Volume 12, Number 2 - November/December 2002

Establish regular meetings with environmental health and safety (EHS) managers at corporate and subsidiary levels to share information and exchange views;

Be timely informed of all major EHS initiatives at both corporate and subsidiary levels and be copied on all material EHS communications at both levels;

Conduct, as a part of the corporate-wide internal audit process, periodic reviews of all major EHS permits held and permit applications prepared by the subsidiaries to ensure that the responsible entities are appropriately identified (and maintain current copies of EHS permits in the legal department);

Raise questions — and, if necessary, obtain legal analysis — concerning the environmental implications (current and future) of corporate structure or traditional corporate governance activities, at the time first contemplated by senior management;

Educate the governance committee of the corporate board on the need to balance oversight and support of subsidiaries with environmental liabilities considerations and enhanced reporting requirements under the Sarbanes-Oxley Act of 2002;

Continue to emphasize to senior management that managing environmental risks is part of doing business and should be included pro-actively in corporate strategic planning just as the enterprise plans for tax or capital expenditures;

Promulgate a procedure for determining when it is appropriate for the corporate parent to assume the environmental obligations of a subsidiary (such as, serving as the "certifying party" when the requirements of the Connecticut Transfer Act apply to the subsidiary's transfer of an establishment);

Develop the appropriate records, processes and structures satisfying the enterprise's business objectives and corporate parent's fiduciary obligations, while limiting the parent's potential environmental risk . Examples of such measures include:

• ensure that bylaws of the subsidiary do not provide officers from the corporate parent with the authority for day-to- day management of a subsidiary's environmental affairs;
• review (and correct) draft corporate minutes whenever there is any potential misstatement concerning parent management or control of subsidiary's environmental operations (also avoid consolidated minutes as the practice blurs the corporate form);
• develop clear policies and procedures for obtaining arms-length parental financial support, such as a parent guarantee or support agreement;
• establish procedures for bringing major EHS issues to the attention of senior management; and
• include EHS audit policies under the purview of the parent board's audit committee while making sure the subsidiaries, and not the parent, bear ultimate responsibility for corrective action.