Keep Due Diligence Moving with EH&S Due Diligence Desktop Reviews

By: Leah Krause, CPEA

From slowing deal flow to causing cancellations of in-person management meetings and due diligence site visits, Covid-19 restrictions have certainly presented new challenges for dealmakers. The ability for acquirers to conduct environmental, health and safety (EH&S) due diligence is no exception, as restrictions make it difficult for EH&S assessors to travel, inspect properties, and conduct on-site interviews – all required tasks for completing Phase I environmental site assessments (Phase I ESAs) in accordance with ASTM 1527-13 standards. In this article, we discuss how firms can address these challenges using virtual tools and keep deals moving from an EH&S perspective.

Keep Due Diligence Moving with EH&S Desktop Reviews

Until such challenges can be overcome, there are other ways to assess the potential environmental liabilities that do not require site visits and allow you to get closer to completing the required EH&S due diligence. They are all elements of the standard Phase I ESA process and include:

  1. Virtual Data Room EH&S Review and Assessment

First, EH&S diligence providers can review seller-provided items typically uploaded to virtual data rooms such as environmental permits, spill and release reports, descriptions of business operations, prior assessment reports, prior audit reports, and related documentation on EH&S matters and begin to assess whether potential liabilities exist or if further investigation may need to be conducted.

  1. Publicly-Available Database EH&S Review and Assessment

Next, several sources of publicly available environmental databases can be accessed online and reviewed to assess potential environmental issues at target locations.  These sources include:

  • Federal databases, such as EPA Envirofacts and Enforcement and Compliance History Online (ECHO)
  • State database, such as California Environmental Protection Agency Regulated Site Portal and California Department of Toxic Substances Control EnviroStor or New Jersey Department of Environmental Protection (DEP) DataMiner
  • Local databases, such as health department databases (e.g. San Diego Department of Health Environmental Health Document Search) and local property information databases (e.g. Los Angeles County Office of the Assessor address search)
  • Other databases, such as Google and Google Earth

These public environmental databases provide important information for properly evaluating the potential EH&S risks associated with a deal including:

  • Facility information – property zoning, ownership information, and industry classification codes
  • Regulatory information – descriptions of permits and regulatory reporting programs
  • Compliance history – agency inspection dates and violation details

3. Third Party Database Review

Finally, a review of  third-party vendor databases, such as Environmental Data Resources, Inc. (EDR), which conduct searches of standard federal, state, and tribal environmental record sources for the subject properties and properties within the specified search radii in accordance with the All Appropriate Inquiry (AAI) Final Rule and the ASTM Standard identifies any documented releases or threatened releases, and helps to assess the likelihood of future environmental liabilities from migrating hazardous substances or petroleum products. Included in the third party database reports are historical use information, which is analyzed to develop a history of the previous uses of the subject property and surrounding area that identify the likelihood of past uses having led to potential environmental liabilities in connection with the subject property \. The following standard historical sources are typically reviewed as part of desktop reviews:

  • Aerial photographs
  • Fire insurance maps
  • United States Geological Survey (USGS) topographic maps
  • Local street directories
  • Building department records

Bringing It All Together

The information from these three sources can be combined to create a Limited EH&S Due Diligence Desktop Review Report (“Desktop Review”) that gives the user an important and useful summary of potential environmental, health and safety concerns with a target facility or portfolio of locations. If the desktop review does not identify any environmental concerns, additional assessment may not be needed. In contrast, if the desktop review reveals potential EH&S risks, a Phase I ESA site visit could be completed at a later date, resulting in a time savings since the desktop review has already been completed.

For more information on Environmental, Health and Safety Desktop Reviews, contact Leah Krause today at 412-915-1626 or leah.krause@ehs-support.com.

Leah KrauseABOUT THE AUTHOR Leah Krause has over 18 years of experience in various sectors of the environmental field. The primary areas of experience include field experience, regulatory compliance support, onsite air pollution compliance, and regulatory experience in Queensland, Australia for the oil and gas industry… Read More

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