Selected Issues In Estimating Remediation Costs For Environmental Remediation Reserves

Accounting rules which require cost accrual for future environmental remediation liabilities by public and private companies increasingly bring environmental professionals and accounting professionals into mutual discussions.  Conflicts and misunderstandings may arise as a result of different vocabularies and differing standards for fiduciary decisions.  This session will focus on three areas in particular that affect reserve setting processes.  1.) What is the role of a "contingency" value in an estimate for future remediation liabilities?  Should a contingency value be used?  What is an appropriate contingency value?  What is the applicability of guidance provided by state and federal environmental authorities? 2.) How are decisions made to estimate the future time required for remediation costs? Are there an appropriate number of years of O&M to be estimated?  How are future O&M costs validated? How does that estimation vary because of  site specific factors? 3.) How are "soft" costs to be addressed in the estimate?  Should legal fees be included? How are taxes to be addressed?  Should estimates include oversight costs that might be billed by agencies?  How should internal site management costs be addressed?

The session will be interactive, encouraging opinions and thoughts from the audience.  Case examples will be employed to illustrate various approaches.