Black & Decker 2012 Annual Report Download - page 112

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The Environmental Protection Agency (“EPA”) and the Santa Ana Regional Water Quality Control Board have each initiated
administrative proceedings against Black & Decker and certain of its current or former affiliates alleging that Black & Decker
and numerous other defendants are responsible to investigate and remediate alleged groundwater contamination in and adjacent
to a 160-acre property located in Rialto, California. The EPA and the cities of Colton and Rialto, as well as Goodrich
Corporation, also initiated lawsuits against Black & Decker and certain of its former or current affiliates in the Federal District
Court for California, Central District alleging similar claims that Black & Decker is liable under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), the Resource Conservation and Recovery
Act, and state law for the discharge or release of hazardous substances into the environment and the contamination caused by
those alleged releases. The City of Colton also has a companion case in California State court. The City of Riverside has a
similar suit in California State Court with similar claims and the same parties. Both of these cases are currently stayed for all
purposes. Certain defendants in that case have cross-claims against other defendants and have asserted claims against the State
of California. The administrative proceedings and the lawsuits generally allege that West Coast Loading Corporation
(“WCLC”), a defunct company that operated in Rialto between 1952 and 1957, and an as yet undefined number of other
defendants are responsible for the release of perchlorate and solvents into the groundwater basin, and that Black & Decker and
certain of its current or former affiliates are liable as a “successor” of WCLC. The Company's settlement discussions among the
EPA and numerous other parties progressed throughout late 2012, culminating in the settlement of the EPA's claims against the
Company, as well as all other administrative proceedings and lawsuits involving Black & Decker related to the WCLC site,
except for the City of Riverside's state court lawsuit. (That lawsuit has been stayed and will, the Company believes, ultimately
be mooted by the implementation of an interim and final remedy at the site.) This settlement is embodied in a Consent Decree
that was filed with the United States District Court for the Central District of California on or about December 4, 2012. The
Consent Decree is a public document, subject to public comment and ultimately, court approval. In substance, Emhart
Industries, Inc. (a dissolved, former indirectly wholly-owned subsidiary of The Black & Decker Corporation) (“Emhart”) has
agreed to be responsible for an interim remedy at the site, which remedy will be funded by (i) amounts gathered by EPA from
multiple parties and placed in trust, and, to the extent necessary, (ii) Emhart's affiliate. The interim remedy requires the
construction of a water treatment facility and the filtering of ground water at or around the Rialto property for a period of
approximately 30 years or more.
The EPA has asserted claims in federal court in Rhode Island against certain current and former affiliates of Black & Decker
related to environmental contamination found at the Centredale Manor Restoration Project Superfund site, located in North
Providence, Rhode Island. The EPA has discovered a variety of contaminants at the site, including but not limited to, dioxins,
polychlorinated biphenyls, and pesticides. The EPA alleges that Black & Decker and certain of its current and former affiliates
are liable for site clean-up costs under CERCLA as successors to the liability of Metro-Atlantic, Inc., a former operator at the
site, and demanded reimbursement of the EPA’s costs related to this site. Black & Decker and certain of its current and former
affiliates contest the EPA's allegation that they are responsible for the contamination, and have asserted contribution claims,
counterclaims and cross-claims against a number of other potentially responsible parties, including the federal government as
well as insurance carriers. The EPA released its Record of Decision ("ROD") in September 2012, which identified and
described the EPA's selected remedial alternative for the site. Black & Decker and certain of its current and former affiliates are
contesting the EPA's selection of the remedial alternative set forth in the ROD, on the grounds that the EPA's actions were
arbitrary and capricious and otherwise not in accordance with law, and have proposed other equally-protective, more cost-
effective alternatives. The Company's estimated remediation costs related to this Centredale site (including the EPA’s past costs
as well as costs of additional investigation, remediation, and related costs such as EPA’s oversight costs, less escrowed funds
contributed by primary potentially responsible parties (PRPs) who have reached settlement agreements with the EPA), which
the Company considers to be probable and reasonably estimable, range from approximately $68.1 million to $139.7 million,
with no amount within that range representing a more likely outcome until such time as the litigation is resolved through
judgment of compromise. The Company’s reserve for this environmental remediation matter of $68.1 million reflects the fact
that the EPA considers Metro-Atlantic, Inc. to be a primary source of contamination at the site. As the specific nature of the
environmental remediation activities that may be mandated by the EPA at this site have not yet been finally determined through
the on-going litigation, the ultimate remedial costs associated with the site may vary from the amount accrued by the Company
at December 29, 2012.
In the normal course of business, the Company is involved in various lawsuits and claims. In addition, the Company is a party
to a number of proceedings before federal and state regulatory agencies relating to environmental remediation. Also, the
Company, along with many other companies, has been named as a PRP in a number of administrative proceedings for the
remediation of various waste sites, including 31 active Superfund sites. Current laws potentially impose joint and several
liabilities upon each PRP. In assessing its potential liability at these sites, the Company has considered the following: whether
responsibility is being disputed, the terms of existing agreements, experience at similar sites, and the Company’s volumetric
contribution at these sites.
The Company’s policy is to accrue environmental investigatory and remediation costs for identified sites when it is probable
that a liability has been incurred and the amount of loss can be reasonably estimated. In the event that no amount in the range of
probable loss is considered most likely, the minimum loss in the range is accrued. The amount of liability recorded is based on
an evaluation of currently available facts with respect to each individual site and includes such factors as existing technology,