Securities Act Release No. 5170

Exchange Act Release No. 9252

July 19, 1971

DISCLOSURES PERTAINING TO MATTERS INVOLVING THE ENVIRONMENT AND CIVIL RIGHTS

The Securities and Exchange Commission today called attention to the requirements in its forms and rules under the Securities Act of 1933 (Securities Act) and the Securities and Exchange Act of 1934 (Exchange Act) for disclosure of legal proceedings and description of registrant's business as these requirements relate to material matters involving the environment and civil rights.

I. CERTAIN MATTERS PERTAINING TO ENVIRONMENT

The Commission's requirements for describing a registrant's business on the forms and rules under the Securities and Exchange Act call for disclosure, if material, ¹ when compliance with statutory requirements with respect to environmental quality e.g., various air, water and other anti-pollution laws, may necessitate significant capital outlays, may materially affect the earning power of the business, or cause material changes in registrant's business done or intended to be done.

Further, the Commission's disclosure requirements relating to legal proceedings call for disclosure, where material, of proceedings arising, for example, under the Rivers and Harbors Act of 1899 (33 U. S. C. 407), the Federal Water Pollution Control Act, as amended (33 U. S. C. 466 et seq.) and the Clear Air Act, as amended (42 U. S. C. 1857 et seq.) as well as under other statutes, federal, state or local, regulating the discharge of materials into the environment, or otherwise specifically relating to the protection of the environment. If such litigation is pending or known to be contemplated but disclosure thereof is omitted on the ground that it is not material, it will be the practice of the Division of Corporation Finance to request registrants to furnish as supplemental information and not as part of the filing, (1) a description of the omitted information and (2) a statement of the reasons for its omission.

II. CERTAIN CIVIL RIGHTS MATTERS

The Commission's requirements for describing registrant's business in the forms and rules under the Securities Act and Exchange Act call for disclosure, if material, when legal proceedings arising under statutory requirements relating to Civil Rights would for example, result in the cancellation of a government contract or termination of further business with the government. Moreover, the Commission's disclosure requirements pertaining to legal proceedings call for disclosure, if material, of proceedings arising, for example, under the Civil Rights Act, any debarment or other sanctions imposed under Executive Order 11246, Title VII of the Civil Rights Act of 1964, and any sanctions imposed for violation of the non-discrimination rules of any Federal regulatory agency whenever such actions are material. If such legal proceedings are pending or known to be contemplated by government agencies but disclosure thereof is omitted on the ground that it is not material, it is the practice of the Division of Corporation Finance to request registrants to furnish as supplemental information and not as a part of the filing, (1) a description of the omitted information and (2) a statement of the reasons for its omission.

By the Commission.

¹  See definition of "material" in Rule 405 of the General Rules and Regulations under the Securities Act of 1933 17 CFR 230.405 and in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934 17 CFR 240.12b-2.