Sunoco 2006 Annual Report Download - page 31

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, 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 2 22 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
Accruals 619 1 2 1—29
Payments (9) (24) (1) (5) (2) (1) (42)
Other 1(4)— — ——(3)
At December 31, 2006 $ 34 $ 69 $ 3 $12 $ 2 $ 1 $121
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 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 in-
surance coverage, the nature and extent of future environmental laws and regulations,
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 parties. Management be-
lieves it is reasonably possible (i.e., less than probable but greater than remote) that addi-
tional environmental remediation losses will be incurred. At December 31, 2006, the
aggregate of the estimated maximum additional reasonably possible losses, which relate to
numerous individual sites, totaled approximately $85 million. However, the Company be-
lieves it is very unlikely that it will realize the maximum reasonably possible 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 im-
pact 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.
Many of Sunoco’s current terminals are being addressed with the above containment/
remediation strategy. At some smaller or less impacted facilities and some previously divested
terminals, the focus is on remediating discrete interior areas to attain regulatory closure.
Sunoco owns or operates certain retail gasoline outlets where releases of petroleum prod-
ucts 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 re-
mediated to meet the applicable standards. The obligation for Sunoco to remediate this
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