• December 2008 - Impact of USA Today Series Investigation on Industrial Facilities

    On December 8, 2008 a national newspaper, USA Today, launched an investigative series entitled “The Smokestack Effect: Toxic Air and America’s Schools”.  Facilities that submit annual emissions information to the U.S. Environmental Protection Agency’s (EPA) under the Toxic Release Inventory (TRI) program will face increased scrutiny by the general public and government agencies.

    The Smokestack Effect: Toxic Air and America’s Schools   http://smokestack.usatoday.com

    Overview

    • Using TRI data , Risk-Screening Environmental Indicators (RSEI), and collecting their own data, USA TODAY spent eight months examining the impact of industrial pollution on the air outside schools across the nation.
    • Using  this research, USA Today created three measures of a school’s exposure to industrial toxic chemicals: Overall Toxicity, Exposure to Cancer Causing Chemicals, and Exposure to Other Toxic Chemicals
    • USA Today developed an internet query tool that provides immediate access to air quality information in the vicinity of 127,800 schools across the U.S.
    • The query results identify nationally ranked nearby industrial facilities that may contribute to the air quality of the schools.  Results include a map with the location of the schools in proximity to the listed industrial facilities that they classify as the “polluters most responsible for the toxics outside this school.”  The public contact number for the “polluting” companies is also listed.

    The Methodology

    • The companies targeted are those that submit TRI reports; USA Today then used  the RSEI model, along with some generic assumptions (e.g. default median stack height), to estimate the impacts associated with each type of air and water release or transfer.
    • USA Today teamed with University of Massachusetts-Amherst researchers who used the findings and a database of 127,800 public and private schools to prepare “toxicity reports” using the RSEI model.
    • USA Today conducted its own research and monitored air quality near 95 public and private schools throughout the nation by placing monitors near schools that the RSEI model suggested faced higher exposure to industrial pollution.  They teamed with Johns Hopkins University and University of Maryland to analyze the data.

    Concerns and Limitations

    • The RSEI model was developed as a screening tool, not an in-depth analysis, for pollution tracking.  USA Today’s investigation is referred to as a “toxicity assessment,” which could mislead readers to believe it qualifies as a “risk assessment” for each school involved.
    • Most facilities involved in the TRI program do not measure their emissions; rather, their reports to the TRI are estimates.  Therefore, the RSEI model can under or overestimate exposure to toxic chemicals.
    • Monitoring near schools was for a comparatively short period of time (all monitoring periods were less than one week).  As a result, the findings may not accurately reflect long-term exposure.
    • The USA Today investigative series has caused significant interest and scrutiny of local industrial facilities; the “toxicity assessments” are based on a limited data set and can lead to incorrect conclusions if the data is not fully understood.

    What should you do now?

    • Ensure key individuals at each of your facilities are familiar with the USA Today investigation.
    • Develop a consistent statement and approach to handling public inquiries based on individual results.

    How EHS Support can help

    • Assist you in understanding the results of this study on your facilities
    • Support your staff in formulating a public response and/or statement
    • Facilitate in formulating internal communications to all facilities and employees
    • Assist with individual special circumstances as you may require
    • To view a more detailed overview of this issue click here

    If you require assistance or have further questions, please contact

    Andrew Patz
    412.215.7703
    andy.patz@ehs-support.com

    Amy Bauer
    251-533-6949
    amy.bauer@ehs-support.com

  • August 2008 - December 15, 2008 - A new SFAS standard will increase the cost and level of effort during environmental due diligence.

    The SFAS 141 (R) Standard will require all M&A activities to quantify environmental liability immediately.

    What is the Significance of SFAS 141(R)?
    SFAS 141(R) continues the evolution toward fair- value reporting, and extends the fair-value requirements to new areas, including mergers, acquisitions and divestitures. Most significant and controversial, is the value of acquired contingencies (e.g. environmental issues, litigation, warranty payouts) now must be estimated on the acquisition date (Day 1). Previously, environmental liabilities were not typically recorded until a dollar amount was probable and estimable. This approach will increase the importance of thorough environmental due diligence during M&A efforts and require that environmental liabilities be quickly and accurately quantified.

    How Can EHS Support Help?
    SFAS 141(R) creates major changes in the accounting for M&A related transactions, and requires environmental issues be immediately quantified to better establish their impact on the value of the deal. Even if you have no M&A activity planned in the near-term, the standard may still affect your business planning. EHS Support’s proprietary environmental liability model allows our staff to provide fast, accurate, and reproducible liability estimates that allow you to get model allows our staff to provide fast, accurate, and reproducible liability estimates that allow you to get your deal completed, profitably! Call us today for a broader discussion on how this standard impacts your business.

    Notable Features and Impact of SFAS 141 (R)

    • Quantifying your environmental risks are front-burner issues, given the potential impact upon the value of the deal, including potential goodwill gain recognition with bargain purchases.
    • For valuation purposes, the measurement date is now the closing date, as opposed to when the deal was announced. This complicates deals that are fully or partially funded by stock.
    • Acquisition costs (e.g. transaction
    • Acquisition costs (e.g. transaction costs and restructuring charges) are expensed immediately, and no longer capitalized and amortized.
    • Joint Ventures are not subject to the standard.

    EHS Support has teamed with Alpern Rosenthal and Egan & Associates and to ensure that we can assist you with
    managing this new business risk from both an environmental and a reporting perspective.

    Click here to view Q&A about SFAS 141(R)