Overview of Considerations
Executive Summary:
Planning the closure, divestiture or acquisition of commercial/industrial assets requires business decisions regarding the fate of assets. Options include idling equipment, repurposing systems, or closing facility assets. The Environmental, Health and Safety (EHS) requirements for each of these options may influence what decisions are made. In turn, understanding the site specific (or even task specific) EHS program requirements and the consequences of each are important to project economics and achieving business goals. Further, discoveries during the due diligence process may change what EHS program requirements will apply, impacting your business needs.
Planning for Transition:
There are a multitude of ways to accomplish the closure, divestiture or acquisition of commercial/industrial assets. For example, idling may be short or long term, although at a certain point, idle equipment may be considered abandoned. Repurposing can mean changing what the system does on-site or moving equipment and installing it at an offsite location. Closure can mean closing equipment in place, scuttling it so that it can never be made operational again, or removing it from the site. Ultimately, the business decision regarding the fate of the asset will need to account for applicable EHS requirements.
A good communication plan will help alleviate stress in a dynamic situation. Establish what information will be conveyed, how it will be distributed, by and to whom. It would be helpful to designate a single point of contact, or an intimate team, for regulators and other stakeholders who may be interested in your changing business. Offer them the opportunity to ask questions and to collaborate with your transition team. Chances are regulators will be sympathetic to your business needs and will be able to help guide you through the transition process. Regulators are vested in safe transitions and clean closures.
Document communications and expectations with regulators and other stakeholders. Determine what documentation is currently available and what will be needed in the future. Review site permits and applicable regulations to confirm reporting requirements and plan for required document retention. Establish where this information will be retained and when it can be purged. Cross reference corporate document retention policies.
Operational EHS Considerations:
To overlay the complexity of the options available for the closure, divestiture or acquisition of commercial/industrial assets, individual EHS program areas will have separate requirements. Consider the framework of requirements that protect human health and the environment from discharges to air, waste, water, and nuclear sources. This framework can be established from a review of regulations, legal registers, site permit documents, Standard Operating Procedures (SOPs), and corporate requirements. Reference federal, state, and local regulations and account for community expectations. It is possible that your business decisions are being reviewed and broadcast on public news networks, which may influence regulators’ perception of your operations.
Permits in particular provide a framework for public information, regulatory expectations, and may be site specific. Permit requirements can be used to inform transition requirements and timelines. For example, an air permit may need to be modified or closed. Notification periods for air permit modifications can range from 15 days for a permit transfer (i.e., a name change) to over a year for a major modification. Another example is tank management. The requirements to close a RCRA permitted hazardous waste tank may be found in a RCRA closure plan written many years ago as part of a permit application. Additional corresponding site plans such as Emergency Action Plans, Hazardous Waste Contingency Plans, Spill Prevention Control and Countermeasures (SPCC), and/or Stormwater Pollution Prevention Plans (SWPPPs) should also describe regulatory and operational requirements that safeguard human health and the environment.
Over the course of the asset transition, operational permits, i.e. safe work permits, will help keep personnel safe and equipment in working condition. Similarly, required routine inspections will need to continue to maintain safe operations, asset integrity and regulatory compliance. Any changes to infrastructure are almost certainly going to require inspections. If there are structural changes, plan for a licensed Professional Engineer (P.E.) to approve these inspections. Idled equipment may also require a P.E. review prior to restart. Further, some equipment service changes will require a regulatory site inspection prior to restart. Shop-made equipment may not be eligible to be moved to another facility unless it has passed an integrity test once it is reinstalled. Equipment that fails an integrity test cannot be returned to service until the point(s) of failure are identified and properly addressed.
EHS Requirements for Closure and Divestiture:
Unfortunately, a business decision may be made to close or divest assets. This course of action is fraught with peril and must be managed carefully. Personnel may be distracted and much of the work to close assets may be non-routine. Personnel and/or tools may be reassigned as part of a divestiture and the resources needed to do non-routine work may not be available. Tensions will be high, and additional security may be advisable.
Consider how to safely manage chemical inventories and operational units such as wastewater treatment plants and/or landfills. Site personnel may have specialized training to operate equipment onsite and contractors may be necessary to fill gaps in staffing. Are there any nuclear sources onsite that will require special handling? What assets have intrinsic value, and what will need to be properly disposed of? New waste streams may be generated, and the site’s RCRA generator status may change.
An additional aspect of closure and divestiture is the determination of property and system boundaries. Consider if there are any downstream facilities that are physically connected to the assets being closed or divested. These stakeholders will need to be informed of site operational changes. Their permits may need to be modified as a result of changes to site operations.
EHS Requirements for Acquisition:
The flip side of divestiture is acquisition. Due diligence will be required to understand the value of any assets being transitioned. The following list of EHS considerations could impact the condition of a property:
- Are there liens or activity use limitations encumbered upon the property?
- Is there soil or groundwater contamination onsite? Was the source of the contamination a historic event or is there an ongoing release?
- Will an investigation be needed to determine the extent of contamination?
- Are there regulated tanks onsite?
- What EHS permits are associated with the site operations?
- What site specific EHS management plans are available?
- Do post closure requirements apply to the facility and for how long? How were these closure requirements established and are they negotiable?
- Are there any unresolved agency violations or enforcement actions associated with the site operations?
This list is by no means exhaustive and due diligence may be accomplished in a multitude of ways. A Phase I Environmental Site Assessment completed in accordance with ASTM standards may be a good means of gathering baseline data for this purpose.
During the transition period, it will be helpful to provide continuity and leverage existing EHS protocols. Ultimately, EHS permits, SOPs, insurance and reports will need to reflect new company information. This will be an opportunity for the new company to establish a beneficial and collaborative relationship with regulators.
Conclusion
In summary, asset closure, transition and acquisition projects are complex. A wealth of information is needed to support good business decisions. What information is needed and when and for who will depend upon many different factors. Site specific permits, regulatory requirements, and operational plans can all be leveraged to facilitate a safe and compliant transition in accordance with predicated timelines.
Trinity provides a network of resources and the regulatory knowledge to help understand the multimedia considerations associated with asset closure, divestiture and acquisition. For more information about the complexities of these transitions, you are welcome to attend one of Trinity’s upcoming free webinars in our Closure, Divestiture and Acquisition series:
Date: Wednesday, July 2, 12 – 1:00 PM CST
This webinar is an introduction to the series and presents options associated with closure, divestiture and acquisition. What are the timelines and due diligence considerations you need to know? We will include information on assessments and inspections, equipment management, recordkeeping, budget impacts, and other multimedia requirements associated with the following course topics.
Course Topics
- Repurposing Assets
- Temporary Closure
- Transfer
- Permanent Closure
Closure, Divestiture & Acquisition Series
Part #2: Permit Management, Regulatory and Closure/Post Closure Requirements for Commercial/Industrial Assets
Date: Thurs, September 4, 12:00 – 1:00 PM CST
This webinar presents details for environmental permit management associated with closure, divestiture and acquisition. The information will be organized by media and describe how to document compliance for the changes you will need to manage.
Course Topics
- Air
- Waste
- Water
- DOT
- Nuclear Sources
- Records and Reporting
Closure, Divestiture & Acquisition Series
Webinar #3: Closure/Divestitures of Commercial/Industrial Assets
Date: Thurs, November 6, 12:00 – 1:00 PM CST
This webinar presents information on asset management associated with closure, divestiture and acquisition. What are the safety considerations for non-routine work? What infrastructure needs to be dismantled or isolated and how should that be done? Any closure plans written long ago by others as part of your permit application now need to be implemented.
Course Topics
- Safety
- Nuclear Sources
- Chemical Management
- Tank Systems
- WWTP
- Infrastructure
- Landfills
- Waste
Closure, Divestiture & Acquisition Series
Webinar #4: Continuity- Acquisition and Future Use of Commercial/Industrial Assets
Date: Thursday, January 8, 12:00 – 1:00 PM CST
This webinar rounds out our Closure, Divestiture and Acquisition series by planning for business continuity. We will focus on start up and shake down and what that may look like from both an infrastructure and legal perspective. As a tickler, due diligence with ASTM and remediation considerations will be included in this presentation.
If you would like to discuss your individual circumstance and the options you should consider, feel free to reach out to
Andrea Simmons – Managing Consultant for more information and how Trinity can help.
