Ear To The Ground

What is in your bottled water? Ugh

Prior posts have noted the debate over bottled water, including its quality.  A recent GAO report raises serious questions about the purity of bottled water.

 

A GAO investigation into bottled water was conducted at the behest of the oversight and investigations subcommittee of the House Committee on Energy and Commerce.  It was probing data available about the quality of bottled water, which had revenues of $11.2 billion, last year, in the United States alone; that figure translates into annual per capita sales of approximately 28.5 gallons.  The new investigation found that “FDA does not have the specific statutory authority to require bottlers to use certified laboratories for water quality tests or to report test results, even if violations of [water-quality] standards are found.”  Moreover, the year-long investigation found that FDA doesn’t make bottled water companies provide information on the quality of the source water they use, on any contaminants detected, or on potential health effects associated with any pollutants tainting their products.

 

This regulatory milieu stands in stark contrast to EPA’s regulation of tap water.  EPA requires regular testing by certified labs, plus reporting to EPA, the State, and consumers of any contaminants uncovered.  Nine years ago, FDA concluded that bottled-water companies could do the same.  However, to date, FDA has not been required to impose such rules on manufacturers, and has not acted on its own to do so despite not infrequent reports of contaminants in bottled water and illnesses derived from consumption of bottled water.

 

The June 2009 report by GAO on bottled water can be found at http://www.gao.gov/products/GAO-09-610.  A recent evaluation of bottled water by the advocacy group, the Environmental Working Group, can be found at http://www.ewg.org/health/report/bottledwater-scorecard.

Legal fees incurred defending CWA lawsuit are not allowable costs under the FAR

Southwest Marine, the operator of a shipyard in San Diego, California, was awarded and performed several contracts with the United States Navy for repairs and alterations to Naval vessels.  During the time period relevant to this dispute, some of Southwest Marine's government contracts were cost-reimbursement contracts, which provided that the Government would reimburse Southwest Marine's costs deemed allowable in accordance with Subpart 31.2 of the Federal Acquisition Regulation.  Southwest Marine was sued and lost a CWA case brought by a private party, the NRDC.

In Southwest Marine, Inc. v. United States et al, 2008 U.S. App. LEXIS 16595 (9th Cir.: 8/6/08), the 9th Circuit affirmed a District Court ruling that the legal costs incurred by Southwest Marine in the CWA litigation were not allowable "costs" under the Federal Acquisition Regulation, 48 C.F.R. §§ 31.201-31.205.

FASB Financial Interpretation No. 47 Obligates Disclosure Even Absent Litigation

In March, 2005, the Financial Accounting Standards Board issued Financial Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations, which "clarifies" FASB's 2002 Statement No. 143.  The Interpretation provides additional detail on the disclosure in financial statements of environmental liabilities when a business is sold.  Prior to FI No. 47, it was believed by some that environmental liabilities (e.g., ACM in buildings, contaminated soil) did not have to be reported absent a pending or threatened lawsuit.  Now, however, these obligations must be disclosed.  This can be particularly onerous for companies with sites that have been "mothballed".  One option is to sell the sites to get them "off the books".  [Certainly in California, separate and apart from any statutory obligation, the existence of such environmental problems must be disclosed to a potential buyer as a matter of common law.]  FI No. 47 can be found at http://www.fasb.org/pdf/fin%2047.pdf.