Environmental laws affecting lenders pre-foreclosure 

The Firm’s environmental & natural resources practice offers one of the most comprehensive and experienced environmental law practices in the United States. With more than forty attorneys with extensive experience in virtually all areas of federal, state, local, and international environmental and natural resources law, the Firm is uniquely qualified to represent the Bank on complex environmental issues. Both the Firm and its attorneys have been consistently recognized in national publications for their experience and excellence, and are known for providing skilled representation in virtually all areas of federal, state, local and international environmental law and natural resources law.

The Firm routinely advises banks, lenders, borrowers, and secured creditors on a wide range of environmental issues. As a group, we have assisted clients on environmental and natural resources issues in more than thirty-five states and ten foreign countries.

We routinely counsel lenders on the environmental liabilities involved in taking environmentally impaired property as collateral, and assisting borrowers regarding their use of environmentally challenged property as collateral. Likewise, we assist lenders and borrowers in selecting qualified consultants and contractors, negotiating and drafting environmental indemnification, escrow, confidentiality, and consulting agreements and counseling consultants and clients on various aspects related to the confidentiality of environmental findings.

Detailed Environmental Lender Requirements

For lenders and borrowers, the Firm also provides counseling on the rapidly changing legal requirements involved in foreclosure on impacted property and the discharge of environmental expenses in bankruptcy proceedings.

Under federal and state laws, the requirements for foreclosing on property contaminated with petroleum products may be, and often are, different than the requirements for foreclosing on property contaminated with hazardous substances. For example, the Comprehensive Environmental Response, Compensation and Liability Act, known commonly as the “Superfund” contains a detailed set of pre- and post-foreclosure requirements for secured creditors, if they are foreclosing on properties containing “hazardous substances,” such as a shopping center with a dry cleaner. Lender Liability Under CERCLA, 40 CFR Part 300. At the same time, the Resource Conservation and Recovery Act, known as “RCRA,” contains another set of detailed requirements that secured creditors and lenders must follow to foreclose on property with underground storage tanks, such as a former gas station. Underground Storage Tanks—Lender Liability, 40 CFR § 280.200. But the requirements under these two similar environmental programs differ significantly, and a secured creditor may lose its protection if the requirements of these programs are not met. Still other environmental laws like the Clean Air Act contain no secured creditor exemptions. And state environmental laws also provide certain secured creditor exemptions, which are critical to understand and factor into the lending transaction.

Representative Experience

Pre-Foreclosure:

• Representation of an international lender in environmental issues related to $20 million loan to textile manufacturers with impacted facilities in five southeastern states.
• Representation of a European lender in evaluating environmental liabilities related to foreclosure on equipment at an 80-year old pulp and paper mill.
• Representation of the domestic branch of a Canadian bank on its purchase of branch locations in Florida.
• Representation of several major banks and other institutional lenders in environmental due diligence in connection with commercial mortgages and loans using real property, and frequently environmentally impaired real property, as collateral.
• Representation of a lender pre-foreclosure on removal of leaking underground storage tanks while preserving UST fund coverage.
• Developed numerous asbestos and lead-based paint operations and maintenance plans for pre-foreclosure properties.
• Organized environmental due diligence for several co-lenders in credit facility for purchase of historically impacted facilities in Ireland and the U.K.

 

Evaluating Liabilities:

• Representation of a lender on environmental issues in foreclosure on facility with expired permits and significant non-compliance.
• Representation of a small local bank in evaluation of real property containing wetlands as security for $2 million loan.
• Representation of a borrower with significant environmental contamination in negotiating and preparing the environmental provisions of a loan agreement.
• Representation of a lender in evaluating liabilities and responsibilities related to presence of lead-based paint in and around apartment used as security.
• Representation of a lender in negotiating the sale and coordinating all approvals with the U.S. Environmental Protection Agency and the U.S. Department of Justice for sale of mortgage at Superfund site.
• Representation of a borrower in negotiating and drafting the environmental provisions in a $900 million credit facility for purchase of electric generating power plants in China and South Asia.
• Representation of a lender in evaluating environmental and land use implications of a farm property with nitrate contaminated groundwater used as collateral.
• Representation of loan officers at several banks on appropriate environmental due diligence for low-capital loans.
• Representation of a lender in a “workout” of a problem loan by counseling on probable remediation requirements and operational and maintenance costs involved in groundwater treatment system.
• Representation of a lender in counseling on the disclosure obligations related to knowledge of contaminated groundwater beneath real property securing mortgage.

 

Brownfields Experience: 

 

Our group offers substantial experience representing and counseling lenders, banks, and secured creditors in the context of brownfields programs throughout the United States.

• Representation of a major lender in providing construction financing for one of the largest brownfields properties in the State of Georgia.
• Representation of a private lender regarding the acquisition of contaminated property pre-foreclosure through state voluntary cleanup program, securing a “limitation of liability’” that could be assigned to a prospective purchaser.
• Representation of a lender for construction funding at one of the largest brownfields sites in the United States.
• Representation of numerous borrowers in obtaining financing for prospective purchaser of brownfields property as condition of acquisition loan.
• Representation of a lender in obtaining protection under state superfund statute for former gas station and industrial property in Atlanta.
• Representation of a lender considering foreclosure on unoccupied condominiums with mold growth at major brownfields site.
• Representation of a lender in litigation against state environmental agency at Superfund site concerning applicability of “secured creditor” under state superfund law.