Sunoco 2011 Annual Report Download - page 102

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. A change in this approach as a result of changing the intended use of a property or a sale to a third
party could result in a higher cost remediation strategy in the future.
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.
The accrued liability for hazardous waste sites is attributable to potential obligations to remove or mitigate
the environmental effects of the disposal or release of certain pollutants at third-party sites pursuant to the
Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”) (which relates to
releases and remediation of hazardous substances) and similar state laws. Under CERCLA, Sunoco is potentially
subject to joint and several liability for the costs of remediation at sites at which it has been identified as a
“potentially responsible party” (“PRP”). As of December 31, 2011, Sunoco had been named as a PRP at 32 sites
identified or potentially identifiable as “Superfund” sites under federal and state law. The Company is usually
one of a number of companies identified as a PRP at a site. Sunoco has reviewed the nature and extent of its
involvement at each site and other relevant circumstances and, based upon the other parties involved or Sunoco’s
level of participation therein, believes that its potential liability associated with such sites will not be significant.
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 approximately $14 million at December 31, 2011. 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 or the assumptions used to estimate losses at multiple sites are adjusted,
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; however, management does not believe that any such charges would have a material adverse impact on the
Company’s consolidated financial position.
The Company maintains insurance programs that cover certain of its existing or potential environmental
liabilities, which programs vary by year, type and extent of coverage. For underground storage tank remediations,
the Company can also seek reimbursement through various state funds of certain remediation costs above a
deductible amount. For certain acquired properties, the Company has entered into arrangements with the sellers
or others that allocate environmental liabilities and provide indemnities to the Company for remediating
contamination that occurred prior to the acquisition dates. Some of these environmental indemnifications are
subject to caps and limits. No accruals have been recorded for any potential contingent liabilities that will be
funded by the prior owners as management does not believe, based on current information, that it is likely that
any of the former owners will not perform under any of these agreements. Other than the preceding
arrangements, the Company has not entered into any arrangements with third parties to mitigate its exposure to
loss from environmental contamination. Claims for recovery of environmental liabilities that are probable of
realization totaled $12 million at December 31, 2011 and are included principally in deferred charges and other
assets in the consolidated balance sheets.
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