Vol. 9, No. 2, Pg. 14. Buying, Selling or Closing a Business: A Summary of Labor and Employment Issues.

• Author: By Ronald E. Cardwell and Jack D. Todd

South Carolina Lawyer

1997.

Vol. 9, No. 2, Pg. 14.

Buying, Selling or Closing a Business: A Summary of Labor and Employment Issues

14Buying, Selling or Closing a Business: A Summary of Labor and Employment IssuesBy Ronald E. Cardwell and Jack D. ToddMany environmental issues arise when buying selling or closing a business. For this article, let's assume that the business being sold or closed is a manufacturing facility located in Anytown, SC.

The facility has disposed of its solid wastes in an off-site landfill since the facility began operating. The facility generates hazardous wastes, which have been disposed of for years at various off-site disposal facilities. The facility property has two underground storage tanks (USTs) that currently store petroleum. The facility maintains permits relating to waste water discharge and air emissions.

Two brothers (the "sellers" or "owners") are the only shareholders of a corporation that owns the facility. The corporation wishes to sell the facility as an ongoing operation. A small but rapidly growing company ("buyer") is looking to acquire just such an operation. If the owners cannot sell the facility, they intend to close it sometime within the next 12 months.

PERSPECTIVES OF THE PARTIES

The first step in addressing the potential environmental liabilities associated with the ownership of a manufacturing facility is to gain an appreciation of the perspectives of the parties who sell, buy or close such a facility.

Sellers. The sellers generally want to maximize their selling price and minimize their potential environmental liabilities. To accomplish these goals, the sellers need to know the environmental condition of their facility at the time of sale. This includes knowledge of the facility's raw materials, processing, goods, compliance equipment, wastes generated, waste disposal, environmental permits, and soil, surface water and ground water conditions.

Buyer. The buyer of a manufacturing facility wants to minimize its costs including the selling price, minimize its potential environmental liabilities and maximize the usage of the facility purchased. These goals may be achieved if the buyer weighs the future profitability of the manufacturing facility against the costs of environmental compliance.

Such costs would include, at a minimum, investigating and possibly remediating environmental conditions at the facility as well as addressing potential environmental liability for off-site migration of contaminants and off-site waste disposal activities.

Owners. The owners of a closing facility must address many of the same issues faced by sellers and buyers. Actions that will insure that the facility retains its value and, if possible, increases in value should be taken. The owners should be concerned that potential environmental liabilities will cause the facility to become worthless or diminished substantially in value as a result of the facility's loss of market appeal and value.

FEDERAL AND STATE ENVIRONMENTAL LIABILITY

Buyers, sellers and owners need to be aware of the myriad of federal and state laws that could subject them to liability for environmental reasons. Due to the complexity of these laws and the limited scope of this article, only the major federal and state statutes that could affect the buying, selling or closing of a facility are listed below.

* Comprehensive Environmental Response, Compensation and Liability Act (CERCLA or Superfund).

* Solid Waste Disposal Act (SWDA) as amended by the Resource Conservation and Recovery Act (RCRA).

* Clean Water Act (CWA).

* Clean Air Act (CAA).

* Emergency Planning and Community Right-to-Know Act (EPCRA).

* Pollution Control Act (PCA).

COMMON LAW CAUSES OF ACTION FOR ENVIRONMENTAL CLAIMS

Buyers, sellers and owners of a manufacturing facility also need to be aware of potential environmental claims that could be raised in the future by neighboring landowners. Potential liability, and the likelihood of liability, from such claims will affect how each party evaluates the terms and conditions of the sale or closure of the facility.

Buyers, sellers and owners need to be aware of the myriad of federal and state laws that could subject them to liability for environmental reasons.

Traditional common law causes of action for environmental claims include trespass (invasion of one's interest in the exclusive possession of property), nuisance (anything that

16substantially and unreasonably interferes with...