Combined Environmental Due Diligence and Compliance Assessements

 

A business seeking to acquire five industrial plants in three states and a Canadian province requested completion of Phase I Environmental Site Assessments and Limited Compliance Assessments.  The businesses were involved in plastic injection molding of food industry-related material handling systems.

The Phase I studies were performed to meet All Appropriate Inquiry as defined by U.S. EPA and ASTM.  The Limited Compliance Assessments considered the need for air, water, solid waste permits and chemical reporting requirements.

The goals of the due diligence process were three-fold: first, to provide the client with the innocent landowner defense and limited liability protections under Superfund; second, to identify environmental compliance liabilities and associated corrective costs; and third, to complete the work in time to allow the client to complete Phase II Site Investigations and negotiate subsequent favorable conditions of the purchase, if desired.

Results

The Phase I activities identified several environmental conditions at the properties, including a significant oil leak at one facility. This finding allowed the client to negotiate a $100,000 remediation of the property, paid by the seller. At another location, an abandoned water supply well was closed consistent with state requirements.

The limited compliance assessments identified multiple lapses at U.S. and Canadian facilities.  The cost to correct these compliance issues exceeded $60,000, and the client was able to recoup these costs from the seller.

In the end, the client acquired a very attractive set of assets that were compliant with state, federal and provincial environmental requirements, the cost of which was paid for by the previous property owner.