Sunoco 2011 Annual Report Download - page 28

occurring after January 1, 2010. Moreover, the United States Congress has from time to time
considered adopting legislation to reduce emissions of GHGs and almost one-half of the states have
already taken legal measures to reduce emissions of GHGs primarily through the planned development
of GHG emission inventories and/or regional GHG cap and trade programs. Most of these cap and
trade programs work by requiring major sources of emissions, such as electric power plants, or major
producers of fuels, such as petroleum refineries, to acquire and surrender emission allowances. The
number of allowances available for purchase is reduced each year in an effort to achieve the overall
GHG emission reduction goal. The adoption of any legislation or regulations that requires reporting of
GHGs or otherwise limits emissions of GHGs from our equipment and operations could require us to
incur costs to reduce emissions of GHGs associated with our operations or could adversely affect
demand for the refined petroleum products that we produce and market.
•Natural resource damages: Certain federal and state government regulators have sought compensation
from companies like us for natural resource damages as an adjunct to remediation programs. Because
we are involved in a number of remediation sites, a substantial increase in natural resource damage
claims at such remedial sites could result in substantially increased costs to us.
We also are subject to liabilities resulting from our current and past operations, including legal and
administrative proceedings related to product liability, leaks from pipelines and underground storage tanks,
premises-liability claims, allegations of exposures of third parties to toxic substances and general environmental
claims. Resolving such liabilities may result in the assessment of sanctions requiring the payment of monetary
fines and penalties, incurrence of costs to conduct corrective actions or pursue investigatory and remedial
activities, payment of damages in settlement of claims and suits, and issuance of injunctive relieve or orders that
could limit some or all of our operations and have a material adverse effect on our business or results of
operations. In February 2012, Sunoco announced that it intends to contribute approximately $250 million by the
end of 2012 to establish a segregated environmental fund by means of a captive insurance arrangement to be used
for the remediation of environmental obligations, related to substantially all current and former operations of the
Company other than the current logistics and retail operations. These legacy sites include inactive or formerly
owned terminals and other logistics assets, divested retail sites and current and previously owned refineries.
Compliance with current and future environmental laws and regulations could require us to make significant
expenditures, increasing the overall cost of operating our businesses, including capital costs to construct,
maintain and upgrade equipment and facilities. To the extent these expenditures are not ultimately reflected in
the prices of our products or services, our operating results would be adversely affected. Our failure to comply
with these laws and regulations could also result in substantial fines or penalties against us or orders that could
limit our operations and have a material adverse effect on our business or results of operations.
Product liability claims and litigation could adversely affect our business and results of operations.
Product liability is a significant commercial risk. Substantial damage awards have been made in certain
jurisdictions against manufacturers and resellers based upon claims for injuries caused by the use of or exposure
to various products. Failure of our products to meet required specifications could result in product liability claims
from our shippers and customers and we may be required to change or modify our product specifications, which
can be costly and time consuming. There can be no assurance that product liability claims against us would not
have a material adverse effect on our business or results of operations.
Along with other refiners, manufacturers and sellers of gasoline, we are a defendant in numerous lawsuits
that allege MTBE contamination in groundwater. Plaintiffs, who include water purveyors and municipalities
responsible for supplying drinking water and private well owners, are seeking compensatory damages (and in
some cases injunctive relief, punitive damages and attorneys’ fees) for claims relating to the alleged manufacture
and distribution of a defective product (MTBE-containing gasoline) that contaminates groundwater, and general
allegations of product liability, nuisance, trespass, negligence, violation of environmental laws and deceptive
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