Dear Committee Members:

Welcome to the latest volume of the Committee's newsletter. Once again we've managed to assemble an excellent selection of timely articles. Andrew Perellis discusses the implications of FASB's requirement under FIN 47 that potential liabilities relating to an asset, including those relating to possible contamination, be accrued and reported even where their quantities remain highly uncertain. Robert Steele provides a thorough analysis of the workings of Superfund taxation, arguing against the re-imposition of the former Superfund "special" taxes. Jane Kimball Warren looks ahead to the looming environmental issues relating to the burgeoning nanotechnology industry. And Sean Sullivan reviews EPA's newly released reporting exemptions with respect to Nitrogen oxide/dioxide. For your convenience, we have hyperlinked references to legislation and other external documents wherever possible.

As always, we are interested in contributions for our next newsletter. If you would like to contribute or discuss a contribution please contact me as noted below.

Cheers,
Jim Harbell
Newsletter Editor
Committee on Environmental, Energy and Natural Resources Law
ABA Business Law Section
Stikeman Elliott LLP
Barristers & Solicitors
5300 Commerce Court West
199 Bay Street
Toronto, Ontario M5L 1B9

Direct Dial: (416) 869-5690
Facsimile: (416) 947-0866
E-fax: (416) 861-0445
jharbell@stikeman.com

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A review of recent public reporting disclosures, submitted by companies in an attempt to comply with a financial accounting interpretation issued last year, suggests that substantial confusion exists in the marketplace. Under applicable accounting principles, a company is to accrue the costs associated with an asset's retirement during the life of the asset. Financial Accounting Standard 143 says so, and it has been around for a number of years. Even so, most publicly traded companies failed to comply, contending that uncertainty as to the timing of the asset retirement, or uncertainty in the cost of the retirement obligation, precluded them from quantifying the liability. In response, the Financial Accounting Standards Board issued Financial Interpretation 47 (FIN 47). That interpretation, in a nut-shell, requires companies to report liabilities now, with uncertainty as to timing or amount to be built into the estimate of the obligation.

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The federal Superfund program has always suffered from a split personality. In creating a system for cleaning up old and new hazardous substance sites and for allocating money to fund the program, was Superfund supposed to be a harsh punishment regime directed against "evil corporate polluters" who caused the contamination? Is this so even if many parties with Superfund liability did nothing wrong and followed existing law, best practices, and even government direction at the time of their past waste disposal activities? Or was Superfund supposed to be an emotion–free economic scheme to raise the funds needed for the massive historical cleanup job confronted by the nation in 1980 and thereafter? Is this so even if it means assessing the costs to certain companies just because they or others like them may have benefited in years past from cheap disposal options and a lack of environmental regulation (whether they knew it or not)? Did it also intend to spread the costs to all taxpayers because we all have a interest in repair of the environment and protection of public health by acting now to make up for society's past legal and scientific oversights?

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EPA recently issued a final rule exempting certain releases of nitrogen oxide and nitrogen dioxide from the release reporting requirements under Section 103 of the Comprehensive Environmental Response Compensation and Liability Act and Section 304 of the Emergency Planning and Community Right-to-Know Act. These statutes require the owner or operator of a facility to report releases of hazardous substances to the National Response Center if the amount released within a twenty-four hour period exceeds the substance's Reportable Quantity. Effective November 3, 2006, facilities are not required to report releases of less than 1,000 pounds of nitrogen oxide and/or 1,000 pounds of nitrogen dioxide, collectively NOx, to the air within a 24 hour period due to "combustion, or combustion related activities." Releases of NOx that are unrelated to combustion, however, are still subject to the 10 pound Reportable Quantity ("RQ") found in 40 C.F.R. Parts 302 and 355.

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In the view of some, nanotechnology is expected to become the transformational technology of the 21st century. This technology focuses on controlling matter at the scale of one billionth of a meter (approximately 100,000th the width of a human hair) in order to create new materials with novel properties and functions. The National Science Foundation predicts that nanotechnology "eventually could impact the production of virtually every human-made object" and "lead to the invention of products yet to be imagined." Yes, the technology of the very small could become very big.

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