Seven Environmental “Do’s” and “Don’ts” for Private Equity Investors

Paul Hastings LLP
Thomas R. Mounteer

August 4, 2014

Private equity (“PE”) investment opportunities abound in many commercial sectors, including those with a history of more intensive chemical use and, hence, greater risk of environmental liability. Over the past two decades, PE investors, and lenders to PE investors, have become much more sanguine about environmental liability risk. As they gear up to participate in an active market, the following “do’s” and “don’ts” will help PE investors avoid unnecessary environmental liability risk.

  1. When Acquiring Equity, Do Proper Diligence into Legacy Environmental Liabilities

 When a PE firm buys a portfolio company from another PE firm, the acquisition is almost always structured as an equity purchase (e.g., the purchase of the target’s stock or LLC member interests). With that structure, and without indemnities, equity purchasers succeed to all the target’s legacy environmental liabilities.

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LSRP UPDATE: NJDEP Announces New Document Review Process

Synergy Environmental, Inc.
David Robinson, LSRP September 21, 2014

For the past four years the NJDEP Bureau of Inspection and Review (BIR) have been performing in depth review of most documents submitted by LSRP’s. Due to the large number of documents being submitted to the NJDEP, the Department has determined that they will be deferring reviews of most non-Response Action Outcome (RAO) documents (e.g., Remedial Investigation Workplans) until the RAO is submitted.

Inspection of documents that the Department considers sensitive to receptors will be reviewed to assure that sensitive populations are protected. Items that require pre-approval (permits, CEAs, etc.) will still be reviewed in a timely fashion. This change in process means that it is more important than ever to make sure that non-RAO documents are administratively and technically complete, and LSRPs should use NJDEP’s Technical Consultation when necessary, especially when using professional judgment to vary from the Technical Requirements for Site Remediation.

David Robinson is a Senior Associate and Manager of Synergy Environmental’s Cherry Hill, New Jersey Office.

US EPA Extends Public Comment Period on the Clean Power Plan until December 1, 2014

Squire Patton Bogg
Anne Harrington

September 18, 2014

In response to widespread requests from states, lawmakers, and industry stakeholders, US EPA announced on September 16, 2014 that it is extending the initial 120-day public comment period for its proposed Clean Power Plan by 45 days until December 1, 2014. As previously reported, the Clean Power Plan proposes guidelines for states to use in developing plans to significantly reduce carbon emissions from existing fossil fuel-fired power plants by 2030.  If implemented, the Plan will substantially impact the US energy sector as well as all 50 state governments. The extension came after a bipartisan group of 53 US senators asked US EPA to extend the comment period by 60 days due to the “complexity and magnitude” of the 45-page proposed rule, which was accompanied by 600 pages of additional documentation.

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Insurer Launches New Environmental M&A Product

Crain Communications, Inc.
Bill Kenealy
Associate Editor

September 4, 2014

Ironshore International has expanded insurance coverages to address environmental risks that arise during a transaction, allowing brokers and agents to provide consumers with a new innovative risk management plan.

Originally created in the wake of the subprime meltdown and catastrophic losses from hurricanes Katrina, Wilma and Rita, the company products ultimately aim to provide insurance protection against the adverse financial outcome of environmental incidents and liabilities.

“Ironshore Environmental is thrilled to be joining forces with our M & A group to provide environmental solutions to issues that can often hinder a domestic or international M & A transaction from closing or adversely affect the offer terms and conditions,” said John O’Brien, Ironshore Environmental CEO.

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