NYLJ: “Babcock and Wilcox:  Drafting Environmental Agreements” 2/17/10

Uniondale, February 17, 2010 — Partner Aaron Gershonowitz has published an article in the latest issue of the New York Law Journal. The Outside Counsel article is titled, “Babcock and Wilcox:  Drafting Environmental Agreements.” In summarizing one of the main points of the article, Gershonowitz explains, “In addition to its analysis of environmental issues, the decision provides some interesting drafting lessons.  For example, the contract contained what may be a classic example of why writing teachers often warn against the use of passive voice.  The agreement treated conditions “discovered after closing” differently from conditions discovered before closing.  Seller received an environmental report before closing and did not provide it to buyer until after closing.  Buyer took the position that it could not have accepted responsibility for these conditions because it did not discover them until after closing.  Use of passive voice hides the subject and the court noted that the agreement did not specify who had to have discovered the conditions before closing.  Thus, buyer was responsible for conditions “discovered” by seller prior to closing even though buyer did not become aware of the conditions until after closing.”

He concluded his analysis by stating, “Drafting agreements that allocate future environmental risks can be difficult both because of the amount of money that can be at stake and because there is very little law on the subject.  The Babcock and Wilcox decision analyzes several of the issues addressed in such negotiations and can be used as a primer for how to draft such provisions.  Among the lessons learned are that an “as is” clause will not release environmental claims on its own, but a broad “as is” clause can be used to lead a court to interpret unclear environmental provisions as a waiver of claims by the buyer; terms that are not defined in the agreement may be interpreted in accordance with their common meaning, not in accordance with the specialized legal meaning that may have been intended; an exclusive remedy clause can defeat statutory and common law claims and a broad general release can release CERCLA (the Comprehensive Environmental Response, Compensation and Liability Act) claims.”

Aaron Gershonowitz concentrates his practice in environmental law and has represented clients in a wide variety of environmental issues, including Superfund matters, RCRA compliance, asbestos in buildings, and the environmental aspects of real estate and corporate transactions. In addition, Mr. Gershonowitz’s practice has included the representation of military contractors with regard to closure of facilities, transfer of facilities, and the related negotiations with the United States government and local governmental agencies.

For more information, please check out the latest issue of the New York Law Journal, or visit on line at www.nylj.com.