ASTM E2137-01

Standard Guide for Estimating Monetary Costs and Liabilities for Environmental Matters

SCOPE
1.1 Purpose--The purpose of this document is to provide a standard guide in the United States for estimating  costs and liabilities for environmental matters. Many possible uses for estimates of costs and liabilities for environmental matters exist, including but not limited to business decision making, communications and negotiations involving change of property ownership, regulatory requirements, third-party lawsuits, insurance premium calculation and claim settlement, change of property use, revitalization, compliance planning, construction, analysis of remedial alternatives, budgeting, strategic planning, financing, and investment analysis by shareholders. The use of estimated costs and liabilities developed in accordance with this standard may be subject to other standards applicable to the matter involved. For example, it is not intended to supersede accounting and actuarial standards including those by the Financial Accounting Standards Board and the U.S. Security and Exchange Commission. This standard does not address the establishment of reserves or disclosure requirements.
1.2 Objectives--The objective of this standard is to provide guidance on approaches for estimating  costs and liabilities for environmental matters.

General Information

• Status: Historical
• Publication Date: 09-Mar-2001
• ICS: 13.020.99 - Other standards related to environmental protection
• Technical Committee: E50 - Environmental Assessment, Risk Management and Corrective Action
• Drafting Committee: E50.05 - Environmental Risk Management

Relations

• Replaced By: ASTM E2137-06 - Standard Guide for Estimating Monetary Costs and Liabilities for Environmental Matters
• Effective Date: 01-Nov-2006
• Referred By: ASTM E3123-18 - Standard Guide for Recognition and Derecognition of Environmental Liabilities
• Effective Date: 10-Mar-2001
• Referred By: ASTM E3228-19 - Standard Guide for Environmental Knowledge Management
• Effective Date: 10-Mar-2001
• Referred By: ASTM E2173-22 - Standard Guide for Disclosure of Environmental Liabilities
• Effective Date: 10-Mar-2001
• Referred By: ASTM E1903-19 - Standard Practice for Environmental Site Assessments: Phase II Environmental Site Assessment Process
• Effective Date: 10-Mar-2001
• Referred By: ASTM E2718-21 - Standard Guide for Financial Disclosures Attributed to Climate Change
• Effective Date: 10-Mar-2001
• Referred By: ASTM E2876-13(2020) - Standard Guide for Integrating Sustainable Objectives into Cleanup
• Effective Date: 10-Mar-2001

Standards Content (Sample)

NOTICE: This standard has either been superseded and replaced by a new version or withdrawn.
Contact ASTM International (www.astm.org) for the latest information
Designation:E2137–01
Standard Guide for
Estimating Monetary Costs and Liabilities for Environmental
Matters
This standard is issued under the fixed designation E 2137; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision. A number in parentheses indicates the year of last reapproval. A
superscript epsilon (e) indicates an editorial change since the last revision or reapproval.
1. Scope PS 104-98 Provisional Guide for Risk-Based Corrective
Action
1.1 Purpose—The purpose of this document is to provide a
2.2 Other Document:
standard guide in the United States for estimating costs and
2 EPA OSWER Directive 9610.17 concerning use of risk-
liabilities for environmental matters. Many possible uses for
based decision making, 1995.
estimates of costs and liabilities for environmental matters
exist, including but not limited to business decision making,
3. Terminology
communicationsandnegotiationsinvolvingchangeofproperty
3.1 Definitions:
ownership, regulatory requirements, third-party lawsuits, in-
3.1.1 allocation or allocated share—the portion of cost or
surance premium calculation and claim settlement, change of
liability for which a party is responsible for payment or
propertyuse,revitalization,complianceplanning,construction,
reimbursement.
analysisofremedialalternatives,budgeting,strategicplanning,
3.1.2 environmental compliance—operations, permits,
financing, and investment analysis by shareholders. The use of
equipment, facilities, products, records, documentation, re-
estimated costs and liabilities developed in accordance with
ports, training, procedures, inspections, certifications, monitor-
this standard may be subject to other standards applicable to
ing, controls, or other conditions or activities that must
the matter involved. For example, it is not intended to
conformtoenvironmentalstatutesincluding,butnotlimitedto,
supersede accounting and actuarial standards including those
CAA, CWA, OPA, RCRA, CERCLA, TSCA, FIFRA, SDWA,
by the Financial Accounting Standards Board and the U.S.
and state and local laws.
Security and Exchange Commission. This standard does not
3.1.3 costs and liabilities—economic expenses, accrued
address the establishment of reserves or disclosure require-
liabilities, and loss contingencies.
ments.
3.1.4 estimator—an individual or entity that prepares and
1.2 Objectives—The objective of this standard is to provide
analyzes costs and liabilities.
guidance on approaches for estimating costs and liabilities for
3.1.5 event—aconditionorincidentwhichoccurred,ormay
environmental matters.
occur, with respect to an environmental condition and/or
3,4
2. Referenced Documents environmental compliance issue, that affects or leads to poten-
tial costs and liabilities. Examples of events include: a new
2.1 ASTM Standards:
requirement for air emission controls (e.g., NO ), a hazardous
x
E 1527 Environmental Site Assessments: Phase I Environ-
waste site that requires remediation, a claim for personal injury
mental Site Assessment Process
related to an alleged environmental incident, or the need to
E 1739 Risk-Based CorrectiveActionApplied at Petroleum
comply with NPDES standards as a result of a process change.
Release Sites
3.1.6 liability—an actual or potential obligation that may or
may not be accrued.
ThisguideisunderthejurisdictionofASTMCommitteeE50onEnvironmental
3.1.7 orphan share—liability assigned to a PRP that cannot
Assessment and is the direct responsibility of Subcommittee E50.05 on Wetland
be located or that is insolvent, or the liability associated with
Ecosystems.
pollutants which cannot be attributed to a PRP.
Current edition approved Mar. 10, 2001. Published May 2001.
For the purposes of this standard, costs and values are defined as monetary
3.1.8 potentially responsible party (PRP)—any individual,
estimates.
legal entity, or government—including owners, operators,
Appendix X1 includes citations for additional relevant documents and require-
ments from other organizations including FASB, SEC, and AICPA.
For referenced ASTM standards, visit the ASTM website, www.astm.org, or
contact ASTM Customer Service at [e-mail]. For Annual Book of ASTM Withdrawn.
Standards volume information, refer to the standard’s Document Summary page on Available from U.S. Environmental Protection Agency, 1200 Pennsylvania
the ASTM website. Avenue, NW Washington, DC 20460.
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959, United States.
E2137–01
transporters, or generators—potentially responsible for, or with regard to, among other things, the resolution of contrac-
contributing to, the environmental impacts at an event. tual, technological, regulatory, legislative, and judicial issues,
3.1.9 studies—investigations such as regulatory interpreta- which could affect the costs and liabilities.
tions and applicability studies, compliance analysis, operating 4.2.2 Periodic Review of Assumptions and Estimates—
scenarios study, engineering design and analysis, cost estima-
Assumptions underlying these estimates should be reviewed
tion, process hazard analysis, modeling, communication plans, periodically for the purpose of incorporating additional infor-
preliminary investigation, sampling and analysis, site assess-
mation that may become available. For example, changes in
ment, site characterization, Phase I and II studies, remedial regulatory requirements, technology, property use, inflation, or
action plan, remedial investigation, contamination assessment
other issues may affect the basis for the estimates, therefore
report, feasibility study, risk assessment, treatability study, necessitating revisions.
ecological impact assessment, environmental impact report,
4.2.3 Comparison with Subsequent Estimates—Subsequent
work plans, ASTM Risk-Based Corrective Action (RBCA) estimates based on additional information should not be
analysis, RCRA facility investigation, RCRA facility assess-
construed as indicating the prior estimates of costs and
ment, report of waste discharge, corrective measures study, liabilities for environmental matters were unreasonable at the
corrective action report, health and safety plan, quality assur-
time they were made. Estimates should be evaluated on the
ance plan, and other studies.
reasonablenessofanalysesandjudgmentsmadeatthetimeand
3.2 Acronyms:
under the circumstances in which they were made. Subsequent
3.2.1 AICPA—American Institute of Certified Public Ac-
improvements in estimates should be made as more informa-
countants.
tion becomes available, but these improved estimates should
3.2.2 CAA—Clean Air Act.
not be considered valid standards on which to measure the
3.2.3 CERCLA—Comprehensive Environmental Response,
reasonableness of a prior estimate based on hindsight, new
Compensation and LiabilityAct of 1980 (as amended, 42 USC
information, use of developing analytical techniques, or other
Section 9601 et seq.).
factors. However, information on trends in estimates over time
3.2.4 CWA—Clean Water Act.
may be of value to a user of financial statements or other users
3.2.5 EPA—United States Environmental Protection
of the cost and liability estimates.
Agency.
4.2.4 Not Exhaustive—Estimation of costs and liabilities
3.2.6 EV—expected value; an estimate of the weighted
for environmental matters does not necessarily require an
mean value of an unknown quantity that represents a
exhaustive evaluation of all possible outcomes. A point exists
probability-weighted average over the range of all possible
at which the cost of obtaining information or the time required
values.
to gather it outweighs improvement in the quality of the
3.2.7 FASB—Financial Accounting Standards Board.
estimate.
3.2.8 FIFRA—Federal Insecticide, Fungicide and Rodenti-
4.2.5 Assessment of Risk—The actual or potential risk to
cide Act.
human health and the environment should be considered in
3.2.9 MLV—most likely value.
assessing environmental matters. The degree of risk should be
3.2.10 NPDES—national pollutant discharge elimination
afactorindevelopingthecostandliabilityestimatesassociated
system.
with those matters.
3.2.11 OPA—Oil Pollution Act.
4.2.6 Estimator Selection—An appropriate estimator or
3.2.12 PRP—potentially responsible party.
group of estimators will consist of those individuals or groups
3.2.13 RBCA—Risk-based corrective action.
who possess sufficient knowledge, training, and experience to
3.2.14 RCRA—Resource Conservation and Recovery Act
developappropriateestimatesforthe costs and liabilitiesbeing
(as amended 42 USC Section 6901 et seq.).
estimated. It is the responsibility of the entity sponsoring the
3.2.15 SDWA—Safe Drinking Water Act.
cost and liability estimates to select an estimator with the
3.2.16 SEC—Securities and Exchange Commission.
appropriate level of knowledge, training, and experience for
3.2.17 TSCA—Toxic Substances Control Act.
the parts of the estimation effort for which that estimator is
responsible.
4. Significance and Use
4.1 Use—The standard is intended for use on a voluntary
5. Procedures for Estimating Costs and Liabilities for
basis by an estimator of costs and liabilities for environmental
Environmental Matters
matters.The user may elect to apply this standard for any or all
5.1 Determination of Relevant Information and Types of
uses outlined in the Purpose. Application of this standard for
Costs and Liabilities:
one use does not compel application of the standard for all or
5.1.1 There are many types of costs and liabilities for
any other use.
environmental matters, including, but not limited to:
4.2 Principles—The following principles are an integral
5.1.1.1 Studies,
partofthisstandardandshouldbeusedtoresolveambiguityor
5.1.1.2 Response action,
dispute regarding the interpretation of estimated costs and
5.1.1.3 Environmental compliance,
liabilities for environmental matters.
5.1.1.4 Defense and legal fees,
4.2.1 Uncertainty Not Eliminated—Even though an esti-
5.1.1.5 Fines and penalties,
mate of costs and liabilities for environmental matters is
prepared in accordance with this standard, uncertainty remains 5.1.1.6 Reimbursement of agency oversight, or
E2137–01
5.1.1.7 Damages arising from resource damages, ecological alternative methods and permitting options, auditability, and
damages, property damage, business interruption, bodily in- performance oriented metrics.
jury, or tort claims such as nuisance and negligence claims. 5.1.3.8 Level of organizational involvement and scrutiny,
5.1.2 Afteridentifyingtheconditionsgivingrisetopotential 5.1.3.9 The degree of communication and involvement with
costs and liabilities for environmental matters, existing rel- the public.
evant information should be considered to estimate costs and 5.1.4 In the absence or insufficiency of such information, an
liabilities identified in 5.1.1, including, but not limited to: assessment should be made of the applicable regulatory and
5.1.2.1 Event type (for example, new EPA air emission industrystandardrequirements,andadeterminationmadeasto
control requirements, leaking landfill, site PRPnotice, compli- whether based on these requirements, significant costs and
ance audit findings), liabilities for environmental matters may be incurred that
5.1.2.2 Number and location of affected operations/ would indicate the need for further data creation and analysis
facilities, in the future.
5.1.2.3 Use of surrounding property, 5.2 Selection of Estimation Approaches—Adecision frame-
5.1.2.4 Past, current, and potential future site uses, work for estimating costs and liabilities for environmental
5.1.2.5 Studies, matters is required. For purposes of naming various estimating
5.1.2.6 Environmental risks posed by the event, methods, the following terminology is used:
5.1.2.7 Bodily injury or other claims related to the event,
Expected Value (EV)
Most Likely Value (MLV)
5.1.2.8 Relevant state or other regulatory requirements and
Range of Values
alternatives,
Known Minimum Value
5.1.2.9 State or federal agency involvement,
5.2.1 The decision to use one or more of these four
5.1.2.10 Public involvement,
estimating methods or another method for a particular purpose
5.1.2.11 Planned or completed remedial activities,
is not arbitrary. The informational value of the estimate
5.1.2.12 Decision documents (for example, Records of De-
supplied by any one method is not equivalent to the others.
cision),
When the uncertainties are great (for example, when an event
5.1.2.13 Litigation activities related to the event (for ex-
is first identified) it may not be possible to make a reasonable
ample, claims, suits, actions, demands, requests for payment,
cost estimate.
notices),
5.2.2 The robustness and comprehensiveness of an estimate
5.1.2.14 Resources, tasks, and deadlines,
and the quantification of uncertainty about the estimate, given
5.1.2.15 Available technologies and designs,
adequate information, generally decreases moving from top to
5.1.2.16 Type and extent of contamination,
bottom of this list of methods. (See Fig. 1.) Depending on
5.1.2.17 Number of operable units (CERCLA) or solid
availability of information and circumstances, the level of
waste management units (RCRA),
5.1.2.18 Involvement of various parties at the event, and
5.1.2.19 Information on prior experience with similar
events.
5.1.3 The organization and application of the foregoing
information may be further subject to corporate, accounting, or
regulatory policy decisions. The user will need to determine
what these policy decisions are, and assess their effect on the
cost estimate. Examples of such policy decisions include, but
are not limited to:
5.1.3.1 Measuring and recording of contingent liabilities,
5.1.3.2 Technical policy decisions or interpretations to be
made by regulatory agencies,
5.1.3.3 Acceptablelevelsofrisk(forexample,businessrisk,
human health risk, ecological risk),
5.1.3.4 The degree to which societal or external costs and
benefits are considered,
5.1.3.5 Whether or not life cycle costs are considered,
5.1.3.6 The degree to which sustainability/sustainable de-
velopment are considered,
5.1.3.7 Local environmental management system criteria,
including trade-off of emissions across environmental media,
See Guide E 1739; PS 104-98; EPA Risk Characterization Program; The
Presidential/CongressionalCommissiononRiskAssessmentandRiskManagement;
and EPA OSWER Directive 961.17 concerning use of risk-based decision making, FIG. 1 Hierarchy of Approaches for Estimating Costs and
1995. Liabilities for Environmental Matters
E2137–01
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