Black & Decker 2014 Annual Report Download - page 115

101
Company, along with many other companies, has been named as a PRP in a number of administrative proceedings for the
remediation of various waste sites, including 31 active Superfund sites. Current laws potentially impose joint and several
liabilities upon each PRP. In assessing its potential liability at these sites, the Company has considered the following: whether
responsibility is being disputed, the terms of existing agreements, experience at similar sites, and the Company’s volumetric
contribution at these sites.
The Company’s policy is to accrue environmental investigatory and remediation costs for identified sites when it is probable
that a liability has been incurred and the amount of loss can be reasonably estimated. In the event that no amount in the range of
probable loss is considered most likely, the minimum loss in the range is accrued. The amount of liability recorded is based on
an evaluation of currently available facts with respect to each individual site and includes such factors as existing technology,
presently enacted laws and regulations, and prior experience in remediation of contaminated sites. The liabilities recorded do
not take into account any claims for recoveries from insurance or third parties. As assessments and remediation progress at
individual sites, the amounts recorded are reviewed periodically and adjusted to reflect additional technical and legal
information that becomes available. As of January 3, 2015 and December 28, 2013, the Company had reserves of $177.3
million and $184.1 million, respectively, for remediation activities associated with Company-owned properties, as well as for
Superfund sites, for losses that are probable and estimable. Of the 2014 amount, $13.0 million is classified as current and
$164.3 million as long-term which is expected to be paid over the estimated remediation period. As of January 3, 2015, the
Company has recorded $21.7 million in other assets related to funding received by the EPA and placed in a trust in accordance
with the final settlement with the EPA, embodied in a Consent Decree approved by the United States District Court for the
Central District of California on July 3, 2013. Per the Consent Decree, Emhart Industries, Inc. (a dissolved, former indirectly
wholly-owned subsidiary of The Black & Decker Corporation) (“Emhart”) has agreed to be responsible for an interim remedy
at a site located in Rialto, California and formerly operated by West Coast Loading Corporation (“WCLC”), a defunct company
for which Emhart was alleged to be liable as a successor. The remedy will be funded by (i) the amounts received from the EPA
as gathered from multiple parties, and, to the extent necessary, (ii) Emhart's affiliate. The interim remedy requires the
construction of a water treatment facility and the filtering of ground water at or around the site for a period of approximately 30
years or more. Accordingly, as of January 3, 2015, the Company's cash obligation associated with the aforementioned
remediation activities including WCLC is $155.6 million. The range of environmental remediation costs that is reasonably
possible is $135.7 million to $268.9 million which is subject to change in the near term. The Company may be liable for
environmental remediation of sites it no longer owns. Liabilities have been recorded on those sites in accordance with policy.
The Company and approximately 60 other companies comprise the Lower Passaic Cooperating Parties Group (the “CPG”).
The CPG members and other companies are parties to a May 2007 Administrative Settlement Agreement and Order on Consent
(“AOC”) with the EPA to perform a remedial investigation/feasibility study (“RI/FS”) of the lower seventeen miles of the
Lower Passaic River in New Jersey (the “River”). The Company’s potential liability stems from former operations in Newark,
New Jersey. As an interim step related to the 2007 AOC, the CPG voluntarily entered into an AOC on June 18, 2012 with the
EPA for remediation actions focused solely at mile 10.9 of the River. The Company’s estimated costs related to the RI/FS and
focused remediation action at mile 10.9, based on an interim allocation, are included in environmental reserves as of January 3,
2015 and December 28, 2013. On April 11, 2014, the EPA issued a Focused Feasibility Study (“FFS”) and proposed plan
which addressed various early action remediation alternatives for the lower 8.3 miles of the River. The proposed plan describes
the remedial alternatives considered to address contaminated sediments in the River and identifies the EPA’s preferred
alternative - the removal of sediments bank to bank in the lower 8.3 miles of the River and constructing an engineered cap over
the dredged area. The preferred alternative would include the removal and disposal of 4.3 million cubic yards of sediment,
would cost approximately $1.7 billion according to EPA’s estimate, and take 5 years to complete. EPA has received public
comment on the FFS and proposed plan (including comments from the CPG and other entities asserting that the FFS and
proposed plan do not comply with CERCLA) which public comment period ended on August 20, 2014. The CPG anticipates
submitting a draft RI/FS for the entire lower seventeen miles of the River to EPA in the first half of 2015. EPA’s final decision
whether to adopt the proposed plan or a different alternative will be made after EPA has taken into consideration the public
comments. At this time, the Company cannot reasonably estimate its liability related to the remediation efforts, excluding the
RI/FS and remediation actions at mile 10.9, as the RI/FS is ongoing, the ultimate remedial approach and associated cost has not
yet been determined, and the parties that will participate in funding the remediation and their respective allocations are not yet
known.
The environmental liability for certain sites that have cash payments beyond the current year that are fixed or reliably
determinable have been discounted using a rate of 0.1% to 3.0%, depending on the expected timing of disbursements. The
discounted and undiscounted amount of the liability relative to these sites is $20.8 million and $27.0 million, respectively. The
payments relative to these sites are expected to be $2.4 million in 2015, $2.0 million in 2016, $2.1 million in 2017, $1.9 million
in 2018, $1.9 million in 2019, and $16.7 million thereafter.