A Professional Association

Daniel S. Schleck, Esq., P.E., CHMM, C.E.S. Halleland Habicht, P.A.

33 South Sixth Street #3900Minneapolis, Minnesota 55402

(612) 836-5500

Environmental Issues in Secured Transactions

A Professional Association

OVERVIEW

Real Estate Issues

Operations

Contract Provisions

Pricing and Alternatives Risk Management

A Professional Association

General Provisions

Attorney/Client Privilege

Scope Definition

Contingencies

Requirements of Lender

A Professional Association

Real Property Evaluation

1. Title Issue

2. ASTM Due Diligence

3. Non-ASTM Considerations

4. New Federal Legislation

A Professional Association

Leased vs. Owned

Past Owner uses

Seller’s Business

Title Issues in Environmental Due Diligence

A Professional Association

1527-00 is the Standard for Phase I

Items included in Review:

Property History

Adjoining Property History and Use

Review of Regulatory Databases

On-site Review of Property

ASTM Due Diligence

A Professional Association

Non-ASTM Scope Considerations

1. Asbestos Building Materials

2. Lead Based Paint

3. Wetlands

4. Mold

5. Radon

6. Lead in Drinking Water

A Professional Association

The Small Business Liability Relief and Brownfields Revitalization Act

of 2002

New Standards for Phase Is

Clarification of the Innocent Landowner Defense

Exempt Bona-fide Purchasers from Liability

Definitions of Bona-fide Purchaser

A Professional Association

What if an Issue Arises?

Conduct a Phase II Assessment

1. Intrusive Soil and Groundwater Sampling

2. More Expensive than a Phase I

3. Should have plan for closure prior to initiation

4. In Minnesota, seek protection of the MPCA Voluntary Investigation and Cleanup Program

5. Insurance

A Professional Association

Environmental Concerns in Business Acquisition

1. Permitting

A. NPDES – Wastewater

B. Air

C. Stormwater

D. Noise

E. Wetlands

2. Permit Transfer

3. State and Federal Reporting

A Professional Association

Contract Provisions

1. Asset Only Acquisition

Continuing Business Enterprise

2. Definition Section of Agreement

3. Express Allocation of Environmental Liability

4. Representation and Warranties

A Professional Association

Pricing and Alternatives to Risk Management

1. Price Adjustment

2. Regulatory Protections

3. Environmental Insurance

A Professional Association

Regulatory Protections

1. Voluntary Investigation and Cleanup Program

A.No Association Letter

B. Off-Site Source Determination Letter

C. No Further Action Determination

D.Certificate of Completion

E. Proposed (Voluntary Party Certificate of Completion)

A Professional Association

Environmental Insurance

1. Cost Cap

2. Third Party Liability

3. On-Site and Off-Site Issues

4. Specific Contaminant

5. Change in Law