Alcoa 2013 Annual Report Download - page 138

Environmental Matters. Alcoa continues to participate in environmental assessments and cleanups at more than 100
locations. These include owned or operating facilities and adjoining properties, previously owned or operating facilities
and adjoining properties, and waste sites, including Superfund (Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA)) sites. A liability is recorded for environmental remediation when a
cleanup program becomes probable and the costs can be reasonably estimated.
As assessments and cleanups proceed, the liability is adjusted based on progress made in determining the extent of
remedial actions and related costs. The liability can change substantially due to factors such as the nature and extent of
contamination, changes in remedial requirements, and technological changes, among others.
Alcoa’s remediation reserve balance was $509 and $532 at December 31, 2013 and 2012 (of which $48 and $74 was
classified as a current liability), respectively, and reflects the most probable costs to remediate identified environmental
conditions for which costs can be reasonably estimated.
In 2013, the remediation reserve was increased by $18 due to a charge of $12 related to the planned demolition of
certain structures at the Massena West, NY and Baie Comeau, Quebec, Canada sites (see Note D) and a net charge of
$6 associated with a number of other sites. In 2012, the remediation reserve was increased by $206 due to charges of
$165 related to the Massena West, NY site (see below), charges totaling $45 related to smelter sites in Canada and
Norway (see below), a charge of $14 related to the former East St. Louis, IL site (see below), a reversal of $30 related
to the former Sherwin, TX site (see below), and a net charge of $12 associated with a number of other sites. In both
periods, the changes to the remediation reserve, except for the aforementioned $12 in 2013, were recorded in Cost of
goods sold on the accompanying Statement of Consolidated Operations.
Payments related to remediation expenses applied against the reserve were $40 and $22 in 2013 and 2012, respectively.
These amounts include expenditures currently mandated, as well as those not required by any regulatory authority or
third party. In 2013 and 2012, the change in the reserve also reflects a decrease of $1 and an increase of $1,
respectively, due to the effects of foreign currency translation.
Included in annual operating expenses are the recurring costs of managing hazardous substances and environmental
programs. These costs are estimated to be approximately 2% of cost of goods sold.
The following discussion provides details regarding the current status of certain significant reserves related to current
or former Alcoa sites.
Massena West, NY—Alcoa has been conducting investigations and studies of the Grasse River, adjacent to Alcoa’s
Massena plant site, under a 1989 order from the U.S. Environmental Protection Agency (EPA) issued under CERCLA.
Sediments and fish in the river contain varying levels of polychlorinated biphenyls (PCBs).
Beginning in 1998 through 2010, Alcoa submitted a number of Analysis of Alternatives Reports to the EPA
documenting the results of river and sediment studies, potential alternatives for remedial actions related to the PCB
contamination, and additional information requested by the EPA. Additionally, from 2004 to 2008, Alcoa completed
work as outlined in an EPA-approved Remedial Options Pilot Study.
In the first half of 2012, Alcoa received final questions and comments from the EPA and other stakeholders on the then
most recent revised Analysis of Alternatives Report submitted in March 2010, including a requirement that would
increase the scope of the recommended capping alternative. In June 2012, Alcoa submitted a revised Analysis of
Alternatives Report, which included four less alternatives than the previous report and addressed the final questions
and comments from all stakeholders. These final questions and comments resulted in a change to Alcoa’s
recommended capping alternative by increasing the area to be remediated. Consequently, Alcoa increased the reserve
associated with the Grasse River by $37 in 2012 to reflect the changes to the recommended alternative.
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