No violation of environmental laws: Overview, definition, and example
What is "no violation of environmental laws"?
"No violation of environmental laws" refers to the condition or assurance that an entity, such as a business or property owner, is in full compliance with all applicable local, state, and federal environmental regulations. This typically means that the entity has not engaged in activities that cause harm to the environment, such as illegal pollution, improper waste disposal, or the violation of regulations regarding air, water, and soil quality.
In business agreements or contracts, a "no violation of environmental laws" clause often ensures that the business or property owner has adhered to environmental laws and is not liable for any violations that could cause harm or legal repercussions. If violations are found, the party may be held responsible for cleanup, fines, and other penalties, depending on the severity of the violation.
Why is "no violation of environmental laws" important?
This clause is important because it protects both parties in an agreement from the financial and reputational damage caused by non-compliance with environmental regulations. For businesses, failing to comply with environmental laws can lead to costly fines, legal disputes, and damage to the company’s reputation.
For property owners, violations of environmental laws can result in the need for costly remediation efforts, as well as potential lawsuits or governmental penalties. Having a "no violation of environmental laws" clause ensures that both parties are aware of the environmental responsibilities and reduces the risk of such legal issues.
Understanding "no violation of environmental laws" through an example
Imagine a company is purchasing a piece of commercial real estate. As part of the due diligence process, the buyer includes a "no violation of environmental laws" clause in the contract. This ensures that the seller has complied with all environmental regulations, such as properly disposing of hazardous materials and not contaminating the land or water.
After the purchase, the buyer discovers that the seller had improperly disposed of toxic waste on the property, resulting in contamination. Due to the "no violation of environmental laws" clause, the seller is responsible for any cleanup costs and legal repercussions because the violation occurred before the sale.
In another example, a manufacturing company is signing an agreement with a supplier to provide materials. The contract includes a "no violation of environmental laws" clause to ensure that the supplier has not engaged in practices that harm the environment, such as illegal waste disposal or exceeding emission limits. If the supplier later violates environmental laws, they may be held liable for the damages, and the business relationship may be terminated.
Example of a "no violation of environmental laws" clause
Here’s how a "no violation of environmental laws" clause might appear in a contract:
“The Seller warrants that, to the best of their knowledge, there have been no violations of applicable environmental laws, regulations, or ordinances concerning the property, nor has the Seller engaged in any activity that could result in environmental harm. The Seller agrees to indemnify and hold the Buyer harmless from any liability, costs, or damages arising from past or present environmental violations.”
Conclusion
The "no violation of environmental laws" clause is a vital provision in contracts and agreements, ensuring that both parties are in compliance with environmental regulations and mitigating the risk of legal, financial, and reputational harm. By including such a clause, businesses and property owners can protect themselves from future liabilities related to environmental issues and ensure that they are meeting their legal and ethical obligations regarding environmental protection.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.