Occidental Petroleum 2001 Annual Report Download - page 40

have increased over time and may continue to rise in the future. Environmental
expenditures related to current operations are factored into the overall
business planning process. These expenditures are mainly considered an integral
part of production in manufacturing quality products responsive to market
demand.
ENVIRONMENTAL REMEDIATION
The laws that require or address environmental remediation may apply
retroactively to previous waste-disposal practices. In many cases, the laws
apply regardless of fault, legality of the original activities or ownership or
control of sites. Occidental is currently participating in environmental
assessments and cleanups under these laws at federal CERCLA sites, comparable
state sites and other remediation sites, including Occidental facilities and
previously owned sites. Also, Occidental and certain of its subsidiaries have
been involved in a substantial number of governmental and private proceedings
involving historical practices at various sites including, in some instances,
having been named as defendants and/or as PRPs under the federal CERCLA law.
These proceedings seek funding and/or remediation and, in some cases,
compensation for alleged personal injury or property damage, punitive damages
and civil penalties, aggregating substantial amounts.
Occidental does not consider the number of CERCLA and similar state sites
at which it has been notified that it has been identified as being involved to
be a relevant measure of exposure. Although the liability of a PRP may be joint
and several, Occidental is usually one of many companies cited as a PRP at these
sites and has, to date, been successful in sharing cleanup costs with other
financially sound companies. Also, many of these sites are still under
investigation by the Environmental Protection Agency (EPA) or the equivalent
state agencies. Before actual cleanup, the parties involved assess site
conditions and responsibility and determine the appropriate remedy. The majority
of remediation costs are incurred after the parties obtain EPA or equivalent
state agency approval to proceed. The ultimate future cost of remediation of
certain of the sites for which Occidental has been notified that it has been
identified as being involved cannot be reasonably determined at this time.
As of December 31, 2001, Occidental had been notified by the EPA or
equivalent state agencies, or otherwise had become aware, that it had been
identified as being involved at 126 CERCLA or comparable state sites. (This
number does not include those sites where Occidental has been successful in
resolving its involvement.) The 126 sites include 34 former Diamond Shamrock
Chemical sites as to which Maxus Energy Corporation has retained all liability.
Of the remaining 92 sites, Occidental has denied involvement at 9 sites and has
yet to determine involvement in 20 sites. With respect to the remaining 63 of
these sites, Occidental is in various stages of evaluation, and the extent of
liability retained by Maxus Energy Corporation is disputed at 2 of these sites.
For 54 of these sites, where environmental
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remediation efforts are probable and the costs can be reasonably estimated,
Occidental has accrued reserves at the most likely cost to be incurred. The 54
sites include 11 sites as to which present information indicates that it is
probable that Occidental's aggregate exposure is insignificant. In determining
the reserves, Occidental uses the most current information available, including
similar past experiences, available technology, regulations in effect, the
timing of remediation and cost-sharing arrangements. For the remaining 9 of the
63 sites being evaluated, Occidental does not have sufficient information to
determine a range of liability, but Occidental does have sufficient information
on which to base the opinion expressed above in the "Lawsuits, Claims,
Commitments, Contingencies and Related Matters" section of this "Management's
Discussion and Analysis of Financial Condition and Results of Operations." For
management's opinion on lawsuits and proceedings and on other environmental loss
contingencies, see the above-noted section.
ENVIRONMENTAL COSTS
Occidental's environmental costs, some of which may include estimates,
relating to compliance with environmental laws and regulations are shown below
for each segment: