But a facility comes with more than the land underneath it. It often comes with air and wastewater discharge permits, hazardous waste generator IDs, an injury and illness history, and years of reports filed with regulators. In my years at the U.S. Environmental Protection Agency (EPA), I saw that record, and any open problems in it, move to the buyer at closing. A sale rarely resolved them.

The Traditional Approach

Environmental due diligence in most property transactions centers on a Phase I Environmental Site Assessment (ESA): a specific evaluation of a site that includes a records review, site visit, and interviews designed to identify likely contamination. If conducted in adherence to ASTM International’s Phase I standard (E1527-21), it satisfies EPA’s All Appropriate Inquiries Rule and helps a buyer qualify for Superfund liability protection.

A Phase I (or the sampling-based Phase II that sometimes follows) answers one primary question: what’s in the ground? The facility’s operational EHS compliance record usually gets a lighter look: a high-level data review and perhaps a few management interviews. Yet much of that record is public: inspection results, violations, permit exceedances, reported releases and enforcement actions. That data is scattered across federal and state systems with different identifiers, which is why it often gets skipped. An EHS compliance risk review pulls it together to show how a facility has actually operated.

Case 1: The Violations Came With the Plant

In April 2019, EPA announced a $1.5 million Clean Air Act settlement over a cement plant in Martinsburg, West Virginia. The violations ran from 2013 through 2016, across two ownership changes. Argos bought the plant in December 2016 and paid the penalty alongside Lehigh, successor to prior owner Essroc.

The violations included exceeding annual particulate limits, late stack testing, and a hydrochloric acid monitor that wasn’t installed on time. EPA built the case from information requests and data the plant reported under its own permit. Much of the story was already in the plant’s own filings when Argos bought it. Identified before closing, issues like these can be addressed in the purchase price or indemnity terms, rather than surfacing later as a penalty the buyer helps pay.

Case 2: The Pipe That Came With the Refinery

In 2012, Philadelphia Energy Solutions (PES), a private equity–led joint venture, took over Sunoco’s Philadelphia refinery, the largest on the East Coast. In June 2019, a corroded pipe elbow ruptured in its hydrofluoric acid alkylation unit. The fire and explosions released more than 5,000 pounds of hydrofluoric acid, caused an estimated $750 million in damage, and shut the refinery for good.

The elbow had been installed in 1973. Following the accident, the U.S. Chemical Safety and Hazard Investigation Board found that it had corroded faster than the surrounding pipe, and that a comprehensive evaluation of the unit’s piping never occurred. The Occupational Safety and Health Administration’s (OSHA) Process Safety Management standard and EPA’s Risk Management Program rule both require operators to confirm that older equipment is still safe to operate when industry standards change. By 1995, the elbow no longer met the updated ASTM standard for that piping. The equipment that failed was nearly 40 years older than PES.

The inspection records that would have revealed the corroded elbow aren’t public. A buyer sees them only by requesting them during due diligence. But public data can show which facilities deserve that closer look: sites running highly hazardous processes, with OSHA process safety citations or a history of reported releases and fires. At those sites, a buyer should ask how the operator confirms that older equipment still meets current standards.

What the EHS Record Shows

A facility’s EHS record tells a buyer where to look. For any target, I would want to know:

Air. Is it a High-Priority Violator, EPA’s most serious Clean Air Act noncompliance classification? Unresolved cases often end in a consent decree requiring new pollution controls, which is capital spending the buyer can inherit.

Water and waste. How often has each discharge point (outfall) exceeded its permit limits? Has hazardous waste volume jumped? Which direction are trends moving in? Repeat exceedances often lead to enforcement and costly treatment upgrades, and rising waste volumes mean higher disposal costs, but also room for potential process improvements.

Safety. How do injury rates compare with peers? Are there serious or repeat OSHA citations, including under the Process Safety Management standard? High injury rates drive workers’ compensation costs and turnover, and repeat citations often point to weak safety management that a new owner will have to fix.

Releases. Has the facility reported spills or chemical releases to the National Response Center (NRC), the federal point of contact for reporting regulated releases? Those reports are public, and a pattern of them can point to equipment or process problems.

Enforcement. What cases are open, and do any obligations run past closing? How do violation patterns across programs compare with peer sites? Consent decrees, settlement agreements and compliance orders can carry obligations that bind future owners, from required upgrades to added monitoring and reporting. A history of violations also raises the odds of future enforcement and closer regulatory scrutiny. These are hidden costs a buyer should factor into the transaction

Use the Window

Under EPA’s New Owner Audit Policy, a buyer that finds violations during diligence has up to 45 days after closing to disclose them, with more penalty relief than the standard Audit Policy offers. That makes findings worth more before closing than after the transaction is complete.

What an EHS Compliance Risk Review Adds

An EHS compliance risk review does three things a Phase I can’t. First, multi-year trends show whether a facility is heading toward enforcement on the new owner’s watch. Second, specific, dated findings can inform the financial, legal and insurance terms of the transaction, such as price adjustments, indemnities and escrows. That matters most before signing, since representations and warranties insurers typically exclude known issues. Third, the review sets a baseline that later reviews can use to show whether compliance risk is improving.

A Phase I focuses on contamination. An EHS compliance risk review looks at how well the facility manages its environmental and safety operational risks.

Before you close, ask one question: if a regulator pulled this site’s public record today, what would they focus on first?

Until next week,

Doug Parker

CEO, Ecolumix

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Coming in Future Issues:

Your sustainability report Is part of the record. Why the gap between a company’s sustainability claims and its regulatory data is getting more attention.

Let the Data Tell Your Story. Why regulators’ numbers carry more weight than your own claims when you need to show real progress.

Questions or topics worth covering? Reach out: doug@ecolumix.com