Businesses are faced with the ever-increasing environmental regulation. Business practices and uses of items that appear to have no attendant legal application may subject a business to civil and criminal liability unless proper precautions are taken and compliance is obtained. The federal Environmental Protection Agency, the Commonwealth of Kentucky Energy and Environment Cabinet Department of Environmental Protection, and local governmental and quasi-governmental agencies have significant hammers to require one or one’s business to remediate contaminated property or restructure certain processes.
The federal Environmental Protection Agency, the Commonwealth of Kentucky Energy and Environment Cabinet Department of Environmental Protection, and local governmental and quasi-governmental agencies have significant hammers to require one or one’s business to remediate contaminated property or restructure certain processes.
BENEFITS OF AN ENVIRONMENTAL PROGRAM
Environmental compliance is essential for the health of your business. There are also substantial benefits and improvements in performance that can be realized from instituting an environmental program. For instance, your business may cut costs by reducing the amount of energy and raw materials used, and waste generated. It may have an opportunity to reduce insurance premiums, and procure more readily available financing through improved environmental policies. Businesses that are perceived as compliant or environmentally friendly may enhance their reputation with their stakeholders (e.g. cutomers, employees, regulators, investors, and the local community).
Under federal and state environmental law, a person can be liable for the identification, investigation, removal and clean up of hazardous substances by the mere act of business or property ownership or use. As a result, one must be aware of and concerned with potential environmental contamination and liability associated with real estate and certain business activities.
Many of the environmental laws apply what is known as “Cradle to Grave” liability. If a person or entity anywhere along the chain generates, uses, stores, transports, brokers, contracts, discharges, releases, or disposes a regulated substance, they may be held liable for the entire cost of the clean-up of a location (which could run in the millions of dollars). This is true even if: (1) your business only used a thimble full of a substance (e.g. a solvent such as acetone which can be found in nail polish remover) that went to a location where millions of pounds of that or other substances exist, and to where hundreds of other companies sent their items; (2) your business complied with all laws; and (3) the substance was not regulated at the time.
Various persons and entities that may incur environmental liability include those involved with business operations, contracting for the hanling of certain substances, buyers and sellers of real property, lessors and lessees of real property, lenders protecting a security interest, trusts holding real property, developers of real property, construction companies, real estate agents and agencies, as well as successor corporations and those holding equity interests in a borrower’s operations.
The means for incurring environmental liability are varied. Acts or omissions on the part of an owner or operator creating or contributing to contamination can result in environmental liability. The purchase of contaminated property, control and/or management of contaminated property or those with legal interests in contaminated property, can all result in environmental liability. Likewise, contamination resulting from a lessee’s activities or contamination by activities on adjacent property, as well as moving waste in the course of selling off collateral, can possibly result in environmental liability. Being aware of environmental risks, laws and possible causes of action are paramount.
Liability falls within three general categories: (1) penalties; (2) remedies; and (3) compensation. Many of the penalties are up to $25,000.00 per day for each violation as long as they continue. Your company may be required to remediate (clean-up) a location. Also, your business may have to compensate an affected person or entity for the damages they incurred due to your company’s action or inaction.
SELECTED REGULATED ACTIVITIES & ITEMS
Renovation or Demolition: Appropriate agencies must be notified prior to all demolitions and many types of renovations to address the existence or non existence of Asbestos.
Because of asbestos’ properties of incombustibility, noise absorption, and resistance to electrical current, corrosive and bacterial attack, it was used in many building materials intended for fire proofing, acoustical soundproofing, and heating and cooling systems insulations. It can be found in about 3000 different kinds of materials.
Asbestos regulations must be followed for demolitions and renovations of facilities with at least 80 linear meters (260 linear feet) or regulated asbestos-containing materials (RACM) on pipes, 15 square meters (160 square feet) of regulated asbestos-containing materials on other facility components, or at least one cubic meter (35 cubic feet) off facility components could not be measured before stripping.
However, all demolitions must notify the appropriate regulatory agency, even if no asbestos is present at the site, and all demolitions and renovations are “subject” to the asbestos regulation insofar as owners and operators must determine if and how much asbestos is present at the site.
A notification is a written notice of intent to renovate or demolish a regulated area with asbestos containing material. Notifications must contain certain specified information including the scheduled starting and completion date of the work, the location of the site, the names of operators or asbestos removal contractors, methods of removal and the amount of asbestos, and whether the operation is a demolition or renovation. One should notify the applicable delegated Sate or Local Pollution Control Agency in your area of your planned demolition or renovation operations.
Notification shall be made at least ten (10) working days before asbestos stripping or removal work or any other activity begins for renovations. Notification is required ten (10) working days before demolition begins.
There are various handling, transport and disposal requirements relating to asbestos removal. These items must be handled by trained and accredited asbestos abatement personnel.
Purchase of Real Property or a Busniness: Environmental due diligence should be performed prior to any purchase of real property or a business. One may be purchasing environmental liability. Caveat Emptor (buyer beware).
In order to minimize liability as a purchaser, it is imperative to perform an environmental assessment. Such action can afford a buyer of certain protections. The goals of such assessment include: (1) identifying potential sources of contamination; (2) locating potential pathways of contamination; (3) identifying potential receptors of the contamination; and (4) identifying parties responsible for contamination.
Before purchasing a business or a parcel of property, the buyer should visit the site to ascertain the type of business conducted, and observe waste handling practices, structures and the general location. Further, the buyer should ensure that a review is undertaken of the files concerning the business or the property in question maintained by the U.S. EPA, the State environmental regulator, and other appropriate federal, state and local offices.
Records reviews should consist, in part, of a review of permit files, plant logs, enforcement documents, repair records, OSHA documents, underground storage tank documents, prior site ownership and use documents, and and release notifications.
On-site physical inspections should include examination of air, water and waste activities; fuel oil tanks and other tanks; wastewater facilities; electrical systems, transformers and capacitators (PCBs); waste accumulation areas; monitoring wells; impoundments; containers; disposal procedures; containment structures; ventilation; spill control equipment; surface and underground tanks; asbestos insulation and other asbestos containing materials; and radon. Questionnaires should be prepared along with checklists to insure that proper “auditing” and due diligence is performed.
A proper description of the site layout and operations, materials containing acquisition dates; descriptions of operations of former owners/operators and history of materials on-site should be examined. Plant layout data; on-site, adjacent or nearby activities; general site appearance and maintenance; identification of buildings and uses; description of operations/process; storage of products, raw materials and wastes should also be reviewed. An outline of the corporate business organization and description of pollution control devices employed at the facility including lists of any areas of environmental non-compliance associated with operations at the facility by the past and present owners/operators/transporters should be noted. The review should also highlight major environmental concerns at the facility, including any areas of regulatory uncertainty and examination of all insurance policies and other financial assurances that cover the environmental and pollution damages, including third party protections, both current and throughout the complete history of the facility.
Stormwater Run-off: Permitting is required for parking lot stormwater run-off due to items such as leakage of fuel and oil form vehicles and heavy metals from certain roofing that may be transported by stormwater into the environment.
Spills, Releases, & Discharges: There are over 800 substances that are regulated in just one law if they enter the environment. Many discharges into the sewer system are regulated.
Many required actions are based on the premise that whenever (a) any hazardous substance is released or there is a substantial threat of such a release into the environment, or (b) there is a release or substantial threat of release into the environment of any pollutant or contaminant which may present an imminent and substantial danger to the public health or welfare, an appropriate governmental entity is authorized to act, or require a business to act, to remove or arrange for the removal of, and provide for remedial action relating to such hazardous substance, pollutant, or contaminant at any time. Furthermore, a business may be required to report on itself and notify the applicable governmental entity of any such release or threat of release of a regulated substance.
List of Selected Regulated Items: Batteries, Adhesives, Paints, Cleaning Agents, Pest Control Products, Florescent Lighting, Packaging, and Solvents.