USA – TEXAS Law and Practice Contributed by: Gerald J. Pels, Elizabeth E. Mack, Gerald D. Higdon, Susan Rainey, Elizabeth Corey and Brett A. Miller, Troutman Pepper Locke LLP
8. Insurance 8.1 Environmental Insurance
6.4 Shareholder or Parent Company Liability Texas generally follows traditional corporate stand- ards for piercing the corporate veil. Regarding statu- tory liability, the degree of control exercised by offic- ers, directors, shareholders, parents, or affiliates can affect their risk for being deemed an “operator”. The US Supreme Court case of US v Best Foods provides sound legal guidance on this issue. 6.5 ESG Requirements At this time, there is no mandatory ESG reporting in Texas. Rather, reporting is market-driven. Many public and private companies, however, prepare and publish ESG or sustainability reports. Companies should not overstate, but rather be specific, consistent, and use data to substantiate assertions related to recycling, climate change, sustainability, and similar issues, thereby avoiding the risk and potential uncertainty of defending “greenwashing” claims. 6.6 Environmental Audits Generally, there are no mandatory self-auditing requirements. Various environmental programmes, however, require inspection, reporting, and correc- tive action. Similar provisions are also included within facility authorisations. The Audit Act (discussed above) enables a prospective buyer to assess a target com- pany’s environmental liabilities and compliance sys- tems prior to a merger or acquisition, thereby allow- ing the buyer to better understand potential financial risks and identify any required corrective actions to avoid future liabilities that may be detrimental to the acquired asset’s value.
Reasonable insurance products are generally avail- able in Texas on a site-specific basis. Pollution Legal Liability (PLL) policies are offered by a number of underwriters. These policies, among other things, offer insurance protection against the discovery of pollution conditions. In some instances, coverage for pre-existing conditions may be available. Such PLL policies often have a “voluntary investigation exclu- sion,” which precludes coverage for sampling con- ducted outside of an agency’s directive. Furthermore, in a transactional context, represen- tation and warranty insurance may be available in some instances. Each of these coverages will typi- cally require diligence and disclosure to underwriters, usually with exclusions for known conditions. Other exclusions often include intentional acts, underground storage tanks (USTs), prior knowledge, assumed con- tractual liability of third parties, lead, asbestos, con- tamination from per- and poly-fluorinated substances (PFAS), failure to maintain controls, changed use, and others. In some instances, a well-designed environmental lia- bility insurance programme can address D&O liability for pollution events, typically in those situations where corporate liability could exist. Environmental insur- ance coverage is not static, and policies may often be manuscripted. Lender liability for contaminated assets is governed by federal and state legislation. Under both federal and state law, a key touchstone is whether the lender constitutes an “owner” or “operator” of the secured collateral. The federal CERCLA statute has an estab- lished liability carve-out for lenders who hold indi- cations of ownership ( e g, a mortgage) to protect a security interest, without participating in the manage- ment of the secured asset. Texas has adopted specific protections from liability arising under state clean-up regimes, which are largely consistent with the federal 9. Lender Liability 9.1 Financial Institutions/Lenders
7. Personal Liability 7.1 Directors and Other Officers
Regarding statutory liability, the degree of control exercised by officers, directors, and shareholders can affect their risk for being deemed an “operator.” The US Supreme Court case of US v Best Foods also provides legal guidance on this issue.
484 CHAMBERS.COM
Powered by FlippingBook