ASTM E2173-07(2011)

Standard Guide for Disclosure of Environmental Liabilities

SIGNIFICANCE AND USE
Uses—This guide is intended for use on a voluntary basis by a reporting entity that provides disclosure in their financial statements regarding environmental liabilities. The degree and type of disclosure depends on the scope and objective of the financial statements. Note the user should be aware that there may be contractual obligations, court decisions, or regulatory directives that may affect the flexibility in use of this guide.
Principles:
The following principles are an integral part of this guide and are intended to be referred to in resolving any ambiguity or dispute regarding the interpretation of disclosures regarding environmental liabilities.
Uncertainty Not Eliminated—Although a reporting entity, as of the time when its financial statements are prepared, may hold a certain position with regard to the existence and extent of its environmental liabilities, there remains uncertainty with regard to the final resolution of factual, technological, regulatory, legislative, and judicial matters, which could affect its environmental liabilities.
Disclosure Dependent on Circumstances—Not every environmental liability warrants the same level of detail in its disclosure. Disclosure will be guided by the scope and objective of the financial statement, and accordingly, by the materiality of the environmental liability and the level of information available.
Comparison with Subsequent Disclosures—Subsequent disclosures that convey different information regarding the extent or magnitude of the reporting entity's exposures should not be construed as indicating the initial disclosures were inappropriate. Disclosures shall be evaluated on the reasonableness of judgments and inquiries made at the time and under the circumstances in which they were made. Subsequent disclosures should not be considered valid standards to judge the appropriateness of any prior disclosure based on hindsight, new information, use of developing analytical techniques, or other facto...
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).  
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-Jun-2011
• ICS: 13.020.10 - Environmental management
• Technical Committee: E50 - Environmental Assessment, Risk Management and Corrective Action
• Drafting Committee: E50.05 - Environmental Risk Management

Relations

• Replaces: ASTM E2173-07 - Standard Guide for Disclosure of Environmental Liabilities
• 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 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 E2137-22 - Standard Guide for Estimating Monetary Costs and Liabilities for Environmental Matters
• Effective Date: 01-Jul-2011
• Referred By: ASTM E3358-23a - Standard Guide for Per- and Polyfluoroalkyl Substances Site Screening and Initial Characterization
• 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: E2173 − 07(Reapproved 2011)
Standard Guide for
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 3.1.1 activity and use limitations (AULs)—legal or physical
restrictions or limitations on the use of, or access to, a site or
1.1 Purpose—The purpose of this guide is to provide a
facility to eliminate or minimize potential exposures to chemi-
series of options or instructions consistent with good commer-
calsofconcern,ortopreventactivitiesthatcouldinterferewith
cial and customary practice in the United States for environ-
theeffectivenessofaresponseaction,toensuremaintenanceof
mental liability disclosures accompanying audited and unau-
a condition of “acceptable risk” or “no significant risk” to
dited financial statements. This guide is consistent with
human health and the environment. These legal or physical
Generally Accepted Accounting Principles (GAAP).
restrictions are intended to prevent adverse impacts to indi-
1.2 Objectives—The objectives of this guide are to deter-
viduals or populations that may be exposed to chemicals of
mine the conditions warranting disclosure and the content of
concern.
appropriate disclosure.
3.1.2 asset retirement obligation—legal obligations associ-
2. Referenced Documents
ated with the retirement of a tangible long-lived asset that
result from the acquisition, construction, development, or
2.1 ASTM Standards:
normal operation of a tangible long-lived asset.
D5746 Classification of Environmental Condition of Prop-
erty Area Types for Defense Base Closure and Realign-
3.1.3 CERCLIS—Comprehensive Environmental Response,
ment Facilities
Compensation and Liability Information System, the list of
E1527 Practice for Environmental SiteAssessments: Phase I
sites compiled by the EPA that the EPA has investigated or is
Environmental Site Assessment Process
currently investigating for potential hazardous substance con-
E1739 Guide for Risk-Based Corrective Action Applied at
tamination for possible inclusion on the National Priorities
Petroleum Release Sites
List.
E2137 Guide for Estimating Monetary Costs and Liabilities
for Environmental Matters 3.1.4 claim—a demand for payment.
2.2 EPA Directives:
3.1.5 current government environmental record source—
United States Environmental Protection Agency, OSWER
any environmental record source available from a government
Directive 9610.17: Use of Risk-Based Decision-Making
or commercial entity, provided the record is updated in
in UST Corrective Action Programs
accordance with the update requirement of Practice E1527.
3. Terminology 3.1.6 engineering controls (EC)—physical modifications to
a site or facility (for example, capping, slurry walls, or point of
3.1 Definitions of Terms Specific to This Standard:
use water treatment) to reduce or eliminate the potential for
exposure to hazardous substances or petroleum products in the
1 soil or ground water on the property.
ThisguideisunderthejurisdictionofASTMCommitteeE50onEnvironmental
Assessment, Risk Management and Corrective Action and is the direct responsibil-
3.1.7 environmental liabilities—asset retirement
ity of Subcommittee E50.05 on Environmental Risk Management.
Current edition approved July 1, 2011. Published July 2011. Originally approved obligations, accrued liabilities, and loss contingencies associ-
in 2001. Last previous edition approved in 2007 as E2173 – 07. DOI: 10.1520/
ated with any natural conditions or manmade incidents, includ-
E2173-11.
ing terrorism, that pose an unacceptable risk to health, safety,
This guide alone does not satisfy or include all disclosure requirements under
property, or the environment that would be the subject of an
GAAP, SEC, or any other agency or regulatory body. Appendix X1 provides some
examples of where such requirements are contained.
enforcement action or other legal action.
For referenced ASTM standards, visit the ASTM website, www.astm.org, or
contact ASTM Customer Service at [e-mail]. For Annual Book of ASTM
3.1.8 Federal Register, (FR)—publication of the United
Standards volume information, refer to the standard’s Document Summary page on
States government published daily (except for federal holidays
the ASTM website.
4 and weekends) containing all proposed and final regulations
AvailablefromtheUnitedStatesEnvironmentalProtectionAgency(U.S.EPA),
Ariel Rios Building, 1200 Pennsylvania Ave., N.W., Washington, DC 20460. and some other activities of the federal government. When
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959. United States
E2173 − 07 (2011)
regulations become final, they are included in the Code of 3.1.17 release—any spilling, leaking, pumping, pouring,
Federal Regulations (CFR), as well as published in the Federal emitting, emptying, discharging, injecting, escaping, leaching,
Register. dumping, or disposing into the environment.
3.1.18 remedial or corrective action—all environmental
3.1.9 financial statements—include, but are not limited to,
response activities to an environmental liability.
statements associated with shareholder reporting, periodic
reports, registration statements, loans, mergers, acquisitions, or
3.1.19 reporting entity—any business or public agency pre-
divestitures. Financial statements may include statements out-
paring a financial statement.
side of SEC filings.
3.1.20 site—real property affected by an environmental
3.1.10 historical government environmental record liability.
sources—any environmental record source available from a
3.2 Initialisms and Acronyms:
government or commercial entity that is older than the most
3.2.1 AICPA—American Institute of Certified Public Ac-
recent current government environmental record source.
countants
3.1.11 historical use information—those sources of infor- 3.2.2 AULs—activity and use limitations
mation about the history of uses of a property. Historical use 3.2.3 CERCLA—Comprehensive Environmental Response,
information is available from local libraries, historical Compensation and LiabilityAct of 1980 (as amended, 42 USC
societies, private resellers, or commercial entities. Some ex- Section 9601 et seq.)
amples of the sources are specified and defined in Section 8.3.4
3.2.4 CERCLIS—Comprehensive Environmental Response,
of Practice E1527. Compensation and Liability Information System
3.2.5 CFR—Code of Federal Regulations
3.1.12 institutional controls—administrative and/or legal
3.2.6 EPA—United States Environmental ProtectionAgency
mechanisms that minimize the potential human exposure to
3.2.7 FASB—Financial Accounting Standards Board
contamination by limiting land use or resource use.
3.2.8 GAAP—Generally Accepted Accounting Principles
3.1.13 materiality—the significance of an item to users of a
3.2.9 LUSTs—Leaking underground storage tanks
financial statement that considers all relevant and surrounding
3.2.10 NPL—National Priorities List
circumstances. A material item is one that its omission or
3.2.11 PRP—potentially responsible party
misstatement is of such a magnitude in the surrounding
3.2.12 RCRA—Resource Conservation and Recovery Act
circumstances that either the judgment of a reasonable person
(as amended 42 USC Section 6901 et seq.)
relying on the financial statement would have been changed or
3.2.13 SEC—Securities and Exchange Commission
influenced by its inclusion or correction, or there is a substan-
tial likelihood that the item, after assessing the inferences, and
4. Significance and Use
their significance, drawn from the given set of facts associated
4.1 Uses—This guide is intended for use on a voluntary
with the financial statement, would be viewed as significantly
basis by a reporting entity that provides disclosure in their
altering the information made available to the investor or
financial statements regarding environmental liabilities. The
shareholder. Relevant sources of information and references
degree and type of disclosure depends on the scope and
are included in Appendix X2. Note that this definition is not
objective of the financial statements. Note the user should be
intended to supersede the definition of materiality in SEC Staff
aware that there may be contractual obligations, court
Accounting Bulletin No. 99—Materiality (See Appendix X1
decisions,orregulatorydirectivesthatmayaffecttheflexibility
and Appendix X2).
in use of this guide.
3.1.14 National Priorities List (NPL)—a list compiled by
4.2 Principles:
the EPA pursuant to CERCLA 42 USC § 9605(a)(8)(B) of
4.2.1 The following principles are an integral part of this
properties with the highest priority for cleanup pursuant to the
guide and are intended to be referred to in resolving any
EPA’s Hazard Ranking System. See 40 CFR Part 300.
ambiguity or dispute regarding the interpretation of disclosures
3.1.15 Potentially Responsible Party (PRP)—any
regarding environmental liabilities.
individual, legal entity, or government—including owners,
4.2.1.1 Uncertainty Not Eliminated—Although a reporting
operators, transporters, or generators—potentially responsible
entity,asofthetimewhenitsfinancialstatementsareprepared,
for, or contributing to, conditions that present an unacceptable
may hold a certain position with regard to the existence and
risk of harm to human health or the environment and that
extentofitsenvironmentalliabilities,thereremainsuncertainty
would be the subject of an enforcement action or other legal
with regard to the final resolution of factual, technological,
action.
regulatory, legislative, and judicial matters, which could affect
3.1.16 reasonably possible—the likelihood, or probability, its environmental liabilities.
associated with a given event occurring that lies in the range 4.2.1.2 Disclosure Dependent on Circumstances—Not ev-
between remote and probable. The probability values assigned ery environmental liability warrants the same level of detail in
to remote and probable will depend on the industry, the its disclosure. Disclosure will be guided by the scope and
aggregate number of sites, observations, and possible objective of the financial statement, and accordingly, by the
outcomes, and the uncertainty associated with estimating materiality of the environmental liability and the level of
probabilities. information available.
E2173 − 07 (2011)
4.2.1.3 Comparison with Subsequent Disclosures— 5.1.1.4 Information is known by the reporting entity that
Subsequent disclosures that convey different information re- indicates an environmental liability has been incurred.
garding the extent or magnitude of the reporting entity’s
5.1.1.5 Asset retirement obligations.
exposures should not be construed as indicating the initial
5.2 Sources of Information—This guide identifies standard
disclosures were inappropriate. Disclosures shall be evaluated
sources that should be reviewed by a reporting entity to
on the reasonableness of judgments and inquiries made at the
properly determine if conditions warrant disclosure. These
time and under the circumstances in which they were made.
sources should be reasonably ascertainable, which is defined as
Subsequent disclosures should not be considered valid stan-
information that is (1) publicly available, (2) obtainable from
dardstojudgetheappropriatenessofanypriordisclosurebased
its source within reasonable time and cost constraints, and (3)
on hindsight, new information, use of developing analytical
practically reviewable. Such sources may include but are not
techniques, or other factors. However, information on trends
limited to the following categories:
may be of value to a user of financial statements.
5.2.1 Current Government Environmental Record Source—
4.2.1.4 Not Exhaustive—Appropriate disclosure does not
Any environmental record source available from a government
necessarily mean an exhaustive disclosure of the reporting
or commercial entity, provided the record is updated in
entity’s environmental liabilities. There is a point at which the
accordance with the update requirement of Practice E1527.
cost of obtaining information or the time required to gather it
These sources include, but are not limited to, the standard
outweighs the usefulness of the information and, in fact, may
environmental record sources specified and defined in Practice
be a material detriment to the orderly preparation of financial
E1527. Current government environmental record sources may
statements and the ability of readers to understand the infor-
identify responsible parties, environmental suits and costs,
mationcontainedtherein.However,allrelevantandreasonably
environmental claims, releases, groundwater contamination,
ascertainable information should be used to determine the
permits, asset retirement obligations, activity and use
content of appropriate disclosure for environmental liabilities.
limitations, institutional control and engineering control
4.2.1.5 Assessment of Risk—As the reporting entity be-
registries, and other environmental conditions warranting dis-
comes aware of an environmental liability or an environmental
closure.Examplesofcurrentgovernmentenvironmentalrecord
compliance issue, the condition or issue should be evaluated to
sources include, but are not limited to:
assess the actual or potential risk to human health and
5.2.1.1 Federal National Priorities List (NPL) site list,
environment. This process may be dependent on the regulatory
5.2.1.2 CERCLIS list,
environment, an understanding of the specifics of the condition
5.2.1.3 Published list of sites and identified responsible
or issue, potential future uses, and asset retirement obligations.
parties under state or local environmental laws,
For example, guidance on petroleum release sites is provided
5.2.1.4 Published list of PRPs, and
in Guide E1739 and additional guidance is provided in EPA
5.2.1.5 Lists of leaking underground storage tanks (LUSTs).
OSWER Directive 9610.17. The degree of risk suggests the
5.2.2 Historical Government Environmental Record
appropriate response actions and should be a factor in the level
Sources—Any environmental record source available from a
of effort devoted to developing the cost and liability estimates
government or commercial entity that is older than the most
associated with the environmental condition or the compliance
recent current government environmental record source. His-
issue.
torical government environmental record sources may identify
5. Determining Whet
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