Alcoa 2009 Annual Report Download - page 42

complaint while the parties pursue an interlocutory appeal to the Indiana Court of Appeals. On December 2, 2009, the
court set a trial date in two individual claims, Kirk and Hedrick, for November 1 and November 10, 2010, respectively.
Discovery in these cases has commenced. The company is unable to reasonably predict an outcome or to estimate a
range of reasonably possible loss.
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.
Alcoa also acquired the extrusion plants located in Feltre and Bolzano. 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. On April 5, 2006, Alcoa Trasformazioni S.r.l., Fusina site (Venice), was also sued
by the Italian Minister of Environment and Minister of Public Works for an alleged liability for environmental
damages, in parallel with the orders already issued by the MOE. Alcoa Trasformazioni S.r.l. appealed the orders,
defended the civil case for environmental damages (which is still pending) and filed suit against Alumix, among others,
seeking indemnification for these liabilities under the provisions of the acquisition agreement. Similar issues also
existed with respect to the Bolzano and Feltre plants, based on orders issued by local authorities in 2006. All the orders
have been challenged in front of the Administrative Regional Courts, and all trials are still pending. However, in
Bolzano the Municipality withdrew the order, and the Tribunal suspended the order in Feltre. Most, if not all, of these
matters occurred during the ownership of Alumix, the governmental entity that sold the Italian plants to Alcoa. The
Court has appointed an expert to assess the causes of the pollution. In June 2008, the parties (Alcoa and Ligestra, the
successor to Alumix) signed a preliminary agreement by which they have committed to pursue a settlement and asked
for a suspension of the technical assessment during the negotiations. The Court accepted the request, and postponed the
technical assessment, reserving its ability to fix the deadline depending on the development of negotiations. Alcoa and
Ligestra agreed to a settlement in December 2008 with respect to the Feltre site. Ligestra paid the sum of 1.08 million
Euros and Alcoa committed to clean up the site. In December 2009, Alcoa Trasformazioni S.r.l. and Ligestra S.r.l.
reached an agreement for settlement of the liabilities related to Fusina (negotiations continue related to Portovesme).
The settlement would also allow Alcoa to settle the case for the environmental damages pending before the Civil Court
of Venice. The agreement outlines an allocation of payments to the MOE for emergency action and natural resource
damages and the scope and costs for a proposed soil remediation project, which is expected to be formally presented to
the MOE in 2010. The agreement is contingent upon final acceptance of the remediation project by the MOE. Alcoa
believes that it has made adequate reserves for these matters.
As previously reported, in December 2006, SCA was sued by the Commissioner of DPNR, U.S. Virgin Islands, in the
Superior Court of the Virgin Islands, Division of St. Croix. The plaintiff alleges violations of the Coastal Zone
Management Act and a construction permit issued thereunder. The complaint seeks a civil fine of $10,000 under the
Coastal Zone Management Act, civil penalties of $10,000 per day for alleged intentional and knowing violations of the
Coastal Zone Management Act, exemplary damages, costs, interest and attorney’s fees, and “other such amounts as
may be just and proper.” SCA responded to the complaint on February 2, 2007 by filing an answer and motion to
disqualify DPNR’s private attorney. The parties fully briefed the motion and are awaiting a decision from the court. At
this stage of the proceeding, the company is unable to reasonably predict an outcome or to estimate a range of
reasonably possible loss.
As previously reported, in December 2006, SCA, along with unaffiliated prior and subsequent owners, were sued by
the Commissioner of the DPNR, U.S. Virgin Islands, in the Superior Court of the Virgin Islands, Division of St. Croix.
This second suit alleges violations by the defendants of certain permits and environmental statutes said to apply to the
facility. The complaint seeks the completion of certain actions regarding the facility, a civil fine from each defendant of
$10,000 under the Coastal Zone Management Act, civil penalties of $50,000 per day for each alleged violation of the
Water Pollution Control Act, $10,000 per day for alleged intentional and knowing violations of the Coastal Zone
Management Act, exemplary damages, costs, interest and attorney’s fees, and “other such amounts as may be just and
proper.” SCA responded to the complaint on February 2, 2007 by filing an answer and motion to disqualify DPNR’s
private attorney. The parties fully briefed the motion and are awaiting a decision from the court. In October 2007,
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