Various judiciary offices and personnel occupy the TMFJB under an Interagency Agreement between AOC and the Administrative Office of the U.S. Courts. Base rent will not change over the initial 30 years, and is set at the amount necessary to retire the debt at $17.2 million annually. Payment of the certificates will end in August 2024. This certificate is not subject to prepayment or acceleration under any circumstance, pursuant to the language in the certificate agreement.

The Statement of Budgetary Resources (SBR) reports Borrowing Authority of $10.3 million and $10.9 million for 2014 and 2013, respectively. These amounts represent the current year portion of the amortized bond discount which is shown in the table above (net of interest payable).

Note 13: Contingent and Environmental Liabilities

AOC is party to various administrative proceedings, legal actions, and tort claims which may result in settlements or decisions adverse to the federal government. AOC also has responsibility to remediate certain sites with environmental contamination hazards related to ongoing operations.

The accrued and potential Contingent and Environmental Cleanup Cost Liabilities, as of September 30, 2014 and 2013 are as follows:

See Table, Full Report, Page 124

Contingent Liabilities

General contingent liabilities consist of claims filed against AOC which are awaiting adjudication. These liabilities typically relate to contracts, labor and equal employment opportunity issues, and personal and property damage.

For the purpose of estimating contingent liabilities for the financial statements, AOC conducted a review of exist- ing claims for which the likelihood of loss to AOC is probable. Additionally, management and AOC’s General Counsel evaluated the materiality of cases determined to have a reasonably possible chance of an adverse outcome. Liabilities were recognized for those cases that were determined to meet management’s materiality threshold (see Note 1.N). No amounts have been accrued in the financial records for claims where the estimated amount of potential loss does not exceed $100 thousand or where the likelihood of an unfavorable outcome is less than probable.

Matters for which the likelihood of an unfavorable outcome is less than probable but more than remote involve a wide variety of allegations and claims. These matters arise in the course of carrying out AOC programs and operations. The ultimate outcomes in these matters cannot be predicted at this time; however as of September 30, 2014 the lower level estimate of these cases amounted to approximately $2.4 million. Sufficient information is not currently available to determine if the ultimate resolution of the proceedings, actions, and claims will materially affect AOC’s financial position or results of operations. Based on the less than probable nature of these claims, an accounting entry for the estimate was not posted and there is no impact on the financial statements.

Environmental Cleanup Cost Liabilities

Pursuant to the Federal Accounting Standards Advisory Board (FASAB) Technical Bulletin 2006-1, Recognition and Measurement of Asbestos-related Cleanup Costs, Federal entities are required to recognize a liability for asbestos cleanup costs. AOC is responsible for managing friable and non-friable asbestos-containing materials (ACM) in all Capitol Complex Buildings owned by the federal government. Beginning in 2000, AOC contracted EPA-accredited asbestos inspectors to conduct inspections in accessible areas using nondestructive sampling techniques. For financial reporting purposes, separate per square foot rates were determined for friable and non-friable ACM. The per square foot values were based on recent removal projects conducted by AOC’s Construction Division and a review of current industry estimates. The rates were applied to the ACM square footage of each Capitol Complex building as estimated during the asbestos inspections. Upon the effective date in FY 2013, AOC recognized an estimated asbestos liability of $86.4 million. The liability was recorded as a prior period adjustment due to a change in accounting principle since the real property has been in service for a significant portion of their estimated useful life.

As required by SFFAS No. 6 Accounting for Property, Plant and Equipment, AOC will determine the need for asbestos liability adjustments on an annual basis. As actual asbestos remediation costs are incurred, the asbestos liability is reduced by the reported amount. In FY 2014, the remaining amount of the asbestos liability that is included in the “Contingent and Environmental Liabilities” line on the Balance Sheet is $85.1 million.

In addition to the requirements of Technical Bulletin 2006-1, AOC is subject to various Federal, state, and local environmental compliance and restoration laws, including the Clean Air Act; the Clean Water Act; the Solid Waste Disposal Act; the Safe Drinking Water Act; and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Estimated environmental and disposal disclosures include expected future cleanup costs, and for those sites where future liability is unknown, the cost of studies necessary to evaluate response requirements.