Environmental Project Due Diligence

What does environmental project due diligence entail? 

Performing due diligence analysis on projects and identifying potential exposure to liabilities or risks arising from environmental law involves a comprehensive review of a project’s potential legal and regulatory implications. To begin this process, one must examine relevant Florida and federal laws, regulations, and secondary sources that govern environmental matters. This assessment aims to identify and mitigate potential environmental risks, such as contamination, non-compliance with regulations, or adverse effects on natural resources.

One example of due diligence analysis in Florida is the evaluation of potential contamination risks during property transactions. This involves assessing potential liabilities associated with contaminated land under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). This federal law holds landowners responsible for cleanup costs if contamination is discovered. In addition, in Florida, the Brownfield Redevelopment Act provides incentives for the cleanup and redevelopment of contaminated properties, which may affect the potential exposure to environmental liabilities.

Another example is the assessment of projects’ compliance with the Endangered Species Act (ESA). This federal law protects threatened, and endangered species and their habitats, and developers must ensure that their projects do not violate the ESA. For example, the Florida Fish and Wildlife Conservation Commission (FWC) enforces state laws and regulations related to threatened and endangered species in Florida.

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In Florida, which laws and regulations apply to environmental project due diligence?

Several vital laws and regulations apply to performing due diligence analysis on projects in Florida. The Florida Department of Environmental Protection (FDEP) oversees the state’s environmental regulatory framework, which includes the Florida Statutes Chapters 373 (Water Resources), 376 (Pollutant Discharge Prevention and Removal), and 403 (Environmental Control). These chapters outline various permitting, compliance, and enforcement requirements that must be considered during a due diligence analysis.

At the federal level, critical environmental laws include the National Environmental Policy Act (NEPA), the Clean Water Act (CWA), the Clean Air Act (CAA), and the Resource Conservation and Recovery Act (RCRA). NEPA mandates an environmental review process for projects receiving federal funding or requiring federal approval, while the CWA and CAA regulate water and air pollution, respectively. RCRA manages hazardous and non-hazardous waste, including storage, transportation, and disposal requirements.

What are the strategic benefits of environmental project due diligence?

Performing due diligence analysis on projects and identifying potential exposure to liabilities or risks arising from environmental law offers several strategic benefits:

• Risk mitigation: Identifying potential environmental liabilities early helps developers and businesses address issues before they become significant problems, reducing legal and financial risks.
• Regulatory compliance: Due diligence ensures that projects adhere to all relevant environmental laws and regulations, preventing fines, penalties, and project delays.
• Reputation protection: Proactively managing environmental risks demonstrates corporate responsibility and commitment to sustainability, enhancing a company’s reputation among stakeholders and the public.
• Financial savings: Identifying and addressing environmental risks during project planning can help avoid costly remediation efforts, litigation, or regulatory penalties later in the project lifecycle.
• Increased property value: Proper due diligence can uncover potential environmental issues that, when resolved, may increase the property’s value and attractiveness to buyers or tenants.
• Informed decision-making: Comprehensive environmental due diligence enables developers and businesses to make well-informed decisions regarding project feasibility, risk management, and potential return on investment.

When a set of facts is appropriate for legal intervention, there are many paths a claimant may take. We are value-based attorneys at Jimerson Birr, which means we look at each action with our clients from the point of view of costs and benefits while reducing liability. Then, based on our client’s objectives, we chart a path to seek appropriate remedies.

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How can real estate developers and businesses implement environmental project due diligence effectively?

Based on the circumstances, the following measures may be impactful:

• Engage qualified professionals: Hire environmental consultants, attorneys, and engineers with expertise in Florida and federal environmental laws and regulations to conduct thorough due diligence assessments.
• Conduct Phase I and Phase II Environmental Site Assessments (ESAs): Perform ESAs to identify potential environmental risks, such as soil and groundwater contamination, and determine the need for further investigation or remediation.
• Review historical records: Examine historical documents, such as land use records, aerial photographs, and previous environmental reports, to identify potential sources of contamination and assess the site’s ecological history.
• Obtain regulatory permits and approvals: Ensure compliance with all applicable environmental laws and regulations by obtaining necessary permits and approvals from relevant federal, state, and local agencies.
• Develop and implement an Environmental Management System (EMS): Create an EMS to establish policies and procedures for managing environmental risks, ensuring regulatory compliance, and fostering continuous improvement in environmental performance.
• Communicate with stakeholders: Engage with stakeholders, such as local communities, regulators, and investors, to share information about environmental due diligence efforts and demonstrate a commitment to transparency and accountability.

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Frequently Asked Questions

1. What is the difference between a Phase I and II Environmental Site Assessment?

A Phase I Environmental Site Assessment (ESA) is an initial investigation that involves a review of historical records, regulatory databases, and a site visit to identify potential environmental risks associated with a property. If the Phase I ESA reveals the presence of Recognized Environmental Conditions (RECs), a Phase II ESA may be conducted. Phase II ESA involves sampling and analyzing soil, groundwater, or other media to determine the extent of contamination and the need for remediation.

2. How do I know if my project requires an Environmental Impact Statement (EIS)?

An EIS may be required for projects that have the potential to impact the environment significantly. The State Environmental Policy Act (SEPA) governs the EIS process in Florida. Suppose a project falls under the purview of SEPA. The developer must submit an environmental resource permit application to the Florida Department of Environmental Protection (FDEP) or the relevant Water Management District. These agencies will determine if an EIS is necessary based on the project’s potential environmental impacts. A less extensive Environmental Assessment (EA) may sometimes be required instead of a full EIS. Therefore, it’s crucial to consult with an environmental attorney to determine the appropriate steps for your project.

3. What role does due diligence play in purchasing or developing a property with potential environmental issues?

Due diligence is a critical step in purchasing or developing a property with potential environmental issues. It involves thoroughly assessing the property to identify potential environmental risks, liabilities, or regulatory compliance concerns. The due diligence process may include reviewing environmental reports, permits, and regulatory records and conducting on-site assessments such as Phase I and Phase II ESAs. By performing due diligence, developers, and buyers can make informed decisions about the property, negotiate appropriate terms in the purchase agreement, allocate responsibility for remediation or regulatory compliance, and avoid costly surprises after the transaction is complete.

Have more questions about an environmental law-related situation?

Crucially, this overview of environmental project due diligence begins to cover only some of the laws implicated by this issue or the factors that may compel the application of such laws. Every case is unique, and the laws can produce different outcomes depending on the individual circumstances.

Jimerson Birr attorneys guide our clients to help make informed decisions while ensuring their rights are respected and protected. Our lawyers are highly trained and experienced in the nuances of the law, so they can accurately interpret statutes and case law and holistically prepare individuals or companies for their legal endeavors. Through this intense personal investment and advocacy, our lawyers will help resolve the issue’s complicated legal problems efficiently and effectively.

Having a Jimerson Birr attorney on your side means securing a team of seasoned, multi-dimensional, cross-functional legal professionals. Whether it is a transaction, an operational issue, a regulatory challenge, or a contested legal predicament that may require court intervention, we remain tireless advocates at every step. Being a value-added law firm means putting the client at the forefront of everything we do. We use our experience to help our clients navigate even the most complex problems and come out the other side triumphant.

If you want to understand your case, the merits of your claim or defense, potential monetary awards, or the amount of exposure you face, you should speak with a qualified Jimerson Birr lawyer. Our experienced team of attorneys is here to help. Call Jimerson Birr at (904) 389-0050 or use the contact form to schedule a consultation.