structuring environmental site access agreements: avoiding...

Structuring Environmental Site Access

Agreements: Avoiding Costly Pitfalls Drafting and Negotiating Scope of Work, Duration, Insurance

and Other Key Provisions to Protect Buyers and Sellers

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THURSDAY, JULY 10, 2014

Presenting a live 90-minute webinar with interactive Q&A

Cindy Karlson, Founder, Law Offices of Cindy J. Karlson, East Hampton, Conn.

Keith E. Montone, Assistant Vice President /Senior Placement Specialist,

Willis Environmental Practice, Radnor, Pa.

Suzanne Ilene (Shoshana) Schiller, Partner, Manko Gold Katcher & Fox, Bala Cynwyd, Pa.

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Cindy J. Karlson

Law Offices of Cindy J. Karlson

Phone: 860.365-5167

Cindy@karlsonlawfirm.com

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Agenda

Understanding Your Deal

Key Issues and Provisions

Specific Provisions

Insurance Issues

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Understanding Your Deal Due Diligence Scenario

Pre-closing issues What kind of access do

you want to grant as seller?

What kind of access is best for buyer?

What are the potential ramifications of access?

Post-closing issues How will access effect a

business? Liability allocation?

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Understanding Your Deal

Special Circumstances:

- Superfund Sites

- Voluntary/Private Clean Ups

- Risk Liability Transfer Deals

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Agreement Form Options

1. Separate access agreement

2. Site access section in overall agreement

3. Access provisions buried in agreement

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Agreement Form Options Example

Following the Closing, the Seller shall comply with Environmental Laws and shall perform or cause the performance of, all on-site and off-site investigation, mitigation, containment, remediation, and post-remediation and other monitoring activities as necessary to receive a Letter of No Further Action. Purchaser shall provide Seller and its agents access to the Property in accordance with the Environmental Remediation and Access Agreement attached hereto as Exhibit A.

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Key Issues and Provisions

Scope of work

Location

Duration

Notice

Confidentiality

Safety

Risk allocation

Insurance

Indemnity

Results

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Scope of Work

Manage expectations

Access to all land, including inside of structures?

Spell it out

How specific do you need to be:

“access the site to perform investigation and sampling”

“access the site to inspect the property and collect soil and groundwater samples”

Inspection only and/or invasive sampling

(soil, water, indoor air?)

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Location, Location, Location Site plan with work locations

Understand how access will impact the property and then determine what access will be allowed:

- Cut pavement to take soil sample or drill groundwater well?

- Disturb landscaping?

- Structural safety issues?

- Drill through basement foundation?

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Duration One time event? multiple?

Days, weeks, months, years

Groundwater monitoring wells –

Extensions

Tying duration to achieving cleanup or other outcome

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Notice

Who must give the notice

What must notice include

Certificate of insurance, site plan, names of persons accessing property

When

Consider nature of the work to be performed

Provisions to deal with emergency access needs

Written/Verbal

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Confidentiality Prohibit dissemination to any third party (other than

environmental consultants and attorneys, provided such parties are made aware of this confidentiality requirement and agree to abide thereby and except as required by law and court order)

What information is confidential:

Any information or reports Buyer and/or its representatives obtain or develop during or as a result of the Work

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Safety Call before you dig

What is liability exposure?

- employees

- guests

- customer

- lessees

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Risk Allocation Indemnification

- Release and hold harmless

Insurance

- What types? amounts?

- Who is covered?

- What evidence should be required?

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Sample Results

Ramifications

Disclosure considerations

Agency reporting triggers

Deal strategy and pricing leverage

Third party liability

Off-site issues

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Example

Purchaser shall provide Seller and its consultants, agents or contractors access to the Property as required to perform the Work. In granting such access, Purchaser may impose restrictions on the time, location and scope of any such work, as well as other conditions and restrictions that Purchaser determines are necessary.

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Practice Tips

Understand your goals

Manage expectations

Fully evaluate ramifications of site access terms and conditions

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Cindy J. Karlson

Law Offices of Cindy J. Karlson

Phone: 860.365-5167

Cindy@karlsonlawfirm.com

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Access Agreements: Specific Provisions

Suzanne Ilene Schiller

Manko, Gold, Katcher & Fox, LLP

Philadelphia, PA

Overview

Applicable Law

Payments for Access

Handling of Waste

Unique Access Issues

Repair and Restoration

Work Plans, Sampling Results and Reporting

Indemnification

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Applicable Law

Sample Provision:

“Applicable Law” shall mean any and all federal, state and local laws, regulations, rules, ordinances, permits, permit conditions, approvals, standards, directives, guidelines, agreements, letters, and executive, judicial and administrative orders and decrees, that apply to the performance of the Work, including but not limited to any and all land use, zoning, and permitting rules, regulations and ordinances of the Township, as well as environmental, health and safety laws, and workplace safety requirements of federal, state, county, and municipal governments, including all administrative agencies thereof, such as the U.S. Environmental Protection Agency (“EPA”) and the [State]

Department of Environmental Protection.

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Applicable Law (cont.)

“No Federal, State, or local permit shall be required for the portion of any removal or remedial action conducted entirely onsite, where such remedial action is selected and carried out in compliance with this section.”

42 U.S. Code § 9612(e)(1)

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Payments for Access

Attorneys’ Fees

Use and Occupancy of Staging and Storage Areas

Business Interruption

Additional security and/or personnel

Consulting Engineer

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Handling of Waste

Important provisions:

No onsite disposal

Responsibility for proper storage, handling, treatment and disposal is on party seeking access

Owner shall not be identified as generator of any materials removed from the site

Consider necessity of HAZWOPER Certification

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Unique Access Issues

Underground Private and Public Utilities

Facility Security

For owner’s benefit

For entrant’s benefit

Landlords and Tenants/Lease Issues

Installation of Wells and Continuing Access for Monitoring

Are damages are inadequate remedy?

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Repair and Restoration

To Whose Satisfaction? Objective vs. Subjective Standards

Quality of Materials Used: what is “commercially reasonable”?

Are there Zoning or Permit Requirements?

If repair is impossible, how will property damage be valued?

Dispute resolution process?

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Work Plans, Sampling Results and Reporting Review Scope of Work and Work Plan documents

If the access is for investigation, make sure you know what kind of sampling is being done, and what contaminants or constituents the samples will be tested for

Consider requiring receipt of any work plans created as a result of investigation before agency submittal

Determine what level of information regarding investigation results will be provided (e.g. just data, or reports and analysis)

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Work Plans, Sampling Results and Reporting (cont.) “Neither Accessing Entity nor its representatives, agents, employees or consultants shall provide Owner or any third party the results of any waste characterization or sample analysis or testing unless requested to do so by Owner. In the event Accessing Entity makes a determination that such results must be reported to any governmental agency for any purpose, Accessing Entity must first notify the Owner of the existence and legal basis for such determination and provide the Owner with a reasonable opportunity to review and respond to such determination.”

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Indemnification

Types of Claims

Tort Claims

On and Offsite Environmental Contamination

Mechanics Liens

Fines, penalties, costs assessed by any governmental entity for violations of local ordinances, codes or statutes

Utility damage

Notification and Acceptance of Tender Procedure

Choice of Counsel

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Questions or Further Information

Suzanne Ilene Schiller

(sschiller@mankogold.com)

Manko, Gold, Katcher & Fox LLP

401 City Avenue, Suite 901

Bala Cynwyd, PA 19004

(484) 430-5700

www.mankogold.com

Access Agreements: Insurance Provisions

Keith Montone

Willis Environmental Practice

Radnor, PA

July 10th 2014

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Insurance

Types of Coverage Required

Additional Insured / Named Insured

Primary Policy / Subrogation

Policy Limits

Evidence of Insurance

Claims

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Coverage Requirements

•Commercial General Liability

•Workers’ Compensation

•Automobile Liability

•Umbrella Excess

•Contractor’s Pollution Liability

•Professional Liability

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Additional Insured

•What does this provide?

•Difference between Additional Insured and Named Insured

•Is Additional Insured standard in Insurance Policies?

•Can my client have their own endorsement?

•Does my client need Named Insured Status?

•For which coverages is this needed?

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Primary Insurance

•What is this provision?

•What is the value in a Site Access Agreement Situation?

•What is standard?

•Primary, Excess, Sharing Provisions?

•What is Non-Contributory?

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Waiver of Subrogation

•What is this provision?

•What is the value and importance in a Site Access Agreement Situation?

•What is standard in policies?

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Notice of Cancellation

•What is this provision?

•What is the value in a Site Access Agreement Situation?

•Cancellation or Material Change in terms

•How can a carrier cancel coverage?

•Typical provisions – 30 days

Policy Limits

Coverage Limits

Commercial General Liability $1,000,000 Per and $2,000,000 agg

Automobile $1,000,000 Per and $1,000,000 agg

Worker’s Compensation As required by Law

Employers’ Liability $500,000 Per and $500,000 agg

Umbrella $10,000,000 Per and $10,000,000 agg

Contractor’s Pollution Liability $2,000,000 Per and $2,000,000 agg

Professional $2,000,000 Per and $2,000,000 agg

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• Is this a project specific placement or practice policy? • Is practice policy on multi year policy period?

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Certificate of Insurance

•What is a certificate / ACORD 25 forms

•What is the value in a Site Access Agreement Situation?

•Pitfalls

•Additional Requests

•Valuable questions you need to ask

•Important information that is not on a certificate

•Claims Made vs. Occurrence Coverage

Non Standard Environmental Requests • Non-Owned Disposal Site Coverage

• Transportation (outside of Automobile)

• Insurance Carrier A.M. Best Rating A-

• Claims Made coverage – requirement to carry

policy after completion

• Dedicated Limits – Larger Projects

• Maximum Deductible or SIR of $50,000

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Claims Procedures

• Advice - Report Report Report!

• Non-Emergency Response Situations –

get carriers approval to remediate / hire

counsel

• Follow up!

• Recent Claims Example

• Exacerbation of pre-existing pollution

condition – offsite migration

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Final Takeaways

• Pollution Loss and Claims

• Involve agent or broker

• Properly drafted insurance provisions in

site access agreements are vital to

protecting client from the unknown

• Role of counsel and insurance broker is key

understanding impacts

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Questions

Keith E. Montone

(Keith.Montone@Willis.com)

Willis Environmental Practice

100 Matsonford Road

Radnor, PA 19087

(610) 254-5674

www.willis.com