Halliburton 2011 Annual Report Download - page 53

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Between 1965 and 1991, a former Halliburton unit known as the Halliburton Industrial Services
Division (HISD) performed work for the U.S. Department of Defense cleaning solid fuel from missile
casings at a semi-rural facility on the north side of Duncan, Oklahoma. We closed our site in coordination
with the Oklahoma Department of Environmental Quality (DEQ) in the mid-1990s, but continued to
monitor the groundwater at DEQ’ s request. A principal component of the missile fuel was ammonium
perchlorate, a salt that is highly soluble in water, which has been discovered in the soil and groundwater on
our site and in certain residential water wells near our property.
Commencing in October 2011, a number of lawsuits were filed against us, including a putative
class action case in federal court in the Western District of Oklahoma and other lawsuits filed in Oklahoma
state courts. The lawsuits generally allege, among other things, that operations at our Duncan facility
caused releases of pollutants, including ammonium perchlorate and, in the case of the federal lawsuit,
nuclear or radioactive waste, into the groundwater, and that we knew about those releases and did not take
corrective actions to address them. It is also alleged that the plaintiffs have suffered from certain health
conditions, including hypothyroidism, a condition that has been associated with exposure to perchlorate at
sufficiently high doses over time. These cases seek, among other things, damages, including punitive
damages, and the establishment of a fund for future medical monitoring. The cases allege, among other
things, strict liability, trespass, private nuisance, public nuisance, and negligence and, in the case of the
federal lawsuit, violations of the U.S. Resource Conservation and Recovery Act, resulting in personal
injuries, property damage, and diminution of property value.
The lawsuits generally allege that the cleaning of the missile casings at the Duncan facility
contaminated the surrounding soils and groundwater, including certain water wells used in a number of
residential homes, through the migration of, among other things, ammonium perchlorate. The federal
lawsuit also alleges that our processing of radioactive waste from a nuclear power plant over 25 years ago
resulted in the release of “nuclear/radioactive” waste into the environment.
We and the DEQ have recently conducted soil and groundwater sampling relating to the
allegations discussed above that has confirmed that the alleged nuclear or radioactive material is confined
to the soil in a discrete area of the onsite operations and is not present in the groundwater onsite or in any
areas offsite. The radiological impacts from this discrete area are not believed to present any health risk for
offsite exposure. With respect to ammonium perchlorate, we have made arrangements to supply affected
residents with bottled drinking water and, if needed, with a temporary water supply system, at no cost to the
residents. We have worked with the City of Duncan and the DEQ to expedite expansion of the city water
supply to the relevant areas.
The lawsuits described above are at an early stage, and additional lawsuits and proceedings may
be brought against us. We cannot predict their outcome or the consequences thereof. As of December 31,
2011, we had accrued $35 million related to our initial estimate of response efforts, third-party property
damage, and remediation related to the Duncan, Oklahoma matter. We intend to vigorously defend the
lawsuits and do not believe that these lawsuits will have a material adverse effect on our liquidity,
consolidated results of operations, or consolidated financial condition.
Additionally, we have subsidiaries that have been named as potentially responsible parties along
with other third parties for nine federal and state superfund sites for which we have established reserves. As
of December 31, 2011, those nine sites accounted for approximately $7 million of our $81 million total
environmental reserve. For any particular federal or state superfund site, since our estimated liability is
typically within a range and our accrued liability may be the amount on the low end of that range, our
actual liability could eventually be well in excess of the amount accrued. Despite attempts to resolve these
superfund matters, the relevant regulatory agency may at any time bring suit against us for amounts in
excess of the amount accrued. With respect to some superfund sites, we have been named a potentially
responsible party by a regulatory agency; however, in each of those cases, we do not believe we have any
material liability. We also could be subject to third-party claims with respect to environmental matters for
which we have been named as a potentially responsible party.