Environmental Compliance 101

When a property is undergoing a transaction (e.g., sale, refinance, foreclosure), a Phase I Environmental Site Assessment (ESA) is conducted to identify any potential liabilities associated with past or present use of the property. The industry standard for performing Phase I ESAs is based on the American Society for Testing and Materials (ASTM) Standard E 1527, which specifies industry-accepted minimum requirements for evaluating the environmental condition of a property. The Phase I ESA is chiefly focused on issues of property use potentially resulting in contamination of the site. However, there are other issues not necessarily related to environmental contamination, but may still represent a significant financial liability when dealing with property transactions.

A limited compliance audit is a review of a company's operations and processes for the purpose of assessing compliance with environmental rules and regulations designed to be completed in a short period of time for a relatively low cost. The cost and time required to meet certain requirements may be an important consideration in the deal. A limited compliance audit may identify a process which requires a permit and/or additional pollution control equipment. The following examples are topics that may be included in a limited compliance audit.

Spill Prevention, Control and Countermeasure (SPCC) Plan
If a facility has sufficient above ground petroleum storage capacity, greater than 1,320 gallons, a SPCC plan is required by the U.S. Environmental Protection Agency (EPA). The SPCC rule includes requirements for oil spill prevention, preparedness and response to prevent oil discharges to navigable waters and adjoining shorelines. The rule requires specific facilities to prepare, amend and implement SPCC plans.

As part of a limited compliance audit, a visual inspection would be conducted to document a site’s petroleum storage capacity, location and spilled preparedness in order to evaluate SPCC needs and compliance. This would be supplemented by an interview or questionnaire to request information such as facility layout diagrams, secondary containment descriptions and current spill response procedures. An SPCC evaluation would be provided to document the site’s current petroleum storage and SPCC status as well as provide recommendations.

Hazardous Waste Storage
The Indiana Department of Environmental Management (IDEM) has been authorized by EPA to implement the majority of the federal Resource Conservation and Recovery Act (RCRA) Subtitle C hazardous waste management program in Indiana. Any facility which treats, stores or disposes of hazardous waste in the State of Indiana is required to obtain a hazardous waste permit.

A review of documents, such as regulatory records, permits, hazardous waste inspection records and Material Safety Data Sheets (MSDS), would be conducted as part of a limited compliance audit. This would be supplemented by a visual inspection of a site’s hazardous waste storage area(s) documenting conditions, length of time and labeling. A hazardous waste evaluation documents the site’s current RCRA compliance status.

Storm Water Pollution Prevention
IDEM administers an Industrial Storm Water Permitting 327 IAC 15-6 (Rule 6) program, which applies to all facilities operating with one or more Standard Industrial Classification (SIC) codes or meet specific activity categories as identified in the Rule. Some examples of facilities with SIC codes include: manufacturing industries, gas stations, printing and publishing industries, fabricated metal products industries, trucking and warehousing and scrap yards.

As a part of the limited compliance audit, a site inspection to evaluate adequate storm water management practices would be conducted. The inspection would determine if best management practices are being performed regarding any areas of potential run-off and assessing storm water outfalls to determine unidentified discharges, if applicable. In addition, an interview with designated facility personnel who are responsible for day-to-day operations and/or monitoring of the storm water at the site would be performed. A storm water pollution prevention evaluation would be provided documenting best management practices and compliance with regulatory requirements.