Compliance audit and Environmental Assessment in Minnesota, Arizona, California

Caltha LLP Project Summary

Project: Pre-Acquisition Due Diligence Assessment
Client: International Food Manufacturer
Location(s): California, Arizona, Minnesota

Key Elements: Phase 1 ESA; Compliance audit

Overview: This project was performed for a Minnesota-based international food manufacturer and was coordinated through a Minneapolis-based law firm. The scope of the assessment was to perform environmental due diligence for multiple facilities located in California and Arizona they intended to acquire, and comprised of a Phase 1 Environmental Site Assessment, performed in accordance with ASTM 1527-13, and a compliance audit to assess the current compliance of existing equipment and operations with applicable State and Federal regulations. Numerous compliance issues and Recognized Environmental Conditions were identified. Caltha staff provided technical support to estimate the potential costs associated with corrective actions required. Caltha also provide technical support to coordinating law firm in developing contract documents and purchase agreements that address environmental issues identified during the assessments.

Click here for more Caltha project examples related to remediation, including site assessments, response action plans and site remediation.
Click on the State to review more project examples for facilities located in in that State and State regulatory updates: AZ, CA, MN .

Phase 1 Environmental and Compliance Audit At Racine, Milwaukee Sites

Caltha LLP Project Summary

Project: Environmental Due Diligence, Phase 1 ESA and Compliance Assessment For Operations Near Racine, Wisconsin
Client: Real Estate Holding Company
Location(s): Wisconsin

Key Elements: Pre-acquisition Due Diligence, Phase I Environmental Assessment, Permit Review

Overview: Caltha was retained by this Real Estate Holding Company to conduct environmental due diligence of three properties located near Racine and Milwaukee, Wisconsin which they intended to acquire and continue to operate. Caltha staff conducted a Phase 1 ESA in accordance with ASTM standard practice E 1527-13. The ESA was augmented with a review of business risks associated with the acquisition and operation of these three existing businesses. Although no Recognized Environmental Conditions were identified, several business risks were revealed, including lack of spill prevention and control measures required under Federal rules, and lack of a State air emission permit for certain VOC emitting sources. Caltha recommended that both deficiencies be addressed prior to closing.

 Click here for more Caltha project examples related to due diligence audits and compliance audits. Click here to review more project examples for facilities located in Wisconsin and Wisconsin regulatory updates.

FAQ Environmental Site Assessment Compared To Environmental Due Diligence

Caltha LLP assists Sellers, prospective Buyers and their Lenders in meeting Due Diligence, Environmental Site Assessment and Environmental Review requirements. To request a quote on-line, go to Caltha Environmental Assessment Quote Web Page.


For further information contact Caltha LLP at info@calthacompany.com or Caltha LLP Website

Environmental Due Diligence Audit of Mississippi Facility

Caltha LLP Project Summary

Project: Techncial Support for Environmental Due Diligence During Corporate Merger
Client: National Food Ingredient Manufacturer/External Legal Counsel
Location(s): Mississippi

Key Elements: Technical support to resolve issues related to due diligence assessments, environmental compliance audit, Phase I ESA

Overview: Caltha LLP provided expert technical support to this national food manufacturing corporation through their external legal counsel. Work was to provide expert technical reviews and consultant services related to due diligence performed by the merger partner consultant. Issues were related to resolving Recognized Environmental Conditions, conformance to the new ASTM Standard Practice E 1527-13, and obligations related to shared environmental permits for air emissions, wastewater and stormwater.


For more information on Caltha LLP due diligence and merger/acquisition support services, go to the Caltha Contact Page

Board Certified Due Diligence Auditors Available For Environmental and Safety Audits

Caltha LLP provides IAA-BEAC certified auditors to perform EH&S audits to support due diligence for organizations or to support routine internal audit programs implemented as part of an overall governance system. Caltha can provide:

• Single auditors to support audit teams as a media or regulatory expert,
• Audit teams to address multiple program areas, or
• Due diligence auditors / audit teams.

Caltha auditors can act as adjunct auditors to augment your existing internal audit team, or can act as an independent third party auditor.


Caltha auditors have conducted assessments in all 50 US States, Canada, Mexico, South America, Europe and Asia.


Click here for more information on Caltha Compliance Audit, Management System Audit and Due Diligence Assessment services

Iowa Due Diligence Audit | Risk Management Plan Assessment

Caltha LLP Project Summary

Project: Due Diligence RMP Focused Compliance Audit of Cold Storage Facility
Client: National Food Processing Company
Location(s): Iowa

Key Elements: Due Diligence, Environmental compliance audit, Multimedia compliance audit, Accidental Release Prevention, Risk Management Program

Overview: Caltha LLP was retained by a national food processing company to conduct a multimedia environmental compliance audit of this cold storage facility as part of its due diligence. The scope of the audit covered all media including wastes, hazardous waste, wastewater, hazardous materials, DOT HazMat and air emissions. Due to the use of anhydrous ammonia refrigerant systems, the facility was subject to the Accidental Release Prevention provisions of 40 CFR 68. The majority of the audit was to review operations for compliance with the requirements of the Risk Management Program and Process Safety Management. This included conformance with the International Institute of Ammonia Refrigeration guidelines. Caltha provided IIA certified auditors to conduct the review.

For more information on Caltha LLP services, go to the Caltha Contact Page

Five Things Due Diligence Auditors Should Know About New RCRA Rules

The Hazardous Waste Generator Improvements Rule (Federal Register Volume 81, Issue 228 , November 28, 2016) includes some new elements to the RCRA – some of which are more stringent compared to the existing rules and some less stringent. The rule becomes effective on May 30, 2017. The rule will affect all facilities that generate hazardous waste, regardless of size. Therefore, EH&S auditors should be aware of these rule changes and the clarifications the rule provides, especially in the Preamble, on EPA's interpretations of existing RCRA requirements for hazardous waste generators.


All auditors that review hazardous waste compliance as part of due diligence should review the final rule, including the Preamble. Some key points are:

1 - Clarifications on EPA's Expectations On Identifying & Handling Hazardous Waste.

The final rule provides clarifications auditors can refer to on how generators are expected to identify, characterize and manage wastes. Although this does not change existing requirements, the Preamble to the Rule discusses the accuracy of waste determinations, where in the process wastes should be characterized/sampled, and other technical clarifications auditors need to be aware of. Interestingly, EPA estimates that 20-30% of generators are currently not in compliance with existing rules on identifying and characterizing waste streams.
Because these clarifications to existing rules do not change rules, they are already "effective".

2 - Independent Requirements verses Conditions of Exemption.

For auditors, some of the more interesting portions of the Rule's Preamble provide a detailed discussion of "Independent Requirements" and "Conditions of Exemption". Although this provides useful clarifications to the existing RCRA rules, it does not change existing requirements. It also provides needed clarifications on how the different types of requirements are applied by EPA to RCRA enforcement action.
In summary, independent requirements are rules that apply to all hazardous waste generators, regardless of generator status. For example, the requirement to identify hazardous wastes. Conditions of Exemption are requirements generators can chose to meet in order to avoid more stringent requirements. For example, LQGs store wastes on-site for less than 90 days to avoid being regulated as a TSDF. They could elect to store wastes longer than 90 days, but would then be held to the requirements that apply to TSDFs.

3 - Sections of RCRA Rule Have Been Reorganized.

One of the purposes of the Hazardous Waste Generator Improvements Rule is to make the requirements for hazardous waste generators more accessible and logical, especially for new generators. To accomplish this, EPA has reorganized the sections of the RCRA generator rules, and many existing sections have been renumbered.
The practical implications of this change for auditors is that regulatory citations referencing the Federal rules in audit reports may change. Although not required, authorized States may opt to reorganize sections of State rules.
One of the challenges facing auditors will be auditing against State rules that incorporate portions of the Federal RCRA rules by reference, especially if references to 40 CFR are no longer accurate.

4 - Effective Date Will Have Limited Immediate Impact

The effective date of the final rule is May 30, 2017. However, the number of generators who will be subject to the Rule on that date is limited. The Rule will be effective on May 30th only for generators in States or Territories that do not have authorized RCRA programs, including:

• Iowa
• Alaska
• Tribal Lands

For States with authorized RCRA programs, the Hazardous Waste Generator Improvements Rule (or portions thereof) will only become effective once State programs are updated. Auditors should be aware of one caveat - some States have incorporated Federal RCRA rules into their State rules by reference. Therefore, in those States the potential exists that revisions to the Federal Rule can be immediately effective.

5 - States Will Only Be Required To Enact Limited Changes To State Programs ; Differences Between State Programs May Increase.

The final Hazardous Waste Generator Improvements Rule includes elements that are more stringent compared to the existing rules and some elements that are less stringent (allow more flexibility). Authorized States will only be required to incorporate portions which are more stringent, and have the discretion to include, or not, those portions which are less stringent than existing State rules.
Therefore, environmental compliance auditors need to be cognizant that the differences between State program requirements for hazardous waste generators may increase as State programs are updated.


Click here for more detailed summary on the key changes to the RCRA requirements for hazardous waste generators.


Caltha LLP assists Sellers, prospective Buyers and their Lenders in meeting Due Diligence, Environmental Site Assessment and Environmental Review requirements. To request a quote on-line, go to Caltha Environmental Assessment Quote Web Page.
For further information contact Caltha LLP at info@calthacompany.com or Caltha LLP Website

Phase 1 Environmental Assessment and Compliance Review For Racine, WI Facilities

Caltha LLP Project Summary

Project: Environmental Due Diligence, Phase 1 ESA and Compliance Assessment For Operations Near Racine, Wisconsin
Client: Real Estate Holding Company
Location(s): Wisconsin

Key Elements: Pre-acquisition Due Diligence, Phase I Environmental Assessment, Permit Review

Overview: Caltha was retained by this Real Estate Holding Company to conduct environmental due diligence of three properties located near Racine, Wisconsin they intended to acquire and continue to operate. Caltha staff conducted a Phase 1 ESA in accordance with ASTM standard practice E 1527-05. The ESA was augmented with a review of business risks associated with the acquisition and operation of these three existing businesses. Although no Recognized Environmental Conditions were identified, several business risks were revealed, including lack of spill prevention and control measures required under Federal rules, and lack of a State air emission permit for certain VOC emitting sources. Caltha recommended that both deficiencies be addressed prior to closing.

For more information on Caltha LLP services, go to the Caltha Contact Page

Caltha LLP assists Sellers, prospective Buyers and their Lenders in meeting Due Diligence, Environmental Site Assessment and Environmental Review requirements. To request a quote on-line, go to Caltha Environmental Assessment Quote Web Page.

For further information contact Caltha LLP at info@calthacompany.com or Caltha LLP Website

SBA Revised Environmental Assessment, Post-default Environmental Investigation Requirements

The US Small Business Administration (SBA) has revised its Standard Operating Procedure (SOP) related to post-default environmental risk management. This procedure is contained in SOP 50 51 3, and became effective November 15, 2010. The revised SOP defines when and how a Post-default Environmental Investigation is conducted 1) before taking title to a property, and 2) before taking control of a business using hazardous substances.

The type and scope of the Post-default Environmental Investigation required varies depending on the risk of contamination, and SOP 50 51 3 provides the minimum standards. All Transaction Screen, Phase I and Phase II Environmental Site Assessments must be performed by an Environmental Professional and be accompanied by a Reliance Letter.

The SOP defines the process to be followed, which includes:

• Determining whether any underground liquid fuel storage tanks are located on the Property,
• Determining the NAICS codes for the Property's uses since the SBA Loan was funded, and whether any of the NAICS codes match codes on the list of NAICS Codes of Environmentally Sensitive Industries,
• Completing any additional testing, record searches or other inquiries recommended by the Environmental Professional who conducted the initial investigation.
  

In addition, if taking control of a business that handles hazardous substances is contemplated, the Post-default Environmental Investigation may also include an environmental audit to determine whether the business has the required environmental permits and is in compliance with applicable environmental laws. In some cases, testing of fixtures and equipment related to the operation of the business, including underground storage tanks, lines and related equipment may also be required.

If the Post-default Environmental Investigation Report concludes that the property is contaminated, SBA's prior written approval must be obtained. Regardless of the conclusions reached in the Post-default Environmental Investigation Report, SBA's prior written approval must be obtained prior to taking control of a business that handles hazardous substances.


Caltha LLP is a leading provider of environmental services to Lenders, and especially to Lenders needing to conform to SBA environmental review procedures. Caltha provides transaction screens meeting ASTM E 1528-06, Phase 1 Environmental Site Assessments meeting ASTM E 1527-05, Phase 2 investigations, and SBA Records Search With Risk Assessment RSRA reports, all certified by a qualified environmental professional.

For further information or to request a quote, go to:

Caltha Environmental Site Assessment & Risk Assessment

Audit Policy Compared To Audit Privilege or Audit Immunity

Many companies and other regulated entities struggle to balance the benefits and risks associated with conducting environmental compliance audits, and more importantly, what to do if non-compliance issues are uncovered, especially in the context of environmental due diligence.

EPA and numerous States have enacted various “audit policies” to reduce the regulatory risks associated with compliance auditing. An “audit policy” generally applies to the settlement of claims for civil penalties for any violations under environmental statutes. It provides incentives (relief from penalties) when regulated entities discover, disclose, and correct certain types of violations. An audit policy may not cover all types of environmental violations and conditions may exist that limit its applicability.

Some States with Self-Disclosure Audit Policies include:

California
Connecticut
Delaware
Florida
Indiana
Maine
Maryland
Massachusetts
Minnesota
New Mexico
New York
North Carolina
Oregon
Pennsylvania
Tennessee
Vermont
Washington

Improper Waste Disposal Discovered During Facility Audit

An “audit policy” is different than “audit privilege” or “audit immunity”. A number of States have passed self-audit "privilege" and/or "immunity" laws. Most privilege laws protect the disclosure of audit reports. For example, in some states, under specified conditions, an audit report is not admissible as evidence in any civil or criminal proceedings. In most cases immunity state laws, under certain specified conditions, gives a person immunity from fines and in some cases criminal penalties related to non-compliance provided that when the information arises from a self-audit that person makes a voluntary disclosure to the appropriate agency. In exchange, companies may be required to implement pollution prevention and/or an environmental management system.


States with Privilege and/or Immunity Laws include:

Alaska
Arizona
Arkansas
Colorado
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Michigan
Minnesota
Mississippi
Montana
Nebraska
Nevada
New Hampshire
Ohio
Oregon
Rhode Island
South Carolina
South Dakota
Texas
Utah
Virginia
Wyoming

EPA has clearly stated its opposition to statutory and regulatory audit privilege and immunity laws that exist in some states.

More information on Environmental Compliance Audits and Regulatory Compliance Assessment
Caltha LLP assists Sellers, prospective Buyers and their Lenders in meeting Due Diligence, Environmental Site Assessment and Environmental Review requirements. To request a quote on-line, go to Caltha Environmental Assessment Quote Web Page.

For further information contact Caltha LLP at
info@calthacompany.com
or
Caltha LLP Website

Environmental Site Assessment - Environmental Due Diligence

A Phase I ESA conducted using ASTM E 1527-05 is intended to identify “Recognized Environmental Conditions” (or RECs) associated with a property. Recognized Environmental Conditions are defined as “the presence or likely presence of any hazardous substances or petroleum products on a property under conditions that indicate an existing release, a past release, or a material threat of a [future] release”. In short, a Phase I ESA addresses releases hazardous substances and petroleum products.

[Read more about Landowner Liability Protections]
[Read more about why Sellers might consider performing a Phase I ESA]

Caltha LLP provides “qualified professionals” to conduct Environmental Due Diligence on industrial and commercial properties. Caltha’s assessment staff are also qualified to conduct environmental compliance assessments, and environmental liability assessments. These additional assessments can be conducted concurrently with a Phase I ESA, thus reducing both cost and time.

What does a Phase I Environmental Site Assessment cost?
Click here to go to Caltha’s on-line Environmental Due Diligence quote request page. You will be prompted to answer a few basic questions regarding the property(ies) you wish to have assessed. Once a request is completed and submitted, you should receive a quote within 24-hours.

[See a list showing in which States Caltha LLP worked recently]

Caltha conducts Phase 1 Environmental Assessments the following States:
[Click on a State to request information]

Alabama Phase I Environmental Site Assessment
Alaska Phase I Environmental Site Assessment
Arkansas Phase I Environmental Site Assessment
California Phase I Environmental Site Assessment
Connecticut Phase I Environmental Site Assessment
Florida Phase I Environmental Site Assessment
Georgia Phase I Environmental Site Assessment
Illinois Phase I Environmental Site Assessment
Indiana Phase I Environmental Site Assessment
Iowa Phase I Environmental Site Assessment
Kansas Phase I Environmental Site Assessment
Kentucky Phase I Environmental Site Assessment
Louisiana Phase I Environmental Site Assessment
Maine Phase I Environmental Site Assessment
Massachusetts Phase I Environmental Site Assessment
Michigan Phase I Environmental Site Assessment
Minnesota Phase I Environmental Site Assessment
Mississippi Phase I Environmental Site Assessment
Nebraska Phase I Environmental Site Assessment
Nevada Phase I Environmental Site Assessment
New Jersey Phase I Environmental Site Assessment
New York Phase I Environmental Site Assessment
North Carolina Phase I Environmental Site Assessment
North Dakota Phase I Environmental Site Assessment
Ohio Phase I Environmental Site Assessment
Oklahoma Phase I Environmental Site Assessment
Oregon Phase I Environmental Site Assessment
Pennsylvania Phase I Environmental Site Assessment
South Carolina Phase I Environmental Site Assessment
South Dakota Phase I Environmental Site Assessment
Tennessee Phase I Environmental Site Assessment
Texas Phase I Environmental Site Assessment
Utah Phase I Environmental Site Assessment
Virginia Phase I Environmental Site Assessment
Washington Phase I Environmental Site Assessment
Wisconsin Phase I Environmental Site Assessment

Caltha LLP assists prospective Buyers and their Lenders in meeting Due Diligence, Environmental Site Assessment and Environmental Review requirements. To request a quote on-line, go to Caltha Environmental Assessment Quote Web Page.

For further information contact Caltha LLP at
info@calthacompany.com
or
Caltha LLP Website

Regulatory Compliance Checklist - Role of Compliance in Environmental Due Diligence

Environmental compliance issues can have a significant financial impact and should be incorporated into the scope of environmental due diligence. A formal compliance audit may be considered, and may have some additional benefits in reducing future liabilities. [read more about recent changes to EPA Audit Policy as it applies to new owners] However, given time and access constraints, a formal audit may not always be feasible during due diligence. This issues are not addressed in a standard Phase I Environmental Site Assessment. Four key areas related to environmental compliance are of high importance:

Non-compliance Issues that Could Result in Capital Improvements. Correcting some non-compliance issues can cost significant amounts of money. For example, tanks without the required secondary containment are expensive to retrofit. Upgrades to pollution control equipment, such as wastewater treatment or air emission control can also be expensive. It is important to understand industrial site operations, so those compliance items which typically involve capital improvements can be highlighted.

Asbestos. The management of asbestos-containing materials is regulated under OSHA, and often is not considered under “environmental compliance”. Management of asbestos in-place requires an Asbestos Management Plan, specialized training and employee notification. Ultimately, if areas with asbestos are disturbed, added costs for handling and disposal of the asbestos material will be realized. Understanding whether asbestos occurs and how it being managed is important to factoring in these future costs.

Missing Permits or Approvals. Changes made at a facility overtime can require new permits, revision to existing permits or pre-approvals for agencies. Understanding what permits and approvals are required is sometimes a complicated task; the result is that upon reviewing the operations, missing permits or approvals can be discovered. “After-the-fact” permitting is often a difficult and expensive process. Capital improvements may be required to comply with the permits, once obtained. The affected processes might need to be shut down until proper permits are obtained. All of these consequences can have a significant financial impact, which should be addressed during the due diligence process.

Upcoming Regulations. The fourth area is upcoming regulations. Although a facility may be in compliance with current requirements, these requirements can change. Impending regulations should be considered to assess any additional costs that will be incurred for the operation. Imminent regulations could, for example, could involve changes to air rules which may require upgrades to pollution control equipment. International regulations on products may also apply; for example, the Waste Electrical & Electronic Equipment (WEEE) and Restriction of Hazardous Substances (RoHS) rules in Europe, which could impact US-based manufacturers.

Caltha LLP provides environmental due diligence services nationwide, specializing in Food, Manufacturing and Electric Utility sectors.

For further information contact Caltha LLP at
info@calthacompany.com
or
Caltha LLP Website

New EPA Audit Policy Helps New Owners - Extends Liabilities for Sellers

Since 2000, US EPA has offered reduced enforcement for self-disclosure of environmental compliance violations. EPA’s policy document, “Incentives for Self-Policing: Discovery, Disclosure, Correction, and Prevention of Violations” is commonly known as the “Audit Policy”. On August 1, 2008, the EPA published an interim approach to applying the Audit Policy to new owners that allows new owners to make a fresh start with the EPA. With the interim approach, the EPA recognizes that a new owner should not be penalized for the economic benefit component relating to violations that arose before a facility was under its control, as long as the new owner is willing to correct issues promptly and institute preventive measures.

Some key elements of the interim approach include:

• Defining a “new owner” to ensure that the violations disclosed originated with the prior owner, and that the new owner was not responsible for the non-compliance disclosed;
• Extending the time for reporting for up to nine months after closing the transaction;
• Relief from the economic benefit component of the penalty for new owners; and
• Applying five of the nine qualifying conditions differently to the new owner.
  

One of the important aspects of this policy is that non-compliance at the Seller’s facility can be reported to regulatory agencies before or soon after property transfer. In making the disclosure, the new owner can make the previous owner responsible for penalties, etc., especially associated with economic benefit component, related to the non-compliance. This stetches out the liabilities that could be assumed by the previous owner, and makes it more important to assure that facilities are in "material compliance" with applicable regulations.

For further information contact Caltha LLP at
info@calthacompany.com
or
Caltha LLP Website

Environmental Compliance Audits vs. Environmental Assessments

From time-to-time, Caltha will receive calls requesting an “environmental audit” of a property. Upon further discussion, it is usually determined that they are actually looking for an “environmental assessment”. It is not unusual for the terms “audit” and “assessment” to be used interchangeably. However, the two processes are very different, and understanding the differences is important to appreciating the different outcomes from audits and assessments.

Audits. The goal of an audit is to collect objective audit evidence to compare to specific compliance requirements. An auditor will typically review documentation relating to each compliance requirement. Once an auditor reviews an adequate sampling of documentation, he/she may conclude the auditee is/is not in compliance with the requirements. In the absence of documentation, it is difficult for an auditor to conclude that requirements are being met.

Environmental audits follow a similar approach. First, the purpose is to demonstrate compliance (or non compliance) with specific regulatory requirements. The status of regulatory compliance may be very important to a prospective Buyer of the business, who made need to budget to correct shortcomings.

Assessments. The goal of an assessment (specifically an environmental site assessment) is to conduct an evaluation within a specified level of effort to identify environmental issues relevant to hazardous substances or petroleum (i.e., recognized environmental conditions). In the case of an assessment, the absence of any information indicating that relevant issues exist leads to the conclusion that no recognized environmental conditions exist.

The assessment approach is the accepted practice for evaluating the environmental risks associated with real estate. As stated in the ASTM standard practice (E 1527-05) for these assessments, this approach is “intended to reflect a commercially prudent and reasonable inquiry”; however, it is not meant to be “an exhaustive assessment of a clean property…There is a point at which the cost of information obtained or the time required to gather it outweighs the usefulness of the information and, in fact, may be a material detriment to the orderly completion of transactions.” The assessment practice is “intended to reduce, but not eliminate, uncertainty regarding the potential for recognized environmental conditions …, and … recognizes reasonable limits of time and cost.”

For further information contact Caltha LLP at
info@calthacompany.com
or
Caltha LLP Website

Environmental Risk Assessment - Simplified Process To Incorporate Risk Into Assessments

Whether intended to address regulatory compliance, or potential environmental / human health impacts, most assessments will ultimately strive to characterize “risk”. There are many possible definitions for “risk”; however, in its simplest form risk could be characterized as:

“How Bad” x “How Likely”

Considered independently, neither of these elements of risk is particularly useful. Considered together, the assessment will place the issues identified into context and allow for informed decisions on urgency and priority of individual issues.

“Risk Assessment” as a practice can be highly technical and requires specialized skills. Risk assessments performed to evaluate potential environmental or human health impacts require significant time and resources. However, on a smaller scale, the basic principles of risk assessment can be easily applied to other types of assessments and can be very useful in communicating results to management and to set priorities. Here we consider the key steps to characterize risk in its most basic form.

Develop an Inventory. The initial step in the process is to extract specific issues from the assessment. The nature of these issues will depend on the type of assessment performed, the goals of the assessment, and the level of detail of the assessment.

As an example, individual “findings” from a regulatory compliance audit might become elements of this inventory. In many cases, the inventory represents the end result of the assessment, and no further evaluation of “risk” is considered. Risk can also be considered separately from the process of developing an inventory, using the assessment report as an input.

Consider Potential Consequences. For each element of the inventory, potential consequences need to be determined. For individual elements, there may be multiple potential consequences. For example, for a hypothetical issue involving lack of required spill control measures at a chemical receiving dock, potential consequences might include:
Capital improvements to come into compliance
Clean up costs associated with potential future spills
Fines and enforcement action

Consider Potential Severity of Consequences. This evaluation addresses “How Bad” in the basic risk equation. For many cases, the severity needs to be translated into a common unit of measurement, which is usually COST. The evaluation can be quantitative (e.g., “low cost”, “high cost”), or can be quantitative, where projected cost values are assigned to different consequences.

Both qualitative & quantitative approaches can work very well. Qualitative approaches have the advantage that they take less time and tend to highlight the criteria issues. These few issues might then be carried forward for more quantitative evaluation.

Consider the Likelihood of Consequences. Here the “How Likely” portion of the risk equation is considered. Once again, both qualitative & quantitative approaches can work well. However, the qualitative approach has the strong advantage. Qualitative evaluation might assign values ranging from “High Likelihood” to “Very Unlikely”.

In considering likelihood, the evaluation may include some assumptions which will affect the results. For example, for our hypothetical example above in which a chemical receiving dock lacked spill control measures required by regulations, the evaluation could assume that the company has a policy to be in compliance with regulations. Therefore, it could be assumed that the required controls will be installed (i.e., “high likelihood”) and therefore the potential for incurring costs associated with future spills will be reduced.

By incorporating RISK into the assessment, it becomes easier to communicate the results and to prioritize follow up actions.

For further information contact Caltha LLP at
info@calthacompany.com
or
Caltha LLP Website

Environmental Compliance Assessments - Quality Assurance in Day-to-Day Assessments

“The EHS manager for a large facility arrives at work to find an agency inspector looking to review his hazardous waste storage area. He accompanies the inspector on the tour and, along with the inspector, discovers numerous deficiencies in labeling and storage practices. He spends the remainder of the morning in a conference room with the inspector going over the deficiencies and discussing potential Notice of Violation and fines.

Upon return to his office, the EHS manager finds on his desk the weekly inspection report for the hazardous waste storage area, completed just after the inspector’s review.

The weekly inspection report indicates No Issues, as it does each week”

This story is true. In this case, upon further review, it was discovered that the staff from the department given the responsibility to conduct inspections were given no training on what the regulations actually required. Although inspections were being conducted as scheduled, the results were providing no value to the organization.

Various types of inspections and compliance assessments are conducted at most facilities to comply with regulatory requirements. Inspections are often required under hazardous waste regulations, SPCC requirements, wastewater permits and other types of permits. These “day-to-day” assessments are no less important than formal facility audits or compliance assessments, yet some organizations put much less emphasis on assuring their quality.

Recent regulations are becoming much more specific about who within the organization should or can conduct these assessments. This is based on two primary factors:

Experience – what are the minimum qualifications required for staff conducting compliance assessments?, and
Training – what training is required to demonstrate that staff meet these minimum qualifications?

Some of the regulatory requirements are very specific in this regard. For example, in New York, only “qualified staff” can conduct routine facility stormwater inspections. Qualified personnel are “those who possess the knowledge and skills to assess conditions and activities that could impact stormwater quality…, and who can also evaluate the effectiveness of BMPs.” In addition, qualified staff must also be trained in accordance with the State’s requirements.

To address these constraints, organizations need to 1) evaluate their “pool” of staff available to conduct inspections, 2) determine which individuals meet the minimum requirements, and 3) provide the required initial and reoccurring training.

By becoming more systematic, organization can be assured they meet their regulatory obligations. More importantly, they can also be assured that their “day-to-day” efforts to assess compliance provide reliable results and actually reduce regulatory liabilities.