Access Agreements

Tread Carefully Through that Open Gate
February 22, 2015

Access agreements are often the stuff of boilerplate, quickly put together on the eve of a site visit or investigation in hopes they will protect against the “just in case” scenario. The problem is that most generalized access agreements won’t provide much protection if damage occurs or if a party is not performing. Ideally, an access agreement should be drafted for the worst-case scenario, with tailored provisions delimiting specific areas of access, precise sampling locations and depths, notice and duration limits, as well as carefully constructed insurance and indemnification requirements.

The need for access agreements generally comes into play where a site requires sampling to more fully understand site conditions pursuant to a Phase II Environmental Site Assessment (ESA), and/or where actual remediation needs to occur. Access agreements can also be important for simple site walks and Phase I (non-intrusive) ESAs, especially for sites with hazardous operations, trade secrets and/or where the property owner wants to control the disposition of reports and other data collected during the site visit. The bottom-line is that there is no one-size-fits-all access agreement, and care should be taken when entering into such an agreement, whether you are the buyer, seller, ground lessee, or contractor. This article provides an overview of key elements of a site access agreement. Tellus Law Group can assist you in developing an agreement to suit your needs or analyze an agreement you have been asked to sign.

There are three key components of a site access agreement:

1. Delineation of the scope of access (where, how long, type of sampling)

2. Party obligations (notice, removal of obstacles to access, safety, facilitation)

3. Allocation of liability (site damage, delay and interruption, injury, insurance)

What follows is an overview of some concerns raised by each of these key elements that should be addressed in any site access agreement.

Scope of Access

When you are the property owner and/or seller, it is very important to be as specific as possible on the scope of access you are granting. If access is granted for collecting samples, obtain a sampling plan that delineates the type of samples to be taken (e.g. soil, vapor, groundwater indoor air) with a site map showing sample locations and depth of samples. The sampling plan should also describe the type of equipment that will be on site to obtain the samples. It is better to require a specific sampling plan, and, if need be, amend it later to address contingencies that crop up. The sample plan and map should be incorporated by reference into the access agreement and made an attachment thereto.

The duration of the access should likewise be as narrow as possible. If the access is for the purpose of conducting Phase II sampling, most sites can be sampled in one to three days but if the approved sample plan includes groundwater monitoring, site access will likely require a week or so in order for the wells to equilibrate. If the access is being granted for the purpose of completing a remedial action - for instance in a post-closing context - it is essential that the duration of access be tied to achieving a mutually agreed upon goal of the cleanup. This is usually in the form of achieving regulatory sign-off, for instance in the form of a “No Further Action” declaration. However, care must be taken to ascertain if the particular jurisdiction even grants such declarations and/or whether there is a large back-log of pending NFA requests. Furthermore, in a remedial action context, there may be a lengthy ongoing monitoring requirement, which the buyer may or may not opt to take over. When agreeing on the cleanup standard to be met, the goals and needs of the parties must be carefully considered.

In contrast to a seller, the purchaser will likely be interested in obtaining broad access and leeway when determining the scope and duration of the sampling activities. For the buyer, the scope may also be driven by concerns for establishing Bona Fide Prospective Purchaser status[1] and/or requirements of the lending institution.

An additional scope consideration that is relevant to both buyers and sellers is the type of record that will be created by the sampling activities on the property. If it is conducted in the pre-closing timeframe, it may produce unfavorable data, which could trigger regulatory reporting requirements and/or require disclosure to other prospective purchasers. Thus, consideration should be given to data confidentiality and sharing. A buyer will likewise be interested in not creating a negative stigma for the new acquisition, so will want to consider how much sampling to conduct; a concern that may be abrogated through cleanup obligations of the seller attached to any negative findings.

Party Obligations

The delineation of party obligations will vary considerably depending on the leverage of the parties and the complexity of the action for which access is sought. Nevertheless, all access agreements should include notice requirements, if for no other reason than to ensure that the party needing access will not encounter a locked gate or hostile tenants upon arrival at the site. Insufficient or ineffective notice results in added sample costs (e.g. needing to mobilize your drilling rig an additional time), business interruption, and threatened relations with employees and tenants. At a minimum, notice provisions should include (i) the persons responsible for giving and confirming receipt of notice (best if in writing); (ii) certificate of insurance, names, dates, time of access; and (iii) a sufficient lead time to coordinate with on-site personnel such as tenants, site operations and security personnel.

Other basic party obligations include facilitation by owner (e.g. access to sampling locations); safety (e.g. delineation of underground utilities, tenant/employee warnings); and efficient site mobilization. Provisions should also include a clear understanding of how sampling results should be treated. In no case should the results be communicated to third parties unless there is a legal obligation or other agreement to do so. Where there is a requirement to provide remediation plans and reports to agencies, the owner should insist on a preview of such documents so that comments can be incorporated prior to agency approval.

Allocation of Liability

Nearly all transactions and cleanup actions involve allocations of liability for both known and unknown environmental conditions. Negotiation of these allocation questions can be intense and result in very complex outcomes. The access agreement should not conflict with allocations set forth in any corresponding deal documents, and likewise the scope of allocation should be reflected in and supported by any insurance policy relied on by the parties to backstop liability. The party granting access will also want the indemnification to cover damages and include a release and hold harmless provision. Additional cost allocation considerations may include:

  • Business interruption
  • Additional security personnel
  • Structural engineers
  • Proper sample and excavation disposal (owner should not be identified as generator)
  • Monitoring well closure
  • Repair and restoration to pre-sample condition and quality
  • Fines and penalties for violations of ordinances, codes and statutes

To ensure that the party seeking access is capable of meeting its financial obligations should damage or other liabilities result from the access, it is critical that their insurance policy is in force and sufficiently broad in its coverage. The grantor should carefully inspect the certificate of additional insured. Additionally, whenever possible it is advisable to inspect the entire insurance policy to ensure there are no exclusions undermining the type of coverage needed. Other important insurance provisions for access agreements include a waiver of subrogation so that the owner’s policy is not tapped for cost off-sets by the insuring party’s carrier, requirement that grantor be provided advance notice of policy cancellation, and sufficient duration of coverage to ensure coverage for claims arising a reasonable time after completion of the work. This area of law is complex, and parties are advised to engage experienced environmental counsel to provide analysis and drafting assistance regarding insurance coverage as it pertains to access agreements.

Tellus Law Group looks forward to supporting your access agreement needs!

[1] To qualify as a Bona Fide Prospective Purchasers (BFPP), a purchaser of real property must meet certain criteria, which is described in U.S. EPA’s "Interim Guidance Regarding Criteria Landowners Must Meet in Order to Qualify for Bona Fide Prospective Purchasers, Contiguous Property Owner, or Innocent Landowner Limitations on CERCLA Liability (3/6/2003). To receive the liability protection under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, commonly known as Superfund), a BFPP must perform "all appropriate inquiries" prior to acquiring the property, and demonstrate "no affiliation" with a liable party.