||Let the Buyer Beware: Estimate Potential Liabilities with ASTM
T he owner of a large automotive-repair business in operation
for decades decides to close shop and sell the land. Buyers are
concerned with pollution liabilities and safe reuse of the property,
as toxins may have leaked into the soil or ground water. Questions
are raised about environmental liabilities and how they relate
to the economics of developing the property.
Standard approaches for estimating costs and liabilities of risk-based
property in the United States are provided in ASTM E 2137, Standard Guide for Estimating Monetary Costs and Liabilities
for Environmental Matters.
The comprehensive guide was developed by experts collaborating
with Subcommittee E50.03 on Environmental Risk Management/Sustainable
Development/Pollution Prevention, part of Committee E50 on Environmental Assessment. Throughout more than six years of
development, Gayle Koch, principal, The Brattle Group, Cambridge,
Mass., chaired deliberations with other economists, accountants,
engineers, lawyers, CFOs, actuaries, and risk-managers to arrive
at consensus on crucial issues in the guide.
E 2137 was designed to be used by a variety of specialists, including:
Economists, accountants, CFOs, and other financial experts;
Banks and lending institutions;
Companies acquiring or selling other companies, or setting reserves;
Attorneys, and others.
We were very careful not to require only one type of professional
to do this, Koch said, as many knowledgeable parties may contribute
to the estimation process.
Different approaches can be decided with E 2137. There is a hierarchy
in the standard of preferred approaches to estimating costs and
there are cost-benefit tradeoffs in choosing one of the methodologies,
Koch noted. There are also data-availability issues that may
affect the selection of the best or most-preferred methodology.
In addition, no one wants to spend more than the value of the
property, investigating it.
Technical questions may be directed to Gayle Koch, The Brattle Group, Cambridge, Mass. (phone: 617/864-7900). ASTM
Committee E50 meets Oct. 23-26 in Dallas, Texas. For membership
or meeting details, contact Staff Manager Dan Smith, ASTM (phone: 610/832-9727). //
Copyright 2001, ASTM