Environmental Lender Liability: Identifying Risks and Opportunities
Under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), lenders acquiring a contaminated property through foreclosure, are exempted from the perils of environmental liability. The exemption, which is commonly referred to as the Secured Creditor Exemption (SCE), creates a safe harbor for lenders against the CERCLA cleanup liability. However, a lender may only be covered and protected from environmental liability under the SCE, if it only holds the contaminated property as security for debt, and not for the facility’s long-term profit.
In this LIVE webcast, a seasoned panel of thought leaders and professionals brought together by The Knowledge Group will provide and present to the audience an in-depth analysis of the fundamentals and all important issues in Environmental Lender Liability. Speakers will go beyond the basics and present their expert thoughts and opinions on the risks and potential opportunities surrounding this significant topic.
Key topics include:
- Environmental Lender Liability - An Overview
- The Secured Creditor Exemption
- The CERCLA Liability
- Scope and Limitations of CERCLA
- Identifying Risks and Common Pitfalls
- Recent Trends, Developments, and Updates
Greenbaum Rowe Smith & Davis LLP
- The statutory basis of environmental lender liability under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and the Resource Conservation and Recovery Act (RSRA);
- The CERCLA “safe harbor” for secured lenders;
- The RCLA “safe harbor” for secured lenders;
- RCRA “citizen suits;”
- The Brownfields Act “windfall lien;”
- The “bona fide prospective purchaser” exemption.
Lender Considerations Prior to Loan/Financing:
- 5 Reasons lender should conduct or take “interest in” environmental due diligence:
- Know the nature and extent of environmental issues to ensure borrower is equipped to handle/repay the loan.
- Loan to value of property evaluation.
- Foreclosure issues – management/control.
- Resale potential.
- Know what provisions to include in loan documents to protect security interest (indemnification, covenants, reps and warranties)
- Lender standards for environmental due diligence:
- Required elements ASTM 1527-13 Phase I Environmental Site Assessment.
- Reliance letter or report issued to the lender.
- Lender review/approval of Phase I/Phase II if needed.
- Careful attention to avoid late REC that was not a REC the first time around.
- Vapor encroachment/intrusion concerns.
Brach Eichler LLC
Lender Liability Risk Under Environmental Laws During Loan Period:
- Practical Tips to Secure Asset and Funding to Address Environment Compliance Issue
- Environmental Insurance – Pollution Legal Liability (PLL) insurance
- Phase I/II Consultant Reliance Letter to Lender
- Environmental Escrows and Covenants in Loan Document
Practical Considerations for Lenders Both Pre-Foreclosure and Post-Foreclosure
- Avoid Pre-Foreclosure Environmental Liability by Not Actively Participating in Management
- Undertake a Foreclosure Evaluation before Foreclosing!
- Allowable Lender’s Activities Post-Foreclosure without Environmental Liability
- Lender Has the Burden of Proof to Show It Qualifies for a Secured Creditor Exemptio
Resource Conservation and Recovery Act (RCRA) Secured Creditor Exemptions Pitfalls
Conclusion: Avoid environmental liability by acting prudent to preserve the asset and document all steps taken to secure the asset, but do not activity participate in management of the business operations or seek to make a financial gain beyond the loan value.
Who Should Attend:
- Commercial and Institutional Lenders
- Financial Institutions
- Environmental Lawyers
- Risk and Compliance Officers
- Environmental Compliance Attorneys
- Environmental Claims Litigators
Mr. North focuses his practice in litigation, with an emphasis on trial practice. He has tried jury and non-jury cases in state and federal courts, including over 75 jury cases to verdict. He is certified by the Supreme Court of New Jersey as a Civil Trial Attorney. Mr. North’s practice concentrates in commercial and banking litigation, including matters involving lender liability claims and defenses, negotiable instruments and financial fraud. Mr. North has also represented banks in class actions alleging claims under New Jersey and federal consumer legislation. Mr. North is a Fellow of the American College of Trial Lawyers and of the International Academy of Trial Lawyers. He is listed in Super Lawyers, Benchmark Litigation, Chambers USA and in four practice areas in Best Lawyers including Banking and Finance Litigation and “Bet-the-Company” Litigation. Mr. North is the author of the evidence treatise A Trial Lawyer’s Strategic Guide to the New Jersey Rules of Evidence, and is the only New Jersey lawyer selected as a principal author of Business and Commercial Litigation in Federal Courts, contributing the chapter in the treatise devoted to Medical Malpractice.
Mr. North focuses his practice in litigation, with an emphasis on trial practice. He has tried jury and non-jury cases …
Kelly Martorano is an attorney in Dickinson Wright’s Real Estate Practice Group, where she specializes in environmental law and commercial real estate transactions. She assists clients such as, large and small companies, financial institutions, and municipalities with evaluating and navigating various transactional and regulatory environmental issues. In addition, she has prepared and negotiated purchase and sale agreements, leases, easements, and various real estate documents related to the acquisition, disposition, leasing, construction and financing of medical office building projects in Michigan.
In the past, Kelly has also represented electric and gas utilities before the Michigan Public Service Commission in regulatory rate proceedings.
Kelly Martorano is an attorney in Dickinson Wright’s Real Estate Practice Group, where she specializes in environmental law and commercial …
Frances Stella is Chair of Brach Eichler's Environmental & Land Use Practice Group and has 25 years of experience in federal and state environmental litigation, site remediation and environmental regulatory compliance counseling in real estate redevelopment and transactions. Her environmental practice includes handling CERCLA and New Jersey Spill Act claims and compliance issues, natural resource damage claims, cost recovery/contribution litigation and mediation, environmental insurance coverage litigation, environmental enforcement defense, permitting, defense of toxic torts, asbestos and vapor intrusion claims, and government compliance environmental investigations and audits. She handles site remediation negotiations with both state and federal environmental agencies and contracts with and supervises environmental consulting firms to develop and implement remedial activities in her role as Common Counsel for PRP groups at Superfund sites and for redevelopers.
Frances Stella is Chair of Brach Eichler's Environmental & Land Use Practice Group and has 25 years of experience in …
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Method of Presentation:
Experience in environmental laws and litigation
NASBA Field of Study:
Business Law - Technical
NY Category of CLE Credit:
Areas of Professional Practice
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About Greenbaum Rowe Smith & Davis LLP
Greenbaum, Rowe, Smith & Davis is a multi-practice law firm serving local, regional and national clients. As one of New Jersey’s leading law firms, the firm brings diverse and comprehensive expertise to the representation of both businesses and individuals. For over 100 years, the firm has earned the trust and loyalty of clients by providing sophisticated, creative and cost-effective representation through collaborative teamwork, proactive legal strategies, attention to detail and relationship-oriented service.
About Dickinson Wright
Dickinson Wright PLLC is a general practice business law firm with more than 450 attorneys among more than 50 practice areas. Headquartered in Detroit and founded in 1878, the firm has fifteen offices in Michigan, Ohio, Kentucky, Tennessee, Nevada, Arizona, Washington, D.C., Toronto, Florida and Texas.
About Brach Eichler LLC
Brach Eichler LLC is a full-service law firm based in Roseland, N.J. With over 70 attorneys, the firm is focused in the following practice areas: Health Law, Real Estate, Litigation, Trusts & Estates, Business Transactions & Financial Services, Personal Injury, Criminal Defense and Government Investigations, Employment Services, Environmental & Land Use, Family Law, Patent, Intellectual Property & Information Technology, Real Estate Tax Appeals, and Tax. Brach Eichler attorneys have been recognized by clients and peers alike in Best Lawyers in America, Chambers USA, and New Jersey Super Lawyers. For more information, visit www.bracheichler.com.