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Presenting a live 90-minute webinar with interactive Q&A Identifying and Managing Environmental Risks in Commercial Transactions Identifying, Quantifying and Allocating Potential Liabilities and Long-Term Environmental Obligations THURSDAY, FEBRUARY 9, 2017 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Lawrence P . Schnapf, Principal, Schnapf LLC , New York William J. Squires, III, Partner, Hinckley Allen & Snyder , Boston 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 .

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I DENTIFYING AND M ANAGING E NVIRONMENTAL R ISKS IN C OMMERCIAL T RANSACTIONS S TRAFFORD P UBLICATIONS F EBRUARY 9, 2017 LAWRENCE P . SCHNAPF SCHNAPF LLC WILLIAM J. SQUIRES, III HINCKLEY, ALLEN & SNYDER LLP

A GENDA  Purpose of Environmental Due Diligence  Conducting Environmental Due Diligence  Allocating and Mitigating Environmental Risks 6

Purpose of Environmental Due Diligence 7

I DENT NG E NVIRONMEN ENTAL R ISKS NTIFYI FYING 8

W HY HY E NVI MENTAL D UE UE D ILI ENCE ? VIRON ONMEN LIGENC Qualify for Defenses Under Environmental Laws Imposing Strict and Joint Liability For Cleanups  Government Cost Recovery and Unilateral Administrative Orders  Third Party Cost Recovery or Contribution Claims  Quantify Material Environmental Liabilities Under Federal and State Laws Imposing Compliance  Obligations Change in Business Operations  Construction Delays or Overruns  Comply With State and Local Transactional Laws  NJ ISRA; CT Transfer Act  NYC e-designation  Satisfy Lender Requirements  9

W HY HY E NVI MENTAL D UE UE D ILI ENCE ? VIRON ONMEN LIGENC  Evaluate Common Law Liabilities  Successor, Parent, Affiliate Liability  Property Damage Claims  Personal Injury  Evaluate Contractual/Lease Obligations  CERCLA 107(e)-parties may not contract away liability  “As Is” only applies to reps and warranties  Release Should refer to “CERCLA - like” liabilities 10

G OAL O F D UE UE D ILI ENCE LIGENC • Not To Eliminate ALL Risk but Understand Material Risks • Cleanup • Compliance • Permits for Business Plans • Culture • Identify and Allocate (Manage) Risk Based on Nature of Transaction • Stage of Deal (pre-bid, exclusivity period) • Time, cost, data room vs site assessments • Deal Killers • Purchaser Tolerance • Bid Pricing • Markup Purchase Agreement • Identify Potential Mitigation Tools 11

K EY EY E NVIRONMEN ENTAL L AWS WS  Principal Sources of Cleanup Liability  CERCLA, 42 U.S.C. 9601 et seq.  RCRA, 42 U.S.C. 6901 et seq.  TSCA (PCBs)  State Versions of CERCLA/RCRA  State Transaction Statues  State Superlien Statutes 12

P RINCIP IPAL S OURCES OF OF R EGUL ULATORY C OMPLIAN LIANCE  Clean Air Act (CAA), 42 U.S.C. 7401 et. seq.  Clean Water Act (CWA), 33 U.S.C. 1251 et seq.  Resource Conservation and Recovery Act (RCRA), 42 U.S.C. 6901 et. Seq.  Toxic Substances Control Act (TSCA), 15 U.S.C. 2601 et seq.  Emergency Planning and Community Right to Know (EPCRA), 42 U.S.C. 11001 et seq.  Comparable State Laws 13

CER ERCLA CLA A UTHOR ITY ORIT  Established “Superfund” to finance cleanups  Authorizes list of most heavily- contaminated sites.  Gov’t May perform cleanups.  Unilateral Administrative Orders to address sites posing substantial and imminent endangerment.  Recover response costs from PRPs.  Permits PRPs to seek reimbursement of response costs from other PRPs. 14

U NILA AL A DMINIS IVE O RDERS LATER ERAL ISTRA RATIVE 42 2 USC 960 606  EPA may issue UAO when it determines  Release or threatened Release  May pose imminent and substantial endangerment to public health or the environment  Failure to comply without sufficient cause may result in fines and treble damages 15

S TANDARD RD OF OF L IABILIT LITY  STRICT LIABILITY  RETROACTIVE LIABILITY  Joint (107 actions only) 16

E LE MENTS OF OF CER ERCLA CLA L IABILIT LITY LEMEN  Release  Includes “disposal”  Passive migration vs active disposal  Hazardous Substance  Facility  Response Costs  Remedial or Removal  Consistency with NCP 17

CER ERCLA CLA L IABLE LE P ARTI RTIES  Current and Former Owners  Current and Past Operators  Generators  Transporters 18

CER ERCLA CLA O WNER  Current Owner  Past Owner “at time of disposal”  Passive vs. active disposal  Title Holders  Easement Holders  Long-Term Tenants  Parent Corporations 19

CER ERCLA CLA O PERATOR  Based on Control  Actual vs ability to control  Past Operator “at time of disposal”  Active vs passive disposal 20

CER ERCLA CLA A RRANGER ER  Intent to Arrange for Disposal of Hazardous Substance  Sale of raw materials/useful product  Liable if transported to non-approved site 21

T RANSP ER SPOR ORTER  Must make decision where to dispose hazardous substances 22

CER ERCLA CLA A FFIRMA IVE D EFENS ES MATIVE NSES  Act of God  Act of War  Third Party  Innocent Landowner (ILO)  Bona Fide Prospective Purchaser (BFPP)  Contiguous Property Owner (CPO) 23

T HIRD RD P ART RTY T RANSFER ERS  Release Solely Caused by TP  No direct and indirect contractual relationship  ILO Exception to this element  Due care  Precaution against foreseeable acts or omissions 24

I NNOCEN ENT L ANDOWNER D EFEN SE (ILO) O) ENSE 42 2 U.S.C .C. . 9601(35 1(35)(A (A) ) AND (B) (B)  Did Not Know or Had No Reason to Know of Release  Perform Pre-Acquisition AAI  Comply with Post-Acquisition Continuing Obligations  Cooperate and Provide Access for Persons Performing Response Actions  Comply With Land Use Controls (LUCs)  Provide Access to Persons Maintaining LUCs 25

BFPP P - 42 42 U.S.C. .C. 960 601(40 1(40)  Applies to transactions after January 11,2002  Applies to Purchasers and Tenants  Applies to brownfield and NPL sites 26

E LE MENTS OF OF BF BFPP PP D EFENSE SE LEMEN  Threshold Criteria  Conducted AAI  Not PRP or affiliated with PRP by:  direct or indirect familial relationship  contractual or corporate relationship  Corporate Reorganization  Disposal took place prior to acquisition 27

BFPP P D EFENSE SE E LEMEN ENTS CONT ’ D  Continuing Obligations  Complied with All Applicable Reporting Requirements  Undertake “Appropriate Care”  Cooperate and Provide Access to Persons Performing Response Actions  Comply With LUCs Provide Access for Persons Maintaining LUCs  Comply with EPA CERCLA Information Requests or Subpoenas 28

CPO PO D EFEN SE ENSE 42 2 U.S.C. .C. 9607( 7( Q )  Owner did not cause, contribute, or consent to release  Conduct “Appropriate Inquiry”  Exercise “Appropriate Care”  Cooperate and Provide Access To Persons Performing Cleanups  Comply With LUCs  Provide Access To Persons Maintaining LUCs  Comply with all release reporting requirements  Comply with EPA CERCLA Information Requests and Subpoenas  Owner not a PRP or affiliated with PRP 29

S ECURE RED C REDIT OR E XEMPTION ION ITOR  Holder of Security Interest Not Owner if  Holds “indicia of ownership” primarily to protect security interest  Did Not “Participate in Management” of facility  Post-Foreclosure Immunity if:  Takes commercially reasonable steps to sale property  Does not Cause or Exacerbate Release  Beware of:  RCRA UST Secured Creditor Exemption  RCRA 7002 actions  Common Law Failure to Disclose 30