Air Quality Services in Environmental Due Diligence

Air quality services play a critical role in a limited environmental compliance review (LECR), offering an assessment of risks, compliance requirements, and the operational impact of air emissions at industrial and manufacturing sites. In a world of myriad air quality regulations that can vary in complexity, these services can identify those that are applicable to a business and mitigate potential environmental liabilities. Additionally, a LECR can offer clarity for buyers, investors, and stakeholders during property transactions, mergers, or acquisitions.

The LECR helps estimate the costs of bringing a site into full compliance and identifies risks associated with current non-compliance. Although compliance-based risk mitigation is the main objective, the LECR can also uncover additional value-adds to the company. Businesses that implement comprehensive, structured, and well-governed environmental management practices are well positioned to both manage the expectations set by air quality regulations and create value to the company and its bottom line. Risk mitigation itself – regulatory, legal, and reputational – can protect and contribute to a company’s value, and value creation opportunities can also extend to better operational efficiencies, more meaningful stakeholder relationships, and access to additional capital markets.

A LECR helps identify potential risks and liabilities related to existing permits and compliance strategies by utilizing the following:

• Permit review: The permit review ensures that a site’s air permit aligns with its operations. The review may include assessing the original air permit application, air dispersion modeling, and emissions or production limits to identify potential compliance gaps.
• Emissions Analysis: Reviewing historical and current pollutant and air toxics emissions data helps identify trends, data gaps and risks. If available, the potential facility-wide emissions may be used to determine whether changes to then air permit level is required or if additional control systems are needed to mitigate emissions.
• Regulatory Compliance: A high-level review of local, state, and federal air quality regulations is conducted to ensure operational compliance. For sites classified as major sources (e.g., those with Title V Air Permits), the review may also address emerging regulations and Environmental Justice (EJ) considerations, which can identify costs associated with missed operating scenarios or production increases.
• Technology Evaluation: Evaluating existing air pollution control technologies helps ensure compliance with permits and operational requirements. Information on equipment installation dates, preventative maintenance records and monitoring data supports permit is reviewed to support operational compliance.
• Environmental Justice (EJ) Review: Based on the information available from the state and federal EJ database, conduct preliminary determinations if the facilities are located in a potential EJ area. Facilities located in EJ areas may face more stringent permitting, testing, monitoring, recordkeeping, and reporting requirements, which could impact ongoing compliance and future expansion projects.

Extending Air Quality Considerations Beyond the Transaction

Air quality compliance considerations may extend beyond the post-transaction phase, with evaluations to ensure continued compliance or address previously identified risks.

• Post-Close Air Audit: A timely, formal air compliance audit after a transaction can qualify businesses for state or federal disclosure policies, potentially reducing penalties for pre-existing noncompliance.
• Ongoing Air Quality Management: Maintaining air quality compliance may include development of tools for monthly emissions tracking, accurate records and reporting. Digital solutions, like Aeterra’s WorkSpace software platform, streamline air tracking and compliance management, enabling businesses to efficiently meet regulatory demands.
• Sustainability Alignment: Air quality audits also support alignment with sustainability goals which may include tracking or reducing greenhouse gas (GHG) emissions, advancing decarbonization initiatives, and setting baseline goals to reduce key pollutants like volatile organic compounds (VOCs) and nitrogen oxides (NOx). This is especially important when integrating the actions taken, and the lessons learned, from engaging in a LECR exercise.

By effectively managing environmental compliance, companies can not only meet regulatory requirements but also unlock a range of strategic benefits that contribute to their overall business success. Cost reduction strategies can be identified through better operational and energy efficiency, workforce morale can increase where businesses demonstrate a strong ethical commitment to the communities they serve, market reputation and company brand can be positively impacted, comprehensive risk mitigation strategies can increase investor confidence, and lastly competitive advantages can be discovered to increase market share and improve growth opportunities.

Integrating air quality services into environmental due diligence enables private equity firms and other stakeholders to assess risks and opportunities. This approach ensures both compliance and operational sustainability, paving the way for informed decision-making and measurable environmental improvements.

We recommend to clients that they look beyond the stick and embrace the carrot. Although air quality regulations - and the efforts taken to remain in compliance - may seem cumbersome, businesses should focus on the ability to use a LECR to unlock value creation, and not simply a means to check off a box.

Aeterra’s air quality services team provides the foundation for proactive risk management, sustainability alignment, and regulatory compliance. By addressing air compliance challenges strategically, companies can protect their investments and achieve long-term operational success. We have both the in-house resources and expertise to help our clients navigate this landscape. Our Workspace software platform is designed to help our clients aggregate and categorize their different compliance-based metrics. Our team of experienced environmental professionals offer a full range of expertise and guidance to ensure the clearest path forward for our clients. We’re here to help and act as a partner to our clients as they work towards a more sustainable business model, and a more sustainable world.