Jenner & Block

"Using Federal and State Auditing Policies in Business Transactions," Environmental Issues in Business Transactions, American Bar Association

In this chapter, Jenner & Block Partner Steven M. Siros explains that, in the course of conducting due diligence in connection with the acquisition of a new facility, violations of environmental laws and regulations are often discovered.  In addition, new owners often evaluate the compliance status of newly acquired facilities in the course of integrating the facility’s environmental health and safety management system into the new owners’ existing management system and, if applicable, to trigger indemnification provisions that may be contained in purchase and sale agreements between buyers and sellers.  Mr. Siros notes that, to the extent that environmental violations are discovered, they are typically corrected.  A more difficult question, however, is whether the violations should be reported to the U.S. Environmental Protection Agency (EPA) in an effort to mitigate potential civil penalties.  He goes on to discuss recent amendments to EPA’s Audit Policy that are designed to encourage disclosure of violations, especially with respect to newly acquired facilities.