Dow Chemical 2013 Annual Report Download - page 47

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The Dow Chemical Company and Subsidiaries
PART I, Item 3. Legal Proceedings.
LEGAL PROCEEDINGS
Asbestos-Related Matters of Union Carbide Corporation
Union Carbide Corporation (“Union Carbide”), a wholly owned subsidiary of the Company, is and has been involved in a large
number of asbestos-related suits filed primarily in state courts during the past three decades. These suits principally allege
personal injury resulting from exposure to asbestos-containing products and frequently seek both actual and punitive damages.
The alleged claims primarily relate to products that Union Carbide sold in the past, alleged exposure to asbestos-containing
products located on Union Carbide’s premises, and Union Carbide’s responsibility for asbestos suits filed against a former
Union Carbide subsidiary, Amchem Products, Inc.
It is the opinion of Dow’s management that it is reasonably possible that the cost of Union Carbide disposing of its asbestos-
related claims, including future defense costs, could have a material impact on the Company’s results of operations and cash
flows for a particular period and on the consolidated financial position of the Company.
For additional information, see Part II, Item 7. Other Matters, Asbestos-Related Matters of Union Carbide Corporation in
Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Note 14 to the Consolidated
Financial Statements.
Environmental Matters
Following a 2008 Risk Management Program ("RMP") inspection by the Environmental Protection Agency ("EPA") at the
Company's Freeport, Texas manufacturing facility, the EPA determined that the facility had two deficiencies in its then-
applicable RMP plan. Although EPA Region Six officials confirmed that all corrective actions were made within a reasonable
period of time, the EPA sought to collect an administrative penalty in excess of $100,000. On May 7, 2013, a proposed
settlement between the Company and the EPA was finalized whereby the Company was assessed a $134,500 administrative
penalty of which $82,000 was paid to the EPA and $52,500 was allocated to a Supplemental Environmental Project ("SEP").
The SEP was resolved when a report documenting the completion of the SEP was submitted to the EPA on January 10, 2014.
Dow Benelux B.V., a Netherlands-based wholly owned subsidiary of the Company, received a summons dated July 20, 2012
from the Public Prosecutor in The Netherlands to appear before the criminal section of the District Court in Breda, The
Netherlands (which venue was subsequently changed to the District Court of Middelburg) (the "Court"). The allegations
contained in the summons relate to seven process safety incidents and environmental spills that occurred between 2005 and
2008 at Dow Benelux B.V.'s Terneuzen manufacturing facility. The Public Prosecutor alleges that each of the incidents
constitutes a violation of certain Netherlands safety procedures and environmental regulations, notably Section 5 of the Major
Accidents Decree 1999 and/or Section 18.18 of the Environmental Act. In addition, five of the incidents allegedly also
constitute a violation of Section 173a of the Dutch Criminal Code. If convicted, Dow Benelux B.V. may face sanctions
including fines in excess of $100,000 for some of the violations. The trial on this matter was held in the District Court in
Middelburg and began on January 14, 2014 and ended on February 7, 2014. The Court is expected to render its judgment by the
end of March 2014.
The Company received an Administrative Complaint dated May 23, 2013 from the Texas Council of Environmental Quality
("TCEQ") alleging violations of various environmental requirements regulating air emissions from operations at its Freeport,
Texas manufacturing facility. The TCEQ is seeking a fine in excess of $100,000 for a number of independent violations of air
permits and regulations. The Company is currently negotiating with the TCEQ.