This Week in Environmental Disclosure

As we’ve posted in the past, public companies must generally disclose environmental legal proceedings in their annual, quarterly, and current reports to the SEC, and whether or not those proceedings have a material effect on the company’s financial position. Today we’ve pulled some disclosures of environmental liabilities from recent filings of interest.

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On March 28, 2008, the Company received a Notice of Violation from the Missouri Department of Natural Resources (the “Department”) alleging various violations of Missouri hazardous waste laws and regulations in connection with the activities of a third-party contractor with whom the Company had contracted for recycling services. The Department alleges that the Company provided certain items to the contractor for recycling that should have been managed as hazardous waste. The EPA has inspected the contractor’s facilities, and both the EPA and the U.S. Attorney’s Office for the Western District of Missouri are conducting investigations. The Company has submitted a response to the Notice of Violation and is cooperating with these authorities. While management cannot predict the ultimate outcome of this matter, management does not believe the outcome will have a material effect on the Company’s financial condition or results of operations.

 

In October of 1993, the Georgia Environmental Protection Division (“EPD”) collected water samples from the Greenville, Georgia site at its boiler drainage sump which tested positive for Tehtrachloroethene (“PCE”), a common dry cleaning chemical. Oxford and the EPD entered into a Consent Order dated July 20, 1994 which had several requirements that included the closure of the boiler drainage sump and an investigation of the contamination on the site.

Oxford hired Kiber Environmental Services, Inc. which later became Peachtree Environmental, Inc. (“Peachtree”) as its environmental consultant and Kilpatrick and Cody, which later became Kilpatrick Stockton (“Kilpatrick”) as its environmental attorneys. Oxford completed the closure of the drainage sump under the requirements of the Resource Conservation and Recovery Act (“RCRA”) on November 20, 1995.

Under the Consent Order, Oxford was also required to conduct an investigation on the site to determine the extent of the contamination. Oxford conducted several extensive surveys of the site that included ground water and soil samples for the site.

During the years of 1999-2000 the Greenville site was placed on an EPA RCRA Cleanup Corrective Action List. This list was developed by the federal government to insure prompt cleanup of RCRA sites. The Greenville site had not been evaluated and therefore could not be labeled as meeting all of the necessary indicators to state that a cleanup had occurred. Therefore, Oxford was contacted in the fall of 2001 by EPD. Investigators from the EPD visited the site and conducted some sampling to determine if the Greenville site could be taken off the EPA RCRA Cleanup List.

The EPD conducted another inspection on February 12, 2002 in order to evaluate the potential need for further corrective action at the site. The results of the inspection were reported to Oxford in a September 10, 2002 letter. This letter stated that the PCE concentration had decreased by approximately one-third since the performance of the last sampling event. EPD concluded that the site had met the environmental indicator goal of “groundwater migration under control”. Oxford and the EPD have agreed to conduct sampling tests every three years of the monitoring wells located on the site. Oxford has provided a Groundwater Monitoring Plan to EPD and it has approved this plan. Oxford continued to test as required from 2002 until 2007.

Georgia Environmental Protection Division’s reviewed the June 2007 Groundwater Monitoring Report, and the Georgia EPD requested that Oxford delineate the source of the continuing contamination of the soil. Peachtree began working with Georgia’s EPD to determine the correct testing procedures for this task. Recently, the Georgia EPD requested Oxford to prepare a groundwater corrective action plan. To complete both of the tasks requested by the Georgia’s EPD, Oxford requested that Peachtree prepare and present for acceptance a Groundwater Corrective Action Plan that addresses the concerns of EPD. This plan has been approved by EPD and the first phase of the plan has just been implemented by Peachtree at the site as of July 11, 2008.

 

We have been identified by the United States Environmental Protection Agency and certain state agencies as a potentially responsible party for cleanup costs associated with alleged past waste disposal practices at several previously utilized, owned or leased facilities and offsite locations. Our remediation activities as a potentially responsible party were not material in fiscal years 2011, 2010 or 2009. Although the materiality of future expenditures for environmental activities may be affected by the level and type of contamination, the extent and nature of cleanup activities required by governmental authorities, the nature of our alleged connection to the contaminated sites, the number and financial resources of other potentially responsible parties, the availability of indemnification rights against third parties and the identification of additional contaminated sites, our estimated share of liability, if any, for environmental remediation, including our indemnification obligations, is not expected to be material.

 

We are subject to numerous U.S. Federal, state and international environmental laws and regulatory requirements and are involved from time to time in investigations or litigation of various potential environmental issues concerning activities at our facilities or former facilities or remediation as a result of past activities (including past activities of companies we have acquired). From time to time, we receive notices from the U.S. Environmental Protection Agency or equivalent state or international environmental agencies that we are a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act (commonly known as the “Superfund Act”) and/or equivalent laws. Such notices assert potential liability for cleanup costs at various sites, which include sites owned by us, sites we previously owned and treatment or disposal sites not owned by us, allegedly containing hazardous substances attributable to us from past operations. We own, previously owned or are currently named as a potentially responsible party at 14 such sites, excluding sites as to which our records disclose no involvement or as to which our liability has been finally determined. While it is not feasible to predict the outcome of many of these proceedings, in the opinion of our management, any payments we may be required to make as a result of such claims in existence at July 1, 2011 will not have a material adverse effect on our financial condition, results of operations or cash flows.

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