ASTM E2137-06(2011)

Standard Guide for Estimating Monetary Costs and Liabilities for Environmental Matters

SIGNIFICANCE AND USE
Use—The standard is intended for use on a voluntary basis by an estimator of costs and liabilities for environmental matters. The user may elect to apply this standard for any or all uses outlined in the Purpose. Application of this standard for one use does not compel application of the standard for all or any other use.
Principles—The following principles are an integral part of this standard and should be used to resolve ambiguity or dispute regarding the interpretation of estimated costs and liabilities for environmental matters.
Uncertainty Not Eliminated—Even though an estimate of costs and liabilities for environmental matters is prepared in accordance with this standard, uncertainty remains with regard to, among other things, the resolution of contractual, technological, regulatory, legislative, and judicial issues, which could affect the costs and liabilities.
Periodic Review of Assumptions and Estimates—Assumptions underlying these estimates should be reviewed periodically for the purpose of incorporating additional information that may become available. For example, changes in regulatory requirements, technology, property use, inflation, or other issues may affect the basis for the estimates, therefore necessitating revisions.
Comparison with Subsequent Estimates—Subsequent estimates based on additional information should not be construed as indicating the prior estimates of costs and liabilities for environmental matters were unreasonable at the time they were made. Estimates should be evaluated on the reasonableness of analyses and judgments made at the time and under the circumstances in which they were made. Subsequent improvements in estimates should be made as more information becomes available, but these improved estimates should not be considered valid standards on which to measure the reasonableness of a prior estimate based on hindsight, new information, use of developing analytical techniques, or other factors. However, information on t...
SCOPE
1.1 Purpose—The purpose of this document is to provide a standard guide 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: 30-Jun-2011
• 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

• Replaces: ASTM E2137-06 - Standard Guide for Estimating Monetary Costs and Liabilities for Environmental Matters
• Effective Date: 01-Jul-2011
• Referred By: ASTM E1903-19 - Standard Practice for Environmental Site Assessments: Phase II Environmental Site Assessment Process
• Effective Date: 01-Jul-2011
• Referred By: ASTM E2718-21 - Standard Guide for Financial Disclosures Attributed to Climate Change
• Effective Date: 01-Jul-2011
• Referred By: ASTM E2173-22 - Standard Guide for Disclosure of Environmental Liabilities
• Effective Date: 01-Jul-2011
• Referred By: ASTM E3228-19 - Standard Guide for Environmental Knowledge Management
• Effective Date: 01-Jul-2011
• Referred By: ASTM E3123-18 - Standard Guide for Recognition and Derecognition of Environmental Liabilities
• Effective Date: 01-Jul-2011
• Referred By: ASTM E2876-13(2020) - Standard Guide for Integrating Sustainable Objectives into Cleanup
• Effective Date: 01-Jul-2011

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 − 06 (Reapproved 2011)
Standard Guide for
Estimating Monetary Costs and Liabilities for Environmental
Matters
This standard is issued under the fixed designation E2137; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision.Anumber in parentheses indicates the year of last reapproval.A
superscript epsilon (´) indicates an editorial change since the last revision or reapproval.
1. Scope E2081Guide for Risk-Based Corrective Action
E2091Guide for Use of Activity and Use Limitations,
1.1 Purpose—The purpose of this document is to provide a
Including Institutional and Engineering Controls
standard guide for estimating costs and liabilities for environ-
2 E2205Guide for Risk-Based Corrective Action for Protec-
mental matters. Many possible uses for estimates of costs and
tion of Ecological Resources
liabilities for environmental matters exist, including but not
E2345Practice for Investigating Electrical Incidents (With-
limited to business decision making, communications and
drawn 2013)
negotiations involving change of property ownership, regula-
2.2 Other Document:
tory requirements, third-party lawsuits, insurance premium
EPA OSWER Directive 9610.17Concerning Use of Risk-
calculation and claim settlement, change of property use,
Based Decision Making, 1995
revitalization, compliance planning, construction, analysis of
remedial alternatives, budgeting, strategic planning, financing,
3. Terminology
and investment analysis by shareholders. The use of estimated
3.1 Definitions:
costs and liabilitiesdevelopedinaccordancewiththisstandard
3.1.1 activity and use limitations (AULs)—legal or physical
may be subject to other standards applicable to the matter
restrictions or limitations on the use of, or access to, a site or
involved.Forexample,itisnotintendedtosupersedeaccount-
facility to eliminate or minimize potential exposures to chemi-
ing and actuarial standards including those by the Financial
calsofconcern,ortopreventactivitiesthatcouldinterferewith
Accounting Standards Board and the U.S. Security and Ex-
theeffectivenessofaresponseaction,toensuremaintenanceof
change Commission. This standard does not address the
a condition of “acceptable risk” or “no significant risk” to
establishment of reserves or disclosure requirements.
human health and the environment. These legal or physical
1.2 Objectives—The objective of this standard is to provide
restrictions are intended to prevent adverse impacts to indi-
guidance on approaches for estimating costs and liabilities for
viduals or populations that may be exposed to chemicals of
environmental matters.
concern.
3,4
3.1.2 allocation or allocated share—the portion of cost or
2. Referenced Documents
liability for which a party is responsible for payment or
2.1 ASTM Standards:
reimbursement.
E1527PracticeforEnvironmentalSiteAssessments:PhaseI
3.1.3 asset retirement obligation—legal obligations associ-
Environmental Site Assessment Process
ated with the retirement of a tangible long-lived asset that
E1739Guide for Risk-Based Corrective Action Applied at
result from the acquisition, construction, development, or
Petroleum Release Sites
normal operation of a tangible long-lived asset.
3.1.4 costs and liabilities—economic expenses, accrued
ThisguideisunderthejurisdictionofASTMCommitteeE50onEnvironmental
liabilities, asset retirement obligations, and loss contingencies.
Assessment, Risk Management and CorrectiveAction and is the direct responsibil-
3.1.5 environmental compliance—operations, permits,
ity of Subcommittee E50.05 on Environmental Risk Management.
CurrenteditionapprovedJuly1,2011.PublishedJuly2011.Originallyapproved
equipment, facilities, products, records, documentation,
in 2001. Last previous edition approved in 2006 as E2137–06. DOI: 10.1520/
reports, training, procedures, inspections, certifications,
E2137-11.
monitoring, controls, or other conditions or activities that must
For the purposes of this standard, costs and values are defined as monetary
conformtoenvironmentalstatutesincluding,butnotlimitedto,
estimates.
Appendix X1 includes citations for additional relevant documents and require-
ments from other organizations including FASB, SEC, and AICPA.
4 5
For referenced ASTM standards, visit the ASTM website, www.astm.org, or The last approved version of this historical standard is referenced on
contact ASTM Customer Service at [e-mail]. For Annual Book of ASTM www.astm.org.
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 − 06 (2011)
CAA, CWA, OPA, RCRA, CERCLA, TSCA, FIFRA, SDWA, 3.2.7 EV—expected value; an estimate of the weighted
and state and local laws, as well as any international jurisdic- mean value of an unknown quantity that represents a
tional requirements. probability-weighted average over the range of all possible
values.
3.1.6 estimator—an individual or entity that prepares and
3.2.8 FASB—Financial Accounting Standards Board.
analyzes costs and liabilities.
3.2.9 FIFRA—Federal Insecticide, Fungicide and Rodenti-
3.1.7 event—aconditionorincidentwhichoccurred,ormay
cide Act.
occur, with respect to an environmental condition and/or
environmental compliance issue, that affects or leads to poten-
3.2.10 MLV—most likely value.
tial costs and liabilities. Examples of events include: a new
3.2.11 NPDES—national pollutant discharge elimination
requirement for air emission controls (for example, NO ), a
x
system.
hazardous waste site that requires remediation, a claim for
3.2.12 OPA—Oil Pollution Act.
personalinjuryrelatedtoanallegedenvironmentalincident,or
3.2.13 PRP—potentially responsible party.
the need to comply with NPDES standards as a result of a
process change.
3.2.14 RBCA—Risk-based corrective action.
3.1.8 fair value—an estimate of the price that could be
3.2.15 RCRA—Resource Conservation and Recovery Act
received for an asset or paid to settle a liability in a current
(as amended 42 USC Section 6901 et seq.).
transaction between marketplace participants that are
3.2.16 SDWA—Safe Drinking Water Act.
unrelated, knowledgeable about factors relevant to the liability
3.2.17 SEC—Securities and Exchange Commission.
and the transaction, able, and willing to transact in the
3.2.18 TSCA—Toxic Substances Control Act.
reference market for the liability.
3.1.9 liability—an actual or potential obligation that may or
4. Significance and Use
may not be accrued.
4.1 Use—The standard is intended for use on a voluntary
3.1.10 orphan share—liabilityassignedtoaPRPthatcannot
basis by an estimator of costs and liabilities for environmental
be located or that is insolvent, or the liability associated with
matters.Theusermayelecttoapplythisstandardforanyorall
pollutants which cannot be attributed to a PRP.
uses outlined in the Purpose. Application of this standard for
3.1.11 potentially responsible party (PRP)—any individual,
one use does not compel application of the standard for all or
legal entity, or government—including owners, operators,
any other use.
transporters, or generators—potentially responsible for, or
4.2 Principles—Thefollowingprinciplesareanintegralpart
contributing to, the environmental impacts at an event.
of this standard and should be used to resolve ambiguity or
3.1.12 studies—investigations such as regulatory interpreta-
dispute regarding the interpretation of estimated costs and
tions and applicability studies, compliance analysis, operating
liabilities for environmental matters.
scenarios study, engineering design and analysis, cost
4.2.1 Uncertainty Not Eliminated—Eventhoughanestimate
estimation, process hazard analysis, modeling, communication
of costs and liabilitiesforenvironmentalmattersispreparedin
plans, preliminary investigation, sampling and analysis, site
accordance with this standard, uncertainty remains with regard
assessment, site characterization, Phase I and II studies, reme-
to, among other things, the resolution of contractual,
dial action plan, remedial investigation, contamination assess-
technological,regulatory,legislative,andjudicialissues,which
ment report, feasibility study, risk assessment, treatability
could affect the costs and liabilities.
study, ecological impact assessment, environmental impact
4.2.2 Periodic Review of Assumptions and Estimates—
report, work plans, ASTM Risk-Based Corrective Action
Assumptions underlying these estimates should be reviewed
(RBCA) analysis, RCRA facility investigation, RCRA facility
periodically for the purpose of incorporating additional infor-
assessment, report of waste discharge, corrective measures
mation that may become available. For example, changes in
study, corrective action report, health and safety plan, quality
regulatory requirements, technology, property use, inflation, or
assurance plan, and other studies.
other issues may affect the basis for the estimates, therefore
necessitating revisions.
3.2 Acronyms:
4.2.3 Comparison with Subsequent Estimates—Subsequent
3.2.1 AICPA—American Institute of Certified Public Ac-
estimates based on additional information should not be
countants.
construed as indicating the prior estimates of costs and
3.2.2 AULs—Activity and Use Limitations.
liabilities for environmental matters were unreasonable at the
3.2.3 CAA—Clean Air Act.
time they were made. Estimates should be evaluated on the
reasonablenessofanalysesandjudgmentsmadeatthetimeand
3.2.4 CERCLA—Comprehensive Environmental Response,
under the circumstances in which they were made. Subsequent
CompensationandLiabilityActof1980(asamended,42USC
improvements in estimates should be made as more informa-
Section 9601 et seq.).
tion becomes available, but these improved estimates should
3.2.5 CWA—Clean Water Act.
not be considered valid standards on which to measure the
3.2.6 EPA—United States Environmental Protection reasonableness of a prior estimate based on hindsight, new
Agency. information, use of developing analytical techniques, or other
E2137 − 06 (2011)
factors. However, information on trends in estimates over time 5.1.2.6 Environmental risks posed by the event,
may be of value to a user of financial statements or other users 5.1.2.7 Bodily injury or other claims related to the event,
of the cost and liability estimates. Any comparison should 5.1.2.8 Relevant state or other regulatory requirements and
recognize the reasons the estimates were performed, whether alternatives,
theywereaccomplishedunderthestandardandanydifferences 5.1.2.9 State or federal agency involvement,
in technique in the application of the standard. 5.1.2.10 Public involvement,
4.2.4 Not Exhaustive—Estimationof costs and liabilitiesfor 5.1.2.11 Planned or completed remedial activities,
environmental matters does not necessarily require an exhaus- 5.1.2.12 Decision documents (for example, Records of
tiveevaluationofallpossibleoutcomes.Apointexistsatwhich Decision),
thecostofobtaininginformationorthetimerequiredtogather 5.1.2.13 Litigation activities related to the event (for
it outweighs improvement in the quality of the estimate. example,claims,suits,actions,demands,requestsforpayment,
4.2.5 Assessment of Risk—The actual or potential risk to notices),
5.1.2.14 Resources, tasks, and deadlines,
human health and the environment should be considered in
assessing environmental matters. The degree of risk should be 5.1.2.15 Available technologies and designs,
afactorindevelopingthecostandliabilityestimatesassociated 5.1.2.16 Type and extent of contamination,
5.1.2.17 Number of operable units (CERCLA) or solid
with those matters.
waste management units (RCRA),
4.2.6 Estimator Selection—An appropriate estimator or
5.1.2.18 Involvement of various parties at the event, and
group of estimators will consist of those individuals or groups
5.1.2.19 Information on prior experience with similar
who possess sufficient knowledge, training, and experience to
events.
developappropriateestimatesforthe costs and liabilitiesbeing
5.1.3 The organization and application of the foregoing
estimated. It is the responsibility of the entity sponsoring the
informationmaybefurthersubjecttocorporate,accounting,or
cost and liability estimates to select an estimator with the
regulatory policy decisions. The user will need to determine
appropriate level of knowledge, training, and experience for
what these policy decisions are, and assess their effect on the
the parts of the estimation effort for which that estimator is
cost estimate. Examples of such policy decisions include, but
responsible.
are not limited to:
5.1.3.1 Measuring and recording of contingent liabilities,
5. Procedures for Estimating Costs and Liabilities for
5.1.3.2 Technical policy decisions or interpretations to be
Environmental Matters
made by regulatory agencies,
5.1 Determination of Relevant Information and Types of
5.1.3.3 Acceptablelevelsofrisk(forexample,businessrisk,
Costs and Liabilities:
human health risk, ecological risk),
5.1.1 There are many types of costs and liabilities for
5.1.3.4 The degree to which societal or external costs and
environmental matters, including, but not limited to:
benefits are considered,
5.1.1.1 Studies,
5.1.3.5 Whether or not life cycle costs are considered,
5.1.1.2 Response action under CERCLA and state or local
5.1.3.6 The degree to which sustainability/sustainable de-
statutesaswellasanyinternationaljurisdictionalrequirements,
velopment are considered,
5.1.1.3 Environmental compliance, (for example, Financial
5.1.3.7 Local environmental management system criteria,
Assurance under RCRA Subpart H requires an annual update
including trade-off of emissions across environmental media,
of estimated closure costs),
alternative methods and permitting options, auditability, and
5.1.1.4 Defense and legal fees,
performance oriented metrics.
5.1.1.5 Fines and penalties,
5.1.3.8 Level of organizational involvement and scrutiny,
5.1.1.6 Reimbursement of agency oversight, or
5.1.3.9 Thedegreeofcommunicationandinvolvementwith
5.1.1.7 Damages arising from resource damages, ecological
the public.
damages, property damage, business interruption, bodily
5.1.4 Intheabsenceorinsufficiencyofsuchinformation,an
injury, or tort claims such as nuisance and negligence claims.
assessment should be made of the applicable regulatory and
5.1.2 Afteridentifyingtheconditionsgivingrisetopotential
industrystandardrequirements,andadeterminationmadeasto
costs and liabilities for environmental matters, existing
...