Archive for the ‘Environmental Disclosure’ Category

Climate Change Is a Wallflower at the Risk Factor Ball

via Wikimedia Commons

via Wikimedia Commons

Rising seas. Extended drought. Raging floods. Market disruptions. Food scarcity. All these, and more, are predicted consequences of global climate change. Last month’s deluge in Colorado was another foretaste of what may be in store for us.

Publicly traded companies are no less immune to the consequences of global climate change than anyone else. Some companies have largely ignored the implications; others have seized on environmental transformation as a business opportunity. The insurance industry has been notably forward thinking in this respect. But then, insurance companies have a vested interest in assessing other companies’ risk factors. Either way, it’s a rare industry which won’t be affected one way or another.

Three years ago, the Securities and Exchange Commission issued guidance on how publicly traded companies should disclose the climate change risks they face. Recognizing the current and potential effects on companies’ performance associated with both climate change and with efforts to ameliorate the change, the commission laid out steps companies should take to inform the public how they intended to deal with future environmental disruption.

The SEC’s guidance seems to be honored in the breach by the great majority of U.S. companies.  According to a report by Inside Climate News, nearly 75 percent of  the nation’s publicly traded companies are ignoring the commission’s disclosure requirements.  This figure comes to us compliments of a retired database developer named Lawrence Taylor, a one-time assessor of air pollution data for the Orange County and San Diego land planning departments. Taylor spent five months and 1,100 hours poring over company filings on the SEC website. Of the 3,895 companies whose most recent annual reports he reviewed, only 27 percent mentioned “climate change” or “global warming” at all. Of the businesses which mentioned climate change, fewer still provided any real specifics. The general exceptions to the rule were carbon-intensive businesses like coal, oil, and natural gas companies, but even they tended to shy away from discussing long-term environmental or regulatory risks. For the most part, the disclosures focused on taxes or changes in market demand.

Seattle’s NPR station, KUOW followed up on Taylor’s research and found that the heavy corporate hitters in Washington State likewise tend to ignore the disclosure requirement. KUOW’s reporter searched the annual 10-K filings of Washington’s biggest companies, looking for the words “climate,” “warming,” “greenhouse” and “carbon.” Of the Fortune 500 firms based in Washington, only Weyerhaeuser revealed how climate change will affect its operations, which makes sense given that it’s a forest products company at heart. Microsoft contented itself with noting that “Changes in weather where we operate may increase the costs of powering and cooling computer hardware we use to develop software and provide cloud-based services.”

The SEC guidance covers a sobering list of climate change disclosures, including the impact of legislation and regulation, international accords, the indirect consequences of regulation and business trends, rising insurance costs, and the myriad physical impacts of climate change including violent storms, rising sea levels, the arability of farmland, and the availability and quality of water. The commission points out that the consequences of climate change can cause catastrophic harm to physical plants and facilities and can disrupt manufacturing and distribution processes. In understated terms, the commission concludes that, “Registrants whose businesses may be vulnerable to severe weather or climate related events should consider disclosing material risks of, or consequences from, such events in their publicly filed disclosure documents.”

But apparently the great majority of firms are breezily ignoring the SEC’s guidance. General Mills, for instance, mentions climate change only in passing as one of a list of disruptions (along with fire, terrorism, strikes, and import restrictions) that might “adversely affect” its business. For a company so heavily dependent on grains from a region experiencing record-setting drought, this seems like whistling past the graveyard.

Ignoring the potential impacts of climate change isn’t going to make them go away, and it isn’t doing investors any favors.

I would like to underscore the 1,100 hours Taylor spent searching filings on the SEC website. If he had gone to our Risk Factors page, he could have finished his research in a fraction of the time. 

Extracting Information from Extractive Industries

Photo by koolmann. Some rights reserved.

A notice in the Federal Register yesterday provided details on upcoming public listening sessions and initiated a new comment period for the United States Extractive Industries Transparency Initiative’s (USEITI) Stakeholder Assessment, which was published last Friday.

USEITI is the U.S. implementation of, well, “regular” EITI, a global coalition of governments and companies that sets standards for transparency in oil, gas, and mining. The U.S. committed to implementing EITI standards in 2011, as part of our National Action Plan, charging the DOI with the task of developing a plan for the government to disclose revenues from oil, gas, and mining assets. (Sound familiar? The voluntary disclosures encouraged by EITI are similar to those required by public companies under Dodd-Frank’s Section 1504.)

Part of this implementation means forming a Multi-Stakeholder Group (MSG), which will be responsible for overseeing implementation of USEITI. EITI Requirement 4(h)(v) notes that the “government may…wish to undertake a stakeholder assessment” as part of forming the MSG, and thus the aforementioned Assessment was born.

Comments on the Assessment are due June 29, 2012.

Oxfam American Sues Securities and Exchange Commission Over Pokey Rulemaking

Photo by Phillip Perry. Some rights reserved.

As reported by E2 Wire’s The Hill, as well as Oxfam itself, the International relief and development organization has recently filed a lawsuit in U.S. District Court for the District of Massachusetts against the SEC for “unlawfully delaying the issuance of a Final Rule implementing a provision of the Dodd-Frank Act that requires disclosure of payments from oil, gas and mining companies to the United States and foreign governments.”

Section 1504 of the Dodd-Frank Act, which mandates the rulemaking, states that “[n]ot later than 270 days after the date of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Commission shall issue [the resource extraction disclosure] final rules.” According to Oxfam, that deadline worked out to be April 17, 2011, making the SEC more than a full year late in complying. The Hill reports that the suit is asking the court to compel the SEC to issue final rules within 30 days.

The proposed rule (“Disclosure of Payments By Resource Extraction Issuers,” SEC 34-63549) was issued by the SEC on December 15, 2010, and has been fought tooth and nail by the oil industry ever since. You can see comments on the proposed rule – both for and against – on Knowledge Mosaic’s Laws, Rules, and Agency Materials page.

While no case filings are available yet, you can follow the progress of the lawsuit here: Oxfam America, Inc. v. United States Securities and Exchange Commission.

Recently in Environmental Disclosure: “20,000 barrels of crude oil were leaked”

As we’ve posted in the past, public companies must generally disclose environmental legal proceedings in various reports to the SEC, and whether or not those proceedings have a material effect on the company’s financial position. Companies may also disclose business risks related to current or pending environmental regulation.

Below is the juiciest stuff we could find that was filed with EDGAR in the past week.

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Central Florida Pipeline Release, Tampa, Florida

On July 22, 2011, KMP’s subsidiary Central Florida Pipeline LLC reported a refined petroleum products release on a section of its 10-inch diameter pipeline near Tampa, Florida. The pipeline carries jet fuel and diesel to Orlando and was carrying jet fuel at the time of the incident. There was no fire and no injuries associated with the incident. KMP immediately began clean up operations in coordination with federal, state and local agencies. The cause of the incident is outside force damage. The incident is under investigation by the PHMSA, U.S. EPA and the Florida Department of Environmental Protection.

  • EME HOMER CITY GENERATION LP | Form 10-Q | 5/2/2012

New Source Review and Other Litigation

In January 2011, the United States Environmental Protection Agency (US EPA) filed a complaint in the Western District of Pennsylvania against Homer City, the sale-leaseback owner participants of the Homer City plant, and two prior owners of the Homer City plant. The complaint alleged violations of the Prevention of Significant Deterioration (PSD) and Title V provisions of the Clean Air Act (CAA), as a result of projects in the 1990s performed by prior owners without PSD permits and the subsequent failure to incorporate emissions limitations that meet best available control technology (BACT) into the station’s Title V operating permit. In addition to seeking penalties ranging from $32,500 to $37,500 per violation, per day, the complaint called for an injunction ordering Homer City to install controls sufficient to meet BACT emission rates at all units subject to the complaint and for other remedies. The PADEP, the State of New York and the State of New Jersey intervened in the lawsuit. In October 2011, all of the claims in the US EPA’s lawsuit were dismissed with prejudice. An appeal of the dismissal is pending before the Third Circuit Court of Appeals.

On July 26, 2010, a release of crude oil on Line 6B of EEP’s Lakehead System was reported near Marshall, Michigan. EEP estimates that approximately 20,000 barrels of crude oil were leaked at the site, a portion of which reached the Talmadge Creek, a waterway that feeds the Kalamazoo River. The pipelines in the vicinity were shut down, appropriate United States federal, state and local officials were notified, and emergency response crews were dispatched to oversee containment of the released crude oil and cleanup of the affected areas. The released crude oil affected approximately 61 kilometres (38 miles) of area along the Talmadge Creek and Kalamazoo River waterways, including residential areas, businesses, farmland and marshland between Marshall and downstream of Battle Creek, Michigan. The cause of the release remains the subject of an investigation by the National Transportation Safety Board and other United States federal and state regulatory agencies.

Pursuant to an administrative order issued by the Environmental Protection Agency (EPA) under the United States Clean Water Act, EEP was directed to clean up the released oil and remediate and restore the affected areas – a process EEP had begun upon discovering the release.

As at December 31, 2010, EEP estimated that before insurance recoveries, and not including fines and penalties, costs of approximately US$550 million ($96 million after-tax net to Enbridge), excluding lost revenue of approximately US$13 million ($2 million after-tax net to Enbridge), would be incurred in connection with this incident. These costs included emergency response, environmental remediation and cleanup activities associated with the crude oil release, as well as potential claims by third parties.

As at December 31, 2011, EEP revised its total estimate for this crude oil release to US$765 million ($129 million after-tax net to Enbridge), an increase of US$215 million ($33 million after-tax net to Enbridge) from December 31, 2010. The changes in estimate are primarily based on a review of costs and commitments incurred , and additional information concerning the reassessment of the overall monitoring area, related cleanup, including submerged oil recovery operations and remediation activities, including the estimated costs related to the additional scope of work set forth in its response to the EPA directive it submitted to the EPA on October 20, 2011. During the fourth quarter of 2011, EEP resubmitted a revised work plan which was approved by the EPA on December 19, 2011.

EEP continues to make progress on the cleanup, remediation and restoration of the areas affected by the Line 6B crude oil release. All of the initiatives EEP undertakes in the monitoring and restoration phases are intended to restore the crude oil release area to the satisfaction of the appropriate regulatory authorities.

Expected losses associated with the Line 6B crude oil release include those costs that are considered probable and that could be reasonably estimated at December 31, 2011. The estimates do not include amounts capitalized or any fines, penalties or claims associated with the release that may later become evident and are before insurance recoveries. Despite the efforts EEP has made to ensure the reasonableness of its estimates, changes to the recorded amounts associated with this release are possible as more reliable information becomes available. There continues to be the potential for EEP to incur additional costs in connection with this crude oil release due to variations in any or all of the cost categories, including modified or revised requirements from regulatory agencies, in addition to fines and penalties as well as expenditures associated with litigation and settlement of claims.

PCB Contamination

We have been working with the Connecticut Department of Energy and Environmental Protection (CT DEEP) and the EPA, Region I, in connection with certain polychlorinated biphenyl (PCB) contamination in the soil beneath a section of cement flooring at our Woodstock, Connecticut facility. In 2000, the majority of the clean-up efforts were completed, and a small amount of residual soil contamination remained. In 2011, after several discussions and proposals with the CT DEEP, we agreed to install a pump and treat system to alleviate further contamination of the ground water. Since inception, we have spent approximately $2.5 million in remediation and monitoring costs related to the PCB soil contamination at this site. We anticipate future costs related to the ground water contamination issue to be de minimis and related to the continued use and maintenance of the pump and treat system now in place at the site.

In addition, during the first quarter of 2010, we discovered PCB contamination in the building at our Woodstock, Connecticut facility, due to it having contained the equipment that was the source of the original PCB soil contamination. Remediation of the contamination within the facility is currently projected to cost between $1.0 million and $2.6 million; therefore, we recorded a liability of $1.0 million related to the building contamination, which represents the low end of the estimated range, as no other amount in the range is more probable at this time.

We believe that these situations will continue for several more years and no time frame for completion can be estimated at the present time.

In April 2010, the Company received a request for information pursuant to Section 308 of the Federal Water Pollution Control Act (Clean Water Act) from Region 3 of the United States Environmental Protection Agency (the “EPA”) concerning the Company’s wastewater practices used in its fishing operations at its Reedville, Virginia facility. The Company responded to the request. The Company cannot predict the outcome of the EPA’s review.

In February 2011, the United States Coast Guard conducted inspections of the vessels at the Company’s Reedville, Virginia facility regarding the vessels’ bilge water discharge practices. Based on the results of those inspections and subsequent communications with the Coast Guard, the Company conducted a survey of its Reedville, Virginia fishing fleet to determine compliance with applicable laws and regulations. Following the completion of certain improvements and repairs, the Coast Guard inspected the vessels and all but two were approved for full operations prior to the beginning of the 2011 Atlantic fishing season. The other two vessels were approved for full operations shortly after the beginning of the fishing season and the delay did not materially impact the fleet’s Atlantic fishing operations.

The Company spent approximately $3.0 million during 2011 to make the above improvements and repairs to the Reedville fleet. The Company is evaluating the vessels in its Gulf fleet based on the review of its Reedville vessels. Based on the results of that evaluation, it is likely that the Company will incur additional costs to make improvements and repairs to its Gulf fleet. Also in connection with that evaluation, the Company has made the interim decision for at least the early part of the 2012 fishing season to conduct both its Atlantic and Gulf fishing operations within 12 nautical miles of shore, pending the resolution of a waiver request that the Company has filed with the Coast Guard regarding the use of certain vessel equipment applicable to “ocean-going vessels” (as defined by Coast Guard regulations) that operate beyond the 12 nautical mile limit. This interim 12 nautical mile restriction will limit the Company’s fishing grounds and could have a material adverse effect on the Company’s fish catch, business, results of operations or financial condition.

The U.S. Attorney’s Office for the Eastern District of Virginia is reviewing both the results of the Coast Guard’s inspection of the Reedville fleet and the EPA request for information, and is currently evaluating whether any civil or criminal enforcement action is warranted. The U.S. Attorney’s Office has indicated that some form of civil and/or criminal disposition is under consideration, but no specific disposition has yet been determined and the Company’s discussions with that Office are ongoing. Depending on the specific details of that disposition, it is possible that the disposition could have an adverse effect on the Company’s business, results of operations or financial condition. During the first three months of 2012, the Company recognized $0.2 million in expenses related to this matter and as of March 31, 2012, the Company has recorded a $0.3 million reserve.

The EPA has issued Notices of Violations (“NOVs”) for our Haverhill and Granite City cokemaking facilities which stem from alleged violations of our air emission operating permits for these facilities. We are currently working in a cooperative manner with the United States Environmental Protection Agency (“EPA”) and the Illinois Environmental Protection Agency to address the allegations. Settlement may require payment of a penalty for alleged past violations as well as undertaking capital projects to improve reliability of the energy recovery systems and enhance environmental performance at the Haverhill and Granite City facilities. As a result of discussions with the EPA, the Company expects these projects to cost approximately $80 million to $100 million and to be carried out over the 2012 through 2016 time period. The majority of the spending is expected to take place from 2013 to 2016, although some spending may occur in 2012 depending on the timing of the settlement. The final cost of the projects will be dependent upon the ultimate outcome of discussions with regulators. At this stage, negotiations are ongoing and the Company is unable to estimate a range of reasonably possible loss. The Company does not believe any probable loss would be material to its financial position, results of operations or cash flows.

  • SunCoke Energy, Inc. | Form 10-Q | 5/2/2012

In addition, the Company has received an NOV from the EPA related to our Indiana Harbor cokemaking facility. After initial discussions with the EPA and the Indiana Department of Environmental Management (“IDEM”), resolution of the NOV was postponed by mutual agreement because of ongoing discussions regarding the NOVs at the Haverhill and Granite City cokemaking facilities. In January 2012, the Company began working in a cooperative manner with the EPA, the IDEM and Cokenergy, Inc., an  independent power producer that owns and operates an energy facility, including heat recovery equipment, a flue gas desulfurization system and a power generation plant, that processes hot flue gas from our Indiana Harbor facility to produce steam and electricity and to reduce the sulfur and particulate content of such flue gas, to address the allegations. Settlement may require payment of a penalty for alleged past violations as well as undertaking capital projects to enhance environmental performance. At this time, the Company cannot yet assess any future injunctive relief or potential monetary penalty and any potential future citations. The Company is unable to estimate a range of probable or reasonably possible loss.

  • STANLEY BLACK & DECKER, INC. | Form 10-Q | 5/2/2012

The Environmental Protection Agency (“EPA”) and the Santa Ana Regional Water Quality Control Board have each initiated administrative proceedings against Black & Decker and certain of its current or former affiliates alleging that Black & Decker and numerous other defendants are responsible to investigate and remediate alleged groundwater contamination in and adjacent to a 160-acre property located in Rialto, California. The EPA and the cities of Colton and Rialto, as well as Goodrich Corporation, also initiated lawsuits against Black & Decker and certain of its former or current affiliates in the Federal District Court for California, Central District alleging similar claims that Black & Decker is liable under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), the Resource Conservation and Recovery Act, and state law for the discharge or release of hazardous substances into the environment and the contamination caused by those alleged releases. The City of Colton also has a companion case in California State court. The City of Riverside has a similar suit in California State Court with similar claims and the same parties. Both of these cases are currently stayed for all purposes. Certain defendants in that case have cross-claims against other defendants and have asserted claims against the State of California. The administrative proceedings and the lawsuits generally allege that West Coast Loading Corporation (“WCLC”), a defunct company that operated in Rialto between 1952 and 1957, and an as yet undefined number of other defendants are responsible for the release of perchlorate and solvents into the groundwater basin, and that Black & Decker and certain of its current or former affiliates are liable as a “successor” of WCLC. The Company believes that neither the facts nor the law support an allegation that Black & Decker is responsible for the contamination and is vigorously contesting these claims.

The EPA has provided to Black & Decker and certain of its current and former affiliates a “Notice of Potential Liability” related to environmental contamination found at the Centredale Manor Restoration Project Superfund site, located in North Providence, Rhode Island. The EPA has discovered a variety of contaminants at the site, including but not limited to, dioxins, polychlorinated biphenyls, and pesticides. The EPA alleged that Black & Decker and certain of its current and former affiliates are liable for site clean-up costs under CERCLA as successors to the liability of Metro-Atlantic, Inc., a former operator at the site, and demanded reimbursement of the EPA’s costs related to this site. The EPA released a Proposed Remedial Action Plan in October 2011, which identified and described the EPA’s preferred remedial alternative for the site. The estimated remediation costs related to this Centredale site (including the EPA’s past costs as well as costs of additional investigation, remediation, and related costs such as EPA’s oversight costs, less escrowed funds contributed by primary potentially responsible parties (PRPs) who have reached settlement agreements with the EPA), which the Company considers to be probable and reasonably estimable, range from approximately $67.4 million to $212.0 million, with no amount within that range representing a more likely outcome until such time as the EPA completes its remedy selection process for the site. The Company’s reserve for this environmental remediation matter of $67.4 million reflects the fact that the EPA considers Metro-Atlantic, Inc. to be a primary source of contamination at the site. The Company has determined that it is likely to contest the EPA’s claims with respect to this site. Further, to the extent that the Company agrees to perform or finance additional remedial activities at this site, it intends to seek participation or contribution from additional PRPs and insurance carriers. As the specific nature of the environmental remediation activities that may be mandated by the EPA at this site have not yet been finally determined, the ultimate remedial costs associated with the site may vary from the amount accrued by the Company at March 31, 2012.

Recently in Environmental Disclosure: Fugitive Emissions

As we’ve posted in the past, public companies must generally disclose environmental legal proceedings in various reports to the SEC, and whether or not those proceedings have a material effect on the company’s financial position. Companies may also disclose business risks related to current or pending environmental regulation.

Below is the juiciest stuff we could find that was filed with EDGAR in the past week.

* * *

 

  • Antero Resources LLC | Form 10-Q | 4/11/2012

In March 2011, we received orders for compliance from the U.S. Environmental Protection Agency (“the EPA”) relating to certain of our activities in West Virginia. The orders allege that certain of our operations at several well sites are in non-compliance with certain environmental regulations pertaining to unpermitted discharges of fill material into wetlands or waters that are potentially in violation of the Clean Water Act. We have responded to all pending orders and are actively cooperating with the relevant agencies. No fine or penalty relating to these matters has been proposed at this time, but we believe that these actions will result in monetary sanctions exceeding $100,000. We are unable to estimate the total amount of such monetary sanctions or costs to remediate these locations in order to bring them into compliance with applicable environmental laws and regulations.

The Company has been named in separate lawsuits in Colorado and Pennsylvania in which the plaintiffs have alleged that our oil and natural gas activities exposed them to hazardous substances and damaged their properties and their persons. The plaintiffs have requested unspecified damages and other injunctive or equitable relief. The Company denies any such allegations and intends to vigorously defend itself against these actions. We are unable to estimate the amount of monetary or other damages, if any, that might result from these claims.

 

Our interstate gas pipelines are involved in remediation activities related to certain facilities and locations for polychlorinated biphenyl, mercury contamination, and other hazardous substances. These activities have involved the EPA, various state environmental authorities and identification as a potentially responsible party at various Superfund waste disposal sites. At December 31, 2011, we have accrued liabilities of $10 million for these costs. We expect that these costs will be recoverable through rates.

We also accrue environmental remediation costs for natural gas underground storage facilities, primarily related to soil and groundwater contamination. At December 31, 2011, we have accrued liabilities totaling $8 million for these costs.

 

  • UIL HOLDINGS CORP | Form 8-K | 4/10/2012

Berkshire formerly owned a site on East Street (the East Street Site) in Pittsfield, MA that was used for gas manufacturing operations. The East Street Site is part of a larger site known as the GE–Pittsfield/Housatonic River Site. The East Street Site is listed on the MDEP list of confirmed disposal sites. Berkshire sold the East Street Site to the General Electric Company (GE) in the 1970s and was named a potentially responsible party by the EPA in 1990. GE filed suit against Berkshire in 2000 seeking reimbursement of and contribution toward costs incurred by GE in responding to releases of hazardous substances by a predecessor in interest to Berkshire at the East Street Site. Berkshire was found liable to GE under the Comprehensive Environmental Response, Compensation and Liability Act and the Massachusetts Oil and Hazardous Materials Release Prevention and Response Act for costs that GE has and will incur in response to historic releases by a predecessor in interest to Berkshire. In December 2002, Berkshire reached a settlement with GE (the Settlement Agreement) which provides, among other things, a framework for Berkshire and GE to allocate various monitoring and remediation costs at the East Street Site. GE previously made several requests for contribution under the terms of the Settlement Agreement. In September 2011, GE sent Berkshire a letter demanding approximately $1.1 million which GE believes represents Berkshire’s share of response costs incurred by GE at the East Street Site from January 1, 2006 through December 31, 2010. The parties are continuing their discussions regarding GE’s claim. Berkshire expects that it and GE will continue to operate under the terms of the Settlement Agreement in connection with the East Street Site. As of December 31, 2011, Berkshire has accrued approximately $2.7 million for these and future costs incurred by GE in responding to releases of hazardous substances by Berkshire at the East Street Site.

 

We have been informed that the U.S. Environmental Protection Agency (“EPA”) is investigating the accuracy of fugitive emissions monitoring statements and records provided by some of our current and former employees to certain customers in West Texas. We are cooperating with the EPA investigation and, in response to subpoenas, have provided information to the EPA. While we do not believe the ultimate outcome of this matter will have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows, this investigation could result in fines, civil or criminal penalties, or other administrative action.

 

We have received notice of a governmental investigation concerning an environmental incident which occurred in February 2011, outside on the premises of our Cudahy, California facility. We acquired this facility as part of the acquisition in October 2010 of the assets and ongoing business operations of General Testing and Inspection, Inc. (“GTI”), a business which provides in-house or shop inspection and non-destructive testing at the Cudahy premises. On February 11, 2011, while liquid hazardous waste was being pumped into the tanker truck of an unaffiliated certified hazardous waste transporter at the Cudahy facility, a chemical reaction occurred that caused an emission of a vapor cloud. No human injury or property damage was reported or appears to have been caused as a result of the incident. The incident was investigated by the L.A. Country Fire Department (the “Fire Department”) and the U.S. Environmental Protection Agency (“EPA”). At the conclusion of the Fire Department’s investigation, the Fire Department imposed on the Company a fine in the amount of $4,000 for alleged violations of the California Health and Safety Code in April 2011, which was paid shortly thereafter.

The Company received no further governmental communications or notices concerning fines or sanctions related to the incident until January 13, 2012, when we received grand jury subpoenas from the U.S. Attorney’s Office for the Central District of California addressed to the Company, GTI and an employee of the Company. These subpoenas were issued in connection with an EPA criminal investigation. The subpoena received by the Company requested documents and information relating to, among other things, our handling, identification, storage and disposal of hazardous waste, training records, corporate environmental policies, acquisition of GTI and any ongoing organization relationship with GTI, and analytical results of the tests concerning the hazardous materials involved in the incident. In April 2012, we were informed by the U.S. Attorney’s Office for the Central District of California that we are a target of a criminal investigation into potential violations of the Resource Conservation and Recovery Act. The violations are alleged to be related to purportedly improper storage and labeling of hazardous waste at the Cudahy facility. This U.S. Attorney’s Office also raised a concern about a possible obstruction of justice issue involving the conduct of one or more of our employees at this facility. Upon receiving the subpoenas, we engaged our outside legal counsel to assist us in conducting an investigation concerning the incident, including interviews with our current employees. To date, we have produced documents in response to the subpoena, and are aware of at least one of our employees having testified before the grand jury.

While management cannot predict the ultimate outcome of this matter, based on our internal investigation to date, management does not believe the outcome will have a material effect on the Company’s financial condition or results of operations.

Compelling Disclosure of Fracking Chemicals

Photo by Horia Varlan. Some rights reserved.

Yesterday, The Hill’s E2 Wire reported on one of the latest attempts to extract information from drilling companies on the chemical make-up of liquids used in the hydraulic fracturing process.

This time, in Wyoming, a group of public health and environmental organizations are petitioning the Wyoming Oil and Gas Conservation Commission (WOGCC, whose website gives this one a run for its money) in attempt to make public documents submitted to WOGCC by manufacturers of products and chemicals used in the industrial process of hydraulic fracturing. The petitioners claim that WOGCC’s earlier denial of a request for such documents was “arbitrary, capricious, an abuse of discretion, and not in accordance with the law.”

According to the petition, Wyoming requires an owner or operator of an oil or gas well that will be hydraulically fractured “to provide to WOGCC ‘detailed information’ about the products and chemicals used, including the identities of all chemical additives and compounds,” and that “under Wyoming’s Public Records Act, the information supplied to WOGCC by oil and gas well operators are public records that must be made available for public inspection except in certain narrowly defined circumstances.”

Earthjustice, one of the petitioners, announced last week’s action in a press release. The petition was filed late Friday in Wyoming’s Seventh District Court.

Despite what appears to be pandering to industry interests, WOGCC doesn’t seem all that popular if you browse the SEC filings on Knowledge Mosaic. A search for Wyoming Oil and Gas Conservation Commission brings up mention of the Commission in quite a few public company risk factors, most in the vein of “Recently, for example, the Wyoming Oil and Gas Conservation Commission passed a rule requiring disclosure of hydraulic fracturing fluid content. At this time, it is not possible to estimate the potential impact on our business of additional federal or state regulatory actions affecting hydraulic fracturing.”

EPA to End Support of Voluntary Disclosures?

This just in from Seyfarth Shaw:

The U.S. EPA’s Office of Enforcement and Compliance Assurance has issued its draft guidance on the Fiscal Year 2013 enforcement program […] The FY 2013 Draft Guidance identifies EPA’s intent to significantly cut back traditional federal enforcement strategies across all major federal environmental programs, and to eliminate the voluntary disclosure program long relied upon by industry to disclose violations discovered during compliance audits.

You can find a copy of the draft guidance here.

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