Energy Transfer 2012 Annual Report Download - page 36

28
mitigation of surface water impacts and prevention of off-site migration. A change in this approach as a result of changing the
intended use of a property or a sale to a third party could result in a higher cost remediation strategy in the future.
Sunoco currently owns or operates certain retail gasoline outlets where releases of petroleum products have occurred. Federal and
state laws and regulations require that contamination caused by such releases at these sites and at formerly owned sites be assessed
and remediated to meet the applicable standards. The obligation for Sunoco to remediate this type of contamination varies,
depending on the extent of the release and the applicable laws and regulations. A portion of the remediation costs may be recoverable
from the reimbursement fund of the applicable state, after any deductible has been met.
In general, each remediation site/issue is evaluated individually based upon information available for the site/issue and no pooling
or statistical analysis is used to evaluate an aggregate risk for a group of similar items (e.g., service station sites) in determining
the amount of probable loss accrual to be recorded. Sunoco’s estimates of environmental remediation costs also frequently involve
evaluation of a range of estimates. In many cases, it is difficult to determine that one point in the range of loss estimates is more
likely than any other. In these situations, existing accounting guidance requires that the minimum of the range be accrued.
Accordingly, the low end of the range often represents the amount of loss which has been recorded.
In addition to the probable and estimable losses which have been recorded, management believes it is reasonably possible (i.e.,
less than probable but greater than remote) that additional environmental remediation losses will be incurred. At December 31,
2012, the aggregate of the estimated maximum additional reasonably possible losses, which relate to numerous individual sites,
totaled approximately $200 million. This estimate of reasonably possible losses associated with environmental remediation is
largely based upon analysis during 2012 and continuing into early 2013 of the potential liabilities associated with the establishment
of the segregated environmental fund discussed above. It also includes estimates for remediation activities at current logistics and
retail assets. This reasonably possible loss estimate in many cases reflects the upper end of the loss ranges which are described
above. Such estimates include potentially higher contractor costs for expected remediation activities, the potential need to use
more costly or comprehensive remediation methods and longer operating and monitoring periods, among other things.
In summary, total future costs for environmental remediation activities will depend upon, among other things, the identification
of any additional sites, the determination of the extent of the contamination at each site, the timing and nature of required remedial
actions, the nature of operations at each site, the technology available and needed to meet the various existing legal requirements,
the nature and terms of cost-sharing arrangements with other potentially responsible parties, the availability of insurance coverage,
the nature and extent of future environmental laws and regulations, inflation rates, terms of consent agreements or remediation
permits with regulatory agencies and the determination of Sunoco’s liability at the sites, if any, in light of the number, participation
level and financial viability of the other parties. The recognition of additional losses, if and when they were to occur, would likely
extend over many years. Management believes that none of the current remediation locations, which are in various stages of
ongoing remediation, is individually material to Sunoco as its largest accrual for any one Superfund site, operable unit or remediation
area was approximately $28 million at December 31, 2012. As a result, Sunoco’s exposure to adverse developments with respect
to any individual site is not expected to be material. However, if changes in environmental laws or regulations occur or the
assumptions used to estimate losses at multiple sites are adjusted, such changes could impact multiple Sunoco facilities, formerly
owned facilities and third-party sites at the same time. As a result, from time to time, significant charges against income for
environmental remediation may occur; however, management does not believe that any such charges would have a material adverse
impact on the Company’s consolidated financial position.
Transwestern conducts soil and groundwater remediation at a number of its facilities. Some of the cleanup activities include
remediation of several compressor sites on the Transwestern system for contamination by polychlorinated biphenyls (“PCBs”),
and the costs of this work are not eligible for recovery in rates. The total accrued future estimated cost of remediation activities
expected to continue through 2025 is $5 million, which is included in the total environmental accruals mentioned above.
Transwestern received FERC approval for rate recovery of projected soil and groundwater remediation costs not related to PCBs
effective April 1, 2007. Transwestern, as part of ongoing arrangements with customers, continues to incur costs associated with
containing and removing potential PCB contamination. Future costs cannot be reasonably estimated because remediation activities
are undertaken as potential claims are made by customers and former customers. However, such future costs are not expected to
have a material impact on our financial position, results of operations or cash flows.
Air Emissions. Our operations are subject to the federal Clean Air Act and comparable state laws and regulations. These laws and
regulations regulate emissions of air pollutants from various industrial sources, including our processing plants, and also impose
various monitoring and reporting requirements. Such laws and regulations may require that we obtain pre-approval for the
construction or modification of certain projects or facilities, such as our processing plants and compression facilities, expected to
produce air emissions or to result in the increase of existing air emissions, that we obtain and strictly comply with air permits
containing various emissions and operational limitations, or that we utilize specific emission control technologies to limit emissions.
We will be required to incur capital expenditures in the future for air pollution control equipment in connection with obtaining
and maintaining operating permits and approvals for air emissions. In addition, our processing plants, pipelines and compression
Table of Contents