Winter 2004-08 EPA to disclose environmental violations to the Securities and Exchange Commission

Number 54
Winter 2004

EPA to disclose environmental violations to the Securities and Exchange Commission

Securities and Exchange Commission (“SEC”) regulations require companies registered with the SEC to disclose, on at least a quarterly basis, the existence of certain administrative or judicial proceedings taken against them under federal, state or local provisions whose primary purpose is the protection of the environment.

By law, counsel for publicly-traded companies must disclose to the SEC financial liabilities of at least $100,000, including environmental violations or the existence of pending or known to be contemplated environmental legal proceedings. In furtherance of the SEC’s mandatory corporate disclosure requirements, the U.S. Environmental Protection Agency (“EPA”) announced on July 16, 2003, that it intends to comply with the Sarbanes-Oxley Act of 2002 by providing notice to the SEC of environmental violations by publicly traded companies. Failure to comply with the act’s notice requirement could result in sanctions to the company’s senior officers and civil and criminal actions against company employees. The Department of Justice, EPA, and the local environmental agencies must also be notified of any known violations.

Compliance with the SEC’s requirement to disclose environmental legal proceedings is important to EPA because it increases public access to corporate environmental information. Increased corporate environmental disclosure also helps maintain a level playing field among companies, helps to raise company awareness concerning environmental issues at the highest levels, and enables investors to more fully account for environmental matters.

More information

For more information, the SEC’s environmental disclosure requirements can be found at Chapter II of 17 C.F.R. Part 229, and specifically at 17 C.F.R. §§229.101, 103 and 303.

© 2004 Goldman Antonetti