. Lexis 95061 (EDCal. Sept. 13,
2010) Toluene, methane – Owner v. former tenant; potential vapor intrusion
created a genuine issue of fact regarding endangerment Sullins v. ExxonMobil, 2010 U.S. Lexis 58921 (NDCal. June 14, 2010)
BTEX – Owner v. former owner; “certain” future exposure may constitute endangerment
Sanchez v. Esso Standard Oil de Puerto Rico Inc., 2010 US Dist. Lexis 1039-49 (DPR Sept. 29, 2010) BTEX – Court rejected allegation and expert on vapor intrusion
Tilot Oil LLC v. BP Products NA, (9-CV-210 EDWisc. Jan. 17, 2012) BTEX – RCRA, common law; neighboring property; exceedance of
vapor intrusion screening levels does not establish endangerment
16
Clean-up and Cost Recovery Element of Investigation/Remediation
Acton Mfg. v. Simon Wrecking, 428 F. Supp. 2d 288 (EDPA 2006)(CERCLA)
Chlorinated; VI identified in 5 year review; investigation/mitigation part of response costs
Chubb Cust. Ins. v. Space Systems, 2010 WL 5069827 (NDCA Dec. 7, 2010) (CERCLA; common law)
Chlorinated; Vapor barrier part of remedy an item of cost recovery claim
Ohio Cas. Insur. Co. v. Reed, 2006 WL 2348957 (SD Ill. Aug. 11, 2006)(Insurers Dec. action)
PCE from dry cleaner; costs of VI study/venting systems
CAEUSA Inc. v. Triple Cities Metal, et al., (NDNY 3:11-CV-0711)
TCE, TCA – Cost of mitigation systems and other from other sources
Sunrise Harbor Realty LLC v. 35th Sunrise Corp., (NY App. Div. 2d Dept. July 12, 2011)
BTEX – Navigation law; failure to plead vapor intrusion in bill of particulars made VI testimony inappropriate
17
Miscellaneous Claims
Jaasma v. Shell Oil Company, 412 F.3d 501 (3d Cir. 2005)(Lease claim) BTEX -- Testimony about uncertainty created by
need for VI analysis was relevant to loss of use
Natiello v. Pennsylvania DEP, 990 A.2d 1196 (Cmmwlth. Ct. 2010)(Pa. Tank Act) BTEX – Order required evaluation of indoor air
pathway
18
Personal Injury/Property Damage Multi-plaintiff or class action
1999 -- Ball v. Bayard Pump & Tank Co., Pa.Ct.Cmn. Pleas No. 99-6438, Mont. County, PA Petroleum from gas station allegedly affecting 49 homes Expert Motions: Retrospective analysis permitted 2007 jury rejected that vapors entered the houses and caused autism and leukemia
1999 – Avila v. Willits Environmental Remediation Trust, 2008 WL 360858; 2009 WL 1813125 (NDCA 2008 and 2009)
Chlorinated solvents (and dioxins)
Originally 1,000 homes, 10 remaining
Negligence, strict liability, fraudulent concealment, intentional and negligent infliction of emotional distress, battery, negligent undertaking, trespass and nuisance
Summary judgment due to of lack of evidence to support expert exposure and causation testimony
2000 -- Antolovich v. Brown Retail Group, 183 P.3d 582 (Colorado Ct. of Appeals from Dist. Ct. Denver, CO 2008) Chlorinated solvents; 425 Homes in Denver Trespass, nuisance, strict liability, unjust enrichment, negligence and exemplary damages 2004 jury award of $1 million non-economic loss (no diminution in value or punitive) Expert’s testimony (deemed factual only) that VI pathway not perceived as risk until 1997/98 and
effectiveness of mitigation barrier system harmless
19
Personal Injury/Property Damage Multi-plaintiff or class action
2004 -- Muniz v. Rexnord, (ND Ill. 04C-2405), DuPage County, Ill. Chlorinated solvents Class action on behalf of 800 CERCLA 107; RCRA; Nuisance; Trespass; Ultrahaz./Strict Liability; Res Ipsa Loquitur;
Negligence; Per Se; Willful Misconduct
2005 – Ward v. Lockheed Martin, Bradley v. Lockheed Martin, (Manatee County, Fla. 2005, 2006) Beryllium, chlorinated solvents, on behalf of 300 plaintiffs Strict liability, negligence, Fla. Statute on discharges, trespass, private nuisance,
intentional infliction of emotional distress
2006 – Martin v. Foster Wheeler, 2007 WL 4437221 (MDPA Dec. 14, 2007) Chlorinated solvents Class of homeowner/occupants, certified for settlement purposes Indoor air at home with highest TCE concentrations characterized as no apparent health threat
20
Personal Injury/Property Damage Multi-plaintiff or class action
2006 -- Aiken, et al. v. General Electric Co., 57 A.D.3d 1070 (NY 3d Dept, Supreme Court Appel. Div. Dec. 4, 2008) Chlorinated solvents (TCE) Homeowners (less than 100) who had previously settled as to groundwater impact Where residents were assured of no health risk, question of fact re: awareness of soil vapor
damage
2006 – Branham v. Rohm & Haas; Booth v. Rohm & Haas (2010), (Phila. Ct. Cmm. Pleas, PA) Chlorinated solvents, especially vinyl chloride, on behalf of residential development VI and drinking water Wrongful death; Survival; Negligence, Negligent Undertaking, Nuisance, Strict Liability, Res Ipsa
Loquitur, Fraud and Misrepresentation, Willful and Wanton Conduct Trial halted after concerns raised on changes to expert report on causation
2008 -- Spears v. Chrysler, (SDOH 3:08-cv-00331), Dayton, OH Chlorinated solvents, alleged class of 1,000 Proposed class action on behalf of thousand plus for property damage and medical monitoring
(certified) Trespass; Private Nuisance; Unjust Ennrichment; Strict Liability; Negligence; Per Se; Medical
Monitoring, Battery; Fraudulent Concealment; Constructive Fraud; Neg. Misrepresentation; Civil Conspiracy; Punitive Damages
21
Personal Injury/Property Damage Multi-plaintiff or class action
2008 -- Blaine v. IBM, (Broome Cty. 0012-2008) Endicott, NY Chlorinated solvents Hundreds of plaintiffs, residential/commercial Negligence/Recklessness; Private Nuisance; Trespass Test plaintiffs chosen by the plaintiffs and defendants will be tried first
2008 -- Sher v. Raytheon (MDFL 8:07-cv-889) St. Petersburg, Fla. Proposed class action on behalf of residential and commercial owners over solvent
plume, one thousand plus (certified) Trespass; Private Nuisance; Unjust Enrichment; Strict Liability; Negligence; Strict
Liability under Fla. Statute not to create hazardous conditions due to discharge of pollutants
VI was taken out of class claims by stipulation
2008 – Voggenthaler v. Maryland Square, LLC, 2010 WL 1553417; 2010 WL 2947296 (D. Nev. April and July 2010) PCE; homeowners group RCRA citizen suit only Soil gas levels in the neighborhood, though low, showed potential for vapor intrusion
into homes and were sufficient to make out imminent and substantial endangerment
22
Personal Injury/Property Damage Multi-plaintiff or class action
2009 – Stoll v. Kraft Foods Global, Inc., 2010 WL 3702359 (SD Ind. Sept. 6, 2010) Chlorinated solvents; vapor mitigation systems in 125 homes Class action certified of 129 home; 200 individuals Negligence, private nuisance, trespass, willful and wanton misconduct, and RCRA citizen suit Settlement, $8.1 million, plus clean-up and mitigation systems in affected homes
2010 – Gessner v. DuPont and Royle Systems, (NJ Super.Ct., Bergen County, Mar. 2010), Pompton Lakes, NJ Chlorinated solvents Alleged higher rates of kidney cancer and non-Hodgkin’s lymphoma in residential area Alleged companies knew or should have known of VI Agnes v. Du Pont, CA 98-1405 (D. N.J. 3/31/2011). Earlier settlements bar current claims.
2011 – Leese v. Lockheed Martin (NJD 2011) Moorestown, NJ Chlorinated Solvents
Clean-up; personal injury and property damages; one home
Spill Act, NJ Water Pollution Control Act, RCRA, Private Nuisance, Trespass, Negligence, Strict Liability
2011 – McHugh v. Madison-Kipp Corporation (WDW 11-CV-724) Madison Chlorinated Solvents
Clean-up; Property damages; 7 homes RCRA citizen suit, negligence, private nuisance, trespass, willful and wanton misconduct
23
Vapor Intrusion in Cases -- Personal
Injury/Property Damage Multi-plaintiff or class action
Key Issues:
Expert testimony of exposure, including
contaminant migration
Expert testimony of general and specific causation
of disease
VI can be an obstacle to commonality in class
action context
Statute of limitations
24
Vapor Intrusion: Evaluating and Managing VI Risk in Commercial Transactions
Recent Federal and State Vapor Intrusion Regulatory Actions
Petroleum Hydrocarbons and Chlorinated Hydrocarbons Differ in Their Potential for Vapor Intrusion, September 2011
http://www.epa.gov/oust/cat/pvi/pvicvi.pdf
25 25
© All Rights Reserved:
Edward L. Strohbehn Jr. (2012)
Vapor Intrusion:
The Ever Changing Regulatory Environment
June 13, 2012
Edward L. Strohbehn Jr.
Bingham McCutchen LLP
26 26
Overview of Recent Actions
Agency Action Date
1 EPA TCE IRIS Listing 9/2011
2 EPA PCE IRIS Listing 2/2012
3 EPA Region IX: Risk Screening Levels (RSLs): Includes New TCE IRIS 11/2011
5 EPA Region IX: MEW Vapor Intrusion Consent Decree 3/2012
6 EPA Review of Draft 2002 VI Guidance 8/2010
7 EPA VI Database: Evaluation and Characterization of Attenuation Factors for VOCs and Residential Buildings
3/16/12
8 EPA VI Screening Level Calculator and User’s Guide 2/12
9 EPA Conceptual Model Scenarios for VI Pathway 2/2012
10 EPA Background Indoor Air Concentrations of VOCs in North American Residences (1990-2005): A Compilation of Statistics for Assessing VI
6/2011
11 EPA Region IX: Screening Level TCE Concentrations in Groundwater for Requiring Indoor Air Testing
2011
12 EPA Overview of Petroleum Vapor Intrusion 9/2011
13 EPA Potential Addition of VI Component to HRS Listing 1/2011
14 EPA Superfund VI FAQs 3/2012
RECENT EPA ACTIVITIES
26
27 27
Overview of Recent Actions (cont.)
Agency Action Date
15 DTSC Final Public Participation VI Guidance 3/2012
16 DTSC Final VI Evaluation Guidance 11/2011
17 DTSC Final VI Mitigation Guidance 11/2011
18 New Jersey New VI Guidance 1/2012
19 Massachusetts New VI Guidance 12/2011
20 Pennsylvania New VI Guidance In Process
RECENT STATE ACTIVITIES
Agency Action Date
21 ASTM E 2600-10 Vapor Encroachment Guidance 6/2010
RECENT ASTM ACTIVITY
27
28 28
Overall Assessment of Recent Agency Regulatory
Actions
• Vapor intrusion has been found to be more complex and
difficult to assess
• Agency vapor intrusion activities are increasing
• Differences exist among various agencies
• Agencies are moving from reliance on modeling, such as
Johnson & Ettinger Model, to reliance on empirical data;
produces more conservative results
• Regulatory actions are trending towards stricter
requirements and standards
• Results potentially in more testing, mitigation, and
monitoring
• Makes vapor intrusion assessments and site remediation
and mitigation potentially more expensive
29 29
EPA Listing of TCE in IRIS Database --
September 28, 2011
• Final TCE health assessment has been 20 years in development
• TCE cancer assessment treats TCE as more toxic than previous
assessment
• EPA IRIS listing resulted in EPA making the residential ambient
air screening level stricter by a factor of 2.8
• EPA IRIS listing resulted in EPA making the commercial
ambient air screening level stricter by a factor of 2.0
• May lead to reopening of sites where TCE cleanup standards
found not protective of public health based on new IRIS criteria
• May lead to more costly site cleanup requirements
EPA Region IX Risk Screening Levels –
November 20, 2011
30 30
EPA Listing of PCE in IRIS Database --
February 10, 2012
• PCE cancer assessment treats PCE as less toxic than
previous assessment
• May lead to decreases in cancer risk estimates
• PCE non-cancer assessment treats PCE as more toxic
than previous assessment
• May lead to increases in non-cancer hazards
• For Superfund cleanups, EPA announced:
MCL of 5 ppb remains groundwater remediation goal
For states with a more stringent standard, the stricter
standard remains the standard
For cleanups based on meeting indoor air contamination
standards, no additional cleanup needed at previously
cleaned sites that were based on previous PCE cancer
assessment
31 31
EPA Region IX MEW Vapor Intrusion Consent Decree --
March 2012
• MEW Site reopened to address vapor intrusion pathway
• EPA may use MEW Record of Decision and Consent
Decree as a model for addressing vapor intrusion at
contaminated sites for:
Approaches for using engineering and institutional
controls in existing and future buildings
Requirements for using active ventilation systems
Standards for no action
• Indoor air testing required for all buildings over
groundwater plume containing TCE at concentration
≥ 5ppb.
32 32
EPA Region IX Policy: TCE Screening Level
Groundwater Concentrations for Indoor Testing -- 2011
• EPA Region IX has a policy of requiring indoor air
testing in:
Residential homes located above groundwater
plume containing TCE at 50 ppb
Commercial buildings located above groundwater
plume containing TCE at 100 ppb
• CA Regional Water Quality Control Board, SF Bay
Region Environmental Screening Level for TCE in
groundwater is
530 ppb [Pre: EPA TCE IRIS Listing]
32
33 33
EPA Review of EPA Draft 2002 Guidance
-- August 2010
• Response to December 2009 EPA Office of Inspector
General evaluation of EPA Draft 2002 Guidance
OIG Concluded: Lack of final guidance on vapor intrusion
impedes efforts to address indoor air risks
• EPA Review is a signal of what may become the
November 2012 guidance. The August 2010 Review:
Recommends increased reliance on multiple lines of
evidence
Recommends updating certain screening methods and
attenuation factors -- a more cautious approach
Recommends likely greater use of indoor air sampling
34
EPA Review of EPA Draft 2002 VI Guidance (cont.)
• Accepting comments through Spring 2012
• Very few comments submitted to date
• EPA is gathering, compiling, and publishing data and tools
in support of preparing the new VI Guidance
• EPA plans to issue final VI Guidance by November 30,
2012
35 35
EPA Empirical Studies and Tools -- 2012/2011
• Four recently issued EPA empirical studies and tools are:
VI Database: Attenuation Factors
VI Screening Level Calculator
VI Pathway Conceptual Model Scenarios
Background Indoor Air Concentrations of VOCs
• The first two:
Underscore EPA’s shift to greater reliance on empirical data
rather than modeling
Produce more conservative risk estimate results than
Johnson & Ettinger Model would produce
36
EPA Empirical Studies and Tools -- 2012/2011 (Cont’d)
• Conceptual site scenarios provide better understanding of
VI pathway
• Background indoor air VOC concentrations are used to
evaluate indoor air monitoring results to help determine
what, if any, additional investigation may be needed
37 37
California DTSC Vapor Intrusion Evaluation Guidance --
October 2011
• Guidance provides that VI assessment should be based on
multiple lines of evidence
• The screening level sub-slab attenuation factor for vapor
migration was changed based on the EPA 2008 national
empirical vapor intrusion database
Attenuation factor changed from 0.01 to 0.05 for both
residential and commercial buildings
Results in five times greater estimated concentration in
indoor air of the VOC chemical constituent
38 38
Other New State VI Regulatory Initiatives
• Massachusetts (December 2011)
• New Jersey (January 2012)
• Pennsylvania (In Process)
39 39
ASTM Vapor Encroachment Guidance --
E 2600-10 – June 2010
• Addresses only vapor encroachment condition -- that is
migration to subsurface of target property
• Not applicable to evaluating vapor intrusion
• Under the ASTM E 1527-05 Phase I Environmental Site
Assessment, a vapor encroachment condition would be a
“recognized environmental condition”
40
ASTM Phase I Environmental Site Assessment
E 1527-05 [Undergoing Formal ASTM Revision]
• Screening procedure to determine if “recognized
environmental condition” exists
• Satisfies EPA “All Appropriate Inquiry” under Superfund (40
CFR Part 312)
• Phase I has four components:
Records review
Site reconnaissance
Interviews
Report
• Usually not possible to make a vapor intrusion
determination based on Phase I information
• May be able to make a vapor encroachment determination
41
Interstate Technology and Regulatory Council (ITRC):
“Vapor Intrusion Pathway: A Practical Guideline”
(January 2007)
• Federal, state, industry and stakeholder consensus
guidance for evaluating vapor intrusion pathway
• ITRC states: “Practical, easy-to-read how-to guideline for
assessing vapor intrusion pathway”
• “Preliminary Screening Steps” and the six “Typical
Scenarios” provide practical guidance relevant for a real
estate transaction site assessment
42
EPA -- Possible Addition of VI to Hazard Ranking
System (HRS)
• HRS is method for scoring/listing Superfund Sites
• Notice issued January 31, 2012 (76 Fed. Reg. 5370)
• Responds to GAO May 2010 Report: if VI were an HRS
component, more than 30 sites would be added to NPL
• Status:
Submitted to OMB February 3, 2012
In delayed status; 90 days for review once in
active status
• EPA indicates that it will not increase the number of
Superfund sites it adds each year; due to limited
resources, it will prioritize sites with VI
43 43
Conclusions
• As underscored at the outset --
Agency regulatory activity is increasing
Greater reliance on empirical data rather than modeling
Trending towards stricter requirements and standards
Resulting potentially in more testing, mitigation, and
monitoring
Results in potentially more expensive assessments,
mitigation, and remediation
• Potential continued variability in standards, approaches,
and required actions among the states and EPA
45
Some Lessons Learned
Investigations Screening values
Background data (availability and use)
Sampling approaches (sequence, conditions, etc.)
Health Assessments
Communications Complications
Resources
Mitigation Technical
Legal issues
46
Vapor Intrusion: Evaluating and Managing VI Risk in Commercial Transactions
Managing Vapor Intrusion Risks in Real Estate
Transactions
47
AGREEMENT OF PURCHASE AND SALE
I. Preliminary Consideration: Screening Evaluation
II. Conditions to Closing III. Representations and Warranties IV. Releases and Waivers V. Indemnities VI. Escrows VII. Covenants that Survive Closing Note: The following slides are meant to serve only as the basis for
discussion. They are not intended to be comprehensive or to represent definitive positions or language of an actual transaction.
48
I. PRELIMINARY CONSIDERATION:
Screening Evaluation
What should Buyer and Seller Consider in Deciding Whether To Conduct or Allow the Performance of a Screening Evaluation of the Property Potential Seller’s Alternatives and Issues:
Perform Pre-Sale Screening Evaluation to Provide Potential Buyer
Do not Allow Pre-Sale Intrusive Environmental Investigation
Potential Buyer’s Alternatives and Issues: Perform Environmental Screening in Advance of
Engaging in Substantive Discussions with Seller Perform Standard Phase I Environmental Screening Perform More Detailed, possibly Invasive,
Environmental Screening
49
II. CONDITIONS TO CLOSING A. Buyer’s Acceptance of Environmental Condition of Property
Should Buyer’s Comfort on Environmental Conditions, Including Vapor Intrusion, Be a Condition to Closing?
Potential Seller’s view: In Response to Buyer Request for Information, Provide
Appropriate Documents; Provide No Assurances or Representations About
Environmental Conditions; Let Buyer Make Its Own Determinations and Conclusions.
Potential Buyer’s view: Ask for Assurances from Seller; Regardless of whether Seller provides Assurances,
Conduct Independent Investigation of Environmental Conditions, Including Vapor Intrusion -- Possibly with Invasive Testing
Have Unconditional Right to Walk
50
II. CONDITIONS TO CLOSING B. Scope of Due Diligence Permitted
How much due diligence on environmental conditions of property will be permitted?
Potential Seller’s view: “Knock yourself out, but:”
Only after review and approval of work plans and consultants;
Indoor sampling not to disrupt, after work hours
Confidentiality, control of disclosures
Non-refundable deposit
Potential Buyer’s view: Consistent with 1.A:
Review and approval of work plan/consultant must be reasonable
Provided reasonable information/access under conditions relevant to Buyer
Right to contact agencies
Right to disclose if Seller does not and law requires
Any non-refundable deposit must be reasonable
51
II. CONDITIONS TO CLOSING C. Seller’s Disclosures on Environmental
Conditions What disclosures will be made by Seller of prior studies and
data? Potential Seller’s view:
Only material documents No representation as to all or completeness Covenant not to sue Seller or its consultants for
deficiencies in documents/information Confidentiality/Return
Potential Buyer’s view:
All information and documents related to VI issues, no materiality threshold
52
II. CONDITIONS TO CLOSING D. Other Potential Conditions to Closing
Put mitigation system in place (by Seller or agreement that Buyer put in place post close) Potential Seller’s view:
If this is economically viable, this might make sense, but there are issues to consider
Prefer Buyer put in place and promise to maintain
Potential Buyer’s view: Yes. Should be put in place, current and future sampling
should take place Seller should be obligated to ensure it meets standards or to
pay for installation
Environmental Access Agreement Necessary if Buyer is going to have any post-closing
obligations, perhaps even if providing indemnity
53
III. REPRESENTATIONS AND WARRANTIES OF SELLER
Disclosure of all material information, including documents
No violations of law No law suits, actions, or government investigations No knowledge of any release of VOCs at or near the
property, soil vapors or indoor air sampling No USTs Knowledge:
Seller’s as a whole Environmental Manager’s Owner’s
Time limits One year, two years, unlimited
54
IV. RELEASES AND WAIVERS
As Is? Potential Seller’s View:
Absolutely
Full release and waiver of any and all claims
Potential Buyer’s View: Except for undisclosed conditions
Not from 3d party claims related to existing conditions
Releases and Waivers in Lieu of Any Indemnities
55
V. INDEMNITIES
Potential Seller’s Views:
None
If any, limited to undisclosed, existing conditions and to government required mitigation/clean-up
And, if any, return indemnity for any claim arising out of disclosed conditions
Rights and/or conditions to seller obligation: cooperation, notice, access, right to fix, right to defend/settle
Two year limit (dollar limit)
Potential Buyer’s Views:
Full indemnity for pre-existing conditions
No time or dollar limit
56
VI. ENVIRONMENTAL ESCROW
Seller’s View: Preferable to pre-closing installation of
mitigation
Can only be spent on agreed mitigation
Time limit of one year
Buyer’s View: Need relief if insufficient to cure the problem
Flexibility to spend on reasonable steps
Consider Purchase Price Adjustment, Cost Sharing, Insurance and Other Alternatives
57
VII. COVENANTS TO SURVIVE CLOSING
Seller’s view:
Mechanism to run with land (deed restriction, deed notice, etc.) providing notice of conditions; limiting uses to non-sensitive; maintaining mitigation system; requiring soils and water management; requiring vapor mitigation in design
Buyer’s view:
None.
If any, flexible restrictions, mechanism to have limitations, etc., removed
58
Contact Information
Christopher M. Roe, Esq. 610-458-4987
Edward L. Strohbehn Jr., Esq. 415-393-2059