Sunoco 2005 Annual Report Download - page 30

extent they are probable of occurrence and reasonably estimable. The accrued liability for
environmental remediation is classified in the consolidated balance sheets as follows:
December 31
(Millions of Dollars) 2005 2004
Accrued liabilities $37 $39
Other deferred credits and liabilities 100 109
$137 $148
The following table summarizes the changes in the accrued liability for environmental
remediation activities by category:
(Millions of Dollars) Refineries
Marketing
Sites
Chemicals
Facilities
Pipelines
and Terminals
Hazardous
Waste Sites Other Total
At December 31, 2002 $52 $ 72 $ 8 $ 19 $ 5 $ 3 $159
Accruals — 23 1 6 1 (1) 30
Payments (9) (22) (2) (10) (1) — (44)
Other —1— — ——1
At December 31, 2003 $ 43 $ 74 $ 7 $ 15 $ 5 $ 2 $146
Accruals 2 20 — 3 2 — 27
Payments (10) (21) (1) (3) (3) — (38)
Acquisitions and divestments 11 — (1) — — — 10
Other 2 1 — — — — 3
At December 31, 2004 $ 48 $ 74 $ 5 $ 15 $ 4 $ 2 $148
Accruals 222 1 6 1—32
Payments (14) (25) (2) (7) (2) — (50)
Other —7(1) 1——7
At December 31, 2005 $ 36 $ 78 $ 3 $ 15 $ 3 $ 2 $137
Total future costs for the environmental remediation activities identified above will de-
pend upon, among other things, the identification of any additional sites, the determi-
nation of the extent of the contamination at each site, the timing and nature of required
remedial actions, 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, inflation rates 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 par-
ties. 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, 2005, the aggregate of the estimated maximum additional reasonably possible losses,
which relate to numerous individual sites, totaled approximately $90 million. However,
the Company believes it is very unlikely that it will realize the maximum reasonably possi-
ble loss at every site. Furthermore, the recognition of additional losses, if and when they
were to occur, would likely extend over many years and, therefore, likely would not have a
material impact on the Company’s financial position.
Under various environmental laws, including the Resource Conservation and Recovery
Act (“RCRA”) (which relates to solid and hazardous waste treatment, storage and disposal),
Sunoco has initiated corrective remedial action at its facilities, formerly owned facilities
and third-party sites. At the Company’s major manufacturing facilities, Sunoco has con-
sistently assumed continued industrial use and a containment/remediation strategy focused
on eliminating unacceptable risks to human health or the environment. The remediation
accruals for these sites reflect that strategy. Accruals include amounts to prevent off-site
migration and to contain the impact on the facility property, as well as to address known,
discrete areas requiring remediation within the plants. Activities include closure of RCRA
solid waste management units, recovery of hydrocarbons, handling of impacted soil, miti-
gation of surface water impacts and prevention of off-site migration.
28