Alcoa 2009 Annual Report Download - page 38

Environmental Matters
Alcoa is involved in proceedings under the Comprehensive Environmental Response, Compensation and Liability Act,
also known as Superfund (CERCLA) or analogous state provisions regarding the usage, disposal, storage or treatment
of hazardous substances at a number of sites in the U.S. The company has committed to participate, or is engaged in
negotiations with federal or state authorities relative to its alleged liability for participation, in clean-up efforts at
several such sites.
As previously reported, since 1989, Alcoa has been conducting investigations and studies of the Grasse River, adjacent
to Alcoa’s Massena, New York plant site, under order from the U.S. Environmental Protection Agency (EPA) issued
under Section 106 of CERCLA. Sediments and fish in the river contain varying levels of polychlorinated biphenyl
(PCB). In early 2002, Alcoa submitted a revised Analysis of Alternatives Report to EPA. This Report identified
potential remedial actions related to PCB contamination of the river, including additional remedial alternatives that
may be required by EPA. It also reflected certain recent studies and investigations on the river, including pilot tests of
sediment capping techniques and other remediation technologies. The range of costs associated with the remedial
alternatives evaluated in the 2002 Report was between $2 million and $525 million. Alcoa believes that rational,
scientific analysis supports a remedy involving the containment of sediments in place via natural or man-made
processes. Because the selection of the $2 million alternative (natural recovery) was considered remote, the company
adjusted the reserve for the Grasse River in 2002 to $30 million representing the low end of the range of possible
alternatives, as no single alternative within that range could be identified as more probable than the others. In June
2003, based on then recent river observations, EPA requested that Alcoa gather additional field data to assess the
potential for sediment erosion from winter river ice formation and breakup so that it could be factored into the range of
remedial alternatives being considered. The results of these additional studies, submitted in a report to EPA in April
2004, suggest that this phenomenon has the potential to occur approximately every 10 years and may impact sediments
in certain portions of the river under all remedial scenarios. Those evaluations were submitted to EPA along with a
proposal to perform additional pilot remedial studies in the river. In May 2004, EPA approved Alcoa’s proposed
Remedial Options Pilot Study (ROPS) that includes sediment removal and capping, the installation of an ice control
structure, and significant monitoring. At the same time, Alcoa adjusted the reserve for the river to include the $35
million estimated cost of the ROPS, in addition to the $30 million previously reserved. Most of the construction work
for the ROPS was completed in 2005 with monitoring through 2008. The reserves for the Grasse River were
re-evaluated in the fourth quarter of 2006 and an adjustment of $4 million was made. This adjustment covered
commitments made to the EPA for additional investigation work for the ongoing monitoring program, including that
associated with the ROPS program; to prepare a revised Analysis of Alternatives Report, and for an interim measure
that involves, annually, the mechanical ice breaking of the river to prevent the formation of ice jams until a permanent
remedy is selected. EPA has since eliminated the ice breaking requirement. The findings from the ROPS program and
from these additional investigations were incorporated into a revised Analysis of Alternatives Report that was
submitted to EPA in 2008. This update incorporated new information obtained from the ROPS regarding the feasibility
and costs associated with various capping and dredging alternatives and incorporated various options for ice control.
EPA will use this information to develop a remedy for the river. Alcoa adjusted the reserve in the fourth quarter of
2008 by an additional $40 million for increases associated with updated cost for a proposed remedy incorporating ice
control and for settlement of potential resource damages. The EPA’s ultimate selection of a remedy could result in
additional liability. Alcoa may be required to record a subsequent reserve adjustment at the time the EPA’s Record of
Decision is issued, which is expected in late 2010 or later.
As previously reported, representatives of various U.S. federal and state agencies and a Native American tribe, acting
in their capacities as trustees for natural resources (Trustees), have asserted that Alcoa and Reynolds Metals Company
(Reynolds) may be liable for loss or damage to such resources under federal and state law based on Alcoa’s and
Reynolds’ operations at their Massena, New York and St. Lawrence, New York facilities. While formal proceedings
have not been instituted, the company continues to actively investigate these claims. Pursuant to an agreement entered
into with the Trustees in 1991, Alcoa and Reynolds had been working cooperatively with General Motors Corporation,
who is facing similar claims by the Trustees, to assess potential injuries to natural resources in the region. With the
bankruptcy of General Motors in 2009, Motors Liquidation Company (MLC) took over General Motors’ liability in
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