New Jersey’s complex environmental regulatory schemes often give rise to significant liabilities and regulatory obligations that affect the sale and purchase of businesses and the conveyance of real property throughout the state. In many instances, environmental laws and regulations can directly affect the value or future viability of a property or business. The Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. § 9601 et seq. (CERCLA or Superfund); the New Jersey Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 et seq. (Spill Act); and the New Jersey Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et seq. (ISRA), all provide real and significant liability concerns for prospective sellers, purchasers and lenders.
Yet despite these obvious impacts, a recent Houlihan Lokey study titled “The Purchase Agreement Study” indicates that indemnification provisions dealing specifically with environmental matters were present on average in only 16 percent of private acquisition transactions. It thus appears that, even today, environmental liability often takes the proverbial “back seat” when it comes to indemnification negotiations.
