Buying or selling property that is known to have some contamination can be a challenge. Under Wisconsin’s Spill Law, responsibility for investigating the extent of contamination and restoring the environment falls not just on those who caused the contamination, but also the current property owner, regardless of whether they had anything to do with it. For this reason, buyers generally look for a discounted price or indemnification from the seller when they know there is a contamination issue.
What if you don’t know for sure if there is contamination?
When it comes to property with a history of commercial or industrial use, prospective buyers (or their lenders), routinely hire environmental consultants to help them evaluate the potential for contamination to exist. These investigations start with a Phase I Environmental Site Assessment (ESA), which typically consists of a site visit, a review of historical records and environmental data bases, and interviews with owners to identify what are referred to as recognized environmental conditions (RECs). However, no testing of soil or groundwater is completed.
If the Phase I indicates there is reason to believe the property is or could be contaminated, the consultant will generally recommend a Phase II ESA, which would involve environmental sampling to confirm or rule out the suspected contamination. From the buyer’s perspective, this information allows them to evaluate legal, business and environmental risks based on known data.
Do you have to allow additional testing?
But what about the seller? Should a seller allow the buyer to conduct a phase II ESA or not? Or should a seller get ahead of the issue and do its own phase II to know just what the issues may be? These are difficult decisions because once an owner knows about the presence of contamination, they are legally obligated to report it to the DNR.
This notification has consequences. If the contamination is limited and no remediation needed, the DNR may determine no further action is required. But, if the DNR determines that further investigation is needed, it will issue what is referred to as responsible party letter, informing the owner of their legal obligation to engage a qualified environmental consultant to determine the full nature and extent of the contamination in soil and groundwater. This could lead to investigating whether contamination has gone beyond the property line and even whether contaminated vapors have migrated to indoor air at the property and adjacent properties.
What can an Environmental Lawyer do to help?
These sorts of investigations and cleanups can be very costly and take a lot of time. At Halling & Cayo, S.C., we understand the high stakes involved and often assist property owners directly or work with their real estate counsel to help navigate the legal and practical challenges.
This can include:
- Drafting environmental provisions in purchase and sale agreements.
- Working with the environmental consultants to advise on the risks and costs associated with testing.
- Interacting with the DNR on the need for investigation and cleanup and the identification of the causer of the contamination or other responsible parties.
- Pursuing claims against other responsible parties and insurance companies.
- Identifying other potential sources of cleanup funding.
While large corporations often have reserves set aside for known and unknown environmental liabilities, we know most property owners are overwhelmed and financially unprepared to deal with a large investigation and cleanup. Our approach prioritizes your business goals and the specifics of your situation. We explore all avenues, always aiming for practical, cost-effective solutions that align with your best interests.
Do not let the concern about actual or potential environmental contamination derail your property transaction or the future of your business. Protect your interests and achieve resolution with strategic, results-oriented legal representation. The environmental attorneys at Halling & Cayo, S.C are waiting to speak with you today. Contact Halling & Cayo, S.C. today for a confidential consultation.
Ted Warpinski and Andy Skwierawski are highly trained and experienced lawyers who represent individuals, small business owners, corporate clients, non-profits, and governmental entities in a wide variety of environmental law, land use, insurance recovery, and complex litigation matters across Wisconsin and in other states. We pride ourselves on providing quality and cost-effective services to all our clients in a pragmatic yet creative manner. You can contact Ted at taw@hallingcayo.com and Andy at mas@hallingcayo.com