Data Center EH&S Transactions Managing EHS Risk

(1)

The world’s leading sustainability consultancy

Data Center EH&S Transactions

Managing EHS Risk

Gary Lucks JD CPEA

ERM

September 17, 2013

(2)

2 Data Center EH&S Transactions

Managing EHS Risk

Gary Lucks JD, CPEA

[email protected]

925 482 8209 (office)

510 290 5423 (cell)

(3)

My Background

Partner ERM

EHS Performance &

Assurance Practice

Lead (NorCal)

Environmental

Attorney/Scientist

Certified Professional

Environmental

Auditor

State Bar

Executive &

Legislation

Committees

West Coast Audit

Roundtable

Legs/Regs Chair

National Audit

Roundtable

(4)

4 M&A Risk Management: Discussion Overview

• EH&S Entitlements/License to Operate

• Audit Privilege for Transactions

• Federal Trade Commission & Sustainability Reporting

(5)

EH&S Activities & Entitlements

5

• EH&S Activities:

o

Emission Units

: generators, tanks, UPS, cooling towers

o

Resources

: water supply, energy, etc.

• Permits & Licenses:

• Air Permitting/Compliance,

• SPCC plans,

• Water,

• EPCRA,

• Waste Management,

• Confined Space,

• Hot Work Permits,

• Lock Out/Tag Out,

(6)

6 M&S EHS Entitlement/License to Operate

• Avoid Unnecessary Operating Restrictions

• Siting: For ambient cooling, attainment status

• Permits must meet Initial and Long-Term Compliance

• Long-Term Business Plans Need to be Considered - “What

If” Development Evaluation!

• Is there a “Co-Location” Issue and/or Other Onsite

Emission Sources (e.g., Boilers)

(7)

Air Permit Compliance Considerations

Striking Best Balance Between Maximum Operating

Capacity (hours limits) and Unnecessary Regulatory

Burden and Cost

Average Allowable Operating hrs./yr./gen. Much lower

in Ozone Non-Attainment Areas and As Number of

Generators Increase

Construction Permit typically Initially good for only18

Months

Permits Contain Numerous Initial/Ongoing

Compliance Assurance Requirements:

Typically to Ensure Emergency Use Classification, Minor Source Emission Status, & Proper Tier Certification

(8)

8 State/Location Variability

Allowable Construction Before Permit Issuance

Permitting Options and Compliance Flexibility

Non-Attainment Status

Stack Testing and/or Modeling Requirements

100 hrs./yr./gen. Testing Limit Variance and Demand

Response Participation

Initial and Ongoing Compliance Actions, Reporting; etc.

Greenhouse Gas (GHG) and Sustainability Concerns

(9)

Critical State Differences

Major Source

Threshold (TPY) 25/100 100 100

Generator Specific

Emission Limits Rule (mmm) No No

Default Usage Limit

(hrs/yr/gen) 200/500 500 500 Streamlined Permitting Options1,2 No Permit Required (NPR) Process 322,000 gal/yr Exemption Registration or General Permit Air Dispersion

Modeling No Maybe No/Yes

Emergency Demand Response Program

Use No/Yes Yes Yes

Load Capacity

Acceptance Yes Yes Uncertain

GA NC SC

1. Recommended for True Minor Sources Only!

2. Significant Benefit as a Minor Source of Emissions (i.e., Emergency and Testing Use Only) 3. Ongoing Compliance Assurance Requirements Still All Apply!

(10)

10 EPA’s M&A Audit Privilege

• Allows “new owners” enhanced penalty

mitigation prior to acquisition date

• Within 9 months of transaction closing, new

owner must:

• Promptly disclose violations to EPA, OR

(11)

General Principals Applicable to All Green Claims

Specificity is preferred over general

Qualifications and Disclosures: should be sufficiently clear, prominent and

understandable to prevent deception

■ clarity of language

■ type size and proximity to claim being qualified

■ absence of contrary claims

Distinction between benefits of Product, Package and Service:

■ environmental claims should be presented in a way that makes clear whether the

environmental attribute/benefit asserted refers to the product, packaging, a service or to a portion or component of the product, package or service

Overstatement of Environmental Attribute: claim should not be presented in a way

that overstates the environmental attribute, expressly or by implication

Comparative Claims: should be presented in a manner that makes the basis for the

comparison sufficiently clear; should be capable of substantiation

(12)

12 Environmental Marketing General Benefit Claims

No misrepresentation, directly or by implication, that a product/package/service offers a general environmental benefit, or that such product is:

■ Compostable

■ Degradable

■ Recyclable

■ Made from Recycled Content

■ Renewable Energy

■ Renewable Materials

■ Non-Toxic

■ Free-of Claims (e.g. free of

■ Ozone-friendly

■ Carbon Offsets

■ Certifications and Seals of Approval

■ Source Reduction

(13)

EHS Compliance Assurance Strategies

Legal Registry: List all potentially applicable regulatory requirements and confirm exempt operations

Program Descriptions of regulatory programs and requirements: to ensure that staff is familiar with specific

compliance tasks and action items

SOPs: addressing the “who, what, when, and how” of obligations to be accomplished throughout the year Roles and responsibilities: for implementing the compliance calendar

Training program: to identify what environmental training is required for which types of employees, and when Updates: Module for gathering and implementing new regulatory developments

Release reporting protocol: Addressing an approach to ensuring all appropriate agencies are notified in the

event of a reportable chemical release

Spill Management/Emergency Response: A functional strategy to cost-effectively manage potential chemical

spills

Dealing with Regulators: Protocol for Dealing with Regulators

Compliance calendar: with brief descriptions of specific compliance tasks (permit renewals, monitoring

frequencies, report submittals, training deadlines, etc.) and action items.

EHSMIS: Enterprise information management system MOC: Management of change Program

Self Inspections/Checklists: for multi-media environmental inspection checklists Third Party Auditing: Validate EH&S compliance

(14)

14

(15)

Questions?

Gary Lucks JD, CPEA

[email protected]

925 482 8209 (office)

510 290 5423 (cell)

(16)

coauthored a book entitled California Environmental Law and Policy: A Practical Guide (Solano Press) and is a regular contributor to the California Environmental Law Reporter. He also wrote the Environmental Auditing Chapter in the California Environmental Law and Land Use Treatise. He currently serves as an advisor to the Bay Area Air Quality Management District and served on the California State Bar Environmental Legislation Committee for over ten years. He also chairs the West Coast Auditing Roundtable. Mr. Lucks also co-founded the Sustainable Earth Initiative, a non-profit specializing in EMS and dedicated to helping public agencies improve their environmental performance. ERM has been helping companies carry out systematic audits of Environmental, Health & Safety (EH&S) programs and performance since 1977. ERM approaches all projects with a clear understanding of your business, and the economic impacts that EH&S issues can have on a company’s bottom line and earnings. We assist clients all over the world who want to understand their liabilities and compliance obligations, act upon them and communicate their efforts to relevant audiences.

ERM offers full-scope EH&S audits that address both regulatory compliance and associated management systems. ERM’s goal is to help clients develop and maintain EH&S programs that not only ensure safety and compliance but also reduce risks and actively improve operational performance.