CHAPTER 8 ENVIRONMENTAL CONSULTING AGREEMENTS
| Jurisdiction | United States |
(May 1979)
ENVIRONMENTAL CONSULTING AGREEMENTS
Denver, Colorado
GREGORY A. SMITH
Denver, Colorado
I. Introduction
As originally conceived, this paper was to be entitled ENVIRONMENTAL CONSULTING AGREEMENTS: HOW TO PLAN FOR UNEX-PECTED DELAY. Such a topic was too broad for it could have included both planning and delay.
This paper will discuss both planning and delay where pertinent but will focus primarily upon environmental consulting agreements as they are formed, how they are performed, and how and when they are terminated. The paper is organized as follows:
I. Introduction
II. The Nature of the Problem
A. Why use a consultant?
B. What should the consultant study?
C. How might a consultant be chosen?
III. Initial Steps in Problem Resolution
A. Creation of the Legal Relationship
a) Formal requirements
b) Some additional matters
i) Representations and Warranties
ii) Scope of Work
iii) Timing of Work
iv) Price
v) Information
vi) Management
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IV. Latter Steps in Problem Resolution
A. Some Functions of Management (technical, legal, financial, etc.)
V. Final Steps in Problem Resolution
A. Completion of Performance
B. Delay in Performance
C. Prevention of Performance
a) Litigation
b) Governmental Activities
c) Non-governmental Activities
VI. Conclusions
***
II. The Nature of the Problem
A. Why Use a Consultant?
The answer to a question such as the one posed is not a proper one for a lawyer to answer, exclusively. The decision to use a consultant is related to a cluster of factors, such factors including, inter alia, legal requirements that such studies be conducted, in-house capacity for conducting such studies with the available personnel, cost of conducting such studies in house, need for such studies, (immediate or intermediate) and efficiency (both financial and technical) in conducting such studies, etc. Consideration of these factors is one to be handled by those with the capability of making such decisions.
B. What should the consultant study?
The answer to the above question requires some familiarity with the laws governing the proposed project.1
These legal requirements have become quite voluminous as environmental concerns have increased. Because these requirements have (in some cases) taken the form of statutory action on the part of government, a clear understanding of such legal requirements is a necessity. The proposed project activities should be outlined by technical staff so that the lawyer has facts upon which to base his analysis. This, in turn, helps in answering the initial question posed above.
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This first step in assembling legal requirements, based upon technical considerations, results in a planning tool because it helps focus management attention on precisely what must be accomplished in order for the project to proceed. As the material is assembled, it can later be used as information to be of use in drafting the consulting agreement itself.
Therefore, the first step in preparing an environmental consulting contract is to review the project in light of legal requirements based upon technological projections.
After the project has been analyzed from such a viewpoint, the requirements should be somewhat in hand. The next question follows: Who is going to do the work to fulfill the requirements? This leads us back to the initial question: Why use an environmental consultant? As noted previously, the decision to use a consultant requires consideration of a number of factors.
Assuming the decision has been reached to employ a consultant, the next question becomes: Who shall be chosen?
C. How might a consultant be chosen?
This question is similar to asking "Who should I go to for a good suit" or "What is a good bakery nearby?" The answer will come only after asking questions and seeking references.2
Technological input is quite important because people active in an area of enterprise are often aware of what other similarly active people are doing. Such inquiries will require some work, but may be worth the effort.
Checking the trade journals is generally a good place to start. A market analysis might turn up some names. The SEC annual or quarterly reports of producers of similar materials is another source of information. So too are federal agencies because, inasmuch as they are the folks who require the applicant to do such studies, they have had experience with the work of various consultants.
To summarize the above into two questions, the following approaches are suggested:
— obtain technical input; and
— ask questions regarding experience, expertise, successes, failures, reputation, etc.
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III. Initial Steps in Problem Resolution
A. Creation of the Legal Relationship
a) Formal Requirements
Consulting agreements3 should deal with the following:4
1. The names of the parties 5
2. Consideration 6
3. Mutual assent
4. Legality
In addition, such agreements could also deal with matters such as:
1. Nature of the relationship created between the parties 7
2. Definitions of terms used
3. The term of the contract 8
4. Termination of the contract prior to complete performance 9
5. Compensation 10
6. Duties of the respective parties and timetables for the performance thereof
7. Ownership and use of the data and reports 11
8. Indemnification, limitations of liability and insurance
9. Warranties and representations 12
10. Liquidated damages
11. Assignability
12. Binding effect on successors
13. Assignability and delegability
14. Modification and waiver
15. Notice provisions
16. Requests for adequate assurances
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17. Severability of provisions
18. Counterpart clauses
19. Governing law
20. Choice of forum (or arbitration)
b) Some Additional Matters
i) Representations and Warranties 13
As indicated at II(C) above, questions regarding the experience, expertise, success, failure and reputation are helpful in choosing a consultant. If care is taken in compiling such information, it might be easily transformed into language relating to representations regarding the expertise of a consultant to do the chosen work.
For example, if a consultant has worked in the area of revegetation (and that is the area in which the task to be performed), it might be well to insert language in the form of a representation of such expertise in gathering data necessary to substantiate a revegetation plan.
To give another example: If a consultant has had substantial experience dealing with groundwater, it might be a good idea to include representations regarding the scope of such experience.
This expertise may be of later assistance in the event performance is prevented [See: V(C) infra] so it is well to set it forth initially.
ii) Scope of Work
As noted at II(B) supra, a clear understanding of the legal requirements14 is a necessity. Inasmuch as this work will have been completed at the early stage of project development, the scope of work segment of the contract should be ready to be inserted where needed. Once again, technical input is quite important so that those who are involved with exploration, development, and extraction can avoid conflicts with those consultants collecting baseline data and other information.
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iii) Timing of Work
Timing of work is important because it may have an effect on permit preparation and approval, construction planning, and construction completion time, to name a few factors. These may, in turn, affect financial commitments and production schedules.
Therefore, it is suggested that the agreement set forth, with particularity, the time frames during which such work will be accomplished.
Such particularity, for example, may divide the year seasonally, with certain field work to be accomplished during the spring, some in the summer, some in the fall and some in the winter. Such divisions are important when the data...
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