Pollution Engineering - October 2008 - (Page 16)

LEGALLOOKOUT By Lynn L. Bergeson Starting with a Clean Slate EPA issues interim approach to applying its audit policy to new facility owners. n Aug. 1, 2008, EPA published its Interim Approach to Applying the Audit Policy to New Owners. The interim approach is an important development, of which Pollution Engineering readers should be aware. O Background The interim approach describes how the agency will apply its Incentives for Self-Policing: Discovery, Disclosure, Correction and Prevention of Violations to new owners of regulated facilities. The audit policy encourages regulated entities voluntarily to discover, disclose, correct and prevent the recurrence of non-compliance with federal environmental laws. “ A new owner would have to meet all nine conditions set forth in the audit policy. The interim approach Under the interim approach, a “new owner” is defined as any owner that makes the following self-certifications: • Prior to the transaction, it was not responsible for environmental compliance at the facility, did not cause the violations being disclosed, and could not have prevented their occurrence; • The violation that is the subject of the disclosure originated with the prior owner; and • Prior to the transaction, neither the buyer nor the seller had the largest ownership share of the other entity, and they did not have a common corporate parent. The interim approach sets out the following penalty mitigation measures: no penalties for economic benefit or gravity will be assessed against the new owner for the period before the date of acquisition; penalties for economic benefit associated with avoided operation and maintenance costs will be assessed against the new owner, but only from the date of acquisition; and penalties for economic benefit associated with delayed capital expenditures or with unfair competitive advantage will not be assessed against the new owner if the violations ” are corrected in accordance with the audit policy. A new owner would have to meet all nine conditions set forth in the audit policy. Some conditions apply differently in the new owner context: • Systematic discovery condition: Because EPA recognizes that a new owner’s pre-closing due diligence review is a one-time event, the agency will not require a new owner’s pre-closing review meet the periodic element of this condition. • Voluntary discovery condition: EPA is expanding its interpretation of the voluntary discovery condition of the audit policy in the new owner context. • Prompt disclosure condition: For violations discovered after closing, a new owner would have to disclose violations within 21 days after discovery or within 45 days after the transaction closing, whichever is longer. • Other violations excluded condition: Violations that resulted in serious actual harm or may have presented an imminent and substantial endangerment are ineligible for the available incentives. • Cooperation condition: EPA is modifying this condition to make clear that the disclosing entity must cooperate with EPA and provide such information as is necessary and requested by EPA to determine the applicability of the audit policy, as modified by this interim approach. New owners are urged to be aware of the interim approach and take advantage of its provisions. It offers a good deal of comfort in transactions often fraught with business surprises of an unwelcome nature. PE Lynn L. Bergeson is managing director of Bergeson & Campbell, P.C., a Washington, D.C., law firm focusing on conventional and engineered nanoscale chemical, pesticide, and other specialty chemical product approval and regulation, environmental health and safety law, chemical product litigation, and associated business issues, and President of The Acta Group L.L.C. and The Acta Group EU Ltd. with offices in Washington, D.C., and Manchester, U.K. Visit www.pollutionengineering.com and electronically forward a copy of this article to a colleague or customer. 16 Pollution Engineering OCTOBER2008 http://www.pollutionengineering.com

Table of Contents Feed for the Digital Edition of Pollution Engineering - October 2008

Pollution Engineering - October 2008 Contents The Editor’s Desk EnviroNews PE Events Legal Lookout Green Connections Clearing the Air Water for People There’s a New Show in Town Catching Wind for Clean Water Taking the Pressure off Blower Selection Pulsed Plasma Positive Redundancy Product Focus: Municipal Water Treatment Product Focus: Monitoring Equipment PE Products Classified Marketplace Advertisers Index State Rules

Pollution Engineering - October 2008

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