An environmental due diligence assessment is now routine in the sale or purchase of land or other assets and in the governance of virtually any business. But since 2002, Sarbanes-Oxley has substantially raised the bar for analysis and risk assessment by obliging corporate directors to accurately report the costs of environmental as well as other liabilities. At the same time, a number of states have expanded the area of potential liability through vigorous enforcement of natural resource damage (NRD) regulations.
When the environmental movement was just gaining momentum in the 1980s, the result in many boardrooms and executive suites was near panic. With few experts available to deal with polluted soil and water and fewer technologies with which to address them, the ultimate price tag for environmental studies and cleanup ("remediation," in the specialist's jargon) was expected to run into the trillions of dollars.
Since then, environmental science and engineering have successfully advanced so that many seemingly impossible challenges can now be met at dramatically lower, even reasonable, costs. One area that has seen particular progress in the past decade is the use of in situ ("in place") bioremediation to reduce or eliminate soil and groundwater contamination. As a result, corporate risk managers have better and more affordable technology available to remedy their environmental problems and can make favorable adjustments to their balance sheets to reflect lower anticipated expenses associated with environmental remediation.
Soil and Groundwater Contamination
In an industrial society, there are literally tens of thousands of businesses and properties that can produce hazardous wastes. Manufacturing plants, industrial properties, medical facilities and automotive manufacturers are obvious waste generators. Less obvious are such smaller-scale operations as dental offices, dry cleaners, photo labs and print shops.
Environmental liabilities come in many forms. Those relating to air quality or to construction materials and processes are relatively easy to identify and manage. The more insidious ones are those that remain hidden below ground. Chemical contamination in the soil and/or groundwater at a site can be very difficult to identify and measure. In some cases, such as a former toxic waste dump, the problem may be obvious. In most cases, however, it is necessary to drill to obtain sample borings and to submit soil and groundwater samples to laboratory analysis.
Usually, soil contamination is associated with a "source area," i.e., that area of the site containing underground storage tanks, where vehicles were parked or serviced, or where an initial chemical spill or release occurred. In order to manage the long-term costs of any subsurface environmental liability, it is imperative that the source-area soils be removed or treated. Without such treatment, a "plume" of contamination will continue to migrate outward through the soil and groundwater, continually contaminating other parts of the site and beyond. In extreme cases, off-site contamination can extend for miles.
Once an area of soil contamination is identified, the most expedient and often the most cost-effective manner of treatment is to excavate the contaminated soil from the site and truck it to an off-site location for proper disposal, which may require final disposal in a hazardous waste landfill. Alternatives to disposal include various onsite mechanical, chemical and thermal treatment methods that may be appropriate depending on the type of contamination encountered, the mass of soil to be treated and the accessibility of the soil.
Relatively speaking, treating soil contamination is usually a straightforward matter. In contrast, groundwater contamination tends to present a more complex challenge, and its solution is generally more difficult and costly. Groundwater contaminants include many different industrial and agricultural chemicals and fuels, including a host of other petroleum hydrocarbons; a wide range of chlorinated compounds such as tetrachloroethylene (PCE), perchlorate and vinyl chloride (PC), carbon tetrachloride, pesticides and industrial solvents; and a long list of metals including arsenic, mercury, lead, chromium and others. …