Proposed GASB guidance on landfills.

• Author: Gauthier, Stephen
• Position: Governmental Accounting Standards Board; municipal solid waste landfills - Issues in Accounting

In June, the Governmental Accounting Standards Board (GASB) issued an exposure draft (ED) that would set new accounting and financial reporting standards for costs associated with the closure and postclosure care of municipal solid waste landfills (MSWLFs). Currently, there are some 6,000 MSWLFs in the United States, of which approximately 80 percent are operated by governments.

The proposed new guidance was issued in response to a recent United States Environmental Protection Agency (EPA) rule ("Solid Waste Disposal Facility Criteria," 40 Code of Federal Regulations, Parts 257 and 258) that will make owners and operators of MSWLFs responsible for ensuring that landfills are properly closed and monitored for a period of 30 years following closure. The closure requirements are effective for owners and operators of MSWLFs in operation after October 9, 1991. Postclosure care and financial assurance requirements will affect MSWLFs in operation after October 9, 1993.

Basic GASB Approach

The GASB believes that closure and postclosure care costs imposed by federal, state or local laws and regulations are an integral part of the cost of operating an MSWLF. Therefore, the GASB believes that the costs of closing a landfill and monitoring the site after closure should be recognized systematically as the landfill is used, regardless of when these costs are paid and regardless of how the costs are funded. In other words, all closure and postclosure care costs would be recognized prior to closure under the GASB proposal.

The GASB further believes that closure and postclosure care costs should be allocated to individual fiscal periods based on landfill usage rather than on the passage of time. Therefore, differing amounts of cost may be allocated to different fiscal periods depending upon the level of landfill use during each period.

Estimated Total Cost

Allocating closure and postclosure care costs to individual fiscal periods during the life of the landfill would require governments to estimate the total amount of those costs. This estimate would include all costs incurred as of the end of the fiscal year related to closure and postclosure care (i.e., equipment, facilities, services), as well as any additional related costs anticipated for the future. Equipment and facilities included in estimated total cost would be limited to items that will be used exclusively for a particular landfill (e.g., liners, leachate collection equipment, gas monitoring and...