Superfund. The federal Superfund statute is notorious for its imposition of liability without regard to fault – known as “strict liability.” Another characteristic of the statute, “joint and several liability,” is equally harsh. Under that legal principle, multiple persons may be potentially liable for an expensive cleanup, but costs for the entire project may be imposed on a single person. Because of the risk of strict, joint and several liability, Superfund has caused a sea change in the way American businesses have purchased and sold property, and other businesses, since the statute was passed in 1980. Proper due diligence is essential.

Property Transactions. One who purchases contaminated property may be held liable for millions of dollars of cleanup costs. No evidence of culpability for the contamination is necessary – the mere status of “owner” is enough. However, as a result of amendments to the federal statute a buyer may be able to insulate itself from Superfund liability, at least as a matter of federal law. We have advised clients on how to obtain “bona fide prospective purchaser” (BFPP) status to help make deals work. We offer seminars on this topic and invite you to call us if you are interested in learning more about the issue.

We have also assisted clients in obtaining No Further Remediation (NFR) letters, as they are known in Illinois. (Similar documents are referred to as No Further Action letters in other jurisdictions.) The NFR letter demonstrates that the government has determined that no additional remediation may be necessary. It adds an additional layer of insulation from exposure to liability, and may reduce risk to an acceptable level. Perhaps of more immediate importance, an NFR letter may be required by the lender.

Business Transactions. Environmental liabilities may manifest themselves long after the acts that created them – a regulatory agency may not issue a notice of violation for ten months after the inspection (which itself may not have come to the attention of the front office) – a slow release of solvents may not be noticed until rural neighbors complain of an odd taste in their well water – and perhaps no one can really say how long those drums of waste have been sitting in the north storage area.

A thorough review during the due diligence period may disclose such potential liabilities through physical inspections, record reviews, interviews and other means. And, as significant a project as that may be, the work is only half finished upon its completion. Whether a stock transaction or assets transaction is planned, environmental liabilities may have to be allocated (involving proper identification of “who gets what,” possibly an adjustment of the price, negotiation of indemnities, and still other devices) to enable the deal to proceed to closing.

We have helped numerous clients minimize their environmental exposure, and have extensive experience in negotiating the allocation of environmental liabilities, drafting contract language for purchase and sale agreements and leases, drafting loan documents, and most of all, closing the deal. We steer our clients’ transactions to completion by working with environmental engineers, drafting comprehensive protections and disclosures in real estate sales contracts, and by working with sophisticated insurance brokers. Our years of experience and our competitive rates uniquely situate us to offer cost-effective competent counsel to clients involved in environmentally sensitive transactions.

Following are a number of examples of our work in shaping transactions to make them work for all parties concerned:

  • Represented seller in negotiations for sale of an electronics manufacturer to a foreign concern. Identification and allocation of known and potential environmental liabilities allowed the deal to be closed.
  • Represented buyer in purchase of multiple parcels of old manufacturing site. Assisted client in negotiating indemnity for potential environmental liabilities and in obtaining “bona fide prospective purchaser” status, as well as no further action (NFA) letter at state level.
  • Represented manufacturer with numerous facilities in U.S. and abroad in negotiating and drafting contracts with various environmental consultants for environmental auditing and remediation services.
  • Represented client in negotiations with predecessor major oil company to obtain transferrable indemnity for cleanup, thus satisfying requirements of purchaser and purchaser’s lender, and allowing sale of property to close.
  • Represented purchaser of property in post-closing negotiations with seller of property, following discovery of previously undisclosed contamination, and resolved issue by return of property to seller.