Workshop LL Environmental Permitting Considerations in - - PDF document

Workshop LL

Environmental Permitting Considerations in Acquisitions, Divestitures, and Mergers

Wednesday, March 28, 2018 11:15 a.m. to 12:30 p.m.

Biographical Information

William H. Haak Haak Law LLC Cleveland, Ohio 216.772.3532 whh@haaklawllc.com William H. Haak is the Founder of Haak Law LLC (www.haaklawllc.com) – an environmental, health & safety legal and consulting firm based in Cleveland, Ohio. He has almost 20 years of experience in occupational safety law and worker safety, and nearly 25 years of experience in environmental law (including extensive experience in air pollution control law and multi-media environmental compliance). Mr. Haak practices nationally in the United States and consults globally on all matters related to the EHS field (plus security and crisis management).

• Mr. Haak graduated from The University of Akron (Business Finance) and Case

Western Reserve University School of Law (J.D. with an emphasis on litigation and trial practice). Following law school, he worked as an Assistant Attorney General in the State

• f Ohio Attorney General’s Environmental Enforcement Section. As counsel to Ohio

EPA, Mr. Haak’s practice was focused primarily on civil and administrative air pollution control cases. During his time with the Attorney General’s Office, Mr. Haak resolved civil environmental enforcement actions resulting in civil penalties totaling approximately $4 million. Prior to forming Haak Law LLC, Mr. Haak was Senior EH&S Counsel for General

• Electric. He supported GE’s Appliances and Lighting Businesses, and was engaged in

complex air permitting issues for other GE businesses nationwide. Mr. Haak has also been Associate General Counsel – EH&S for Hexion Specialty Chemicals in Columbus, Ohio, and Senior Regulatory Law Counsel for Owens Corning in Toledo, Ohio. He served overseas in the former Soviet Union (Ukraine) as an Environmental Enforcement Specialist with the American Bar Association’s Central & East European Law Initiative ("ABA/CEELI"). Haak is a frequent lecturer to attorneys, engineers, and environmental professionals on topics concerning federal and state air pollution law. In addition, he has taught as an adjunct faculty member at the University of Central Florida in Orlando and Columbus State in Columbus, Ohio. Since 2005, Haak has taught classes focusing on Air Pollution Law and Occupational Safety and Health Law at The University of Toledo College of Law as an Adjunct Professor.

Biographical Information

Catherine Werner, Senior Director Environmental, Health & Safety and Supply Chain Learning GE Appliances, GE Appliance Park, Louisville, KY 40225 Catherine.Werner@geappliances.com Catherine Werner was born in Virginia Beach, Virginia. She attended Washington and Lee University in Lexington, VA and graduated with a bachelor's degree in geology- environmental science in 1990. She entered the field of environmental consulting working for Booz, Allen & Hamilton in the Washington DC area (1990-1992). She then accepted a consulting role working for Radian International, which was later acquired by

• URS. She relocated to Chapel Hill, NC and later to Albuquerque, NM. During eight

years of consulting, Ms. Werner supported both military and commercial clients including GE. She joined GE Aviation in 1998 in Albuquerque, NM as an Environmental Specialist supporting aircraft engine component manufacturing operations. While working for GE, she completed her masters of business administration at the University

• f New Mexico in 1999 and held multiple site roles including Business Operations

Leader, Lean/Six Sigma Leader, and Environmental, Health, and Safety (EHS) Leader. In 2007, Ms. Werner accepted a role with GE Transportation as the EHS Leader for the global locomotive field services organization. In 2011, she expanded her role adding responsibility for nine supply chain sites including one start-up facility and relocated to Erie, PA. In 2013, she accepted her current role as the EHS Leader for GE's Appliances business headquartered in Louisville, KY.

• Ms. Werner holds both the Certified Safety Professional (CSP) and Certified Hazardous

Materials Manager (CHMM) certifications. She served as Treasurer on the national Board of Directors for the CHMM membership organization from 2003-06 and was recognized as a Fellow of the Institute of Hazardous Materials Managers in 2009. She received her CSP in 2011. Ms. Werner enjoys skiing, running, reading, and traveling with her family. She is a beginning piano player and wannabe surfer. Amanda Jennings, Managing Consultant, Trinity Consultants 110 Polaris Parkway, Suite 200, Westerville, Ohio 43085 614.433.0733 Fax: 614.433.0734 ajennings @trinityconsultants.com

• Ms. Jennings is a Managing Consultant in Trinity’s Westerville, Ohio, office and

provides air quality support for various industries in Ohio, including but not limited to, petroleum refining/distribution, chemical manufacturing, surface coating, asphalt processing/shingle manufacturing, and fiberglass and foam insulation manufacturing. She has completed numerous projects over her 13 years of consulting experience ranging from minor and major source state construction permit to install (PTI) or permits to install and operate (PTIO) applications, Fee Emissions Reports (FERs), emissions inventories, Toxic Release Inventory Reports (TRIs), Title V operating permit renewal and modification applications, MACT and GACT general consulting/compliance assistance, and regulatory applicability analyses. Ms. Jennings graduated from Ohio University with a Bachelor of Science Degree in Chemical Engineering.

Environmental Considerations in Acquisitions, Divestitures, & Mergers

Session LL

March 28, 2018

William H. Haak

Haak Law LLC

HAAK LAW LLC

Environmental, Health & Safety Legal and Consulting Services William H. Haak Tel: 216.772.3532 whh@haaklawllc.com

Introduction

• Agenda
• Setting the stage
• Considerations related to deal structure
• Triage and due diligence
• The nuts and bolts of permit transfers
• Pre-close considerations beyond permits
• Post-merger integration – and when does it end?
• Questions

HAAK LAW LLC

Environmental, Health & Safety Legal and Consulting Services William H. Haak Tel: 216.772.3532 whh@haaklawllc.com

At the Outset…

• Mergers, divestitures, and acquisitions (“MD&A”) are

difficult and stressful on both sides of any deal

• People (including you) are afraid of change
• People (including you) are worried about displacement
• “Synergy” is MD&A code for “reduction in force”
• Stay humble, empathetic, and compassionate
• Pre and post-close work is a second full-time job
• All companies and all facilities are “different”
• ”Different” doesn’t always mean “wrong”, but...
• Sometimes, “different” is just plain wrong...
• Make sure you can appreciate which is which

HAAK LAW LLC

Environmental, Health & Safety Legal and Consulting Services William H. Haak Tel: 216.772.3532 whh@haaklawllc.com

Getting Your Footing

• A warning on antitrust “gun jumping”
• Avoid anything that could be perceived as “anti-competitive”
• Cannot act as one entity prior to closing date
• Be wary of oversharing on either side
• On the Buyer’s side:
• Understand what the deal team needs from you
• Help shape due diligence as much as possible
• On the Seller’s side:
• Anticipate responding to endless data requests
• Provide data in a way that minimizes need for follow-up
• Dealing with sophistication gaps (and non-expert consultants)

HAAK LAW LLC

Environmental, Health & Safety Legal and Consulting Services William H. Haak Tel: 216.772.3532 whh@haaklawllc.com

Miscellaneous Deal Considerations

• EHS implications of deal structures
• Mergers
• Acquisitions with/without name changes
• Will there be a “change in control”?
• What about the closing date?
• Often tied to antitrust approval (globally)
• Could change several times
• Dealing with permit transfers requiring advance

notice

• Managing through communications blackouts...

HAAK LAW LLC

Environmental, Health & Safety Legal and Consulting Services William H. Haak Tel: 216.772.3532 whh@haaklawllc.com

Buyer’s Side Due Diligence Pitfalls

• Not knowing what to ask
• Asking for too much
• Not receiving what you ask for
• Thinking indemnifications will save the day
• Tipping baskets, deductibles, and caps
• The seller isn’t going down without a fight!
• What about “no look” provisions?
• Expediency?
• Something to hide?
• Advice on what to do on Day 1 post-close...

HAAK LAW LLC

Environmental, Health & Safety Legal and Consulting Services William H. Haak Tel: 216.772.3532 whh@haaklawllc.com

Basic EHS Triage for Buyers

• All owned/leased real property
• Known or suspected contamination and/or clean-ups
• All Phase I’s and II’s
• List of facilities and regulatory authorities for each
• List of permits and/or exemptions for each facility
• OSHA recordable injury rate for each facility
• EHS staffing breakdown for entire organization
• Environmental and OSHA enforcement matters
• “Cats and Dogs”
• DOT certificate of registration
• UST financial assurance mechanisms

HAAK LAW LLC

Environmental, Health & Safety Legal and Consulting Services William H. Haak Tel: 216.772.3532 whh@haaklawllc.com

The Seller’s Side of Due Diligence...

HAAK LAW LLC

Environmental, Health & Safety Legal and Consulting Services William H. Haak Tel: 216.772.3532 whh@haaklawllc.com

IX. Environmental ฀ Reviews and/ or inspection reports for all properties ฀ Permits, licenses and other agreements relating to air or water use or quality, solid or liquid wastes, hazardous waste, and all other environmental issues ฀ Notices, correspondence and complaints related to environmental issues ฀ Lawsuits or other proceedings pertaining to environmental issues ฀ Remediation ฀ Describe all solid and liquid waste generated, how it is handled, and list all landfills and disposal sites used ฀ Describe air pollution and wastewater discharges ฀ Underground storage tanks including registration, condition, removal, etc. ฀ Existence, condition, and handling of controlled or hazardous substances at properties including asbestos, PCBs, petroleum, herbicides, pesticides, and radioactive materials ฀ Past and present insurance policies ฀ Condition of neighboring areas ฀ Employee issues including OSHA citations and health issues ฀ List any other environmental or occupational safety/ health concerns

• “Get me all of this next week.”

Nuts & Bolts of Permit Transfers

Amanda Jennings Managing Consultant

MEC S ession LL

Agenda

˃ Preparation and Planning ˃ Programs to Consider ˃ After the Transfer

Preparation and Planning

˃ Understand What is Happening

 New owner, operator, or both?  Will only portions of the site transfer

• wnership?

 What is the name of the newly transferred

facility?

 What is the expected closing date?  Corresponding facility modifications?

Preparation and Planning

˃ Understand the Requirements

 Regulatory Review

♦ Identify impacted regulatory programs.

– Reports, plans, and permits. – Agency responsible.

♦ Identify deadlines.

– Post close or pre-close?

♦ Identify submittal requirements.

– Permit transferability. – Notification vs new permit application.

Preparation and Planning

˃ Get Organized

 Plan all milestones in the transfer

♦ Responsibility of new owner or seller? ♦ Develop letters, notifications, and applications in

advance.

– Ready to sign!

♦ Assign tasks internally. ♦ Identify the new signatory ♦ Track deadlines vs. impending closing date.

Preparation and Planning

˃ Communicate with Agencies

♦ Identify the correct contact and j urisdiction –

city, county, or state.

♦ Confirm requirements and deadlines for

notifications or permit updates.

♦ What steps will they take upon closing?

– Will a new permit be issued?

Programs to Consider

˃ Air Permits

 Title V Transfer Requirements

State Transferability Submittal Timing Indiana Yes ‐Administrative Amendment ‐Signed, written Agreement Not specified Kentucky No, new permit required. Within 10 days of close. Ohio Yes Within 30 days of close.

Programs to Consider

˃ Potential Complicating Factors

 Permit in renewal (expired)?  Access to permitting software?  Permit modification(s) required?  Dual permit programs.

♦ Construction permit transfers.

 Consent decrees.

♦ S

eparate notifications required.

 Will the agency issue a new permit?

Programs to Consider

˃ GHG Mandatory Reporting Rule

 40 CFR 98, due March 31 annually.  If there is a change in ownership, consistent

with the requirements in 40 CFR 98.4(h), the Certificate of Representation (COR) needs to be updated within 90 days of the change of

• wnership.

Programs to Consider

˃ NPDES

/ KPDES Water Permits

 Pollution Discharge Elimination S

ystem Permit

State Transferability Submittal Timing Indiana Yes ‐Notification ‐Written agreement At least 30 days prior to proposed transfer date. Kentucky Yes ‐Change in ownership certification form ‐Written agreement At least 30 days prior to proposed transfer date. Ohio Yes ‐Notification ‐Permit application transfer form/written agreement ‐Notification* ‐ at least 60 days prior to proposed transfer ‐Agreement ‐ at least 30 days prior to proposed transfer *General permit = 30 days

Programs to Consider

˃ EPCRA: Tier II / SDS Reporting

 Both sets of owners/ operators responsible  Consider a courtesy notification:

♦ While it is not required under S

ect ions 311 and 312, it would furt her t he purposes of EPCRA if owners and

• perat ors informed t he S

t at e Emergency Response Commission (S ERC) about t he change in ownership of a facilit y

 Consult S

ERC as to whether separate or combined Tier II reports are preferred during a reporting year with an ownership change

Programs to Consider

˃ EPCRA: Emergency Planning Notification

 Provide a notification to the local

emergency planning committee (LEPC) of any changes occurring at the facility relevant to emergency planning within 30 days after changes have occurred

♦ 40 CFR 355.20 ♦ Change in facility emergency coordinator(s)

Programs to Consider

˃ EPCRA: Toxic Release Inventory (TRI) Reporting

 The owner/ operator of the facility on the July 1

deadline is primarily responsible for prior year TRI

♦ Although, any other owner/ operator prior to the deadline

may also be held liable

 TRI Facility ID (TRIFID) is location specific

♦ A facility retains the ID even if the facility changes ownership

• r name

*https://tri‐epa.zendesk.com/hc/en‐us

Programs to Consider

 TRI (continued)  Example: Company A purchases Company B

between Jan 1 and June 30. Who submits the TRI due July 1 for prior year? *

♦ Company A submits the Form R using Company B’s

name

– Use name of facility as it was as of Dec 31 of the “ reporting

year”

♦ Company B still liable

Programs to Consider

˃ Risk Management Plan (RMP)

 If the owner of a facility changes, the RMP

should be updated to reflect the current owner by the date ownership changes or responsibility for operation of the facility is transferred

 Facility sold will keep original RMP Facility ID#  S

ubmit ownership change as a “ correction” in RMP*eS ubmit

♦ Corrections do not require review and revision of all

nine sections of the RMP and do not impact the 5-year anniversary date for updating/ resubmittal.

Other Programs to Consider

˃ Asbestos ˃ S

PCC

˃ Facility Response Plans (FRP) / Integrated

Contingency Plans (ICPs)

˃ Hazardous Waste ˃ Radiation Licenses ˃ Building or Radio Permits ˃ Rule-required S

S MPs or O&M Plans

After the Transfer

˃ Create F

AQ document

 Ensure all parties understand the immediate

path forward for environmental reports, permits, and plans

 Permit required reports

♦ Who submit s?

Who signs?What is t he report ing period?

 Compliance plan updates

♦ Owner name and/ or responsible part y changes

˃ Anticipate potential increase in agency

inspections after transfer occurs

Reflections and Lessons Learned

Mergers – Acquisitions– Divestitures Catherine Werner, CSP, CHMM GE Appliances, a Haier Company

WHO WE ARE

GE Appliances is a $7B appliances manufacturing, distribution, and service company

2

Enabling Happiness and Wellbeing in Every Home Enabling Happiness and Wellbeing in Every Home

GE APPLIANCES TIMELINE

Q4 2014: announced Electrolux would purchase GEA Q4 2015: DOJ blocks purchase, GE withdraws Q1 2016: announced Haier to purchase GEA Q2 2016: Purchase completed 6/6/16 Q1 2017: U.S. Haier ops merged into GEA, ofc, warehouse, R&D, & mfg Q4 2017 Closed and divested mfg site Q1 2018: Investment & Growth

3

U.S. MANUFACTURING SITES

Appliance Park, Louisville, KY Selmer, TN 2016-17 Merger Decatur, AL LaFayette, GA 2017 Divestiture

*

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GE APPLIANCES ENVIRONMENT, HEALTH, AND SAFETY

GEA EHS Vision: Safely and sustainably design, manufacture, deliver, and service world-class, competitive appliances EHS Team Mission: Compliance

Risk Management Customer Service

Company Brands and Reputation Minimize Legal and Financial Liability +

What We Do:

• EHS Operations
• Factory, Facility & Fleet Enviro, Health, Safety, & Ergo
• Emergency Preparedness, 24/7 Incident Response
• Compliance & Risk Management Auditing
• Enviro. Permit Negotiation and Compliance

ensures operational flexibility (NPI, Change Mgt)

• Enviro. Due Diligence for A&D, Lease, Close, Build
• Chemical Mgt for 6,000+ Chemicals
• Contractor Management & New Equipment Reviews
• Remediation, Regulator Relationships, Community Outreach, Sustainability

Protect People & Environment +

5

ADDITIONAL PLANNING & PARTNERING

• Transitioning EHS Management Systems and Data
• How much historical data is needed…Injury, Audit,

Inspection, Training, Medical

IT

• Contract and Contractor Management
• Subscriptions and Master Service Agreements
• Validate insurance coverage (new min-max)

Sourcing

• Be part of the deal team. Your voice is critical.
• Clearly identify transitional service agreement requirements

(i.e., temporary carryover services)

Finance & Legal

• What are your “critical-to-compliance” systems?
• Clearly identify transitional service agreements & terms
• Cost estimating & who’s paying for transition?

Negotiating with Parent and Purchaser

Focus on Business Continuity & Critical-to-Compliance

6

REMEMBER

• Your current suppliers and contractors want to keep you as a

client, consider multi-year terms

• Your new company may have new systems in to which your

training and data must fit-can experience longer lead times for start up (e.g., new intranet, training, HR, ERP tools)

• Proactively engage stakeholders, do not wait to be asked
• Keeping a sense of optimistic calm and optimally a sense of

humor while planning and executing helps the team

Plan for no surprises, but be prepared to pivot—resiliency w ins

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FINALLY

• Brief your family and friends that you will be busier
• n a significant project
• Take care of yourself, your health, your family, and

your friends

• Keep BIG picture perspective while executing project

details

• Invest in exercise, sleep, and good take out
• Celebrate milestones!

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