Alcoa 2009 Annual Report Download - page 120

environmental conditions, as well as a pro rata share of the final closure of the active waste disposal areas, which
remain in use. Alcoa’s share of the closure costs is proportional to the total period of operation of the active waste
disposal areas. Alcoa estimated its liability for the active disposal areas by making certain assumptions about the period
of operation, the amount of material placed in the area prior to closure, and the appropriate technology, engineering,
and regulatory status applicable to final closure. The most probable cost for remediation was reserved.
East St. Louis, IL—In response to questions regarding environmental conditions at the former East St. Louis
operations, Alcoa and the City of East St. Louis, the owner of the site, entered into an administrative order with the
EPA in December 2002 to perform a remedial investigation and feasibility study of an area used for the disposal of
bauxite residue from historic alumina refining operations. A draft feasibility study was submitted to the EPA in April
2005. The feasibility study included remedial alternatives that ranged from no further action to significant grading,
stabilization, and water management of the bauxite residue disposal areas. As a result, Alcoa increased the
environmental reserve for this location by $15 in 2005. The EPA’s ultimate selection of a remedy could result in
additional liability. Alcoa may be required to record a subsequent reserve adjustment at the time the EPA’s Record of
Decision is issued, which is expected in 2010 or later.
Vancouver, WA—In 1987, Alcoa sold its Vancouver smelter to a company that is now known as Evergreen
Aluminum (Evergreen). The purchase and sale agreement contained a provision that Alcoa retain liability for any
environmental issues that arise subsequent to the sale that pre-date 1987. As a result of this obligation, Alcoa recorded
a reserve for the Vancouver location at that time. Evergreen decommissioned the smelter and cleaned up its portion of
the site under a consent order with the Washington Department of Ecology (WDE). In February 2008, Evergreen
notified Alcoa that it had identified numerous areas containing contamination that predated 1987.
Separately, in September 2008, Alcoa completed a Remedial Investigation/Feasibility Study (RI/FS) under the
Washington State Model Toxics Control Act and negotiated a consent decree with the WDE, which requires Alcoa to
complete cleanup of PCB contaminated sediments in the Columbia River as well as remediate soil contamination in
upland portions of the Vancouver property.
In late 2008, Alcoa started cleanup work on the Columbia River and discovered additional contamination and waste
materials along the shoreline area and in upland areas. In addition, Evergreen presented additional cost estimates for
contaminated areas that were discovered since March 2008.
As a result of all of the above items related to the former Vancouver site, Alcoa increased the environmental reserve by
$16 in 2008.
While continuing the cleanup work on the Columbia River in early 2009, Alcoa discovered more contamination and
waste materials, resulting in a $2 increase to the environmental reserve. Later in 2009, cleanup work was completed
related to the Evergreen property, the Columbia River, and the upland portions of the Vancouver property. Alcoa
submitted a final report on this cleanup work to the WDE near the end of 2009 satisfying the remediation requirements
of the consent decree.
Fusina and Portovesme, Italy—In 1996, Alcoa acquired the Fusina smelter and rolling operations and the Portovesme
smelter, both of which are owned by Alcoa’s subsidiary Alcoa Trasformazioni S.r.l., from Alumix, an entity owned by
the Italian Government. At the time of the acquisition, Alumix indemnified Alcoa for pre-existing environmental
contamination at the sites. In 2004, the Italian Ministry of Environment (MOE) issued orders to Alcoa Trasformazioni
S.r.l. and Alumix for the development of a clean-up plan related to soil contamination in excess of allowable limits
under legislative decree and to institute emergency actions and pay natural resource damages. Alcoa Trasformazioni
S.r.l. appealed the orders and filed suit against Alumix, among others, seeking indemnification for these liabilities
under the provisions of the acquisition agreement. In 2009, Ligestra S.r.l., Alumix’s successor, and Alcoa
Trasformazioni S.r.l. agreed to a stay on the court proceedings while investigations were conducted and negotiations
advanced towards a possible settlement. In December 2009, Alcoa Trasformazioni S.r.l. and Ligestra S.r.l. reached an
agreement for settlement of the liabilities related to Fusina while negotiations continue related to Portovesme. The
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