Friday, February 03, 2006

GASB Releases ED on Pollution Liability

The Governmental Accounting Standards Board recently released an exposure draft detailing five situations where a state or local government may have to book a liability for pollution remediation (clean-up). The scenarios are: [1] pollution remediation must be done immediately by the government because of ecological endangerment, [2] the government itself violated pollution laws or regulations, [3] the government is named by a regulatory agency (such as the Environmental Protection Agency) as a responsible or potentially responsible party OR a party which will share costs with the responsible party, [4] the government has been named or is likely to be named in a lawsuit to remediate pollution, [5] the government either acts to start clean-up or legally commits itself to remediation. Generally, the cost will have to be shown in the government's operating statement, but the government can treat the cost as a capital outlay under one of four conditions: [1] prepare property for sale, [2] prepare property bought with pre-knowledge that remediation would be needed, [3] permits use of utility property damaged by pollution, [4] property used in pollution remediation can be used for other purposes.


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