Sunoco 2009 Annual Report Download - page 65

reasonably estimable. The accrual is undiscounted and is based on currently available information, estimated
timing of remedial actions and related inflation assumptions, existing technology and presently enacted laws and
regulations. It is often extremely difficult to develop reasonable estimates of future site remediation costs due to
changing regulations, changing technologies and their associated costs, and changes in the economic
environment. In the above instances, if a range of probable environmental cleanup costs exists for an identified
site, existing accounting guidance requires that the minimum of the range be accrued unless some other point in
the range is more likely, in which case the most likely amount in the range is accrued. Engineering studies,
historical experience and other factors are used to identify and evaluate remediation alternatives and their related
costs in determining the estimated accruals for environmental remediation activities. Losses attributable to
unasserted claims are also reflected in the accruals to the extent they are probable of occurrence and reasonably
estimable.
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, 2009, the aggregate of the
estimated maximum additional reasonably possible losses, which relate to numerous individual sites, totaled
approximately $85 million. However, the Company believes 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 impact on the
Company’s financial position.
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 less than $9 million at December 31, 2009. 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, 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.
Under various environmental laws, including RCRA, 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 consistently 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,
mitigation 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 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 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
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