CHAPTER 2 ENVIRONMENTAL INVESTIGATIONS
| Jurisdiction | United States |
(Feb 1993)
ENVIRONMENTAL INVESTIGATIONS
TRC Environmental Corporation
Englewood, Colorado
TABLE OF CONTENTS
Page NO.
SECTION
CHARACTERIZATION OF THE VARIOUS TYPES OF ENVIRONMENTAL INVESTIGATIONS
BASELINE ENVIRONMENTAL CONDITIONS SURVEY
INVESTIGATIONS ASSOCIATED WITH PROPERTY TRANSFER
ENVIRONMENTAL COMPLIANCE AUDITS
ENVIRONMENTAL INVESTIGATIONS ASSOCIATED WITH CONTAMINATION ASSESSMENT
SELECTING PERSONNEL FOR PERFORMANCE OF ENVIRONMENTAL INVESTIGATIONS
PREPARATION AND USE OF THE ENVIRONMENTAL INVESTIGATION REPORT
GOVERNMENTAL POLICIES REGARDING ENVIRONMENTAL INVESTIGATIONS
PROSPECTIVE TRENDS
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CHARACTERIZATION OF THE VARIOUS TYPES OF ENVIRONMENTAL INVESTIGATIONS
As a result of ever-increasing regulations effecting the mineral resources industries, particularly as pertaining to environmental compliance issues, many companies have elected to minimize potential liability exposure through employing a variety of environmental investigatory methods. Due to the broad range of situations in which this liability exposure can manifest itself, different types of environmental investigations have been developed, each to serve specific and different purposes. Since each serves to define environmental concerns under different conditions, each type of investigation has its own characteristics.
There are essentially four major categories for environmental investigations, namely: (1) the environmental baseline conditions survey; (2) the environmental investigation associated with property transfer; (3) the environmental compliance audit; and, (4) the environmental investigation associated with contamination assessment.
The objectives, methodologies, and end-uses for each of these types of environmental investigations has evolved considerably over the past 15 years or so, however, that evolution has occurred exponentially over the past 2 to 3 years, as a result of issuance of regulatory policy guidelines and more definitive industry standards. What formerly has been a voluntary activity with little or no specific guidance has almost become a standard of practice for industry, as well as for technical consultants and law firms.
BASELINE ENVIRONMENTAL CONDITIONS SURVEY
The baseline environmental conditions survey is typically conducted to satisfactorily achieve what the name implies, that being definition of the "baseline environmental conditions" prior to construction of a mineral project, be it a mine, mill, environmental corrective action, or even an exploration effort.
This type of survey can be one of the most cost effective environmental surveys in the long-run, however, it is unfortunately the most frequently under-scoped and under-performed survey of the four identified. Too often, the baseline conditions survey is narrow-focused, and scoped to achieve the minimally necessary environmental data to secure operating permits and/or prepare environmental assessment (EA/EIS) documents. Unfortunately, many mining companies are missing the opportunity to establish in a cost-effective manner, a data-bank of defensible data to fend off potential future environmental litigation.
Since mining activity unfortunately must occur in areas that are highly (preferably!) mineralized, and oftentimes under acid-producing conditions, it is essential that every precaution be taken to ensure, particularly when considering development in previously mined areas, that pre-existing conditions be fully defined. This is also true when considering construction of facilities in greenfields areas. And, what is necessary to establish these baseline conditions may exceed, or be required to be in a different format than that which is required for permit document preparation.
When developing the baseline environmental conditions survey, it is critical for the technical process design and operations personnel to effectively communicate with environmental specialists to define what information is desirable as not only as baseline data, but also how that information can best be assembled to be of value in defining over the long term what environmental impacts or contributions
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are to be realized as a result of the facility operations. A frequent mistake that occurs in developing baseline data at a minesite involves mistaken assumptions on behalf of technical operations personnel that environmental sampling is no different from metallurgical and/or exploration sampling.. when in fact defensibility of such data is dependent on a variety of established protocols.
Elimination of potential erroneous baseline information gathering can be achieved through early-on involvement of qualified environmental staff. What's more, there can be significant economic benefit realized when the need for additional sampling or re-sampling can be minimized. While this type of approach at this time, is relatively speaking, in its infancy, great benefit is to be gained by the technical/operations staff in achieving awareness of the environmental program's needs, and equally so, environmental staff can benefit through expanding the knowledge base with regard to understanding the difficulties encountered as part of project development. In the final analysis, it is desirable to concurrently achieve two goals:
• Development of an environmental baseline sampling program to satisfactorily obtain the database necessary for future use, both in terms of format and extent; and,
• Development of cooperative efforts into the project design phase to ensure that operational and compliance objectives are optimized, given the constraints of the particular project.
Through proper planning, the environmental baseline conditions survey can yield the data necessary to establish pre-existing conditions, providing data of value not only in project development, but also of value for "insurance" purposes in the event of future liability questions.
INVESTIGATIONS ASSOCIATED WITH PROPERTY TRANSFER
Acquisition evaluation teams need to be ever-mindful of certain liabilities that may accompany a property or company being acquired. These liabilities, more than likely in most circumstances, are not reflected as contingent liabilities in the balance sheets. If they do appear on the balance sheets they may not adequately represent the true cost to the acquisition party. The potential liabilities referred to are those associated with environmental concerns. They can manifest themselves in CERCLA involvement, RCRA enforcement actions, and undiscovered natural resource damages assessments (NRDA) under CERCLA 107(d), through arms-length ownership percentages, and untold other "attachment" mechanisms.
The key to successful acquisition structuring is to identify these concerns early on. The next important step is to correctly assess their implication, or, to understand the magnitude of costs that can be incurred. To their dismay, large and small operators alike, have shown a tendency to underestimate the quantification of costs, or more commonly dismiss the findings as something that will be addressed later at site closure or during final reclamation. A common error is to view a solution to the problem as source removal (e.g., remove/reprocess the tailing and stabilize when completed, etc.) while neglecting to assign proper weight to the concern created by the source or effect (e.g., groundwater contamination, heavy metals soil contamination, etc.).
Such liabilities need not render an acquisition or project as undesirable or uneconomic. Proper recognition and representation of costs can significantly impact the venture in a negative manner;
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however, when quantifiable up front, these costs can be anticipated, and probably sequenced, in the overall venture evaluation. The key is to anticipate the magnitude and manipulate the sequencing to enable a reduction of the negative impacts on the present worth determination.
Bases Of Concern in the Acquisition Process
Almost any type of activity in the industry today warrants at a minimum, a cursory review of potential liabilities. In the extreme case, certain allocations of "due-diligence" funding are mandated prior to exercising of an option or ownership agreement. Recently introduced legislation and evolving standards of practice, such as the ASTM Standard, pertaining to "innocent landowner" provisions would make due-diligence property transfer assessments essential.
Various scenarios may represent hidden liabilities that may not be immediately recognizable to the typical mining entrepreneur, or even to the large firm. The major factor contributing to the hidden nature of these liabilities is usually related to some type of "arms-length" relationship that disguises or otherwise blurs the appearance of a direct liability. Unfortunately, the concept of "joint and several liability" quickly brings those unforseen liability concerns to the forefront. By focusing on the wide range of liability possibilities, the acquisition party can avoid the unexpected inevitably to occur at some point in the future. Additionally, there is some gratification provided in "innocent landowner" defense postures available to those parties that have diligently investigated potential liabilities as part of their pre-acquisition due-diligence, though clear definition is lacking.
With respect to CERCLA, a relatively large number of mining or mining-related sites have been named or proposed to the NPL, and those active in the industry are aware of most, if not all of those sites. While we may be aware of these identified sites, there are two potential pitfalls awaiting the typical acquisition participant that are less clearly defined, and often overlooked. These are: the inability to predict which sites or districts (which have escaped hazard ranking or other regulatory interest to date) will in fact evolve as significant liability concerns...
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