Our seminar on property transactions, (post the Kawartha Lakes decision) should provide some lively discussions. Will there be increased liability? Will you have to look more closely at neighbouring sites? How can you best protect yourself, your company, or your municipality? For more information about this important seminar, follow this registration link https://dragun9262013seminar.eventbrite.com/
Eco Eating: Chipotle has never been unambiguous about their “green” views of agriculture or their commitment to humane treatment of animals. As they state on their website, “food with integrity is our commitment to finding the very best ingredients raised with respect for the animals, the environment and the farmers.”
They have developed some clever marketing campaigns that clearly play to their demographics. But does their most recent video cross this line and do they risk backlash, or is it just another well developed ad campaign that will play very well to their audience? The video and, of course, the application for your handheld device or notebook is called “The Scarecrow.” This short animation, which includes an almost macabre version of “Pure Imagination” from Willy Wonka, cynically portrays large farming as dark and foreboding. Here is link to the video, which has had more than 5,000,000 hits.
Food Wastage: Eco-friendly restaurants such as Chipotle and, in fact, all consumers of food (i.e., everyone) may be interested in a September 11, 2013, report from the United Nations Environmental Programme/Food and Agriculture Organization, “Food Wastage Footprint: Impacts on Natural Resources.” This report on food wastage (“food loss” and “food waste”) states, “The waste of a staggering 1.3 billion tonnes of food per year is not only causing major economic losses, but also wreaking significant harm on the natural resources that humanity relies upon to feed itself.” This report points to wastage hot spots in Asia, Europe, and Latin America. It also points to consumers as key contributors to food waste. As I pointed out in an article in our local newspaper, the producers of food have made impressive gains in productivity and reducing their environmental footprint; consumers need to do their part too.
As always, if you need assistance on an environmental issue, negotiating a permit, technical support on litigation, or you are at odds with overly “enthusiastic” environmental activists, we can help. For more information, contact our senior environmental scientist, Jeffrey Bolin at 248-932-0228.
The following blog post was submitted by Mark Resch, LPG, a geologist at The Dragun Corporation.
On August 20, 2013, the U.S. Department of Treasury, Office of the Comptroller of the Currency, released the “Comptroller’s Handbook, Safety and Soundness, Commercial Real Estate Lending.” The handbook “provides guidance for bank examiners and bankers on commercial real estate (CRE) lending activities.” It provides guidance for environmental risk management for banks after the loan has been approved.
Generally, banks have established policies for environmental due diligence prior to the purchase of commercial real estate (such as the federal Standards and Practices for All Appropriate Inquiries (AAI) regulations established under 40 CFR 312). The environmental due diligence provides a process for users to qualify for one of the three defenses to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) liability act (the defenses are innocent landowner, contiguous property owner, and bona fide prospective purchaser). Although often overlooked, CERCLA also requires the user to perform various “continuing obligations” to maintain the lender liability defense. Many banks do not have a method for evaluating the users continuing obligations process. Therefore, banks may not know if the loan value is being degraded due to an environmental condition.
This handbook provides guidance for banks to establish programs for evaluating the status of the continuing obligations or changes to the business that could affect the loan. The guidance includes:
- “provide guidelines that the lending staff should follow for monitoring potential environmental concerns for the duration of loans held in the bank’s loan portfolio. These guidelines should focus on changes in business activities that might result in an increased risk of environmental contamination associated with the property, thus adversely affecting the value of the collateral.”
- “maintain guidelines for loan documentation that protect the bank from environmental liability and related losses. Loan documentation should ensure that contractual provisions, including rights of access, are sufficient to facilitate AAI-compliant evaluations.”
- “collateral monitoring and periodic inspection requirements throughout the loan term for properties with higher environmental risk.”
- “a means of evaluating potential environmental liability risk and environmental factors that could impact the ability to recover loan funds in the event of a foreclosure.”
What does this all mean? Will your lender require more documentation of continuing obligations? If they have a more “active role” in management of your environmental issues, does this create CERCLA liability for the lender? Your lender may be able to provide some insight regarding their current and potential future policies.
According to the EPA, Safeway, the nation’s second largest grocery store chain, “has agreed to pay a $600,000 civil penalty and implement a corporate-wide plan to significantly reduce its emissions of ozone-depleting substances from refrigeration equipment at 659 of its stores nationwide.” The total cost of the settlement and implementation of the plan are estimated to be approximately $4.1 million.
The EPA release states, “The settlement resolves allegations that Safeway violated the Clean Air Act by failing to promptly repair leaks of HCFC-22, a hydro-chlorofluorocarbon that is a greenhouse gas and ozone-depleting substance used as a coolant in refrigerators, and failed to keep adequate records of the servicing of its refrigeration equipment.”
It was just this spring when Wal-Mart was tagged for $110 million fine under the Clean Water Act and the Federal Insecticide, Fungicide, and Rodenticide Act.
So, who or what is next on the EPA Enforcement Agenda? EPA’s Selection of National Enforcement Initiatives for FY 2014-2016 might provide some clues, but a collective head’s up to companies of all NAICS seems to be in order.
…and if you haven’t already done so, surround yourself with trusted environmental advisors; we can provide some guidance in this area.
We will be in Cambridge, Ontario on September 26th presenting our next seminar. We will consider the Kawartha Lakes decision and what this means in the context of property transactions. To learn more and to register on EventBrite, click here.