As a result of the wave of media attention concerning corporate scandals over the last two years, Congress enacted the Sarbanes-Oxley Act of 2002 in an effort to combat corporate corruption. One of the key provisions of the Sarbanes-Oxley Act is that all chief executive officers and chief financial officers of publicly-traded corporations must now personally certify the accuracy of the quarterly and annual reports a company makes to the Securities and Exchange Commission (SEC). Although the SEC has had disclosure regulations in place for more than 20 years, the provisions of the Sarbanes-Oxley Act now provide for substantial criminal penalties, including lengthy prison sentences, for individuals who fail to comply with these disclosure obligations. Given the potentially severe penalties for non-compliance, CEOs and CFOs are now seeking additional information from their employees, including environmental managers, prior to making required SEC disclosures. This paper will address the specific SEC regulations and guidance documents that relate to disclosure of environmental matters including: disclosure of costs associated with coming into compliance with environmental regulations; disclosure of costs associated with environmental litigation and enforcement actions; and disclosure of anticipated future costs associated with contingent environmental obligations. This paper will conclude with a discussion of the factors that should be considered when deciding to make an environmental disclosure, and how that disclosure should be handled.
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