Vapor Intrusion: Evaluating and Managing VI Risk in

Vapor Intrusion: Evaluating and Managing

VI Risk in Commercial Contracts Using Negotiation and Drafting Techniques to Protect Interests in Real Estate Transactions

Today’s faculty features:

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

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.

WEDNESDAY, JUNE 13, 2012

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

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

Edward L. Strohbehn, Jr., Of Counsel, Bingham McCutchen, San Francisco

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.

• 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.

• Print the slides by clicking on the printer icon.

For CLE purposes, please let us know how many people are listening at your

location by completing each of the following steps:

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

attendees at your location

• Click the SEND button beside the box

FOR LIVE EVENT ONLY

Sound Quality

If 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 1-866-755-4350 and enter your

PIN -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 Quality

To maximize your screen, press the F11 key on your keyboard. To exit full screen,

press the F11 key again.

Using Negotiation and Drafting Techniques to Protect Interests in Real Estate Transactions

STRAFFORD PUBLICATIONS WEBINAR

June 13, 2012

Edward L. Strohbehn Jr. Christopher M. Roe Bingham McCutchen LLP Fox Rothschild LLP Three Embarcadero Center 747 Constitution Drive, Suite 100 San Francisco, CA 94111 P.O. Box 673 (415) 393-2059 Exton, PA 19431-0673 (415) 307-2715 (cell) (610) 458-4987 (415) 722-2059 (cell) [email protected] [email protected]

Vapor Intrusion: Evaluating and Managing VI Risk in Commercial Transactions

mailto:[email protected]


http://www.foxrothschild.com/

6


Recent Vapor Intrusion Cases

Recent Federal and State Vapor Intrusion Regulatory Actions

Some Lessons Learned

Managing Vapor Intrusion Risks in Real Estate Transactions

7


Recent Vapor Intrusion Cases

8

Vapor Intrusion in a Growing Body of Cases

June 13, 2012

Presented by:

Christopher M. Roe, Esq., Fox Rothschild LLP

9

Vapor Intrusion in Various

Types of Cases Challenges to Generic Clean-up Standards

Challenges to Environmental Impact Analyses in Development Context

Clean-up and Cost Recovery 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

10

Vapor Intrusion in Cases -- Personal

Injury/Property Damage

Potential claimants against responsible parties:

Occupants (employees/contractors)

Tenants

Owners

Neighbors

11


Injury/Property Damage Causes of action

Negligence, Negligence Per Se Trespass Nuisance, Nuisance Per Se Strict Liability Fraudulent Concealment/Negligent Misrepresentation Statutes, RCRA, CERCLA, OPA, State Statutes

Damages/Claims for Relief Compensatory Damages Medical monitoring/Fear of cancer Diminution/Stigma Punitive/Exemplary Damages Injunction/mitigation

12

Challenges to Generic

Clean-up Standards Citizens’ Environmental Coalition, Inc. v. New York State

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 requires evaluation of

vapor intrusion pathways at all sites, regardless of

magnitude of soil contamination.

13

Challenges to Environmental Impact

Analyses in Development Context Carson Coalition for Healthy Families v. City of Carson, 2007

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, passive 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); Hohbach 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

14

Clean-up and Cost Recovery RCRA 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 businesses RCRA for continuing violation and imminent and substantial endangerment

United States v. Apex Oil, 2008 WL 7836308 (SDIll. July 2008); aff’d on appeal (Aug. 2009)(RCRA), Hartford, Illinois 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, insufficient to establish

imminent and substantial endangerment

Indiana Dept. of Env. Management v. Bulk Petroleum, 866 N.E.2d 120 (Ind.App. May 8, 2008)(Ind. Requirements) BTEX -- Irreparable harm not shown for preliminary injunction where no evidence of VI into

homes

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 and negligence

15

Clean-up and Cost Recovery RCRA and Preliminary Injunctions

Grace Christian Fellowship v. KJG Investments, 2008 WL 2412981 (EDWisc. June 12, 2008) 2009 U.S. Dist. Lexis 76954 (2009) BTEX – RCRA, common law; vapors entering church basement,

prelim. injunction proceeding, expert issues; no endangerment Newark Group v. Dopaco Inc., 2010 U.S. Lexis 95061 (EDCal. Sept. 13,

2010) Toluene, methane – Owner v. former tenant; potential vapor intrusion

created a genuine issue of fact regarding endangerment Sullins v. ExxonMobil, 2010 U.S. Lexis 58921 (NDCal. June 14, 2010)

BTEX – Owner v. former owner; “certain” future exposure may constitute endangerment

Sanchez v. Esso Standard Oil de Puerto Rico Inc., 2010 US Dist. Lexis 1039-49 (DPR Sept. 29, 2010) BTEX – Court rejected allegation and expert on vapor intrusion

Tilot Oil LLC v. BP Products NA, (9-CV-210 EDWisc. Jan. 17, 2012) BTEX – RCRA, common law; neighboring property; exceedance of

vapor intrusion screening levels does not establish endangerment

16

Clean-up and Cost Recovery Element of Investigation/Remediation

Acton Mfg. v. Simon Wrecking, 428 F. Supp. 2d 288 (EDPA 2006)(CERCLA)

Chlorinated; VI identified in 5 year review; investigation/mitigation part of response costs

Chubb 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 recovery claim

Ohio Cas. Insur. Co. v. Reed, 2006 WL 2348957 (SD Ill. Aug. 11, 2006)(Insurers Dec. action)

PCE from dry cleaner; costs of VI study/venting systems

CAEUSA Inc. v. Triple Cities Metal, et al., (NDNY 3:11-CV-0711)

TCE, TCA – Cost of mitigation systems and other from other sources

Sunrise Harbor Realty LLC v. 35th Sunrise Corp., (NY App. Div. 2d Dept. July 12, 2011)

BTEX – Navigation law; failure to plead vapor intrusion in bill of particulars made VI testimony inappropriate

17

Miscellaneous Claims

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

need for VI analysis was relevant to loss of use

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

pathway

18

Personal Injury/Property Damage Multi-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 permitted 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

19


2004 -- Muniz v. Rexnord, (ND Ill. 04C-2405), DuPage County, Ill. Chlorinated solvents 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 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

20


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

(certified) Trespass; Private Nuisance; Unjust Ennrichment; Strict Liability; Negligence; Per Se; Medical

Monitoring, Battery; Fraudulent Concealment; Constructive Fraud; Neg. Misrepresentation; Civil Conspiracy; Punitive Damages

21


2008 -- Blaine v. IBM, (Broome Cty. 0012-2008) Endicott, NY Chlorinated solvents Hundreds of plaintiffs, residential/commercial Negligence/Recklessness; Private Nuisance; Trespass Test plaintiffs chosen by the plaintiffs and defendants will be tried first

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, 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 homes and were sufficient to make out imminent and substantial endangerment

22


2009 – Stoll v. Kraft Foods Global, Inc., 2010 WL 3702359 (SD Ind. Sept. 6, 2010) Chlorinated solvents; vapor mitigation systems in 125 homes Class action certified of 129 home; 200 individuals Negligence, private nuisance, trespass, willful and wanton misconduct, and RCRA citizen suit Settlement, $8.1 million, plus clean-up and mitigation systems in affected homes

2010 – Gessner v. DuPont and Royle Systems, (NJ Super.Ct., Bergen County, Mar. 2010), Pompton Lakes, NJ Chlorinated solvents Alleged higher rates of kidney cancer and non-Hodgkin’s lymphoma in residential area Alleged companies knew or should have known of VI Agnes v. Du Pont, CA 98-1405 (D. N.J. 3/31/2011). Earlier settlements bar current claims.

2011 – Leese v. Lockheed Martin (NJD 2011) Moorestown, NJ Chlorinated Solvents

Clean-up; personal injury and property damages; one home

Spill Act, NJ Water Pollution Control Act, RCRA, Private Nuisance, Trespass, Negligence, Strict Liability

2011 – McHugh v. Madison-Kipp Corporation (WDW 11-CV-724) Madison Chlorinated Solvents

Clean-up; Property damages; 7 homes RCRA citizen suit, negligence, private nuisance, trespass, willful and wanton misconduct

23


Injury/Property Damage Multi-plaintiff or class action

Key Issues:

Expert testimony of exposure, including

contaminant migration

Expert testimony of general and specific causation

of disease

VI can be an obstacle to commonality in class

action context

Statute of limitations

24


Recent Federal and State Vapor Intrusion Regulatory Actions

Petroleum Hydrocarbons and Chlorinated Hydrocarbons Differ in Their Potential for Vapor Intrusion, September 2011

http://www.epa.gov/oust/cat/pvi/pvicvi.pdf

http://www.epa.gov/oust/cat/pvi/pvicvi.pdf

25 25

© All Rights Reserved:

Edward L. Strohbehn Jr. (2012)

Vapor Intrusion:

The Ever Changing Regulatory Environment

June 13, 2012

Edward L. Strohbehn Jr.

Bingham McCutchen LLP

26 26

Overview of Recent Actions

Agency Action Date

1 EPA TCE IRIS Listing 9/2011

2 EPA PCE IRIS Listing 2/2012

3 EPA Region IX: Risk Screening Levels (RSLs): Includes New TCE IRIS 11/2011

5 EPA Region IX: MEW Vapor Intrusion Consent Decree 3/2012

6 EPA Review of Draft 2002 VI Guidance 8/2010

7 EPA VI Database: Evaluation and Characterization of Attenuation Factors for VOCs and Residential Buildings

3/16/12

8 EPA VI Screening Level Calculator and User’s Guide 2/12

9 EPA Conceptual Model Scenarios for VI Pathway 2/2012

10 EPA Background Indoor Air Concentrations of VOCs in North American Residences (1990-2005): A Compilation of Statistics for Assessing VI

6/2011

11 EPA Region IX: Screening Level TCE Concentrations in Groundwater for Requiring Indoor Air Testing

2011

12 EPA Overview of Petroleum Vapor Intrusion 9/2011

13 EPA Potential Addition of VI Component to HRS Listing 1/2011

14 EPA Superfund VI FAQs 3/2012

RECENT EPA ACTIVITIES

26

27 27

Overview of Recent Actions (cont.)

Agency Action Date

15 DTSC Final Public Participation VI Guidance 3/2012

16 DTSC Final VI Evaluation Guidance 11/2011

17 DTSC Final VI Mitigation Guidance 11/2011

18 New Jersey New VI Guidance 1/2012

19 Massachusetts New VI Guidance 12/2011

20 Pennsylvania New VI Guidance In Process

RECENT STATE ACTIVITIES

Agency Action Date

21 ASTM E 2600-10 Vapor Encroachment Guidance 6/2010

RECENT ASTM ACTIVITY

27

28 28

Overall Assessment of Recent Agency Regulatory

Actions

• Vapor intrusion has been found to be more complex and

difficult to assess

• Agency vapor intrusion activities are increasing

• Differences exist among various agencies

• Agencies are moving from reliance on modeling, such as

Johnson & Ettinger Model, to reliance on empirical data;

produces more conservative results

• Regulatory actions are trending towards stricter

requirements and standards

• Results potentially in more testing, mitigation, and

monitoring

• Makes vapor intrusion assessments and site remediation

and mitigation potentially more expensive

29 29

EPA Listing of TCE in IRIS Database --

September 28, 2011

• Final TCE health assessment has been 20 years in development

• TCE cancer assessment treats TCE as more toxic than previous

assessment

• EPA IRIS listing resulted in EPA making the residential ambient

air screening level stricter by a factor of 2.8

• EPA IRIS listing resulted in EPA making the commercial

ambient air screening level stricter by a factor of 2.0

• May lead to reopening of sites where TCE cleanup standards

found not protective of public health based on new IRIS criteria

• May lead to more costly site cleanup requirements

EPA Region IX Risk Screening Levels –

November 20, 2011

30 30

EPA Listing of PCE in IRIS Database --

February 10, 2012

• PCE cancer assessment treats PCE as less toxic than

previous assessment

• May lead to decreases in cancer risk estimates

• PCE non-cancer assessment treats PCE as more toxic

than previous assessment

• May lead to increases in non-cancer hazards

• For Superfund cleanups, EPA announced:

MCL of 5 ppb remains groundwater remediation goal

For states with a more stringent standard, the stricter

standard remains the standard

For cleanups based on meeting indoor air contamination

standards, no additional cleanup needed at previously

cleaned sites that were based on previous PCE cancer

assessment

31 31

EPA Region IX MEW Vapor Intrusion Consent Decree --

March 2012

• MEW Site reopened to address vapor intrusion pathway

• EPA may use MEW Record of Decision and Consent

Decree as a model for addressing vapor intrusion at

contaminated sites for:

Approaches for using engineering and institutional

controls in existing and future buildings

Requirements for using active ventilation systems

Standards for no action

• Indoor air testing required for all buildings over

groundwater plume containing TCE at concentration

≥ 5ppb.

32 32

EPA Region IX Policy: TCE Screening Level

Groundwater Concentrations for Indoor Testing -- 2011

• EPA Region IX has a policy of requiring indoor air

testing in:

Residential homes located above groundwater

plume containing TCE at 50 ppb

Commercial buildings located above groundwater

plume containing TCE at 100 ppb

• CA Regional Water Quality Control Board, SF Bay

Region Environmental Screening Level for TCE in

groundwater is

530 ppb [Pre: EPA TCE IRIS Listing]

32

33 33

EPA Review of EPA Draft 2002 Guidance

-- August 2010

• Response to December 2009 EPA Office of Inspector

General evaluation of EPA Draft 2002 Guidance

OIG Concluded: Lack of final guidance on vapor intrusion

impedes efforts to address indoor air risks

• EPA Review is a signal of what may become the

November 2012 guidance. The August 2010 Review:

Recommends increased reliance on multiple lines of

evidence

Recommends updating certain screening methods and

attenuation factors -- a more cautious approach

Recommends likely greater use of indoor air sampling

34

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

• Accepting comments through Spring 2012

• Very few comments submitted to date

• EPA is gathering, compiling, and publishing data and tools

in support of preparing the new VI Guidance

• EPA plans to issue final VI Guidance by November 30,

2012

35 35

EPA Empirical Studies and Tools -- 2012/2011

• Four recently issued EPA empirical studies and tools are:

VI Database: Attenuation Factors

VI Screening Level Calculator

VI Pathway Conceptual Model Scenarios

Background Indoor Air Concentrations of VOCs

• The first two:

Underscore EPA’s shift to greater reliance on empirical data

rather than modeling

Produce more conservative risk estimate results than

Johnson & Ettinger Model would produce

36

EPA Empirical Studies and Tools -- 2012/2011 (Cont’d)

• Conceptual site scenarios provide better understanding of

VI pathway

• Background indoor air VOC concentrations are used to

evaluate indoor air monitoring results to help determine

what, if any, additional investigation may be needed

37 37

California DTSC Vapor Intrusion Evaluation Guidance --

October 2011

• Guidance provides that VI assessment should be based on

multiple lines of evidence

• The screening level sub-slab attenuation factor for vapor

migration was changed based on the EPA 2008 national

empirical vapor intrusion database

Attenuation factor changed from 0.01 to 0.05 for both

residential and commercial buildings

Results in five times greater estimated concentration in

indoor air of the VOC chemical constituent

38 38

Other New State VI Regulatory Initiatives

• Massachusetts (December 2011)

• New Jersey (January 2012)

• Pennsylvania (In Process)

39 39

ASTM Vapor Encroachment Guidance --

E 2600-10 – June 2010

• Addresses only vapor encroachment condition -- that is

migration to subsurface of target property

• Not applicable to evaluating vapor intrusion

• Under the ASTM E 1527-05 Phase I Environmental Site

Assessment, a vapor encroachment condition would be a

“recognized environmental condition”

40

ASTM Phase I Environmental Site Assessment

E 1527-05 [Undergoing Formal ASTM Revision]

• Screening procedure to determine if “recognized

environmental condition” exists

• Satisfies EPA “All Appropriate Inquiry” under Superfund (40

CFR Part 312)

• Phase I has four components:

Records review

Site reconnaissance

Interviews

Report

• Usually not possible to make a vapor intrusion

determination based on Phase I information

• May be able to make a vapor encroachment determination

41

Interstate Technology and Regulatory Council (ITRC):

“Vapor Intrusion Pathway: A Practical Guideline”

(January 2007)

• Federal, state, industry and stakeholder consensus

guidance for evaluating vapor intrusion pathway

• ITRC states: “Practical, easy-to-read how-to guideline for

assessing vapor intrusion pathway”

• “Preliminary Screening Steps” and the six “Typical

Scenarios” provide practical guidance relevant for a real

estate transaction site assessment

42

EPA -- Possible Addition of VI to Hazard Ranking

System (HRS)

• HRS is method for scoring/listing Superfund Sites

• Notice issued January 31, 2012 (76 Fed. Reg. 5370)

• Responds to GAO May 2010 Report: if VI were an HRS

component, more than 30 sites would be added to NPL

• Status:

Submitted to OMB February 3, 2012

In delayed status; 90 days for review once in

active status

• EPA indicates that it will not increase the number of

Superfund sites it adds each year; due to limited

resources, it will prioritize sites with VI

43 43

Conclusions

• As underscored at the outset --

Agency regulatory activity is increasing

Greater reliance on empirical data rather than modeling

Trending towards stricter requirements and standards

Resulting potentially in more testing, mitigation, and

monitoring

Results in potentially more expensive assessments,

mitigation, and remediation

• Potential continued variability in standards, approaches,

and required actions among the states and EPA

44



45


Investigations Screening values

Background data (availability and use)

Sampling approaches (sequence, conditions, etc.)

Health Assessments

Communications Complications

Resources

Mitigation Technical

Legal issues

46


Managing Vapor Intrusion Risks in Real Estate

Transactions

47

AGREEMENT OF PURCHASE AND SALE

I. Preliminary Consideration: Screening Evaluation

II. Conditions to Closing III. Representations and Warranties IV. Releases and Waivers V. Indemnities VI. Escrows VII. 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 transaction.

48

I. PRELIMINARY CONSIDERATION:

Screening Evaluation

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

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

49

II. CONDITIONS TO CLOSING A. Buyer’s Acceptance of Environmental Condition of Property

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; 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 Conditions, Including Vapor Intrusion -- Possibly with Invasive Testing

Have Unconditional Right to Walk

50

II. CONDITIONS TO CLOSING B. Scope of Due Diligence Permitted

How much due diligence on environmental conditions of property will be permitted?

Potential Seller’s view: “Knock yourself out, but:”

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

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

Any non-refundable deposit must be reasonable

51

II. CONDITIONS TO CLOSING C. Seller’s Disclosures on Environmental

Conditions What disclosures will be made by Seller of prior 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

deficiencies in documents/information Confidentiality/Return

Potential Buyer’s view:

All information and documents related to VI issues, no materiality threshold

52

II. CONDITIONS TO CLOSING D. Other Potential Conditions to Closing

Put mitigation system in place (by Seller or 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 consider

Prefer Buyer put in place and promise to maintain

Potential Buyer’s view: 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 Necessary if Buyer is going to have any post-closing

obligations, perhaps even if providing indemnity

53

III. REPRESENTATIONS AND WARRANTIES OF SELLER

Disclosure of all material information, including documents

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 Owner’s

Time limits One year, two years, unlimited

54

IV. RELEASES AND WAIVERS

As Is? Potential Seller’s View:

Absolutely

Full release and waiver of any and all claims

Potential Buyer’s View: Except for undisclosed conditions

Not from 3d party claims related to existing conditions

Releases and Waivers in Lieu of Any Indemnities

55

V. INDEMNITIES

Potential Seller’s Views:

None

If any, limited to undisclosed, existing conditions and to government required mitigation/clean-up

And, if any, return indemnity for any claim arising out of disclosed conditions

Rights and/or conditions to seller obligation: cooperation, notice, access, right to fix, right to defend/settle

Two year limit (dollar limit)

Potential Buyer’s Views:

Full indemnity for pre-existing conditions

No time or dollar limit

56

VI. 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

Consider Purchase Price Adjustment, Cost Sharing, Insurance and Other Alternatives

57

VII. COVENANTS TO SURVIVE CLOSING

Seller’s view:

Mechanism to run with land (deed restriction, deed notice, etc.) providing notice of conditions; limiting uses to non-sensitive; maintaining mitigation system; requiring soils and water management; requiring vapor mitigation in design

Buyer’s view:

None.

If any, flexible restrictions, mechanism to have limitations, etc., removed

58

Contact Information

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

[email protected]

Edward L. Strohbehn Jr., Esq. 415-393-2059

[email protected]

