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Welcome to the net profit podcast with Ryan Kimler your net Profit CFO helping business owners like you grow their net profit one episode at a time and now your host Ryan Kimbler.
Hello and welcome to another episode of the Net Profit podcast.
I'm your host Ryan Kimler.
The net profit CFO today I've got a very special guest with me, Jennifer Novak.
And today, we're going to be discussing environmental law.
It is a brand new topic to the podcast and it's one that I think a lot of business owners don't think about, even though sometimes they definitely should and and can't have an impact on their business.
And I am excited to hear Jennifer share about that topic with us.
Jennifer, welcome to the show.
Thank you so much, Ryan.
I'm excited to be here.
Yes, I am excited to have you on the show.
I mean, as I just told my audience, this is a brand new topic for us and I'm excited to dive into it.
But I wanna give you an opportunity.
I gave you, you know, just a short intro.
I know you're an expert in environmental law and litigation around that topic, but I wanna give you an opportunity to kind of share your background and kind of how you got to where you are today.
So I always wanted to be a lawyer.
I was born and my mom was in law school and grew up around her law school classmates.
So all these when the lawyers and at the time that was pretty unusual of women still weren't a major presence in the legal profession.
And I just thought that's what women did.
So the same way some people grow up and you know their their dad's doctors, they're gonna be a doctor.
That's really what shaped a lot of my perspective, but also in growing up around these women.
I came to the conclusion that the law is about helping and solving problems and saw it as a really useful vehicle in a lot of people's lives and different aspects of life to be able to go in and navigate problems for people and and help sort that out.
So I took the traditional path, you know, went to college, went to law school.
I worked for a judge for a year, which was a great education about how they view the world.
Litigated with some law firms for a few years.
And then I had the opportunity to go work for the California Department of Justice, the Deputy Attorney general representing a whole bunch of California's natural resources agencies.
And that was really my first exposure to what environmental on is it presented a really unique perspective and that these agencies have to balance the fact that we live in a real world where there are businesses, there are industrial and manufacturing operations and oil and gas and and the gambit and at the same time their mission is to protect human health and the environment.
So how do you navigate that where they have this enormous power?
Is it is most government agencies do, but how do you wield it in a way that seems both fair and effective?
I spent 10 years defending the agencies and their decision making and having to look through that lens of what makes sense in this situation and and where are we trying to fix a problem.
But doing it in an unfair way and for the last 10 plus years, I've had my own firm now trying to bring that perspective to the private sector.
Most of our clients are small businesses to medium sized businesses, though there are some who are Fortune 500 or international based and we also represent property owners because especially in California we have a legacy of aerospace and oil and gas and manufacturing and all of that has left behind issues that we don't always know about when we get into a property transaction.
And then there's a small component of my practice where we represent nonprofit groups, and sometimes it might be to help them assess whether or not the rules are going as far as they might wanna see in a way that isn't Bective, but also because some businesses honestly are just recalls trend and what do you do when you have the vast majority of people actually trying to follow the rules.
And yet some of the people who are flaunting them just get away with it.
Too often in enforcement cases you go after the low lying fruit, and those are the people who are trying as opposed to the people who are making life difficult.
And to me, that's so fundamentally unfair.
I have zero problem going in and forcing the law against sure.
So absolutely a little bit about what my world looks like and how I got here.
Very interesting, very interesting.
So I wanna start out and I think you know you kind of talked about this a little bit.
How do we draw the line between over regulation under regulation? Right.
I mean, you were kind of talking about it, some real fine line of how do we how do we make this situation a win win where you know we can enforce the law but also at the same time you know let people run their businesses too.
I I think yeah.
I mean, how do we how do we balance over regulation versus under regulation?
I think there are really 2 components that I see a lot of.
I mean, the first is education and the environmentalists are gonna hear this, and they're gonna roll their eyeballs because they're used to people, especially the government, talking about.
Just educate people.
Give them a chance.
But the problem is that that's not really the government's job, or at least not the way it sees its job.
They'll they'll put regulations out there and they might put up some guidance documents frequently asked questions, but then you're left to your own devices even if you have the wherewithal to hire lawyers or consultants to advise you as to whether this applies to you and how to follow it, what the consequences are.
You also are assuming that they know what they're doing, and I see a lot of bad advice being given the settings for most people you know you're smart enough to run a business.
You're smart enough to figure a lot of things out, and there tends to be an assumption that, OK, something I needed to know.
I would know it right.
Someone would make sure I knew it, and that's just not the way the system works.
So for me, that's the first big feeling is that we have regulations on the books and then we look at them like they're ineffective when really we've never given them the chance to work.
And then what happens is we slap another regulation or law on it to try to fix the fact that there are, you know, effective or to go farther because people weren't complying.
And we're not seeing the results that we want.
So those those are two big issues, which is again you're you're not getting things a chance and then uneven enforcement as I alluded to earlier, when you're not actually enforcing the rules that you have, then some people are following them, some people aren't and you're not seeing it's intended goal or result.
You know, I I would also throw in here the fact that it is complicated as I mentioned.
And so for a lot of people, especially with a family business, the things you were doing 20,30,50, 100 years ago are not the way we look at the world now.
And this is also an area where you're challenging for both the lawyers, consultants and the businesses.
It's so science dependent that is science means we can discover more and more chemicals and other products, and in smaller and smaller detections and we can study the potential health effects it needs.
The rules are constantly changing because we're constantly trying to figure out how we get to that level.
And I could talk about this for example and better like plastics or what we call forever chemicals, but that there is no one stable period of time where you can just go with the flow.
I got this.
It's all good, and yet that's what we expect in our businesses.
We get to a place of certainty and environmental laws, just not certain.
I think for I think for a lot of business owners, you know until they get hit with a violation, right, this is something that is not on their radar.
And I wanna, you know, and for a lot of them, probably not at all.
You know, it's just like as you're running your business, I think as as a business owner, you're just thinking about what are the things that I have to do right.
And and I wanna go back to the education piece that you talked about.
You know where you feel like there's, you know, kind of a lack of education in the marketplace on the laws that are in place.
I mean where where are some good resources or places that business owners can go to get more educated on these topics of environmental law and and being able to make sure that they are compliant.
So depending on your industry, there are often trade groups and the lot of them have their own lobbyists or lawyers who are involved in the organization.
Consultant sewer involved in the organization and they tend to keep their finger on the pulse of what's coming next, and it also assert the right to that particular industry and into that conversation to try to see if they can't shape where the regulations are going before those are adopted, or even once it's adopted, to maybe get a an informal agreement with the Regulatory agency that OK, you're not gonna go this far. Right?
We can approach this maybe in a step by step by step, so that we look at the science and if the data show that we need to take the next step, we take the next step.
If it shows we have no problem to let us go, right?
And so that can be one way for a small business to arm itself and to have the heads up when these things are gonna happen, because otherwise, I mean, I'm telling you is some of these permits or 100 plus speeches long and then what they're doing is sometimes just incorporating other things that you can find elsewhere.
And it's this never ending.
You know, one thing refers to another refers to another, and if you don't know all of that, then it's very difficult for you to know.
You know, if my neighbor can do one thing, why can't I do it right?
It it seems unfair, but there may be reasons why your neighbor is in a different situation than you, you know, so it's no there.
There's a rationale behind all of it, but if you're on the outside, it may not make sense.
Sure, absolutely.
So I think the next I would love to just hear you know when you're clients come to you, I mean I guess how does the process work, you know and you know if a business owner is in the unfortunate situation that they're found like in violation of an environmental law, you know, how does, how does it look, you know, to work with you?
Yeah, it's funny because the clients who come to us as lawyers directly tend to be the people who've been burned in the past, where they were redeveloping a property or they were engaging in their ordinary course of business.
And then they found out they had violations, and it was so painful and expensive.
Took so much time that they told themselves, and never doing this again.
And then then they bring us in at the beginning of the process.
It's not even that involved.
It might just be, hey, as we go through the startup of this business, the development of this property, you know, from time to time, we're gonna loop you in and we want your feedback to course correct us or to ask questions that we may not be seeing.
That was the people who, right, they've learned their lesson and they they know the importance of getting that information all throughout the process, more often than not, it's a situation like the one you mentioned, where if someone just sitting at their desk one day and they get a letter in the mail on official government letterhead or they get a letter from their next door neighbor who's trying to sell their property and they've determined, like, whoops.
Yeah, we can't sell our property because we've got some sort of contamination.
We think it actually came from you guys in those circumstances.
The first course of action is usually they go to an environmental consultant, you know, an engineering firm, a high geologist, something along those lines.
And for the most part, I think a lot of the consultants just get involved and they handle it and they don't think of it as a legal problem.
Many consultants, however, have seen this process of what happens to clients who aren't armed with the defense and information, and they know enough to say, look, I think you need a lawyer to look at this too.
And you truly is more of a science problem than a law problem.
So it's not like you're paying a lawyer an extreme amount of money to take a lot of time to look at it, but among the things we can do are to ask some basic questions.
I mean, just yesterday I was talking to a consultant about umm, like why do we have to wait for one thing to happen to for another thing to happen.
Another thing to happen that could take years and really be at the mercy of a government agency, couldn't we split this project into like couldn't you tackle part of it now and then you know, simultaneously be negotiating with them over what then the broader scope looks like.
And the reality is, if we tackle the problem, the first problem now, we would make the second problem a little easier to fix.
And at that point, the consultant was like, yeah, absolutely.
You could do that.
I'm like, well, that's seems like a really logical way to do it rather than to just make this for business owner, keep waiting, waiting, waiting, waiting, waiting.
As the problem might get worse from a science standpoint, but also from a legal standpoint, what kind of liabilities might be associated with that?
So even though I do not have an engineering degree, I'm not a geologist at least know enough about the field to be able to poke and prod and ask a couple of questions.
And if they tell me this is the way we wanna do it, and This is why it makes sense, then OK, I'm on board.
But I have a client to protect at the same time and so it's just a matter of overseeing asking some questions and quite often translating the technical science speak into something that my clients can understand.
And when they come to me, because they've received a letter and they think it's a scam, I can look at them and go, OK, no, this is legit.
This is what you have to do.
This is what when you have to do it or you know there have been other times when threatened by lawsuits tonight.
Dig into it a little bit and I'm like, no, we're just going to go tell them to bounce out right there.
They really are just trying to see whether or not you'll be scared enough to throw some money at them, so let's not let them do that.
But if a business owner tries to do it, it's too easy for the government or an environmental group or some other concerned citizen.
Just blow them off.
Like, of course, you're going to tell us you're completely compliant yourself.
But you bring the lawyer in and then it gives it a little bit more of this.
No, we're drawing the line.
If you wanna get to this client, you've gotta get through me.
Yeah, for sure.
And I think, you know, having your help along the way and having your guidance along the way, it's almost like, you know, kind of like prevent it, put it, you know, putting money into preventative maintenance on your car, right, a little bit, a little bit of that along the way, you know, probably leaves your car running better for longer.
And you don't have big problems that end up costing you a lot of money.
And it sounds like, you know, dealing with the, you know, the environment and dealing with you know these regulations, you know similar situation, right, a little bit just you know not trying to cut costs and you know a little bit of money now invested over time goes a long way versus you know having a having something you know blow up in your face and then be in a big lawsuit over it.
And and I think 1 area where people are really surprised that I I preach about is in when we're talking about the transition of the business from, you know, the current owner to if they want to even close it and walk away, they're potentially gonna have some obligations to ensure it's done correctly and they don't have any violations.
They didn't know about, but more heartbreakingly, if they're intending to pass it on to family members or a property that they own the passing on to family members.
If you haven't asked the question of is this a liability or asset?
You know what really is the nature of this then?
You're potentially setting up your loved ones to be dealing with massive problems down the road, and for example, if you've commingled all your assets and you have a bad asset in there, which is actually, you know, a property or business that may have environmental liabilities, or let's be honest, other kinds of liabilities, it could be a labored employment lawsuit.
It could be, you know, a lot of things.
Then you're potentially opening up all those assets to be available to pay for those liabilities instead of segregating them, having everything be its own thing for the business or the property, so that that's the scope like that's the the universe of what somebody could tap into and the rest of it is protected.
You know, we see other situations where you know, people thought a piece of property would be their retirement, and it turns out if there's a problem with it, then how do you value what it is now?
I mean, how are you gonna entice somebody to come in and buy it from you?
Or if you're the buyer and you thought that the owner was gonna take care of all your problems for you, you made a business decision.
You evaluated the true cost of this transaction based on those promises and the assumption you weren't gonna get stuck with a half million or $1,000,000 cleanup bill.
And then what if?
Whoops, that promise can't be make good business owners need to actually be thinking about a variety of things.
An environmental issues are just one of them.
It's just the world in which I live.
So that's that's how I go. Preach.
Yeah, for sure for sure.
I know of just a short story really quickly.
I know of a piece of ground here in Missouri that used to be a a land waste film or like a, you know, like a dump basically.
And they ended up finding out that it had at one point or another, ended up being like a nuclear waste problem.
And it yes and it is not.
And and it doesn't have a business or anything like that.
It's really, you know, like open Farm ground and timber.
But for years, the government has known about the the nuclear problem, and that, and they always send a crew out to clean it up.
And no one the landowner never paid the bill.
No, no, any any of the bills.
And so you know, now you have a piece of ground that's worth probably $250,000.
And the environmental bill for the ground is like 6 or $700,000.
So you know the property is probably never going to change hands and and then when the landowner passes and obviously the government will probably just take it because they're owed, you know, three or four times with with the properties worth and those bills just continue to build because nobody's paying those bills.
And so so it's kind of, you know, and I don't really understand why the government hasn't taken it yet, right, because you know to kind of recoup sell it and recoup some of what they're owed.
But they haven't, so it's kind of, you know, the landowner owns it for now, but when they pass, it'll probably, you know, never change hands or never go to the kids or anything like that because, you know, there's these bills that have stacked up.
And so it's kind of gonna become a no man's land. Almost.
Well, it and it's just weird situation where we feel like the government is really in our business and constantly coming down on us.
But if you think about it, the grand scheme of things, whether you're talking the federal government, states, cities, what have you, they're really under resourced in this particular area where they had to pick and choose the kind of statements that they make.
On one hand, you might think they wanna go.
After that, they're really big target because that's gonna make a really big statement.
That's also really risky.
You're gonna expend a lot of resources doing it and and when I was with the state, we had situations like that where, you know, we, you know you're you're one or two people facing off against a dozen, two dozen other businesses and their lawyers and their bombarding you.
I'm trying to litigate you to death and you know you have justice on your side.
You're representing the taxpayers, but that doesn't mean these people are gonna make it easy on.
On the other hand, if you're the government and you've then say great, we'll just go after all these little guys.
Well, that also seems punitive too, right?
Like, why are you going after me when this guy down the street is so much worse than I am?
And it when I explained to people that I have a completely clean conscience representing businesses and individuals who are subject to environmental regulations, in part of my belief is that you can make far more of an impact in terms of cleaning up and protecting the environment.
If you just help people to do a little bit better.
So if all these different businesses that might otherwise be having you know operations or you know, take their permits, they're not following reports, they're not doing sampling, they're not doing.
If you could just get them all to clean up their act a little bit, then I think we moved the needle much farther than if you just go out and you slap them all and you hit them over the head.
And now there's this perception that no matter what I do, I'm gonna be in trouble.
I might have.
Why did I spend all this money trying to comply again when the guy down the street does nothing?
No ones going after him, so I it it really think that you have to look at the problem for a variety of sides and for me this is win, win, right.
I I represent a lot of good people who need to do better sometimes, and sometimes they're doing everything they should be and they're being unfairly targeted.
But you you need somebody to look at it and give you that very assessment.
Sure, absolutely.
Well, I think we've, we've covered, you know, kind of a lot of the pitfalls of the system and kind of the negative side of things.
Let's let's let's shift gears a little bit.
I mean, you know, how can a business really create an advantage for themselves, you know, through environmentalism and, you know, being more sustainable, especially in this environment, right?
And and this literal societal environment and by being #1 conscious #2 being willing to make that commitment to care about how you have your operations, where you're located, what you do and be be willing to, you know, put yourself out there.
There are plenty of businesses that now tell the different, you know, regulations and other industry standards that they're gonna adhere to.
You have companies that promise to donate money back to get you to do carbon offsets and things of that nature.
You obviously have to be concerned with greenwashing, right?
The the concept that you're not just talking about environmental issues for the PR, but you're actually following through, but there are so many things businesses can do it little tweaks here and there and some of them might cost a little more and some of them might not.
But I'm I'm I'm telling you, if you have a a business where your operations look like they're in order, like you care about whether you're creating a mess or spewing things versus not caring and everything's disorderly and somebody were to look at you thinking, OK, that's a problem waiting to happen.
People will gravitate toward the ones where that they think are doing the right thing.
I think as humans we want to support people who are doing the right thing, then telling you after studying a lot about millennials and Gen Z that is extremely important to them, that you're being as sustainable as possible.
They will purposely go look for companies that they can really get behind to support and be huge advocates for.
So I think from a money making standpoint, it's important to be thinking about sustainability.
But then, now let's talk about carrot and stick.
Going back to my world, could you do pay attention and then includes things like training your employees, not just like, hey, sweep up after a shift or like, do an inspection, but making sure they understand why they're doing it.
So they do a good job.
You're gonna avoid problems later on down the road.
That would ultimately cost your business money.
You you you may not want to pay for somebody to come in and and do these inspections internally and do audits, but if the mandatory minimum penalty is $10,000 or or somebody from an environmental group could sue you and one violation is worth up to $64,000, maybe you think twice about investing that money just like you were saying.
It's like insurance.
It's like car maintenance.
It's like going to the doctor before you actually have the problem, and it's something that either will be really expensive to fix, or maybe you can't fix it at all.
Yeah, I think you know, do you just talked about a couple of the minimum fines and things.
I mean, I think for some small business hours, they're probably not gonna have the money just laying around us.
Just pay that right?
Well, and not to mention, I mean we we definitely represent some smaller businesses and the idea of now paying consultants you know 5000 here, 10,000 here that's not something they ever budgeted for.
So at the very least, again, it's an education issue where businesses need to know, do you don't have that rainy day fund if you're not thinking about these types of issues.
And again, it's not just environmental.
It could be a whole variety of things.
Then what are you gonna do when that time comes?
And in a pretty frequent question I get is.
Well, what if I just walked away?
What if I literally just handed the keys to the government and walked away and I say and it's there unless you move to some remote island someplace and you've severed all ties and you know you don't have any assets anywhere you it's still gonna come back to you.
You you can't just make your problem somebody else's problem and avoid it.
That's why it's better to pay attention to it sooner rather than later.
Yeah, I think that's a very interesting point.
So you know, by the law, I guess beyond beyond your business, it sounds like the owners are held responsible personally as well they can be you know, certainly if you're a corporation, you're an LLC, you have a a formality where that's the person technically who owns it, right?
But I still people who own it as individuals or they didn't respect the what we call the legal fiction of the business.
The fact that, yeah, you might run it, it may only be yours, but if you had all the paperwork and you adhere to or the all the formalities and you treated it like it was separate from you, then I as a lawyer can say ohh that's that's on the business.
I mean, they're in Full disclosure, I mean, there are certain legal theories that we see where people can go after owners or shareholders or officers if they had the chance to do the right thing and they chose not to, those tend to be rare.
But simply knowing that those are on the books means, yeah, people have leverage over you and could threaten certainly to drag you in personally for something the business did.
So again, information is power.
Yeah, for sure.
And it and like you said, I mean if it's already, if it's already been done in the past and you know the path has kind of been laid already, yeah, it's, I don't know.
I I've had.
I've had so many discussions.
I mean, I'm.
I'm I'm part time therapist.
Honestly, because I I really do have to take the brunt of my clients frustrations and to hear like, you know, we've been doing this for 30 years or I grew up working in this business and you know we're we're better than the other guys or we didn't.
We never caused any problems and it's like, OK, I can only tell you what the science says and if I dig a hole gear in your property and I dig up soil and I find chemicals or I find chromium or I find, you know, nitrates from an agricultural business, then it got there somehow.
So then the question is, how did it get there?
And ultimately, where does that lead us in terms of who's responsibility does to clean that?
And that's just one element of environmental law.
But that's the one where I have the most contact with small businesses and property investors and others.
Yeah, absolutely.
I mean there's, I mean, you know we've we've been chatting for the last 20-30 minutes, but there's, I can tell there's.
So there's so much that goes into it, right?
And impossible for us to cover in 30 minutes.
Just straight up impossible.
I'm but Jennifer.
Where you know where is the best place that my audience, you know, if they're needing help in this area especially, you know, I think especially if you're a business owner out there that you don't have a plan or you haven't talked to anyone or you know you don't really, you know have a solid foundation underneath you.
Where's the best place that they can connect with you and get your help and expertise?
So let me offer a couple places.
So the first is we actually have a YouTube channel and we have maybe 4560 videos, something like that where I just talk about some of the little aspects that affect that very people.
I've been mentioning, you know, small to medium sized businesses.
Anyone in the regulated community on a variety of topics, and so that's a good place to at least learn a little bit more and get your juices flowing as to whether you're thinking maybe this applies may maybe it doesn't.
We also once a month open ourselves up for office hours.
It's the first Wednesday of every month you can make an appointment with me or with one of my attorneys.
15 minutes.
It's confidential, it's free.
Or the only one on the call.
And sometimes people just jump on.
No, and give us a scenario and then we can give them some resources.
We can you answer some questions for them.
It's not quote unquote legal advice.
It is guidance, but that's really easy and you can go to our website and see when the next office hours are and click on the link to sign up.
You can also use our website to sign up for what I call a 15 minute Discovery call, which is no obligation.
Again, completely confidential.
We have them, you know, anywhere from a half dozen to a dozen times per week, and you can just go and then select time slot and I'll talk to you and then here.
Again, it's about the education.
It's about helping.
Very good.
I like it.
I like it a lot.
Well, we'll make sure that we get all those links down in the show notes for our audience.
So they can go check it out.
I mean, especially the YouTube channel, I think that education is fantastic.
But Jennifer, I wanna thank you for your time.
Thank you for being a guest.
Thank you for coming on the show today.
Of course, right.
Thank you so much.
And the important things that you do for businesses, it's really important for businesses to get the help that they need.
So they can actually work on the things that they're best at.
Absolutely, absolutely.
Thank you.
I appreciate that.
Well, until next time, everybody go accelerate your profits.
See ya.
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