ASTM E2173-16

Standard Guide for Disclosure of Environmental Liabilities

SIGNIFICANCE AND USE
4.1 Significance—Since the release of FASB Statement 5—Accounting for Contingencies—in March 1975, the regulatory complexity around environmental matters has increased due to a variety of long-term trends and factors, including but not limited to:  
4.1.1 Number and scope of federal, state, local, and non-U.S. environmental and financial reporting laws and their implementing regulations;  
4.1.2 Number and scope of treaties signed by the United States, as well as the implementing laws and regulations; parties in these treaties include multilateral organizations and Native American tribes;  
4.1.3 Judicial decisions clarifying the impact of laws, regulations, and treaties;  
4.1.4 Costs to comply with environmental regulations;  
4.1.5 Number of known chemical compounds (see Chemical Abstracts Service REGISTRYSM, which contains over 113 million unique organic and inorganic substances);  
4.1.6 Knowledge about benefits and effects of chemical compounds on human health, ecological receptors, and the environment, such as toxicology studies (see National Library of Medicine's TOXNET database at www.nlm.nih.gov);  
4.1.7 Number and efficacy of remedial technologies;  
4.1.8 Experience with assessing and remediating environmental conditions;  
4.1.9 Financial impact of counterparty failure; and  
4.1.10 Investor interest in the impact of these trends and factors on their investments.  
4.2 Concurrently, the issuers of generally accepted accounting principles (GAAP) and financial reporting standards have been evolving. While the Securities and Exchange Commission (SEC) was established in 1934, FASB was created in 1973, GASB in 1984, FASAB in 1990, and IASB in 2001. As part of Sarbanes-Oxley Act of 2002 (Public Law 107–204, 116 Stat. 745), PCAOB was founded in 2002.
Note 1: Many of these trends and factors, as well as the changes to GAAP, have occurred slowly. For example, users of this guide will likely be aware that chemicals that were not regulated or consid...
SCOPE
1.1 Purpose—The purpose of this guide is to provide a series of options or instructions consistent with good commercial and customary practice in the United States for environmental liability disclosures accompanying audited and unaudited financial statements. This guide is consistent with Generally Accepted Accounting Principles (GAAP)2 issued by Financial Accounting Standards Board (FASB), as well as related statements, rules, regulations, and/or procedures issued by Government Accounting Standards Board (GASB), Public Company Accounting Oversight Board (PCAOB), Securities and Exchange Commission (SEC), and Federal Accounting Standards Advisory Board (FASAB). This guide is intended to be consistent with other issuers of accounting standards and practices, including International Accounting Standards Board (IASB).  
1.2 Objectives—The objectives of this guide are to determine the conditions warranting disclosure and the content of appropriate disclosure.

General Information

• Status: Historical
• Publication Date: 30-Sep-2016
• ICS: 13.020.10 - Environmental management
• Technical Committee: E50 - Environmental Assessment, Risk Management and Corrective Action
• Drafting Committee: E50.05 - Environmental Risk Management

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: E2173 − 16
Standard Guide for
1
Disclosure of Environmental Liabilities
This standard is issued under the fixed designation E2173; 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 (´) indicates an editorial change since the last revision or reapproval.
4
1. Scope 2.2 FASB Standard:
Statement of Financial Accounting Concepts No. 8 “Con-
1.1 Purpose—The purpose of this guide is to provide a
ceptual Framework for Financial Reporting”, September
series of options or instructions consistent with good commer-
2010
cial and customary practice in the United States for environ-
mental liability disclosures accompanying audited and unau-
3. Terminology
dited financial statements. This guide is consistent with
3.1 Definitions of Terms Specific to This Standard:
2
Generally Accepted Accounting Principles (GAAP) issued by
3.1.1 accretion, n—increase to the present value of a
Financial Accounting Standards Board (FASB), as well as
liability solely because of the passage of time, normally a year;
related statements, rules, regulations, and/or procedures issued
also “unwinding the discount.”
by Government Accounting Standards Board (GASB), Public
3.1.2 activity and use limitations, AULs, n—legal or physi-
Company Accounting Oversight Board (PCAOB), Securities
cal restrictions or limitations on the use of, or access to, a site
and Exchange Commission (SEC), and Federal Accounting
or facility to eliminate or minimize potential exposures to
Standards Advisory Board (FASAB). This guide is intended to
chemicals of concern or prevent activities that could interfere
be consistent with other issuers of accounting standards and
with the effectiveness of a response action to ensure mainte-
practices, including International Accounting Standards Board
nance of a condition of “acceptable risk” or “no significant
(IASB).
risk” to human health and the environment.
1.2 Objectives—The objectives of this guide are to deter-
3.1.2.1 Discussion—These legal or physical restrictions are
mine the conditions warranting disclosure and the content of
intended to prevent adverse impacts to individuals or popula-
appropriate disclosure.
tions that may be exposed to chemicals of concern. (E2091)
3.1.3 asset retirement obligation, n—legal or constructive
2. Referenced Documents
obligations associated with the retirement of a tangible long-
3
2.1 ASTM Standards:
lived asset that result from the acquisition, construction,
E1527 Practice for Environmental SiteAssessments: Phase I
development, or normal operation of a tangible long-lived
Environmental Site Assessment Process
asset.
E2091 Guide for Use of Activity and Use Limitations,
3.1.3.1 Discussion—Activities include, but are not limited
Including Institutional and Engineering Controls
to, demolition, decommissioning, decontamination,
E2137 Guide for Estimating Monetary Costs and Liabilities
reclamation, restoration, and abandonment.
for Environmental Matters
3.1.4 claim, n—demand for payment or compensation.
3.1.5 commitment, n—type of liability covering purchase
1
ThisguideisunderthejurisdictionofASTMCommitteeE50onEnvironmental
obligations that serve to mitigate environmental liabilities.
Assessment, Risk Management and CorrectiveAction and is the direct responsibil-
3.1.5.1 Discussion—An example is an entity continuing a
ity of Subcommittee E50.05 on Environmental Risk Management.
Current edition approved Oct. 1, 2016. Published November 2016. Originally
property lease obligation indefinitely to defer a remediation or
approved in 2001. Last previous edition approved in 2011 as E2173 – 07(2011).
asset retirement obligation due at the end of the lease. (ASC
DOI: 10.1520/E2173-16.
440)
2
This guide alone does not satisfy or include all disclosure requirements under
GAAP, SEC, IASB, or any other agency or regulatory body. Appendix X1 provides
3.1.6 Comprehensive Environmental Response, Compensa-
some examples of where such requirements are contained.
tion and Liability Act of 1980 (as amended, 42 USC Section
3
For referenced ASTM standards, visit the ASTM website, www.astm.org, or
contact ASTM Customer Service at [e-mail]. For Annual Book of ASTM
4
Standards volume information, refer to the standard’s Document Summary page on Financial Accounting Standards Board 401 Merritt 7 P.O. Box 5116 Norwalk,
the ASTM website. Connecticut 06856-5116. http://www.fasb.org/
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959. United States
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E2173 − 16
9601 et seq.), CERCLA, n—also known as “Superfund,” a 3.1.16 Federal Register, FR, n—publication of the U.S.
...

This document is not an ASTM standard and is intended only to provide the user of an ASTM standard an indication of what changes have been made to the previous version. Because
it may not be technically possible to adequately depict all changes accurately, ASTM recommends that users consult prior editions as appropriate. In all cases only the current version
of the standard as published by ASTM is to be considered the official document.
Designation: E2173 − 07 (Reapproved 2011) E2173 − 16
Standard Guide for
1
Disclosure of Environmental Liabilities
This standard is issued under the fixed designation E2173; 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 (´) indicates an editorial change since the last revision or reapproval.
1. Scope
1.1 Purpose—The purpose of this guide is to provide a series of options or instructions consistent with good commercial and
customary practice in the United States for environmental liability disclosures accompanying audited and unaudited financial
2
statements. This guide is consistent with Generally Accepted Accounting Principles (GAAP).(GAAP) issued by Financial
Accounting Standards Board (FASB), as well as related statements, rules, regulations, and/or procedures issued by Government
Accounting Standards Board (GASB), Public Company Accounting Oversight Board (PCAOB), Securities and Exchange
Commission (SEC), and Federal Accounting Standards Advisory Board (FASAB). This guide is intended to be consistent with other
issuers of accounting standards and practices, including International Accounting Standards Board (IASB).
1.2 Objectives—The objectives of this guide are to determine the conditions warranting disclosure and the content of appropriate
disclosure.
2. Referenced Documents
3
2.1 ASTM Standards:
D5746 Classification of Environmental Condition of Property Area Types for Defense Base Closure and Realignment Facilities
E1527 Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process
E1739E2091 Guide for Risk-Based Corrective Action Applied at Petroleum Release SitesUse of Activity and Use Limitations,
Including Institutional and Engineering Controls
E2137 Guide for Estimating Monetary Costs and Liabilities for Environmental Matters
4
2.2 EPA Directives:FASB Standard:
United States Environmental Protection Agency, OSWER Directive 9610.17:Statement of Financial Accounting Concepts No.
8 Use of Risk-Based Decision-Making in UST Corrective Action Programs“Conceptual Framework for Financial Reporting”,
September 2010
3. Terminology
3.1 Definitions of Terms Specific to This Standard:
3.1.1 accretion, n—increase to the present value of a liability solely because of the passage of time, normally a year; also
“unwinding the discount.”
3.1.2 activity and use limitations (AULs)—limitations, AULs, n—legal or physical restrictions or limitations on the use of, or
access to, a site or facility to eliminate or minimize potential exposures to chemicals of concern,concern or to prevent activities
that could interfere with the effectiveness of a response action,action to ensure maintenance of a condition of “acceptable risk” or
“no significant risk” to human health and the environment. These legal or physical restrictions are intended to prevent adverse
impacts to individuals or populations that may be exposed to chemicals of concern.
1
This guide is under the jurisdiction of ASTM Committee E50 on Environmental Assessment, Risk Management and Corrective Action and is the direct responsibility
of Subcommittee E50.05 on Environmental Risk Management.
Current edition approved July 1, 2011Oct. 1, 2016. Published July 2011November 2016. Originally approved in 2001. Last previous edition approved in 20072011 as
E2173 – 07.E2173 – 07(2011). DOI: 10.1520/E2173-11.10.1520/E2173-16.
2
This guide alone does not satisfy or include all disclosure requirements under GAAP, SEC, IASB, or any other agency or regulatory body. Appendix X1 provides some
examples of where such requirements are contained.
3
For referenced ASTM standards, visit the ASTM website, www.astm.org, or contact ASTM Customer Service at [e-mail]. For Annual Book of ASTM Standards
volume information, refer to the standard’s Document Summary page on the ASTM website.
4
Available from the United States Environmental Protection Agency (U.S. EPA), Ariel Rios Building, 1200 Pennsylvania Ave., N.W., Washington, DC 20460. Financial
Accounting Standards Board 401 Merritt 7 P.O. Box 5116 Norwalk, Connecticut 06856-5116. http://www.fasb.org/
3.1.2.1 Discussion—
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959. United States
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E2173 − 16
These legal or physical restrictions are intended to prevent adverse impacts to individual
...