Vappor Intrusion: Liabilityy and Risks Evolving Standardsmedia.straffordpub.com/products/vapor-intrusion-liability-and-risks... · Presenting a live 90‐minute webinar with interactive

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

Vapor Intrusion: Liability and Risks p yUnder Evolving StandardsManaging Vapor Intrusion Risks in Real Estate Transactions and Avoiding Claims

T d ’ f l f

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

WEDNESDAY, MARCH 30, 2011

Today’s faculty features:

Christopher M. Roe, Partner, Fox Rothschild, Exton, Penn.

Edward L. Strohbehn, Jr., Partner, Bingham McCutchen, San Francisco

The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.

Conference Materials

If you have not printed the conference materials for this program, please complete the following steps:

• Click on the + sign next to “Conference Materials” in the middle of the left-hand column on your screen hand column on your screen.

• Click on the tab labeled “Handouts” that appears, and there you will see a PDF of the slides for today's program.

• Double click on the PDF and a separate page will open. Double click on the PDF and a separate page will open.

• Print the slides by clicking on the printer icon.

Continuing Education Credits FOR LIVE EVENT ONLY

For CLE purposes, please let us know how many people are listening at your location by completing each of the following steps:

• Close the notification box

• In the chat box, type (1) your company name and (2) the number of attendees at your location

• Click the blue icon beside the box to send

Tips for Optimal Quality

S d Q litSound QualityIf you are listening via your computer speakers, please note that the quality of your sound will vary depending on the speed and quality of your internet connection.

If the sound quality is not satisfactory and you are listening via your computer speakers, you may listen via the phone: dial 1-866-873-1442 and enter your PIN when prompted Otherwise please send us a chat or e mail when prompted. Otherwise, please send us a chat or e-mail [email protected] immediately so we can address the problem.

If you dialed in and have any difficulties during the call, press *0 for assistance.

Viewing QualityTo maximize your screen, press the F11 key on your keyboard. To exit full screen, press the F11 key againpress the F11 key again.

Evaluating Vapor Intrusion in Real Estate TransactionsEstate Transactions

Vapor Intrusion in a Growing Body of Cases

Presented byPresented byChristopher M. Roe, Esq.

V I t i i G i B d f C

March 30, 2011

Vapor Intrusion in a Growing Body of Cases© 2011 Fox Rothschild

Vapor Intrusion in Various Types of CasesTypes of Cases

Challenges to Generic Clean-up Standards Challenges to Environmental Impact Analyses Challenges to Environmental Impact Analyses

in Development Context Clean-up and Cost Recoveryp y

- RCRA Imminent and Substantial Endangerment; preliminary injunction imminence

- Element of Remediation and 5 Year Review Personal Injury and Property Damages

- Multi-plaintiff or class action- Lease termination


Lease termination


Challenges to GenericClean-up StandardsClean-up Standards

Citizens’ Environmental Coalition, Inc. v. New York State Department of Environmental ConservationState Department of Environmental Conservation, 57 A.D.3d 1279, 871 N.Y.S.2d 435 (Dec. 24, 2008)- petitioners contend generic standards violate statute

because they do not account for vapor intrusion- because even low levels of contaminants do not

ensure absence of vapor intrusion -- DEC requiresensure absence of vapor intrusion DEC requires evaluation of vapor intrusion pathways at all sites, regardless of magnitude of soil contamination.

V I t i i G i B d f CVapor Intrusion in a Growing Body of Cases© 2011 Fox Rothschild

Challenges to Environmental Impact Analyses in Development ContextAnalyses in Development Context

Carson Coalition for Healthy Families v. City of Carson, 2007 WL 3408624 (Cal.App. Nov. 16, 2007)(CEQA)WL 3408624 (Cal.App. Nov. 16, 2007)(CEQA)

- Seeking to rescind certification of environmental impact report and approval of mixed use project on former landfill site

- Methane concern, but raised residential units, methane detection, i i i b b l l bpassive venting system, open air garage, membrane below slabs,

building ventilation, and DTSC sign-off sufficient

Court House Plaza Company v. City of Palo Alto, 2010 WL 2625263 (Cal.App. Jun. 30, 2010)(CEQA); Hochbach Company Realty Limited Partnership v. Palo Alto (N.D.CA Jan. 2010)

- Mixed use project; procedural deficiency re: vapor mitigation (MND)


- Federal civil rights case dismissed


Clean-up and Cost RecoveryRCRA and Preliminary InjunctionsRCRA and Preliminary Injunctions

State of Maryland v. US Dept. of Army, (DMd. 08-cv-3443)(resolved)- Chlorinated solvents, alleged risks to indoor air of homes and

businessesbusinesses- RCRA for continuing violation and imminent and substantial

endangerment United States v. Apex Oil, 2008 WL 783608 (S.D.Ill. July 2008); aff’d on

appeal (Aug 2009)(RCRA)appeal (Aug. 2009)(RCRA)- Petroleum -- Vapors . . . present or may present imminent and

substantial endangerment to health: Residents may suffer adverse health effects; may be harmed by fires or explosions; home sampling and mitigation part of injunctive relief

SPPI-Somersville v. TRC Cos., 2009 WL 2612227; West Coast Home Builders v. Aventis Cropscience, 2009 WL 2612380 (NDCA Aug. 21, 2009) (RCRA, CERCLA, and common law)

- Chlorinated solvents; Risk of VI, contingent on future development, ins fficient to establish imminent and s bstantial endangerment


insufficient to establish imminent and substantial endangerment


Clean-up and Cost RecoveryRCRA and Preliminary InjunctionsRCRA and Preliminary Injunctions

Indiana Dept. of Env. Management v. Bulk Petroleum, 866 N.E.2d 120 (Ind.App. May 8, , ( pp y ,2008)(Ind. Requirements)- BTEX -- Irreparable harm not shown for preliminary injunction

where no evidence of VI into homesExxonMobil Oil Corp v Nicoletti Oil 713 F Supp 2d ExxonMobil Oil Corp. v. Nicoletti Oil, 713 F.Supp.2d 1105 (EDCA 2010)(RCRA/common law)- BTEX – “air filtration units” to residents among costs sought to

be recovered under theories including contractual indemnity g yand negligence

Grace Christian Fellowship v. KJG Investments, 2008 WL 2412981 (ED Wisc. June 12, 2008)

BTEX RCRA l l i t i


- BTEX – RCRA, common law claims; vapors entering basement classroom, preliminary injunction proceeding, expert issues


Clean-up and Cost RecoveryElement of Investigation/RemediationElement of Investigation/Remediation

Action Mfg. v. Simon Wrecking, 428 F. Supp. 2d 288 (EDPA 2006)(CERCLA)(EDPA 2006)(CERCLA)- Chlorinated; VI identified in 5 year review; investigation and

mitigation part of response costs Chubb Cust. Ins. v. Space Systems 2010 WLChubb Cust. Ins. v. Space Systems, 2010 WL

5069827 (NDCA Dec. 7, 2010) (CERCLA; common law)- Chlorinated; Vapor barrier part of remedy an item of cost- Chlorinated; Vapor barrier part of remedy an item of cost

recovery claim Ohio Cas. Insur. Co. v. Reed, 2006 WL 2348957 (SD

Ill. Aug. 11, 2006)(Insurers Dec. action)


Ill. Aug. 11, 2006)(Insurers Dec. action)- PCE from dry cleaner; costs of VI study/venting systems


Miscellaneous Claims

Jaasma v. Shell Oil Company, 412 F.3d 501 (3d Ci 2005)(L l i )501 (3d Cir. 2005)(Lease claim)- BTEX -- Testimony about uncertainty created

by need for VI analysis was relevant to lossby need for VI analysis was relevant to loss of use

Natiello v. Pennsylvania DEP, 990 A.2d y ,1196 (Cmmwlth. Ct. 2010)(Pa. Tank Act)- BTEX – Order required evaluation of indoor

i th


air pathway


Personal Injury/Property Damage

Potential claimants against responsible parties: Occupants (employees/contractors)p ( p y ) Tenants Owners Owners Neighbors


Personal Injury/Property Damage Causes of action

- Negligence, Negligence Per Seg g , g g- Trespass- Nuisance, Nuisance Per Se- Strict Liability

Fraudulent Concealment/Negligent Misrepresentation- Fraudulent Concealment/Negligent Misrepresentation- Statutes, RCRA, CERCLA, OPA, State Statutes

Damages/Claims for Relief- Compensatory DamagesCompensatory Damages- Medical monitoring/Fear of cancer- Diminution/Stigma- Punitive/Exemplary Damages

I j ti / iti ti


- Injunction/mitigation


Personal Injury/Property Damage Multi-plaintiff or class actionMulti plaintiff or class action

1999 -- Ball v. Bayard Pump & Tank Co., Pa.Ct.Cmn. Pleas No. 99-6438, Mont. County, PA- Petroleum from gas station allegedly affecting 49 homes- Expert Motions: Retrospective analysis permittedp p y p- 2007 jury rejected that vapors entered the houses and caused autism and leukemia

1999 – Avila v. Willits Environmental Remediation Trust, 2008 WL 360858; 2009 WL 1813125 (NDCA 2008 and 2009)

- Chlorinated solvents (and dioxins)( )- Originally 1,000 homes, 10 remaining- Negligence, strict liability, fraudulent concealment, intentional and negligent infliction of

emotional distress, battery, negligent undertaking, trespass and nuisance- Summary judgment due to of lack of evidence to support expert exposure and causation

testimony

2000 -- Antolovich v. Brown Retail Group, 183 P.3d 582 (Colorado Ct. of Appeals from Dist. Ct. Denver, CO 2008)

- Chlorinated solvents; 425 Homes in Denver- Trespass, nuisance, strict liability, unjust enrichment, negligence and exemplary damages


- 2004 jury award of $1 million non-economic loss (no diminution in value or punitive)- Expert’s testimony (deemed factual only) that VI pathway not perceived as risk until

1997/98 and effectiveness of mitigation barrier system harmless



2004 -- Muniz v. Rexnord, (ND Ill. 04C-2405), DuPage County, Ill.- Chlorinated solvents- Class action on behalf of 800- Class action on behalf of 800- CERCLA 107; RCRA; Nuisance; Trespass; Ultrahaz./Strict Liability; Res Ipsa

Loquitur; Negligence; Per Se; Willful Misconduct

2005 – Ward v. Lockheed Martin, Bradley v. Lockheed Martin, (Manatee C t Fl 2005 2006)County, Fla. 2005, 2006)

- Beryllium, chlorinated solvents, on behalf of 300 plaintiffs- Strict liability, negligence, Fla. Statute on discharges, trespass, private

nuisance, intentional infliction of emotional distress

2006 – Martin v. Foster Wheeler, 2007 WL 4437221 (MDPA Dec. 14, 2007)- Chlorinated solvents- Class of homeowner/occupants, certified for settlement purposes- Indoor air at home with highest TCE concentrations characterized as no apparent health

threat



2006 -- Aiken, et al. v. General Electric Co., 57 A.D.3d 1070 (NY 3d Dept, Supreme Court Appel. Div. Dec. 4, 2008)

Chl i t d l t (TCE)- Chlorinated solvents (TCE)- Homeowners (less than 100) who had previously settled as to groundwater impact- Where residents were assured of no health risk, question of fact re: awareness of soil

vapor damage

2006 Branham v Rohm & Haas; Booth v Rohm & Haas (2010) (Phila Ct Cmm Pleas 2006 – Branham v. Rohm & Haas; Booth v. Rohm & Haas (2010), (Phila. Ct. Cmm. Pleas, PA)

- Chlorinated solvents, especially vinyl chloride, on behalf of residential development- VI and drinking water- Wrongful death; Survival; Negligence, Negligent Undertaking, Nuisance, Strict Liability,

Res Ipsa Loquitur, Fraud and Misrepresentation, Willful and Wanton Conduct p q , p ,- Trial halted after concerns raised on changes to expert report on causation

2008 -- Spears v. Chrysler, (SDOH 3:08-cv-00331), Dayton, OH- Chlorinated solvents, alleged class of 1,000- Proposed class action on behalf of thousand plus for property damage and medical


oposed c ass ac o o be a o ousa d p us o p ope y da age a d ed camonitoring (certified)

- Trespass; Private Nuisance; Unjust Ennrichment; Strict Liability; Negligence; Per Se; Medical Monitoring, Battery; Fraudulent Concealment; Constructive Fraud; Neg. Misrepresentation; Civil Conspiracy; Punitive Damages



2008 -- Blaine v. IBM, (Broome Cty. 0012-2008) Endicott, NY- Chlorinated solvents- Hundreds of plaintiffs, residential/commercialu d eds o p a s, es de a /co e c a- Negligence/Recklessness; Private Nuisance; Trespass- Test plaintiffs chosen by the plaintiffs will be bill tried

2008 -- Sher v. Raytheon (MDFL 8:07-cv-889) St. Petersburg, Fla.Proposed class action on behalf of residential and commercial owners over solvent plume- Proposed class action on behalf of residential and commercial owners over solvent plume, one thousand plus (certified)

- Trespass; Private Nuisance; Unjust Enrichment; Strict Liability; Negligence; Strict Liability under Fla. Statute not to create hazardous conditions due to discharge of pollutants

- VI was taken out of class claims by stipulation

2008 – Voggenthaler v. Maryland Square, LLC, 2010 WL 1553417; 2010 WL 2947296 (D. Nev. April and July 2010)

- PCE; homeowners group- RCRA citizen suit only- Soil gas levels in the neighborhood though low showed potential for vapor intrusion into


- Soil gas levels in the neighborhood, though low, showed potential for vapor intrusion into homes and were sufficient to make out imminent and substantial endangerment



2009 – Stoll v. Kraft Foods Global, Inc., 2010 WL 3702359 (SD Ind. Sept. 6, 2010)

- Chlorinated solvents; vapor mitigation systems in 125 homes- Chlorinated solvents; vapor mitigation systems in 125 homes- Class action certified of 129 home; 200 individuals- Negligence, private nuisance, trespass, will and wanton misconduct, and

RCRA citizen suit

2010 -- v. DuPont and Royle Systems, (NJ Super.Ct., Passaic County, Mar. 2010), Pompton Lakes, NJ

- Chlorinated solvents- Alleged higher rates of kidney cancer and non-Hodgkin’s lymphoma in

residential arearesidential area- Alleged companies knew or should have known of VI

2010 – Vapor intrusion is an item on plaintiff PI law firm radar and websites



Key Issues: - Expert testimony of exposure, including

contaminant migrationE t t ti f l d ifi- Expert testimony of general and specific causation of diseaseVI can be an obstacle to commonality in- VI can be an obstacle to commonality in class action context

- Statute of limitations


Statute of limitations


Contact Information

Christopher M. Roe, Esq.610 458 4987610-458-4987

[email protected]


Evaluating Vapor Intrusion/Vapor Encroachment g p pin Real Estate Transactions:

Recent Federal/State Guidance Actions;;Key Industry Guidance

Presentation to Strafford Publications Webinar“Vapor Intrusion: Liability and Risks Under Evolving Standards --Managing Vapor Intrusion Risks in Real Estate Transactions and Avoiding Claims”Avoiding Claims”

San FranciscoMarch 30 2011March 30, 2011Edward L. Strohbehn Jr.PartnerBingham McCutchen LLP

Copyright c 2010 Edward L. Strohbehn Jr.All rights reserved

OverviewOverview• Recent Federal/State Guidance Actions

Concerning Vapor Intrusion (VI) EvaluationConcerning Vapor Intrusion (VI) Evaluationo Recent US Environmental Protection Agency (EPA)

ActionsO i f St t VI G id D to Overview of State VI Guidance Documents

o Example of Recent State Action: Massachusetts

• Interstate Technology and Regulatory Council gy g y(ITRC) Guidance

• ASTM Real Estate Transaction Screening P dProcedures

Recent EPA VI ActionsRecent EPA VI Actions• EPA Current Revision Process for 2002 Draft VI

GuidanceGuidance • EPA January 31, 2011 Notice of Public Comment

Opportunity on Adding VI Component to Hazard Ranking System

• EPA March 17, 2011 Notice of Public Comment Opportunity on Development of EPA Final VIOpportunity on Development of EPA Final VI Guidance

EPA Approach for Developing EPAEPA Approach for Developing EPA Final VI Guidance (Henry Schuver, April 16, 2010)• Launch VI website (April 2010)

http://www.epa.gov/oswer/vaporintrusion/o Portal for information on EPA VI activitieso Resources for environmental professionals, lawyers, and

the public• Identify portions of EPA Draft VI Guidance (2002) to be

updated (Summer 2010)• Seek public input via a range of methods (Summer• Seek public input via a range of methods (Summer

2010 through 2011)• Conduct interagency review• Issue final guidance (Fall 2012)

EPA Review of 2002 EPA VI Guidance:EPA Review of 2002 EPA VI Guidance: Basic Conclusions and Proposed Revisions of 2002 VI Draft Guidance (August 2010)• High variability of spatial and temporal distribution g y p p

of VOC concentrations in subsurface and indoor air • Vapor intrusion is more building-specific• Greater emphasis to be placed on using multiple

lines of evidence• Greater complexity found in the factors that:• Greater complexity found in the factors that:

o Affect migration and distribution of VOCso Affect potential for vapor intrusion

EPA Review of 2002 EPA VI GuidanceEPA Review of 2002 EPA VI Guidance (cont.)

G i tt ti f t t b d t d• Generic attenuation factors to be updated• “Indoor air last” approach for sampling appears

likely to be revised to:likely to be revised to:o Allow more flexibility in subsurface and indoor air

sequencing of samplingo Get more rapid and direct assessment of indoor airo Get more rapid and direct assessment of indoor airo Gain benefits of improved public relations and

communication

• More methodologies to be developed for addressing indoor air background contamination

EPA Notice of Public CommentEPA Notice of Public Comment Opportunity About Adding VI Component to HRS (January 31, 2011)• HRS is the method for listing Superfund Sites on

the EPA List• Notice issued January 31, 2011 (76 Fed. Reg.

5370)EPA ti bli i t h th t i l d• EPA requesting public input on whether to include VI component in HRS

• Comment Deadline: April 16 2011Comment Deadline: April 16, 2011

EPA Notice of Public CommentEPA Notice of Public Comment Opportunity About Adding VI Component to HRS (January 31, 2011) (cont.)• Notice responds to GAO May 2010 Report; it p y p

concluded that if VI were an HRS component, more than 30 sites would be added to CERCLA Superfund ListSuperfund List

• Some issues EPA has requested be addressed could relate to factors that might be considered in a real estate transaction; for example:

EPA Notice of Public CommentEPA Notice of Public Comment Opportunity About Adding VI Component to HRS) (cont.)

o Level and/or extent of VI that would warrant placement on HRSP ti l li d t d t t i t i io Practical sampling procedures to detect vapor intrusion in a building

o Identification of structures -- other than residences and h l th t ld lt i i ifi t th t t hschools -- that could result in significant threat to human

health (eg, museums, athletic facilities)

EPA Notice of Public CommentEPA Notice of Public Comment Opportunity on EPA Draft VI Guidance Development (March 17, 2011)• Notice issued March 17, 2011 (76 Fed. Reg.

14660)• EPA requesting public input on development of

final EPA VI Guidance titled: “Evaluating Vapor Intrusion to Indoor Air Pathway from ContaminatedIntrusion to Indoor Air Pathway from Contaminated Groundwater and Soil (Subsurface Vapor Intrusion Guidance)”

• Comment Deadline: May 14, 2011

EPA Notice of Public CommentEPA Notice of Public Comment Opportunity on EPA Draft VI Guidance (cont.)• EPA plans to include in the Final VI Guidance the

following factors that could be relevant to evaluating VI in a real estate transaction:

o Updated chemical toxicity valueso How risk from petroleum hydrocarbons should beo How risk from petroleum hydrocarbons should be

addressedo When or whether preemptive VI mitigation is appropriate

Wh i tit ti l t l d d d t i tio When institutional controls and deed restrictions are appropriate

State Vapor Intrusion GuidanceState Vapor Intrusion Guidance Documents• More than 30 states have issued VI guidance;• More than 30 states have issued VI guidance;

about 5 federal agencies have issued VI guidance• EnviroGroup Ltd maintains a database of federal

and state guidance documents at: http://www.envirogroup.com/links.phpIn general most guidance provides “vapor intrusion• In general, most guidance provides vapor intrusion assessment” type guidance

• State VI guidance can be relevant to a real estate gtransaction due diligence

Massachusetts Revises Its VaporMassachusetts Revises Its Vapor Intrusion Guidance (December 2010)

T i t t ti ll ibl ti l• To assist potentially responsible parties comply with Massachusetts Contingency Plan which deals with assessment and remediation of contaminated sites

• Provides guidance about factors that could be relevant to a real estate transaction due diligencerelevant to a real estate transaction due diligence, such as:

o Determining if vapor intrusion pathway is complete;o Conducting exposure and risk assessments;

Interstate Technology and RegulatoryInterstate Technology and Regulatory Council (ITRC): “Vapor Intrusion Pathway: A Practical Guideline” (January 2007)• Federal, state, industry, and stakeholder y

consensus guidance for evaluating the vapor intrusion pathway.ITRC states: “Practical easy to read how to• ITRC states: “Practical, easy-to-read how-to guideline for assessing the vapor intrusion pathway”

• The “Preliminary Screening Steps” and the six “Typical Scenarios” provide guidance about issues that could be relevant for a real estate transactionthat could be relevant for a real estate transaction

ITRC Vapor Intrusion PathwayITRC Vapor Intrusion Pathway Guidance: Preliminary Screening Steps

The preliminary screening steps pose questions• The preliminary screening steps pose questions that potential buyer can consider addressing such as:

o Does property represent an acute exposure concerno Are any of the chemicals of concern at the property both

volatile and toxicvolatile and toxico Is the property located in close proximity to volatile

chemicals in soil, soil gas, or groundwatero Does an exceedance of the generic screening level existo Does an exceedance of the generic screening level exist

and, if so, does the level warrant further investigation

ITRC Investigative Approaches forITRC Investigative Approaches for Typical Scenarios: The Scenarios

Residential and Commercial Receptors Near Active• Residential and Commercial Receptors Near Active Service Station

• Dry-Cleaning Operations in Strip Mall Near Residential Neighborhood

• Small Industrial Site Degreasing Solvent Contamination Near Adjoining Mixed-Use NeighborhoodNear Adjoining Mixed Use Neighborhood

• Brownfield Redevelopment Site (Vacant Land)• Large Industrial Building Undergoing Redevelopment• Multifamily Dwelling Located Over Former Gas Station

ASTM Real Estate ScreeningASTM Real Estate Screening Procedures: E 1527-05 & E 2600-10

E 1527 Th ll k Ph I E i t l• E-1527: The well known Phase I Environmental Site Assessment Process can be used in screening a property for VI as part of a real estate transaction.

o E 1527 Goal: To determine if there are any “recognized environmental conditions” (RECs) and VI can be a REC

o Phase I satisfies CERCLA “all appropriate inquiry”o Phase I satisfies CERCLA all appropriate inquiry requirements for achieving CERCLA liability protections for innocent landowner, contiguous property owner, or bona fide prospective purchaserp p p

• E 1527 is currently undergoing a formal ASTM revision process

ASTM Real Estate ScreeningASTM Real Estate Screening Procedures: E 1527-05 & E 2600-10 (cont.)• E 2600-10: The new Guide for conducting Vapor

Encroachment Screening on Property Involved in Real Estate Transactions

o Purpose: To provide practical guidance for conducting a vapor encroachment screen of a property involved in avapor encroachment screen of a property involved in a real estate transaction to determine if chemicals of concern have encroached upon a property as vapors

• Does not satisfy any aspect of CERCLA “all• Does not satisfy any aspect of CERCLA all appropriate inquiry.”

ASTM 1527-05 Phase I EnvironmentalASTM 1527-05 Phase I Environmental Site Assessment

A REC th lik l f• A REC means the presence or likely presence of any hazardous substance or petroleum producton a property that indicates an existing release, past release, or material threat of a release of a hazardous substance or petroleum product into structures ground ground water or surface waterstructures, ground, ground water, or surface water on the property

• EPA takes the position that the vapor phase of volatile hazardous substances shall be addressed under CERCLA

ASTM 1527-05 Phase I EnvironmentalASTM 1527-05 Phase I Environmental Site Assessment (cont.)

Th Ph I i t l it t• Thus, a Phase I environmental site assessment can address vapor intrusion/vapor encroachment considerations in a real estate transaction

• Performing a Phase I Environmental Site Assessment for vapor intrusion/vapor encroachment issues would meet CERCLAencroachment issues would meet CERCLA requirements for achieving CERCLA liability protections

ASTM 1527-05 Phase I EnvironmentalASTM 1527-05 Phase I Environmental Site Assessment (cont.)

Ph I h f t• Phase I has four components:o Records reviewo Site reconnaissanceo Interviewso Report

N t th t ll t ibl t• Note that usually not possible, or necessary, to make a vapor intrusion determination based on Phase I information but may be able to make a yvapor encroachment determination.

ASTM E 2600-10 Vapor EncroachmentASTM E 2600-10 Vapor Encroachment Screening

D l d ifi ll t id• Developed specifically to provide screening/investigative process and procedures to determine if a “vapor encroachment condition” exists at a property

• A VEC is the presence or likely presence of chemicals of concern vapors in the subsurface of achemicals of concern vapors in the subsurface of a target property

• Must be performed by an environmental p yprofessional, like a Phase I ESA

• Information to be evaluated can include using Ph I ESA i f tiPhase I ESA information

ASTM E 2600-10 Vapor EncroachmentASTM E 2600-10 Vapor Encroachment Screening (cont.)

Th VEC i i i d f t• The VEC screening process is comprised of two tiers.

• Tier I Screening is non-invasive informationTier I Screening is non invasive information gathering; includes all Phase I information if done in conjunction with a Phase I

S• Tier II Screening can involve invasive screening (e.g., sampling of soil, soil gas, and/or groundwater) g )

ASTM E 2600-10 Strategic PlanningASTM E 2600-10 Strategic Planning Considerations

If d t E 2600 VEC S i th d t E• If conduct E 2600 VEC Screening, then conduct E 1527 and E 2600 simultaneously:

o Only E 1527 provides AAI benefits, which Buyer likely y p y ywants

o Both screens developed for property transactions

• Conduct E 2600 Tier 1 and Non Invasive Tier 2• Conduct E 2600 Tier 1 and Non-Invasive Tier 2 Screens Simultaneously

o Information for both easily and cost-effectively collected together

o Maximizes possibility of making VEC determination with publicly available, non-invasive information

Contact InformationContact Information

Ed d L St hb h JEdward L. Strohbehn Jr.Bingham McCutchen LLP

Three Embarcadero CenterThree Embarcadero CenterSan Francisco, CA 94111

Tel: 415.393.2059Fax: 415.393.2286

Email: [email protected]

Ci l 230 Di l I t l R S i l ti id th t f th f idi t i lti d th

BostonHartford

Hong Kong

Circular 230 Disclosure: Internal Revenue Service regulations provide that, for the purpose of avoiding certain penalties under theInternal Revenue Code, taxpayers may rely only on opinions of counsel that meet specific requirements set forth in the regulations,including a requirement that such opinions contain extensive factual and legal discussion and analysis. Any tax advice that may becontained herein does not constitute an opinion that meets the requirements of the regulations. Any such tax advice therefore cannotbe used, and was not intended or written to be used, for the purpose of avoiding any federal tax penalties that the Internal RevenueService may attempt to impose.

LondonLos Angeles

New YorkOrange CountySan FranciscoSanta MonicaSilicon Valley

© 2009 Bingham McCutchen LLP One Federal Street, Boston, MA 02110-1726 ATTORNEY ADVERTISING

To communicate with us regarding protection of your personal information or to subscribe or unsubscribe to some or all of Bingham McCutchen LLP’s electronic and mail communications, notify our privacy administrator at

[email protected] or [email protected] (privacy policy available at www.bingham.com/privacy.aspx). We can be reached by mail (ATT: Privacy Administrator) in the US at One Federal Street, Boston, MA

02110-1726 or at 41 Lothbury, London EC2R 7HF, UK, or at 866.749.3064 (US) or +08 (08) 234.4626 (international).

Bingham McCutchen (London) LLP, a Massachusetts limited liability partnership regulated by the Solicitors Regulation Authority, is the legal entity which operates in the UK as Bingham. A list of the names of its partners

and their qualifications is open for inspection at the address above. All partners of Bingham McCutchen (London) LLP are either solicitors or registered foreign lawyers.

S y p p

TokyoWashington

bingham.com

Bingham McCutchen LLP, a Massachusetts limited liability partnership, is the legal entity which operates in Hong Kong as Bingham McCutchen LLP. A list of the names of its partners practicing in the Hong Kong office and

their qualifications is open for inspection at the address above. Bingham McCutchen LLP is registered with the Hong Kong Law Society as a Foreign Law Firm and does not practice Hong Kong law. Bingham McCutchenLLP operates in Hong Kong in formal association with Roome Puhar, a Hong Kong partnership which does advise on Hong Kong law.

This communication is being circulated to Bingham McCutchen LLP’s clients and friends. It is not intended to provide legal advice addressed to a particular situation. Prior results do not guarantee a similar outcome.

74055067

AGREEMENT OF PURCHASEAND SALEAND SALE

Christopher M Roe EsqChristopher M. Roe, Esq.And

Ed d L St hb h J EEdward L. Strohbehn, Jr., Esq.

AGREEMENT OF PURCHASEAND SALEAND SALE

I. Conditions to ClosinggII. Representations and WarrantiesIII Releases and WaiversIII. Releases and WaiversIV. IndemnitiesV EscrowsV. EscrowsVI. Covenants that Survive Closing

Note: The following slides are meant to serve only as the basis for discussion. They are not intended to be comprehensive or to represent definitive positions or language of an actual p p g gtransaction.

49

Preliminary Consideration:S i E l iScreening Evaluation

What should Buyer and Seller Consider in Deciding Whether To Conduct or Allow the Performance of a Screening Evaluation of thePerformance of a Screening Evaluation of the Property Potential Seller’s Alternatives and Issues:

Perform Pre-Sale Screening Evaluation to Provide Perform Pre Sale Screening Evaluation to Provide Potential Buyer

Do not Allow Pre-Sale Intrusive Environmental Investigation

Potential Buyer’s Alternatives and Issues: Perform Environmental Screening in Advance of Engaging

in Substantive Discussions with Seller Perform Standard Phase I Environmental Screening Perform More Detailed, possibly Invasive, Environmental

Screening 5050

I.A. Buyer’s Acceptance of Environmental C diti f P tCondition of Property

Should Buyer’s Comfort on Environmental Conditions Should Buyer s Comfort on Environmental Conditions, Including Vapor Intrusion, Be a Condition to Closing?

Potential Seller’s view: In Response to Buyer Request for Information, Provide

Appropriate Documents;Appropriate Documents; Provide No Assurances or Representations About

Environmental Conditions; Let Buyer Make Its Own Determinations and Conclusions.

Potential Buyer’s view: Ask for Assurances from Seller; Regardless of whether Seller provides Assurances, Conduct

Independent Investigation of Environmental ConditionsIndependent Investigation of Environmental Conditions, Including Vapor Intrusion -- Possibly with Invasive Testing

Have Unconditional Right to Walk

Assume for discussion:Assume for discussion: Buyer’s Comfort on Environmental Conditions a Condition to

Closing, With Complete Right to Walk 51

I.B. Scope of Due Diligence P i dPermitted

How much due diligence on environmental diti f t ill b itt d?conditions of property will be permitted?

Potential Seller’s view: Consistent with1.A, “Knock yourself out, but:” Only after review and approval of work plans and consultants; Only after review and approval of work plans and consultants; Indoor sampling not to disrupt, after work hours Confidentiality, control of disclosures Non-refundable deposit Non refundable deposit

Potential Buyer’s view: Consistent with 1.A: Review and approval of work plan/consultant must be

reasonable Provided reasonable information/access under conditions

relevant to Buyer Right to contact agencies Right to disclose if Seller does not and law requires Right to disclose if Seller does not and law requires Any non-refundable deposit must be reasonable

52

I.C. Seller’s Disclosures on E i l C di iEnvironmental Conditions

What disclosures will be made by Seller of prior t di d d t ?studies and data?

Potential Seller’s view: Only material documents No representation as to all or completeness Covenant not to sue Seller or its consultants for Covenant not to sue Seller or its consultants for

deficiencies in documents/information Confidentiality/Return

Potential Buyer’s view: All information and documents related to VI issues,

no materiality thresholdno materiality threshold

53

I.D. Other Potential Conditions to Cl iClosing

Put mitigation system in place (by Seller or t th t B t i l t l )agreement that Buyer put in place post close)

Potential Seller’s view: If this is economically viable, this might make sense, but

there are issues to considerthere are issues to consider Prefer Buyer put in place and promise to maintain

Potential Buyer’s view: Yes. Should be put in place, current and future sampling Yes. Should be put in place, current and future sampling

should take place Seller should be obligated to ensure it meets standards or to

pay for installation

Environmental Access Agreement Environmental Access Agreement Necessary if Buyer is going to have any post-closing

obligations, perhaps even if providing indemnity

54

II. REPRESENTATIONS AND WARRANTIES OF SELLERWARRANTIES OF SELLER

Disclosure of all material information, including documentsdocuments

No violations of law No law suits, actions, or government investigations No knowledge of any release of VOCs at or near the

property, soil vapors or indoor air sampling No USTs Knowledge:

Seller’s as a whole Environmental Manager’s

O ’ Owner’s Time limits

One year, two years, unlimited

55

II RELEASES AND WAIVERSII. RELEASES AND WAIVERS

As Is? As Is? Potential Seller’s View:

Consistent with 1.A, absolutelyConsistent with 1.A, absolutely Full release and waiver of any and all

claims

Potential Buyer’s View: Except for undisclosed conditionsNot from 3d party claims related to

existing conditions

56

IV INDEMNITIESIV. INDEMNITIES Potential Seller’s Views:

None If any, limited to undisclosed, existing conditions and

to government required mitigation/clean-upg q g / p And, if any, return indemnity for any claim arising out

of disclosed conditions Rights and/or conditions to seller obligation: Rights and/or conditions to seller obligation:

cooperation, notice, access, right to fix, right to defend/settle

Two year limit (dollar limit) Two year limit (dollar limit) Potential Buyer’s Views:

Full indemnity for pre-existing conditions No time or dollar limit

57

V ENVIRONMENTAL ESCROWV. ENVIRONMENTAL ESCROW

Seller’s View: Preferable to pre-closing installation of

mitigation Can only be spent on agreed mitigation Time limit of one year

Buyer’s View: Need relief if insufficient to cure the problem Flexibility to spend on reasonable steps

58

VI. COVENANTS TO SURVIVE CLOSINGCLOSING

Seller’s view: Mechanism to run with land providing notice

of conditions; limiting uses to non-sensitive; i t i i iti ti t i i ilmaintaining mitigation system; requiring soils

and water management; requiring vapor mitigation in designmitigation in design

Buyer’s view: None None. If any, flexible restrictions, mechanism to

have limitations, etc., removed

59

Contact InformationContact Information

Christopher M. Roe, Esq.610-458-4987610-458-4987

[email protected]

Ed d L St hb h J EEdward L. Strohbehn, Jr., Esq.415-393-2059

[email protected]

60