Securities and Exchange Commission (“SEC”)

           Regulation S-K, Item 103

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EPA issues new SEC disclosure guidance 5/11/2001 In 1998, a study by the EPA Office of Enforcement and Compliance Assurance (OECA) found that 74 percent of publicly-traded companies had failed to adequately disclose the existence of environmental legal proceedings in their 10-K registration requirements as mandated by Securities and Exchange Commission (“SEC”) Regulation S-K, Item 103. As a result, OECA recently issued a guidance document advising regional offices when they should inform targets of EPA enforcement actions that enforcement proceeding may be a reportable legal proceeding under Item 103 of Regulation S-K.

The document entitled “Guidance on Distributing the Notice of SEC Registrants’ Duty to Disclose Environmental Legal Proceedings in EPA Enforcement Actions” indicated that any enforcement action initiated by EPA is potentially a “legal proceeding” that is subject to SEC’s environmental disclosure requirements. The guidance states that a “Notice of SEC Registrants’ Duty to Disclose Environmental Legal Proceedings” should be distributed to parties that are subject to an EPA initiated enforcement action or where the agency has the lead for prosecuting the case.

The notice is to be distributed to the agent of the company upon the commencement of a formal proceeding, which the guidance defines as the filing of an administrative complaint, issuance of an administrative order or sending of a letter demanding payment of stipulated penalties. The administrative legal proceeding must have been taken in response to a violation of a federal, state or local law or regulation with the primary purpose of environmental protection.

The notice should not be distributed if the target of the enforcement action is a federal, state or local government entity, or if the case has been or is expected to be referred to the Department of Justice. Moreover, if the lead enforcement personnel reasonably believe that Item 103 would not apply based on the facts or circumstances of the case, the notice need not be distributed. For example, an administrative order for access or a PRP information request would not likely have to be distributed.