Sunoco 2014 Annual Report Download - page 85

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The Partnership is subject to numerous federal, state and local laws which regulate the discharge of materials into the
environment or that otherwise relate to the protection of the environment. These laws and regulations result in liabilities and
loss contingencies for remediation at the Partnership's facilities and at third-party or formerly owned sites. At December 31,
2014 and 2013, there were accrued liabilities for environmental remediation in the consolidated balance sheets of $14 and $5
million, respectively. The accrued liabilities for environmental remediation do not include any amounts attributable to
unasserted claims, since there are no unasserted claims that are probable of settlement or reasonably estimable, nor have any
recoveries from insurance been assumed. Charges against income for environmental remediation totaled $15, $10, $1 and $6,
million for the years ended December 31, 2014 and 2013; and for the periods from October 5, 2012 to December 31, 2012 and
from January 1, 2012 to October 4, 2012, respectively. The Partnership maintains insurance programs that cover certain of its
existing or potential environmental liabilities. Claims for recovery of environmental liabilities and previous expenditures that
are probable of realization were not material in relation to the Partnership's consolidated financial position at December 31,
2014 and 2013.
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 technology available and needed to meet the various existing legal requirements; the nature and extent of future
environmental laws, inflation rates and the determination of the Partnership's liability at multi-party sites, if any, in light of
uncertainties with respect to joint and several liability; and the number, participation levels and financial viability of other
parties. Management believes it is reasonably possible that additional environmental remediation losses will be incurred. At
December 31, 2014, the aggregate of the estimated maximum additional reasonably possible losses, which relate to numerous
individual sites, totaled $9 million.
The Partnership is a party to certain pending and threatened claims. Although the ultimate outcome of these claims cannot
be ascertained at this time, nor can a range of reasonably possible losses be determined, it is reasonably possible that some
portion of them could be resolved unfavorably to the Partnership. Management does not believe that any liabilities which may
arise from such claims and the environmental matters discussed above would be material in relation to the Partnership's results
of operations, financial position or cash flows at December 31, 2014. Furthermore, management does not believe that the
overall costs for such matters will have a material impact, over an extended period of time, on the Partnership's financial
position, results of operations or cash flows.
Sunoco has indemnified the Partnership for 30 years from environmental and toxic tort liabilities related to the assets
contributed to the Partnership, that arose from the operation of such assets prior to the closing of the February 2002 initial
public offering ("IPO"). Sunoco has also indemnified the Partnership for 100 percent of all losses asserted within the first 21
years after the closing of the IPO. Sunoco's share of liability for claims asserted thereafter will decrease by 10 percent per year.
For example, for a claim asserted during the twenty-third year after closing of the IPO, Sunoco would be required to indemnify
the Partnership for 80 percent of its loss. There is no monetary cap on the amount of indemnity coverage provided by Sunoco.
The Partnership has agreed to indemnify Sunoco for events and conditions associated with the operation of the Partnership's
assets that occur on or after the closing of the IPO and for environmental and toxic tort liabilities to the extent Sunoco is not
required to indemnify the Partnership.
Management of the Partnership does not believe that any liabilities which may arise from claims indemnified by Sunoco
would be material in relation to the Partnership's financial position, results of operations or cash flows at December 31, 2014.
There are certain other pending legal proceedings related to matters arising after the IPO that are not indemnified by Sunoco.
Management believes that any liabilities that may arise from these legal proceedings will not be material in relation to the
Partnership's financial position, results of operations or cash flows at December 31, 2014.
12. Equity Offerings
In July 2012, the Partnership converted 7.9 million Class A units to common units that were originally issued to Sunoco
in connection with the acquisition of the Eagle Point Tank Farm and related assets. Prior to their conversion, the Class A units
participated in the allocation of net income on a pro-rata basis with the common units. In accordance with applicable
accounting guidance, the Partnership recorded the Class A units at $20 million, the difference between Sunoco's historical
carrying value of the assets acquired and the cash paid by the Partnership. In connection with this transaction, the general
partner contributed $2 million to the Partnership to maintain its two percent general partner interest. In the fourth quarter 2014,
the Partnership acquired land at Eagle Point from Sunoco under a purchase option embedded in an existing lease. As this was a
transaction between entities under common control, the land was recorded at Sunoco's historical carrying value, resulting in an
increase to equity of $54 million.
On June 12, 2014, the Partnership completed a two-for-one split of its common units. The unit split resulted in the
issuance of one additional common unit for every one common unit owned. All unit and per unit information included in this
report are presented on a post-split basis.