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Major Air Enforcement Action Against New Plant Owner Suggests the Value of EPA’s “New Owner Audit Policy”

A new $1.3 million Clean Air Act penalty action by U.S. EPA and the Michigan Department of Environmental Quality against AK Steel Corporation has received significant public and media attention this week.  The proposed consent decree, filed with the court and opened for public comment on May 19th, includes significant cash penalties and supplemental environmental project requirements, along with burdensome obligations to establish an environmental management system, perform third party audits, and install costly new pollution controls.  Less often mentioned in this week’s stories about the consent decree is the fact that AK Steel just acquired the facility in question last year.

While it likely would have been inapplicable in this particular instance for a variety of reasons, the fact that a facility’s new owner is so quickly facing such large penalties and significant injunctive obligations serves as an important reminder that U.S. EPA has a strong policy – the so-called “Interim Approach” or “New Owner Audit Policy” issued in August 2008 – which provides relief from penalties for new owners of facilities and companies that “find, fix, and disclose” environmental issues at their new facilities.  The Bracewell team was “present at the creation” of the new owner audit policy and has overseen new owner audits and disclosures on tens of billions of dollars of acquisitions in a number of industries.  If you’re thinking of an acquisition – or if you have recently completed one – please contact us to discuss whether EPA’s new owner audit policy or various state audit laws or policies might help eliminate your exposure to potential penalties arising from environmental conditions or issues you might acquire.

© 2019 Bracewell LLP


About this Author

Tim Wilkins, environmental, natural resources, attorney, Bracewell law firm

Tim Wilkins is the head of Bracewell's firm-wide Environmental and Natural Resources practice group. Tim represents large companies that rely on him for strategic environmental permitting assistance, the defense of environmental enforcement actions, and assistance with the environmental aspects of major transactions. He is a nationally-recognized leader in environmental auditing, having overseen environmental compliance audits involving thousands of locations, handled hundreds of environmental audit disclosures, and pioneered the development and use of U.S. EPA's audit...

Kevin Ewing, Energy, environmental, attorney, Bracewell law firm

Kevin Ewing advises chiefly energy and infrastructure companies concerning natural resources and environmental issues arising from new regulations and agency policies, corporate risk management, and major incidents.  His clients are generally involved in offshore exploration and development, transmission siting, gas pipelines, LNG facilities, and highways.  Kevin is regularly involved in crisis preparedness and response, representing clients before government investigators, in negotiations with federal agencies, and in internal investigations.

Areas of special focus include offshore E&P, environmental impact assessment, federal leasing and permitting, suspension/debarment, and federal lands policy (and related administrative/civil litigation).  Kevin also advises public companies on mandatory and voluntary disclosure of environmental proceedings, investigations and risks, and he assists companies facing shareholder demands and governmental inquiries into disclosures about climate change and hydraulic fracturing.  He also has broad experience representing specialty chemical manufacturers and technology innovators with respect to TSCA compliance, auditing and enforcement defense.