Alcoa 2010 Annual Report Download - page 121

In June 2003, the EPA requested that Alcoa gather additional field data to assess the potential for sediment erosion
from winter river ice formation and breakup. The results of these additional studies, submitted in a report to the 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. The EPA informed Alcoa that a final remedial
decision for the river could not be made without substantially more information, including river pilot studies on the
effects of ice formation and breakup on each of the remedial techniques. Alcoa submitted to the EPA, and the EPA
approved, a Remedial Options Pilot Study (ROPS) to gather this information. The scope of this study included
sediment removal and capping, the installation of an ice control structure, and significant monitoring.
From 2004 through 2008, Alcoa completed the work outlined in the ROPS. In November 2008, Alcoa submitted an
update to the EPA incorporating the new information obtained from the ROPS related to the feasibility and costs
associated with various capping and dredging alternatives, including options for ice control. As a result, Alcoa
increased the reserve associated with the Grasse River by $40 for the estimated costs of a proposed ice control remedy
and for partial settlement of potential damages of natural resources.
In late 2009, the EPA requested that Alcoa submit a complete revised Analysis of Alternatives Report in March 2010
to address questions and comments from the EPA and various stakeholders. On March 24, 2010, Alcoa submitted the
revised report, which included an expanded list of proposed remedial alternatives, as directed by the EPA. Alcoa
increased the reserve associated with the Grasse River by $17 to reflect an increase in the estimated costs of the
Company’s recommended capping alternative as a result of changes in scope that occurred due to the questions and
comments from the EPA and various stakeholders. While the EPA reviews the revised report, Alcoa will continue with
its on-going monitoring and field studies activities. In late 2010, Alcoa increased the reserve by $2 based on the most
recent estimate of costs expected to be incurred for on-going monitoring and field studies activities as the EPA
continues its review into 2011.
The ultimate selection of a remedy may result in additional liability. Alternatives analyzed in the most recent Analysis
of Alternatives report that are equally effective as the recommended capping remedy range in additional estimated
costs between $20 and $100. As such, 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 2011 or later.
Sherwin, TX—In connection with the sale of the Sherwin alumina refinery, which was required to be divested as part
of the Reynolds merger in 2000, Alcoa agreed to retain responsibility for the remediation of the then existing
environmental conditions, as well as a pro rata share of the final closure of the active waste disposal areas, which
remain in use. Alcoa’s share of the closure costs is proportional to the total period of operation of the active waste
disposal areas. Alcoa estimated its liability for the active disposal areas by making certain assumptions about the period
of operation, the amount of material placed in the area prior to closure, and the appropriate technology, engineering,
and regulatory status applicable to final closure. The most probable cost for remediation was reserved.
East St. Louis, IL—In response to questions regarding environmental conditions at the former East St. Louis
operations, Alcoa and the City of East St. Louis, the owner of the site, entered into an administrative order with the
EPA in December 2002 to perform a remedial investigation and feasibility study of an area used for the disposal of
bauxite residue from historic alumina refining operations. A draft feasibility study was submitted to the EPA in April
2005. The feasibility study included remedial alternatives that ranged from no further action to significant grading,
stabilization, and water management of the bauxite residue disposal areas. As a result, Alcoa increased the
environmental reserve for this location by $15 in 2005. 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 2011 or later.
Vancouver, WA—In 1987, Alcoa sold its Vancouver smelter to a company that is now known as Evergreen
Aluminum (Evergreen). The purchase and sale agreement contained a provision that Alcoa retain liability for any
environmental issues that arise subsequent to the sale that pre-date 1987. As a result of this obligation, Alcoa recorded
a reserve for the Vancouver location at that time. Evergreen decommissioned the smelter and cleaned up its portion of
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