structuring environmental site access agreements: avoiding...
TRANSCRIPT
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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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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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
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
Willis Environmental Practice
100 Matsonford Road
Radnor, PA 19087
(610) 254-5674
www.willis.com