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Environmental Due Diligence Archives

Soil Vapor Intrusion Concern Prompts EPA to Support Revision to Phase I Environmental Site Assessment Protocol

The health threats posed by physical contact with contaminated soil or groundwater are well known. But increasingly, state and federal regulators are recognizing that harmful vapors from such contamination can be drawn into nearby buildings and pose a threat to the occupants. Known as soil vapor intrusion, this threat can come from undiscovered contamination beneath a building, or even from the remnants of previously remediated soil or groundwater.

EPA Announces New Tenant Protections Under Superfund

EPA has just extended to tenants the Bona Fide Prospective Purchaser ("BFPP") protection, by which Congress previously exempted certain prospective owners from harsh Superfund liability. Even where the landlord loses its BFPP protection, the new EPA enforcement guidance memo allows tenants to hold onto it, assuming the tenant can meet certain requirements. 

Can Entering Into a CERCLA Consent Decree Preclude Subsequent Cost Recovery Actions?

Congress enacted the Superfund Act, whose formal name is the Comprehensive Environmental Response, Compensation, and Liability Act, or CERCLA, in 1980 to promote the clean up (remediation) of properties, typically abandoned landfills or other sites, that had been contaminated by the disposal of hazardous materials. To further this goal, Congress cast a wide net and imposed strict liability for all "Potentially Responsible Parties" (PRPs) who contributed to the contamination at a site. See 42 USCS Sec. 9607(a). 

No Asbestos, PCBs, USTs

It may be appropriate to add specific representations on individual contaminants or areas of concern to buyer or lender. In addition to those listed, formaldehyde and radon may be of concern to the buyer.

No Notices or Knowledge of Basis

1. Disclosure of outstanding notices or basis for notices is important to a continuing business: "Seller has not received written or oral notification that any of its current or past operations or a by-product thereof is related to or subject to any investigation by any Governmental Authority evaluating whether any remedial action is needed to respond to a release or a threatened release of a contaminant. 

No Hazardous Substances

This most common of representations and warranties is most often abused. Buyer or tender may initially want a flat representation that there are not now and never have been any Hazardous Materials on the premises or any operations that generate, use, treat, store, or dispose of Hazardous Materials. Difficulties that immediately arise include the length of time this representation will reach back, the de minimis without a qualifier based on the best knowledge. 

No Violations / Compliance With Laws

A typical provision states: "Except as set forth in schedule x.x and except for violations which would not have a Material Adverse Effect, seller is not and has not been in violation of any Environmental Requirements. 

Material Adverse Effect and Adverse Environment Condition

Material Adverse Effect: In a sale of any ongoing business, one way to address the difficulty of being absolute in the representations and warranties when in fact the parties are not concerned about the de minimis presence of hazardous materials or damages, is to define Material Adverse Effect. 

Term Definition: Environmental Damages

Environmental Damages: This definition is a convenient place to collect all the possible liabilities and damages arising from the presence of hazardous materials on the property in violation of, or requiring remediation under, any Environmental Requirements. It can then be used in the indemnity and cost sharing provisions. 

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