1.1 Introduction

The guidance in ASC 410-30 is based on federal environmental laws and regulations in the United States. Specifically, the guidance is based largely on the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA or the “Superfund”) and the corrective action provisions of the Resource Conservation and Recovery Act of 1976 (RCRA). Since certain aspects of the accounting guidance on environmental remediation liabilities refer specifically to both statutes, we believe that it is beneficial for entities to understand the requirements of each of those laws before applying the accounting guidance in ASC 410-30. Accordingly, this Roadmap’s discussion of environmental remediation liabilities is designed to provide both an overview of the legal and regulatory framework of environmental obligations, primarily in the United States (see Chapter 2), and a detailed explanation of the FASB’s guidance on accounting for environmental remediation liabilities (see Chapter 3).

An ARO is a legal or contractual obligation associated with the retirement of a tangible long-lived asset that results from the acquisition, construction, development, or normal operation of a long-lived asset. The FASB’s guidance on accounting for AROs is codified in ASC 410-20.

In ASC 410-20, the guidance on AROs is predicated on the existence of a legal obligation to retire an asset, which, in accordance with the definition of a legal obligation in ASC 410-20-20, can arise from “an existing or enacted law, statute, ordinance, or written or oral contract or by legal construction of a contract under the doctrine of promissory estoppel.” However, unlike environmental remediation liabilities, which are largely governed by comprehensive federal statutes and regulations, AROs in the United States are largely the result of contractual agreements as well as federal or state statutes and regulations and typically arise as a result of asset-specific operating permits. Accordingly, our discussion of AROs first addresses the accounting framework in ASC 410-20 (see Chapter 4), including relevant interpretive accounting and financial reporting guidance. The Roadmap then gives an overview of certain legal and regulatory requirements and certain specific accounting considerations related to various industry- and asset-specific AROs (see Chapter 5).