Environmental compliance audits are detailedaudits of an operation or manufacturer to determine if the operatoris in compliance with local, state, and federal regulations.Compliance audits differ from Phase I and II environmental siteassessments (ESAs) in a fundamental way: Phase I and II ESAs focuson releases of hazardous substances to real estate,whereas compliance audits focus on whether or not operationscomply with environmental laws with the objective of reducingregulatory risk, avoiding violations, enforcement, and fines. Environmental Site Assessments are a standard component ofthe transactional due diligence process, but conducting acompliance audit during due diligence is the exception, not therule.

This is because non-compliance may not obviously de-value anasset, and the cost therefore may not seem justified. This isunfortunate because environmental compliance audits offer much morethan simply an opportunity to avoid fines and violations.Compliance audits directly benefit each party involved in a largeor small real estate or corporate transaction, whether it's thebuyer, seller, operator, lender, or investor.

Operators