Jamie Kiser, COO and general counsel for Rhyno Partners, a Charlotte, NC-based investment group, has decades of experience in handling environmental issues, especially in relation to acquisitions and disposals of businesses and properties – which is a time when many previously unknown liabilities and exposures come up.
The best way to avoid a nasty surprise during the middle of a transaction is to make sure environmental issues are an integral part of your due diligence process.
And it pays to have an expert – an environmental consultant – do the work. Or, as Jamie puts it: “You come to find out that you’ve not only bought a million-dollar building, you’ve bought a $10 million liablity.”
We get into detail on that, as well as how to avoid liability for things that aren’t your fault, why industrial sites – and veteran companies – pose the most risk, and more, including…
- The importance of “history” when investigating a site
- How to properly use due diligence to gauge risk and make effective business decisions
- Why small companies have more to worry about with environmental liabilities
- A strategy to make sure you catch hidden “environmental gorillas”
- And more
Mentioned in this episode:
Voiceover: You're listening to the Business of Environment Podcast with Mark Roman.
Mark Roman: Okay, welcome everyone to the Business of Environment Podcast where we explore insights on the intersection of business, the environment and regulation. I'm your host, Mark Roman. I'm really excited about today's podcast because we have a very special guest today, Mr. Jamie Kiser. Jamie is the chief operating officer and general counsel for Rhyno Partners, an investment group based out of Charlotte, North Carolina.
Jamie's an attorney with over 28 years experience in private practice and as an in house counsel for a multinational manufacturing company. As in house counsel, Jamie's practice included the management of environmental matters for the company. Now, Jamie's education has allowed him to walk the same holes as basketball royalty. You see, Jamie's a graduate of Davidson College and the University of North Carolina will school.
Jamie and I have worked together on many environmental matters over the years that were primarily associated with acquisitions, divestitures and disposals of businesses and properties. And as a result, Jamie's been a client, a colleague, and most importantly, a really good friend for many years. Welcome, Jamie to the Business of Environment Podcast.
Jamie Kiser: Thank you, Mark. And thanks for that really nice introduction.
Mark: I appreciate you taking the time to join us and I'm sure the listeners are going to be well educated on what you have to say today. But before we jump into anything specific, Jamie, beyond the brief bio that I gave, can you let everyone know a little bit more about, like your background and, and what really led you down the path to practicing law and the environmental field?
How Jamie Got Into the Environmental Field
Jamie: Sure. So I guess going back to the, sort of the first question would be how did I get into practicing law. I, my father was an attorney and was in house counsel. In fact, he was general counsel for a company for a bank, small bank here in North Carolina that is now pretty well known. It's now Bank of America. And so when he retired in 2001, he retired not from North Carolina National Bank, but he retired from Bank of America. At the time, I believe might have been the largest bank in the country in deposits.
And so, you know, having been exposed to him going to law school was a pretty natural thing. I worked for a couple of years in finance, and then decided that I would give law school or try and so, went to law school and came out of law school, went into private practice and had a general corporate-focused practice and got a call from a headhunter about joining a multinational firm and I told him at first No, I wasn't interested but I know a little bit about the company and so I said, Sure, I'll go in and talk to them. And lo and behold, I got an offer.
And I went to work for that company that was headquartered in London, but historically was based in Charlotte, North Carolina. And I was there for almost 20 years until we were acquired by another multinational firm headquartered in Denver, Colorado. So in terms of how I got into environmental law, I had not done any sort of environmental work in private practice, and just out of necessity, when I got to the in house position, we were thinly staffed and we had just two of us here in Charlotte, the president and general counsel and me covering all legal matters.
And this company was a company with over 100 years of history, and so of course, had some environmental issues to be addressed. And so I was thrown in the fire very quickly after I walked in the door in June of 1999 and had to learn as I went about all of the tricks and traps and all of the, you know, the issues that come up with dealing with not only historic environmental matters, but also you know, environmental matters that come up while you're operating a manufacturing company.
Mark: So talk about sink or swim huh? You were thrown to the wolves, if I may say. Well, I can tell you you were quite successful at what you did. Your reputation is very solid in the field and, you know, my work experience with you has been only positive and I've learned a lot from you. Tell us a little bit about Rhyno Partners. What you guys do and you know, what you do for them?
Jamie: Sure. So, Rhyno partners is a completely different position from what I'm used to. This is a very entrepreneurial endeavor. It's a couple of friends, one primary investor and we are simply finding good companies to invest in and purchasing them and we even are working on a startup. And so this is a new world for me. It requires me to put on not just the lawyers had but the business hat and some of the skills I gained while in house counsel.
But it also is requiring me to learn all over again, because there are parts of being an entrepreneur where you're doing everything and some of this is pretty new to me. So once again, I'm learning as I'm going. So it's been challenging and fun, and we'll see how it goes. We've been at it now about, just about a year.
Mark: Well, congratulations on that. It's it sounds exciting and, you know, best you on that. Now I have to state this for the non-basketball fans out there and I can't believe I have to ask this for you, of you but please fill in those listeners that really don't pay attention to basketball. The famous fellow alumni from Davidson College that you're aware of that are in the basketball field now.
Jamie: That's right. Well, there's one in particular and he, at this point in time, maybe the most famous Davidson College graduate. All their, over history there've been a few that were famous but Steph Curry graduated, well he hasn't graduated yet. He's promised to come back and finish his degree but was at Davidson for three years and I think most people that are basketball fans know a little bit about the history of the Baby Faced Assassin and how he was overlooked by all the big schools. ]
And Bob McKillop who is a wonderful coach and a wonderful leader and a great asset to Davidson College recognized I guess, Steph's potential and greatness and he brought into Davidson. So Steph was several years behind me but we actually play, have played golf together on one occasion so I can actually I've got a club in my bag that he swung, and that probably will end up on a wall in my house someday if my wife ever lets me put it up.
Mark: Hermetically sealed also.
Jamie: That's right.
Mark: And I feel confident enough I don't have to say mention any alumni from Tar Heel Nation, but if anyone doesn't know that, they're free to visit my office and see all the Michael Jordan memorabilia. So we'll leave it at that. Now we worked together for many years while you were in house counsel at that large firm, a manufacturing company, especially during due diligence for property transactions. Now, from a legal standpoint, Jamie, can you expand upon the importance of due diligence, especially during these transactions, whether you're buying or selling?
The Importance of Due Diligence
Jamie: Yes, it's, you know, from my perspective or from the perspective of a cautious lawyer anyway, and certainly, hopefully of the management of any company when you go to buy a property or a business, understanding what you're getting and recognizing the risks, especially when you're talking about industrial properties, it's absolutely critical because you may think you're buying a million-dollar building and you've come to find out that you've not only bought a million-dollar building, you bought a $10 million liability.
Because the property is contaminated. You didn't do your due diligence. You didn't get your innocent buyers defense and you're in trouble. And with some of the acquisitions we did, when I was in house, we were, you know, these were multiple in on a couple of occasions, 2 billion-plus dollar acquisitions. And you know you're buying some environmental liability, but in the scope of things, it's a liability that you will do except to get the business and then it's an argument of how you either cordon off or hopefully have the seller if the seller still available, keep all or some of that liability.
But due diligence is critical. It's folly to go into any transaction that involves real estate and not understand what the potential liability is there. In fact, I mean, you know, you mentioned earlier, and I've just got to pause for a second and say this, you talked about how I was thrown in the fire and how I had developed somewhat of a practice around environmental law, but you, in particular, Mark, were responsible for a lot of my education.
You know, if we're not having the opportunity to work with you that, you know, I would have possibly gotten to the level of knowledge and ability to navigate some of these regulatory and liability issues, but you got me there a whole lot faster. So for that, I'll always be grateful. I just wanted to say that. And, you know, but also, you know, because we have had such a good relationship for so long I called you when Rhyno Partners was, we're in the process of buying a building now.
And, you know, it's a small building, a small parcel of land, but purely out of habit and, you know, what I think is necessity. I wanted some level of due diligence and I asked you to help us out with that and you've been incredibly helpful and you've identified some risks and we're now in a position of making some business decisions.
But I'm comfortable that we have all the information and all the tools we need to make an informed and intelligent decision about how to move forward with this piece of property, which is important to this, you know, this nascent business that we're starting. So, you know, before I was the lawyer that got the call in house and said we're buying this business or this property, you know, start the due diligence process, which includes not only environmental but a lot of other things. So in this case, I was the partner owner, and my initial reaction was call Mark and ask him what he thinks we ought to do.
Mark: Well, thanks, Jamie. I'm simply thankful that we can continue to work together. You know, not only continue our personal relationship but our professional as well. It's, I'm extremely thankful for that. And you just mentioned, you know, your role with the former large firm company and now Rhyno. What do you see as your biggest challenge for you and serving as in house counsel for that big company and now in house counsel, COO, you know, a man of many hats for the investment group when it comes to environmental matters?
Jamie: In terms of the transition, the, I guess the biggest challenge is when you're with a large, corporate multinational firm, you're usually working with a lot of talented, experienced people. And so if, for example, if I had a question and I'll just stick to specifically to environmental matters, but if I had a question or a concern about let's say, a site that we were having to manage that we'd inherited you know, I had somebody down the hall that I could go, our general counsel and president, and I can go talk, commiserate with him about you know, issues and questions.
You also have resources available to you. You have the money to pay to do, for example, the thorough due diligence. And it was on such a large scale and, you know, sophisticated people that understood, you know, what needed to be done as you protected the company from potentially significant liability, not just in the due diligence phase, but also in ongoing operations and in the managing of existing liabilities. And in walking that regulatory tightrope. You know, this is such a small enterprise that it, the, I will say these are talented, very smart people that I'm working with, but they've not been in the end environmental world.
And so, you know, this is all new to them, all the discussions we're having around buying a small piece of property is new. They don't have some of the experience that I've had with merger and acquisition work. So some of that is new to them. And there's a cost sensitivity because you just don't have the resources that you know, close at hand to spend money on an issue and invest in preparation and prevention, like you would in a large multinational corporation where people immediately understand all the issues, or someone within the company understands all the issues that you may face down the road.
Mark: So I'd imagine you had to reevaluate what level of risk and exposure you're comfortable with under the different roles. And how difficult was that to manage that change in perspective?
Identifying and Assessing Risks in Acquisitions
Jamie: In, you know, frankly it, I don't think it was that difficult because you, in the larger multinational that I worked in and that you helped us with so much, the issues and the ability to sort of issue spot or risk identify risks. The risks aren't entirely different, there, it's just a different scope of risk. So for example, I think I mentioned you have a $2 billion acquisition and you know you're buying an old, hundred-year-old manufacturing facility that hasn't been operated for 20 years, and you know that you've got an environmental issue there.
But you're willing to, you know, in the scope of the acquisition, it's not a, it's a risk that worth taking to complete the acquisition. To take on that liability and you have an under, you know, we had an understanding and personnel in the company had an understanding of what a particular contaminated site was likely to, what sort of risk it posed in the long term. They usually, you know, there were sometimes surprises, but often, you know, we could identify a range of liability in terms of cost, but also, more importantly, time.
You know, when do we get out from under this? And so, you know, I'll use for, as an example, the purchase of this property that we're looking at, you know, it's a $2 million or so, acquisition. So if there were a potential liability of any kind, that was a million dollars. You know, we wouldn't have blinked at that in one of the large acquisitions at the multinational company, but here that's, you know, that's not only a deal killer but potentially a business killer. And so, it, you know, the skills or tools to identify risks and issues I think are the same.
But the magnitude of the risk that caused the ability to tolerate that is much less. And so you have to be, what I'm learning is I have to be a lot more careful. I have to be a lot more diligent in understanding exactly what the risks are. You know, we bought a company that services the natural gas industry with gauges and heaters and dials and pumps and, you know, a one-time liability that we just call our insurance carrier and a multinational and say let's, you know, help us work through this.
Just the litigation costs with this small company, the natural gas company that we bought, could shut it down. Could bankrupt it. So it's all a matter of magnitude and it's all a matter of scope. But I think the assessment of risk, you know, both environmental and otherwise and the understanding the upside and the downside of, you know, ultimately everything comes down to a business decision. And, but there's greater potential for a business ending liability when you're small. And I think that's the biggest difference.
Mark: Yeah. So it's important for those of our listeners that, you know, maybe looking into buying or selling business or property it's important to understand your level of risk and what you're willing to accept as part of the transaction. And also it's important, whether you're a big company, small company, in between, do your due diligence in essence. Make sure you cover all bases. Beyond that, is there any other advice you can give our listeners that are thinking of acquiring or selling a property as it pertains to environmental matters?
Jamie: I, you know, I would say well, first of all, and we've already touched on this, but, you know, be thorough in your due diligence around environmental matters. You know, if you've got an operating entity, be, you know, proactive and anticipate and prepare for issues and how to avoid them. I mean you talk about, I love your analogy, but I love you talk about gorillas. And I think that comes from the, there's a film where people are passing a ball back and forth and the watcher is instructed to count the number of times the ball is passed. And during the film, I think a gorilla walks across the screen.
And something like, maybe it's a third or a half of the people watching the film never see the gorilla because we're so deeply involved in counting the number of times the ball is passed back and forth they miss it. And so, you know, working in the multinational firm where I was, you know, we had heavy manufacturing industry going on. And more often than not, was when we had acquired an entity and went in and found my gosh, there's, again, using your term, gorillas everywhere that people just missed.
Things that are common sense and simple. So, you know, I would say anticipate and then be proactive. Knowing, for example, the applicable laws, regs, rules wherever you are, state and otherwise. And if you don't know, you don't have the capacity to be fully proactive, to fully anticipate and to know the laws, rules and regs, higher goodness consultants that do or good attorneys that do. get somebody to help. I mean, we're, at the multinational where I was we needed Mark Roman. We needed an invasion environmental because we simply didn't have the personnel.
And in my case, for a lot of it, the technical knowledge to achieve the, you know, to anticipate and be proactive. So, you know, if you can build a good team, both internally and externally, I think that would be probably if I summarize it into one statement, that would be my best advice. Build a good team and use outside consultants as needed and make sure they're good and they're good at what they do.
Mark: Yeah. And, you know, and that applies, like I said, small, medium, large, you know entities, whoever's involved that you really need to do that due diligence. And the one thing that I remember the first time I came across your work at the multinational firm, was related to the need for someone to understand that hundred plus year history of all the companies that, you know, everybody starts you know, like Rhyno, Microsoft started the same way. Hewlett Packard, InVision, everybody starts with a small grouping, you know, working out of your garage, if you will.
And then they become they acquire other businesses, they do other functions, they manufacture different things, whatever it may be. And there's a long history there. And I, the first time I came across your work was where you really rolled up your sleeves and here you were thrown to the wolves again. All right, Jamie, figure out the history of this multinational firm that has, you know, over 100 years of history, and you were able to figure that out. I mean, you're, I equated your work to a detective of sorts. Can you expand a little bit about the importance of understanding the history of the organizations that, you know, relative to environmental matters?
Getting a Historical Context of a Company Regarding Environmental Matters
Jamie: Certainly, and, you know, you gave me a lot of credit for being a detective. But as I said before, I had a good team that helped me dig into and even find some of those historical documents. Some of them buried in warehouses in Chicago and Charlotte, North Carolina. So once again, that was a team effort as well. But, you know, the, I'll speak to my experience, but the importance of it is in environmental matters especially, oftentimes you're dealing with issues that were, they may have arisen or been discovered fairly recently, but they were caused, you know, 20, 30, sometimes 50, 60, 75 years ago.
And when, in our case, when you had a company that had, you know, it was a circuitous route from its beginnings to what it was when I work for it, but a company with 100 plus years of history. You know, oftentimes, what I found was we thought, okay, we've been made aware of this issue at this specific location. They, you know, The EPA or a third party says they think it's us. And you dig into that corporate history and you say, wait a minute, there's a branch in this history. And this entity or this location branched off of us years ago. And this isn't our liability.
And we were successful more than a few times because we dug into that corporate history to say, No, this is, you know, you're coming after us but this is not us and here's why. And, you know, that saved money, you know, in litigation expenses, probably. It certainly saved money in cleanup costs or in remediation costs at a facility that was alleged to have been owned by our corporate entity but hadn't been. And so that's the easiest example of understanding and knowing the history. And the other is legally it may be you.
You're involved in a site, but then they try to saddle you with constituents at the site that if you know the manufacturer, in our case, the manufacturing history of the company you might know and Mark, you are excellent at this, you would know there's no way that this operation generated this waste. So you're barking up the wrong tree third party or whoever it might be that's coming after us. And so knowing the, you know, you may manufacture blue widgets today, but you never manufactured yellow widgets.
And if you can show that you never manufactured yellow widgets then you can show that constituents at a site, there's no way they can be your constituents because those constituents only come from yellow widgets, not from blue widgets. So, you know, those are the two most prominent reasons that I found, as I practiced in house that knowing the history of a company is so valuable. It can really push off a lot of liability that really isn't yours.
Mark: Right. And what we, a big mistake that I find a lot of folks make, I have a few clients that, you know, take these approaches. I always tell them, don't assume anything, you really need to confirm everything, especially when it comes to history when it relates to environmental matters. And where that comes up, especially to the forefront, is in transaction.
You know, for example, we just dealt with somebody that, the client that was in the process of purchasing an office complex and he didn't understand the need for due diligence. And, you know, I told him about it just because it's an office complex today doesn't mean it was one yesterday, you know? Well, what happened on that property before? Because once you become an owner of that property, you inherit what's there. And so you need to understand that history.
Just like, you know, you need to show that hey, what I'm doing today doesn't equate to what the issue that you're you're looking at me to pay into, like the blue widget versus yellow widget. So so you know, history is extremely important for everyone to understand and in environmental matters. So thanks for those great examples. Jamie. One of the biggest complaints I hear relative to environmental matters is staying in tune with regulations. What do you believe makes some successful in navigating these complex regular regulatory environment while others struggle?
Why Some are Successful and Others Struggle When Navigating Environmental Regulations
Jamie: Well, I guess on the one level, it's, you know, it's you can never stop studying and learning. I mean, that's critical if you're going to be involved in any way in any sort of environmental work because although I guess the science doesn't necessarily change, the level of knowledge of the science change the determination of the danger of some constituent may change. I mean I think a good example recently is it seems, as I was exiting the multinational company, I kept hearing about all these concerns. So the last maybe it's risen the last 10 years of one four dioxane.
And you know there are wastewater treatment plants. You know, they test below those, the discharge and, you know, that's their concentrations often in those and it's because one four dioxane comes from things, consumer goods, detergent and other things. And so, you know, if you stopped your studying and learning at, you know, in 1999 you wouldn't be as aware of this. For me particularly, around the issue of navigating regulatory issues, I'll say it again, build a good team. You know, have your Mark Roman there to give a call to and your vision in environmental there, and, you know, for me as well, it was building a good team of outside legal counsel.
Because, for some of us, it's impossible to keep up with all the regulatory issues by yourself. The best I could do was keep up with the big issues that are the issues that affected our industry specifically, or the sites where we might be located specifically. But, you know, you need to engage, you know, if you've not engaged outside consultants and attorneys, subject matter experts, bring them in house. Because if you try to rely on sort of static knowledge of, well, this is how things are now and this is how things will always be, you're going to get surprised.
Mark: Yeah, I've often found that many times regulations aren't paid attention to simply because they're difficult to understand. You know, they're not the greatest reading material, if you will. And I can't stress enough the importance that regulations need to be understood in order to be successful and complying with them. I mean, it's, you know, common sense. And what's key there is to find someone that can translate this legalese if you will to plain speak.
And Jamie, you have a special talent for that because and Rhyno Partners is very lucky to have you onboard because I've experienced your ability to do that translation many times during complex transactional matters that we were both involved in. And it enabled me to better understand the issue at hand, and as a result, do a better job as an environmental consultant to address that issue at hand.
Because you know, I read these things and much of it goes over my head simply because of the way it's worded and organized and, you know, sometimes it takes me two or three times reading it. But when I consulted with you on these matters, it, you know, and it is quite evident in our interview today is you're able to distill down into simple to understand language, what's going on. And that's a talent. And that, like I said Rhyno is very lucky. Rhyno Partners is very lucky to have you onboard there with those matters.
Jamie: Thank you for saying that. And, you know, it takes me two or three times to read those regulations too. If it only takes two or three times. I'm pretty happy about it. You're doing pretty well.
Mark: Yeah. What's the number one piece of advice for businesses dealing with potential environmental challenges that you can give them and why?
Jamie; Well, I guess it will go back to what I touched on before and probably was a little loquacious on but you know, it's anticipate the issues. You know your business hopefully better than anyone else. You know, if you've got someone in there in your business who works on environmental health and safety issues, make sure that you're sitting down with your team, you know, at each site if you've got multiple sites and understanding how you avoid, how you prevent creating environmental issues for yourself.
You know, in heavy industry like I was in, we had sumps and trenches. And one of the things we found and, you know, prior to our operation of them or was that those sumps and trenches were well built, but they had seams in them. And sometimes the seams leaked, and if whatever was going into those sumps and trenches could find its way into the ground, which could then find its way into the groundwater. And all it took to prevent that was regularly inspecting those sumps and trenches and sealing those seams, sealing those gaps.
And so, you know, there are things you know you don't know and things you don't know you don't know, but you should be able to prepare for and anticipate and be proactive about the risks that you know are presented by your operation. And, you know, it goes back to that, the gorilla issues. You're working hard every day to put your product out the door, but don't be so, you know, head down, nose to the grindstone working that you failed to look up every once in a while and make sure that, you know, your practices are environmentally sound and you're not creating a multimillion-dollar issue for yourself.
Mark: Yeah, one of your comments really hit home for me. It's one of the best pieces of advice I was given as a youngster and that's know what you don't know. And you'll get pretty far in life. Well Jamie, you're a pretty busy guy. And can you share with our audience any interest or hobby that you enjoy doing with whatever free time you do have?
Jamie: Oh gosh, I have a lot of interests and a lot of things that skim the surface on unfortunately don't go in-depth on. But, you know, I love being outdoors and hiking, cycling. I run a little bit. Play some golf, I won the flight, my member guest golf tournament this past weekend with actually my partner from Rhyno Partners. So we had a lot to celebrate this weekend. I think, you know, in my spare time what's bringing me the most joy now is just watching my 15-year-old daughter and 12-year-old son and their academic and athletic pursuits.
Both run cross country and had really successful years, and, you know, that for some reason I don't know why but that brings a lot of joy to watch them compete and participate in sports. But I like to be on the move, hopefully outside. Because I spend a lot of time in my chosen profession sitting in a chair and reading and studying. And so I like to get out and get moving when I can.
Mark: Excellent. That's a, it's a great time of year to be doing that also. Well, Jamie, hey, I want to thank you very much for taking the time to join us today. If people want to get in touch with you to find out a little bit about, more about Rhyno Partners and yourself, how would they do that?
Jamie: Rhyno Partners' website is currently being built but you can find me on LinkedIn. It's under either Jamie or James Kaiser. It'll get to both in Charlotte, North Carolina. And I guess until that website is built call Mark Roman. He can put you in touch.
Mark: And what we'll do is, and Jamie's last name is KISER. So look for him on LinkedIn, but we'll have some information on the podcast page about how to get in touch with you also in the future. Jamie, I want to thank you again. And I really appreciate you taking the time out today and sharing your valuable knowledge with everybody. And I wanted to thank everyone for listening to today's show. And until we share some time together again stay safe and be well. Thanks.
Jamie: Thanks Mark.