News
Joining Economic and Environmental Interests: It Can Work, If You Do Your Homework
Promoting economic development and protecting natural resources can pay off in the long run for investors or developers. When purchasing property for development, an informed decision-making process helps monitor costs and liabilities for the purchaser while also preserving South Carolina’s unique natural resources for future generations.
DUE DILIGENCE BEFORE THE PURCHASE
Having the right people armed with accurate information assures both the buyer and the people of South Carolina there are no unfavorable surprises and if there are, they are dealt with properly. To make sure the information is reliable and acceptable to regulators, select the best-qualified engineering professional to conduct the environmental site assessment. This is a must do for three reasons.
First, if the consultant who conducts the assessment is not deemed qualified, the purchaser can be held liable for contamination that existed on the site prior to the purchase, even though the purchaser had nothing to do with the pollution at issue.
Second, a good environmental consultant will understand a client’s needs and understand how the consultant’s findings may affect the deal. The consultant also will understand the liability issues surrounding the inquiry process and will implement the process efficiently.
Finally, the purchaser needs to define all recognized environmental concerns so that costs and liabilities are taken into consideration before the deal.
DISCOVERING RECOGNIZED ENVIRONMENTAL CONCERNS
Once the initial expert environmental assessment is complete and the results are in, there are a number of important questions to ask. Among them, is additional assessment necessary to better define the issues? If so, how much will it cost, and who should pay? Once the concerns are identified, what remediation, if any, will be necessary, and how much will that cost? What is the regulator’s role in the process?
MANAGING ENVIRONMENTAL RISKS
The most important reason for needing more information early is to allow the purchaser to assign the environmental liabilities and costs. An attorney can identify the pros and cons of the following options:
- Purchase price adjustment
- Indemnifications for existing contamination, prospective releases, third party claims, or remediation
- Escrows
- Carve out parcels
- Warranties
- Brownfields contracts with the South Carolina Department of Health and Environmental Control
- Environmental insurance
POST-CLOSURE ISSUES
Even after a successful closing, there may be permitting and other regulatory matters that will need attention. Specifically, a permit or other special considerations may be needed before beginning renovations, construction, or operations. These might include:
- Wetland issues and permitting requirements
- Asbestos surveys and notifications
- Construction and operating permits for air emissions sources
- Land-disturbing and storm water permits
As with all contractual matters, the earlier the issues and solutions are discussed, the better off all parties will be. So follow these simple guidelines to help intertwine South Carolina’s economic and environmental interests, and help both investors and developers succeed in business.
