Dow Chemical 2013 Annual Report Download - page 123

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NOTE 14 – COMMITMENTS AND CONTINGENT LIABILITIES
Dow Corning Credit Facility
The Company is a 50 percent shareholder in Dow Corning Corporation ("Dow Corning"). On June 1, 2004, the Company
agreed to provide a credit facility to Dow Corning as part of Dow Corning's Joint Plan of Reorganization. The aggregate
amount of the facility was originally $300 million; it was reduced to $50 million effective June 1, 2013, of which the
Company's share is $25 million. At December 31, 2013, no draws had been taken against the credit facility.
Environmental Matters
Introduction
Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the
liability can be reasonably estimated based on current law and existing technologies. At December 31, 2013, the Company had
accrued obligations of $722 million for probable environmental remediation and restoration costs, including $73 million for the
remediation of Superfund sites. This is management’s best estimate of the costs for remediation and restoration with respect to
environmental matters for which the Company has accrued liabilities, although it is reasonably possible that the ultimate cost
with respect to these particular matters could range up to approximately two and a half times that amount. Consequently, it is
reasonably possible that environmental remediation and restoration costs in excess of amounts accrued could have a material
impact on the Company’s results of operations, financial condition and cash flows. It is the opinion of the Company’s
management, however, that the possibility is remote that costs in excess of the range disclosed will have a material impact on
the Company’s results of operations, financial condition or cash flows. Inherent uncertainties exist in these estimates primarily
due to unknown conditions, changing governmental regulations and legal standards regarding liability, and emerging
remediation technologies for handling site remediation and restoration. At December 31, 2012, the Company had accrued
obligations of $754 million for probable environmental remediation and restoration costs, including $69 million for the
remediation of Superfund sites.
The following table summarizes the activity in the Company's accrued obligations for environmental matters for the years
ended December 31, 2013 and 2012:
Accrued Obligations for Environmental Matters
In millions 2013 2012
Balance at January 1 $ 754 $ 733
Additional accruals 200 203
Charges against reserve (222) (176)
Foreign currency impact (10) (6)
Balance at December 31 $ 722 $ 754
The amounts charged to income on a pretax basis related to environmental remediation totaled $203 million in 2013,
$197 million in 2012 and $261 million in 2011. Capital expenditures for environmental protection were $102 million in 2013,
$145 million in 2012 and $170 million in 2011.
Midland Off-Site Environmental Matters
On June 12, 2003, the Michigan Department of Environmental Quality ("MDEQ") issued a Hazardous Waste Operating License
(the “License”) to the Company’s Midland, Michigan manufacturing site (the “Midland site”), which included provisions
requiring the Company to conduct an investigation to determine the nature and extent of off-site contamination in the City of
Midland soils, the Tittabawassee River and Saginaw River sediment and floodplain soils, and the Saginaw Bay, and, if
necessary, undertake remedial action.
City of Midland
On March 6, 2012, the Company submitted an Interim Response Activity Plan Designed to Meet Criteria ("Work Plan") to
the MDEQ that involved the sampling of soil at residential properties near the Midland site for the presence of dioxins to
determine where clean-up may be required and then conducting remediation for properties that sample above the
remediation criteria. The MDEQ approved the Work Plan on June 1, 2012 and implementation of the Work Plan began on
June 4, 2012. During 2012 and 2013, the Company submitted and had approved by the MDEQ, amendments to the Work
Plan to sample properties in 2012 and 2013 that were originally scheduled for sampling in 2014 through 2017. At
December 31, 2013, all properties identified through sampling as being above the remediation criteria have been
remediated.