Pre Site Selection (after the geographical area(s) (or top 2) have been identified):
- If heavy industrial/highly regulated, a regulatory permitting authority comparison, i.e. between two states or metro areas, can be conducted (comparison usually based on requirements and costs related to air emissions and wastewater consumption and/or effluent).
- An Environmental Site Assessment (ESA) — Phase I — is a requirement with most lenders and is used to determine the environmental condition of a property and identify risks that may have material environmental impact on the business or planned use. Even if the operator is not using a lender, a Phase I is recommended (see AAI below). In addition, even in a lease scenario, a Phase I is recommended.
- When purchasing property, EPA recognizes the ASTM E 1527-13 ESA as meeting the requirements of All Appropriate Inquiries (AAI) under the Comprehensive Response, Compensation and Liability Act (CERCLA). This standard provides prospective purchasers a method to secure CERCLA liability protection. (Note: In a merger and acquisition scenario, the type of transaction [stock vs. asset] may impact the level of protection for the buyer; consult with legal counsel or other professional).
- If Recognized Environmental Conditions (RECs) are identified, further investigation is usually conducted. The purpose of the Phase II ESA is to evaluate the RECs identified in the Phase I ESA for the purpose of providing sufficient information regarding the initial invasive investigation of contamination, in order to assist in making informed business decisions about the property. If the need for a Phase II (site investigation) is warranted, it is prudent to seek assistance from an environmental or real estate attorney.
- Consideration is given to sustainable design of the building (light footprint on the environment). There can be a variety of drivers on this topic — ultimate cost s*avings/ROI, public image, etc.
If a new operation, a compilation of the planned processes and chemicals and process flow should be assessed against primary environmental regulations to determine compliance obligations, timelines, costs, etc.; or
- If purchasing an existing operation, environmental regulatory compliance should be considered. Prospective purchasers should understand the status of compliance (if open issues or pending violations — i.e., unpermitted operations, violations of discharge or emissions limits, unsafe conditions, etc. and associated costs to remediate).
- If considering incorporating new processes and or incorporating ‘green’ processes into an expansion plan for purposes of environmental sustainability, waste reduction, reducing regulatory scrutiny, or reduced costs, those processes must be considered in the environmental strategy and plan. These types of plans can have a long lead time.
In many cases, the permit authorization must be in hand by the time any construction that is related to the emission sources (i.e., concrete work, electrical, etc.) is undertaken. Environmental regulations, at the core, are impacted by the operation’s processes, chemicals, and the quantities of storage, emissions, effluent, and waste. U.S. Environmental Protection Agency (EPA) regulations have unique requirements and timelines and are managed by state (sometimes local) agencies. Considerations include:
- Clean Air Act Permit — The business must have approval prior to construction; typically (if NOT a PSD source) the maximum lead time is 270+ days — not including time to prepare and submit permit package. Timing varies within the U.S. so check with local agencies and inquire about programs to expedite permitting if needed. If emissions controls are required, specification, cost comparisons, and order time can take up to a year in certain cases.
It’s important to ensure you understand the definition of construction, as defined by the state clean air act authority. In many cases, the permit authorization must be in hand by the time any construction that is related to the emission sources (i.e., concrete work, electrical, etc.) is undertaken. Consult the local Clean Air Act Authority for details. Many people make the mistake of thinking that a permit must be in hand by the first date of operation. Food for thought: State and/or local economic development staff can aid in easing timelines in some cases.
- Safety Data Sheets (formerly MSDS) — SDS requirements are considerations for both EPA and OSHA (Occupational Safety and Health Administration). Manufacturers and logistics companies must maintain SDS for all products stored and/or used at the facility. The industrial sector utilizes the information on the SDS (chemical constituents, precautionary info for handling, and use chemical details, i.e. VOC) and applies this information to EPA regulatory guidance in order to determine compliance requirements. SDS are also a requirement in the safety realm, so that the employees have information available to them regarding the hazards to which they are exposed.
- Toxic Substances Control Act (TSCA) — This relates to the reporting, recordkeeping, testing, and restrictions to chemical substances and mixtures — via production, importation, use, and disposal of specific chemicals. The rules vary depending on whether you are manufacturer/processor or distributor or importer. It is important to understand how TSCA affects your operation as certain aspects of compliance have a long lead time.
- Clean Water Act — Regulations to monitor pollutant discharges into the waters of the U.S. are spelled out in the Clean Water Act. The regulations give EPA authority to implement pollution-control programs, i.e., wastewater standards, spill prevention plans, permitting, monitoring, training, etc. for industry. Compliance might include the requirement of installation of certain treatment equipment, containment structures, and ongoing monitoring. Lead time can be many months (if the applicability to these regulations is significant) or can be a shorter turnaround approval cycle of a few months (if relatively simple).
- Resource Conservation Recovery Act — The act includes regulations that control hazardous waste from the “cradle-to-grave” that are monitored through permitting, recordkeeping, reporting, plans, and training. This includes the generation, transportation, treatment, storage, and disposal of hazardous waste. There are also state and local regulations that apply to other wastes, such as used oil, batteries, etc. Unless operation plans include treatment, storage, and operation (which is highly regulated), the compliance steps timing averages 45 days and is straightforward in many instances.
- Emergency Planning and Community Right to Know Act — Regulations that aid communities in planning for chemical emergencies require industry to track the storage, use, and releases of hazardous chemicals via various reporting due annually or in the event of an emergency. The initial reports are due within 30–60 days of the first date of operation (in most instances).
OSHA (Pre-Operation and Operational Considerations):
- Equipment planning — e.g., electrical, guarding, and hazard assessment is required (in order to verify which regulations apply). If equipment is coming in from a foreign country, retrofits may be necessary to ensure compliance, which means lead times for engineering, equipment orders, and installation should be considered.
- Written plans and training for employees on many requirements must be in place when over 10 full-time employees are on site (even in construction phase).
- Examples of OSHA standards include warning signs and labels, medical and first aid, sanitation, lighting, electrical, confined space, hot work, welding, cutting, scaffolding, material handling, chemical hazards, personal protective equipment, etc. Investors need to understand that written management plans and training must be implemented and completed when employees are on the production floor — even in pre-manufacturing testing phase.
- The above OSHA considerations have periodic requirements for retraining and ongoing compliance.
- Many industries utilize Management Standards, such as ISO 14001:2015 (environmental) and OHSAS 18001 (safety; soon to be released as ISO standard), which provide a framework to manage business processes in order to meet or exceed customer requirements (among other quality standards).