Author: snydergroup

Too often we only think of employing environmental experts in an adversarial context. In truth, battles between experts rarely assist in advancing negotiations and often become the issue that unnecessarily kills deals.

We suggest a change in strategy. Utilize your experts earlier in the negotiating process, before the process becomes adversarial. How do we do this?

THE RIGHT CONSULTANT

1) Select the right consultant. First, retain one who is proficient in the required field of expertise (for example, remediation strategy, hazardous waste disposal or regulatory familiarity). Second, the environmental consultant should be someone who looks for solutions. Third, the consultant should not have a reputation as a hired gun who would rather “win” than facilitate the completion of the deal.

DEFINE THE BIG ISSUE

2) If there is a critical issue which may significantly affect the deal, identify it and define it from a technical perspective as soon as possible. Hoping it will go away is rarely a viable solution.

DOES THE LAW APPLY TO YOU?

3) If the outstanding issue involves the potential applicability of a state or federal statute, try to resolve any ambiguity prior to the commencement of negotiations. Unknowns may result in a huge expenditure of time and money as counsel tries to protect its clients from uncertainty through contract drafting.

REASONABLY QUANTIFY COSTS

4) Similarly, if the uncertainty involves issues pertaining to the likely cost of investigation/remediation, obtaining a reasonable cost estimate may help the parties and lenders narrow the range of anticipated costs.

In summary, consider utilizing environmental experts earlier in the transaction process. It may save time and money. Furthermore, if there is a “deal breaking issue”, the earlier the parties discuss it, the less time is wasted.

If you have any questions related to this blog please contact Attorney Eric Jacobi via email at ejacobi@jacobicase.com or via phone at 434.260.7978.

States have needed to continuously update their coronavirus response protocols as infection rates rise and as the world learns more about the Covid-19 pandemic. Moreover, the Centers for Disease Control and Prevention (CDC) also provides guidance that states, business owners, and landlords should follow. Landlords and businesses are expected to keep up with the myriad changes, implement programs and policies in accordance with the protocols and guidelines, and take new precautions as the situation evolves.

Both landlords and businesses may face liability if they fail to adhere to the protocols and rules, or fail to adapt to changes quickly enough, even when the precautions are already taken would have been viewed as sufficient just days before. Many states invite whistleblowers to report noncompliance, and failure to abide by the applicable rules can lead to fines and possibly even lawsuits. Accordingly, it is important that landlords and business owners promptly identify the applicable rules and protocols, that they implement compliant programs and policies so that people stay safe, and that owners mitigate their potential liability.

Although each state has different rules, the CDC and state guidelines provide that landlords generally are responsible for maintaining and cleaning common areas. This includes lobbies, communal bathrooms, hallways, and stairways. The CDC provides detailed guidance on the types of cleaning solutions that should be used. Owners of office buildings should also increase ventilation and circulate outdoor air where possible. The particular details, however, often present unique challenges to landlords who are used to operating under one set of rules, only to discover a different set now applies.

As a firm with offices in Connecticut and Virginia, we will be focusing this document on the law of these two states. Under Connecticut law and CDC guidance, landlords should develop a cleaning plan to ensure their buildings remain safe. In addition to thoroughly cleaning the common areas, buildings should post signs displaying the updated policies, including social distancing, use of masks, and ordering people to go home if they are sick. Facilities are encouraged to complete a self-certification to receive a “Reopen CT Badge” which advertises that the building adheres to Connecticut’s rules.

Business owners and landlords should be aware that Governor Ned Lamont has reverted back to Phase 2.1 in Connecticut. While marketed as a “slightly modified version of Phase 2,” this stage introduces several material changes that can confuse even careful observers [1].

[1] “Latest Guidance,” Connecticut Covid-19 Response; available at: https://portal.ct.gov/Coronavirus/Covid-19-Knowledge-Base/Latest-Guidance (Nov. 6, 2020).

For instance, private gatherings in indoor commercial venues may have no more than 25 people, the same as in Phase 2. However, private gatherings in outdoor commercial venues can have no more than 50 people (far fewer than the 100 allowed in Phase 2). A commercial venue could receive fines for hosting a group of 75 people, mistakenly thinking the gathering was still legal under Phase 2 rules. It is important to note that the capacity requirements vary depending on the type of business, so it is essential to check with the Phase 2.1 regulations before implementing a capacity policy for your business or building.

Overall, restrictions under Virginia law are similar. Owners must ensure that social gatherings are limited to 50% of the event spaces’ occupancy or 25 people, whichever is less. However, one particularly unique aspect is that different parts of the Commonwealth can operate under different sets of rules. For instance, until recently, it was only restaurants in the Eastern Region of Virginia which were required to stop selling alcohol in restaurants at 10 PM. A restaurant chain’s Virginia Beach location, therefore, had different responsibilities than the same restaurant’s Alexandria location.

Landlords and business owners must be diligent to ensure compliance with rules and guidance promulgated by the CDC. It is better to proactively avoid problems than to react to accusations or respond to whistleblower complaints or even lawsuits. Landlords and business owners should be vigilant in complying with the state rules to mitigate potential liability. The stakes go beyond just avoiding a fine; these actions also help save lives. And regardless of the financial penalties, the public relations problems alone should incline landlords to comply with the rules.

Legal counsel can help you navigate the Covid-19 rules so that buildings avoid noncompliance, mitigate potential liability, and minimize the risk of spreading Covid-19. Jacobi & Case has trained lawyers in both Connecticut and Virginia who are available to answer questions.

The Connecticut legislature overwhelmingly voted to sunset the Connecticut Transfer Act, the law which has regulated contaminated properties in the state for the last 35 years. Instead, Connecticut will shift to a release-based remediation program where “any person who creates or maintains a release to the land and waters . . . shall, upon discovery of such release (1) Report the release . . . and (2) Remediate any release to the standards identified in [the adopted] regulations.”

This massive revision to the environmental laws is theoretically intended to accelerate the cleanup of polluted lands while revitalizing the economy. The program will become effective when implementing regulations are first adopted.

However, the law contains only the most rudimentary guidelines, instead of leaving to a Working Group the process of developing the myriad regulations necessary to provide standards, prioritize cleanup sites, and identify contaminant concentration levels. Without any of this information, it remains to be seen whether this release-based system will actually benefit the Connecticut economy or lead to a cleaner environment.

The breadth of this new law also presents increased liability challenges to businesses and property owners. Failing to properly report a release or merely maintaining a polluted property is enough to constitute a violation. Furthermore, the legislature expanded the definition of a “person” for purposes of the release-based remediation program. A person will include “any officer or governing or managing body of any partnership, association, firm or corporation or any member or manager of a limited liability company.”

An amendment to the bill clarifies that (A) the officer, body, member, or manager must be in a position of responsibility that allows the person to influence corporate policy, (B) there must be a nexus between the individual’s actions (or inactions) and the violation of the Act, and (C) the actions (or inactions) of the individual facilitated such a violation.

The largest implication of this expanded definition is the ease with which liability can attach to the individual without having to undergo the difficult process of piercing the corporate veil. Under the release-based system, an entity’s officers can face significant liability for creating or maintaining a release even if the conduct was performed within the scope of their corporate authority. This language also conveys that it will be far easier to target parent corporations who may have deeper pockets.

Businesses and their executives must be very careful to avoid inadvertent violations. Those potentially impacted by this new law should reach out to environmental counsel to help guide them through the new laws.

Is there light at the end of the tunnel?

Last month Governor Lamont signed Public Act No. 19-75, a new law that amended several provisions in the Transfer Act. These amendments are favorable to the regulated community and are designed to narrow the scope of real properties and businesses that are subject to the Transfer Act, as well as to lessen the burden for those already in the program.

The amendments include the addition of several new important exceptions to the definition of an “establishment,” and the shortening of the time period that DEEP has to audit an LEP Verification.

In particular, the amendments exclude from the definition of an “establishment” any real property or business operation from which more than 100 kilograms of hazardous waste was generated in any one month from the following activities:

• The one-time generation of hazardous waste in any one month, as a result of either the first time such waste was generated or such a one-time generation since the last time a Form I, Form II, Form III or Form IV was required to be submitted.
• The removal of unused chemicals or materials as a result of the emptying or clearing out of a building.
• The complete cessation of a business operation provided the waste is removed not later than ninety days after such cessation.

Another important change is the shortening of the time period DEEP has to audit an LEP Verification from three years to one year. Further, DEEP must complete the audit within three years from the date of submittal.

These amendments will provide some relief to the regulated community for transactions involving real property or businesses that are not major generators of hazardous wastes. Although some of the language is not ideal and will be subject to some interpretation, overall the amendments are a step in the right direction.

The amendments will become effective on October 1, 2019. Application of the new provisions will not be retroactive and will not apply to transactions that occur prior to the October 1, 2019 effective date. Of note, the legislation mandates the convening of a new working group to develop recommendations for additional legislative changes to the Transfer Act.

This is an important opportunity for the regulated community and signals a willingness on the part of the legislature to facilitate commercial transactions in which environmental issues may exist. Lenders, developers, and commercial realtors are well-advised to participate in this process and make their concerns known.

Even though I am technically considered a millennial, I distinctly remember a time when technology was not an integral part of my life. Today, it would be foolish to fail to recognize its significance in my daily life and prevalence in the practice of law on many different levels. One of the bigger players in the e-commerce world today is eBay, Inc., a company that provides an online auction and shopping platform to its users. I recently represented an eBay user in a dispute with the company, which resulted in a successful and cost-efficient disposition for my client. Drawing on my experience, I hope to shed some light on the unique process of navigating a dispute with eBay, Amazon, Etsy and similar e-commerce giants.

Although it may not be so obvious to a non-lawyer, the obvious starting point with navigating such a dispute is eBay’s “User Agreement”, which of course, is a legally binding contract between the user and eBay. I have no doubt that the vast majority of eBay users have never read this document and just accept its terms with one click of the mouse. Perhaps the most important sentence within the introductory provision of the User Agreement is the following statement: “Please be advised that this User Agreement contains provisions that govern how claims you and we have against each other are resolved.” It should also come as no surprise that the User Agreement is littered with various disclaimers, limitations of liability and exclusions of damages. Applicable law regarding the enforceability of those provisions can vary from jurisdiction to jurisdiction.

One of the more significant tactical decisions a commercial litigator will have to make is whether to attempt to resolve a dispute via alternative dispute resolution or litigation. Courts strongly favor the use of alternative dispute resolution mechanisms such as arbitration and seek to enforce arbitration clauses whenever possible. Different types of commercial or consumer disputes present unique considerations in this regard, and dealing with eBay was certainly different from other types of such disputes I have handled. In many contexts, litigation may seem like the only answer, but arbitration is often preferred over litigation for several reasons (speed, cost, efficiency, simplicity, etc.). In my case, arbitration was even more appealing. The procedure outlined in the “Agreement to Arbitrate” within eBay’s User Agreement highlights several of those distinct advantages. The Agreement to Arbitrate also mandates that all claims against eBay are to be resolved through arbitration, and gives the eBay user the alternate option of asserting a qualifying claim in small claims court. Additionally, any claim that is pursued outside of arbitration in the courts of a state other than Utah faces the possibility that it will be removed or transferred to a court in Utah.

The prospect of pursuing a claim against eBay may seem like a daunting one. We here at Jacobi & Case, P.C. relish the challenge, and have the skills, experience and mindset needed to tackle unique challenges like this, to do so aggressively and to advocate on your behalf no matter who your adversary might be.

I have always loved Yogi Berra. He was a Hall of Fame player and a Hall of Fame creator of peculiar expressions. My favorite Yogiism is “When you come to a fork in the road, take it.” Although not a Yogiism, I am also fond of the expression, “Don’t throw the baby out with the bathwater.” Although the image is awfully strange, the concept makes sense, especially when dealing with environmental regulation in Connecticut. The Transfer Act has received its fair share of criticism over the years. However, getting rid of the Transfer Act is not the answer. Instead, making it work to protect health and the environment while promoting business growth must be the objective.

Having had the privilege of participating in the Transfer Act’s statutory development as early as 1995, I do have a strong interest in its successful development. It doesn’t work well in its present configuration, as it is out of sync with the trend toward risk assessment as the basis for regulation. It is also too slow of a process, with the average cleanup taking 7 years to complete. Frankly, it also has a bad reputation with out-of-state developers who have little interest in being stuck in regulatory quicksand for an indefinite period of time when their projects and sites are not the sources of significant risk. The Transfer Act’s bad reputation is well deserved.

The problems are fixable, but risk assessment must become the primary factor in defining the level of cleanup required at a site. Of course, I don’t want “foxes in the hen house.” Yogi could have said that, but didn’t. It means that the state must spend money to hire a number of experts in environmental risk assessment to assure that the assessments are performed properly and reviewed quickly.

By the way, we also need more DEEP staff conducting Transfer Act reviews. This process must become much faster if we are going to encourage business investment and redevelopment in this State. Going back to the beginning of the LEP program in the mid-1990s, it was designed to trust LEPs, particularly for sites that, based on groundwater classification and analytical data, did not reflect significant risk.

The original Environmental Condition Assessment Form was quite simple. If the site was in a GB groundwater area and the analytical data was acceptable, the vision was that the LEP would be empowered to implement the Remediation Standard Regulations with little interference. Whether anyone wants to agree with me or not, the fact is that from time to time, this concept was not followed by personnel at DEEP who did not fully commit to the LEP process. It will never be perfect, but the process can work efficiently if sufficient resources are allocated and the regulatory attitude changes.

Over 30 years ago, when my oldest son Eric was about 7 years old, he wrote a story entitled, “What I Want to Be.” It started with a singular line. “When I grow up I want to be an environmental layer.” Yup. He wanted to be a “layer” just like his dad. Maybe that is why his drawing, which accompanied the story, pictured a man with a briefcase in one hand and a baseball glove on the other. I had this picture in my mind earlier today when I was focusing on the most important and fundamental functions an environmental lawyer performs, particularly in a transactional setting.

Not surprisingly, often the most important job is to assemble the right team. Assuming that the client is the team manager, I would consider myself the catcher, controlling the game on the field. My key player would be the technical consultant, a Licensed Environmental Professional (“LEP”). I want that player to really understand the job. I need the LEP to know how critical this role is to the success of the team.

When representing a seller, it is essential that the technical consultant understands that the Phase 1 Environmental Site Assessment must provide a sufficient factual basis for the lawyer to determine Transfer Act applicability. There is a substantial liability on a seller who conveys a Transfer Act site without making an appropriate Transfer Act filing. The consultant performing Phase 1 must also perform a sufficient review of historical documentation and conduct a site visit so that a subsurface investigation if one is necessary, can be focused on the likely release areas and constituents of concern.

On behalf of the seller, the consultant’s Phase 2 scope of subsurface work may not necessarily include investigating the site to the extent (and cost) required to achieve site verification. The seller may simply want sufficient information developed to give prospective purchasers a reasonable idea of the environmental condition of the property. An experienced seller may appreciate the fact that a serious buyer will generally desire to conduct an independent Phase 2 investigation following a review of the seller’s reports. Further, under the Transfer Act, the buyer will have 2 years following receipt of a DEEP notice that its Transfer Act filing is complete to finish the investigation. A cost-conscious seller, therefore, may conclude that a more limited investigation is appropriate so long as it reasonably informs the buyer of the site’s condition.

Finally, the team needs to determine if a remedial cost estimate is appropriate and whether that cost estimate should be incorporated into the investigation report. In this regard, consideration should be given to whether the LEP’s cost estimate should be widely disseminated or whether it should be limited to a subset of serious buyers who have sufficiently demonstrated their desire to pursue the transaction and who have signed a confidentiality agreement.

In summary, the selection of the correct LEP is critical to the fate of many transactions. How do you choose the “right” consultant? First, technical competence, experience, and credibility with the governmental agencies are givens. Second, the consultant must understand that the team’s objective is primary. Depending on the client’s goals, a comprehensive investigation is not necessarily the best approach from a money or timing perspective.

Similarly, an unrealistic remedial cost estimate, in the long run, is not in the best interests of any party. Third, the team members must be able to communicate well together. Objectives change. Development plans change. Draft reports must be quickly modified. The consultant’s pace cannot lag behind. In a nutshell, my advice to developers is to put a good team together and keep it together as long as it works. It sounds much easier than it actually is.