Acquiring industrial energy infrastructure requires legal support that goes well beyond standard M&A due diligence. Liquid energy terminals — facilities that receive, store, and distribute petroleum products, refined fuels, and other liquid commodities — are subject to extensive environmental regulation at the federal and state level. Understanding the regulatory obligations that come with ownership, and identifying any legacy environmental issues that could affect the economics of a transaction, are essential components of a successful acquisition in this sector.
Mandelbaum Barrett PC’s environmental law practice group advised on the $212 million acquisition of four liquid energy terminals. The successful completion of this transaction reflects the firm’s capacity to handle complex environmental due diligence, regulatory compliance analysis, and transactional support on large-scale industrial deals. The firm’s corporate law and environmental law attorneys regularly advise clients on transactions with significant environmental components across New Jersey, New York, and surrounding jurisdictions.
Environmental Due Diligence in Energy Asset Acquisitions
The due diligence process for a liquid energy terminal acquisition differs significantly from that of a typical commercial real estate or business purchase. Terminal facilities commonly have environmental histories involving underground storage tanks, soil contamination, stormwater management systems, air quality permits, and hazardous substance handling records. Identifying the scope of any legacy environmental issues, and understanding who bears financial responsibility for remediation, is a critical component of transaction structuring.
Buyers who fail to conduct thorough environmental due diligence before closing may find themselves responsible for cleanup costs that were not adequately reflected in the acquisition price or addressed through indemnification provisions. Federal environmental statutes can impose significant liability on current property owners for pre-existing contamination in certain circumstances, making pre-closing investigation a non-negotiable part of responsible industrial acquisitions.
Regulatory Compliance and Permitting
Liquid energy terminals operate under a complex overlay of federal and state environmental permits, including permits related to air emissions, stormwater discharges, spill prevention and response planning, and storage tank operation. Acquiring these facilities requires understanding which permits transfer with the facility, which require new applications from the buyer, and whether any outstanding compliance issues require resolution before or after closing.
According to the U.S. Environmental Protection Agency, facilities that store significant quantities of petroleum products must maintain Spill Prevention, Control, and Countermeasure (SPCC) plans. Buyers of terminal facilities must assess the adequacy of existing plans and ensure that compliance obligations are properly maintained after the acquisition closes.
Environmental Risk Allocation in Industrial Transactions
Environmental risks in industrial acquisitions are typically addressed through a combination of representations and warranties, indemnification provisions, environmental insurance, and post-closing escrow arrangements. The goal is to ensure that each party bears an appropriate portion of the environmental risk associated with the assets being transferred, based on what was known at the time of closing and what the parties agreed to address contractually.
Contact Mandelbaum Barrett PC for Environmental and Corporate Law Guidance
If your organization is involved in an industrial acquisition or a transaction with significant environmental components, the environmental law and corporate law teams at Mandelbaum Barrett PC can provide the due diligence and transactional support your deal requires.
Reach out through our contact page to speak with our team. We are here to help you navigate complex transactions from due diligence through closing.
These stories are successful case results from our attorneys. Please note that results may vary depending on your particular facts and legal circumstances.