Sunoco 2009 Annual Report Download - page 99

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and deceptive business practices. In addition, several actions commenced by state authorities allege natural
resource damages. Plaintiffs may seek to rely on a “joint liability of industry” theory at trial, although there has
been no ruling as to whether the plaintiffs will be permitted to pursue this theory. Plaintiffs are seeking
compensatory damages and in some cases, injunctive relief, punitive damages and attorneys’ fees.
In December 2007, Sunoco, along with other refiners, entered into a settlement which covered 53 MTBE
cases. The settlement required a cash payment by the group of settling refiner defendants of approximately $422
million (which included attorneys’ fees) plus an agreement in the future to fund costs of treating existing wells as
to which MTBE has not currently been detected but which later is detected, over four consecutive quarters, above
certain concentration levels. As MTBE is no longer used, and based on a generally declining trend in MTBE
contamination, the Company does not anticipate substantial costs associated with the future treatment of existing
wells. The Company established a $28 million accrual ($17 million after tax), representing its allocation
percentage of the settlement, in 2007 and recognized an $18 million gain ($11 million after tax) in 2008 in
connection with an insurance recovery, both of which are reflected in provision for asset write-downs and other
matters in the consolidated statements of operations. During 2008, Sunoco made a cash payment of
approximately $28 million and recovered the $18 million of proceeds from the insurance settlement.
In 2008, Sunoco settled four cases relating to MTBE contamination in the Fort Montgomery, NY area which
included two federal cases and two state cases. A case involving the City of New York was also recently settled.
The impact of these settlements was not material.
Approximately half of the remaining MTBE cases are pending in federal court and have been consolidated
for pretrial purposes in the U.S. District Court for the Southern District of New York (MDL 1358). The other
cases are in state courts in New Hampshire and New York. Discovery is proceeding in all of these cases.
In 2009, Sunoco established an additional $15 million charge ($9 million after tax) for estimated future legal
expenses attributable to the remaining cases as well as estimated settlement costs for certain of the cases. This
charge is reflected in provision for asset write-downs and other matters in the consolidated statement of
operations.
For the MTBE cases for which no damages have been accrued, there has been insufficient information
developed about the plaintiffs’ legal theories or the facts that would be relevant to an analysis of the ultimate
liability to Sunoco. However, Sunoco does not believe that they will have a material adverse effect on its
consolidated financial position.
Conclusion
Many other legal and administrative proceedings are pending or may be brought against Sunoco arising out
of its current and past operations, including matters related to commercial and tax disputes, product liability,
antitrust, employment claims, leaks from pipelines and underground storage tanks, natural resource damage
claims, premises-liability claims, allegations of exposures of third parties to toxic substances (such as benzene or
asbestos) and general environmental claims. Although the ultimate outcome of these proceedings and other
matters identified above cannot be ascertained at this time, it is reasonably possible that some of these matters
could be resolved unfavorably to Sunoco. Management believes that these matters could have a significant
impact on results of operations for any future quarter or year. However, management does not believe that any
additional liabilities which may arise pertaining to such matters would be material in relation to the consolidated
financial position of Sunoco at December 31, 2009.
15. Noncontrolling Interests
Cokemaking Operations
Sunoco received a total of $415 million in exchange for interests in its Indiana Harbor cokemaking
operations in two separate transactions in 1998 and 2002. Sunoco did not recognize any gain as of the dates of
these transactions because the third-party investors were entitled to a preferential return on their respective
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