Tecumseh Products 2014 Annual Report Download - page 69

67
or the amount of any potential future settlements or resolution of these claims, if any, could be material to our financial
position, consolidated results of operations and cash flows.
We anticipate that we will incur additional expenses as we continue to cooperate with the investigations and defend the
lawsuits. We expense all legal costs as incurred in our Consolidated Statements of Operations. Such expenses and any
restitution payments could negatively impact our reputation, compromise our ability to compete and result in financial losses in
an amount which could be material to our financial position, consolidated results of operations and cash flows.
Environmental Matters
At December 31, 2014 and December 31, 2013 we had accrued $5.7 million and $2.4 million, respectively, for environmental
remediation. Included in the December 31, 2014 balance is an accrual, measured on a discounted basis, of $1.6 million for the
remaining estimated costs associated with remediation activities at our former Tecumseh, Michigan facility. We have met with
the United States Environmental Protection Agency ("USEPA") several times and most recently in early 2014, to discuss the
overall project at this site. On September 30, 2013, we submitted the Supplement to the Current Human Exposures
Environmental Indicators Report to the USEPA. This Supplement confirmed that human exposures are under control in
accordance with the Administrative Order on Consent. USEPA provided comments on January 31, 2014. We submitted a
scope of work for additional investigation activities to USEPA on March 27, 2014 to respond to USEPA’s comments. These
additional investigative activities began in the second quarter of 2014. The deadline for the final corrective measures proposal
was extended to January 31, 2016, based upon feedback from the USEPA and time to address their comments. Most of the
investigation is now expected to be completed in the next 6 months while remediation and monitoring activities are expected to
be completed by the end of 2020. Delays in demolition activities of the current property owner could delay remediation system
construction at the site. The investigation efforts expected to take place in the fourth quarter of 2014 and the first quarter of
2015 have been hampered due to winter weather. Based upon the additional investigation activities that were requested by
USEPA and additional remediation activities that will be required, an additional accrual of $1.5 million was recognized during
2014 in "Impairments, restructuring charges, and other items" in our Consolidated Statement of Operations.
We were named by the USEPA as a potentially responsible party in connection with the Sheboygan River and Harbor
Superfund Site ("SRHS") in Wisconsin. In 2003, with the cooperation of the USEPA, we and Pollution Risk Services, LLC
(“PRS”) entered into a Liability Transfer and Assumption Agreement (the “Liability Transfer Agreement”). Under the terms of
the Liability Transfer Agreement, PRS assumed all of our responsibilities, obligations and liabilities for remediation of the
entire SRHS and the associated costs, except for potential future liabilities related to Natural Resource Damages (“NRD”).
Also, as required by the Liability Transfer Agreement, we purchased Remediation Cost Cap insurance, with a 30 year term, in
the amount of $100.0 million and Environmental Site Liability insurance in the amount of $20.0 million.
We believe that insurance coverage will provide sufficient assurance for completion of the responsibilities, obligations and
liabilities assumed by PRS under the Liability Transfer Agreement. In conjunction with the Liability Transfer Agreement, we
completed the transfer of title to the Sheboygan Falls, Wisconsin property to PRS. Active remediation of the SRHS was
completed in 2013 and PRS is currently preparing the final work completion reports. PRS has been submitting these reports
during the second and third quarters of 2014 and will continue to submit required reports during the first quarter of 2015.
USEPA is expected to issue a Certificate of Completion for the Site after it has reviewed and approved the final work
completion reports.
Now that the remediation and reporting on SRHS is nearing completion, the natural resource trustees (Wisconsin Department
of Natural Resources, U.S. Fish and Wildlife Service, and the National Oceanic and Atmospheric Administration (collectively,
the "Trustees")) will have the opportunity to assess if they will assert any NRD claims. In September 2012, we were advised
that the Sheboygan River Natural Resource Trustees conducted a pre-assessment screen of natural resources damages related to
the Sheboygan River and Harbor Site, including the Kohler Landfill Superfund Site and the Campmarina Alternate Superfund
Site. In a letter received by us on May 23, 2013, the Trustees provided notice to us of their intent to perform a formal NRD
assessment. The Trustees sent this letter to three parties in addition to us. Neither we, nor any of the other three notified parties,
admit that we are, or it is, liable for any natural resource damages in connection with the SRHS. Further, no allocation of
liability among the parties, whether interim or final, has been reached.
At this time, we have not received a Notice of Intent to Sue as required by the Comprehensive Environmental Response,
Compensation and Liability Act as a predicate to any lawsuit for natural resources damages by the Trustees. However, we have
entered into a second tolling agreement with the Trustees to stop any applicable limitations period on their asserted claims for
the period from September 15, 2014 to September 15, 2015, "to facilitate settlement negotiations between the Parties".
Settlement discussions among us, one of the other potentially responsible parties ("PRP's") and the Trustees have been ongoing
and continue. In 2014, we accrued $3.1 million for this issue, as part of "Loss from discontinued operations, net of tax".