Dow Chemical 2009 Annual Report Download - page 151

Table of Contents
The amounts charged to income on a pretax basis related to environmental remediation totaled $269 million in 2009, $140 million in 2008 and
$92 million in 2007. Capital expenditures for environmental protection were $219 million in 2009, $193 million in 2008 and $189 million in 2007.
Midland Site Environmental Matters
On June 12, 2003, the Michigan Department of Environmental Quality (“MDEQ”) issued a Hazardous Waste Operating License (the “License”) to the
Company’s Midland, Michigan manufacturing site (the “Midland site”), which included provisions requiring the Company to conduct an investigation to
determine the nature and extent of off-site contamination in Midland area soils; Tittabawassee and Saginaw River sediment and floodplain soils; and Saginaw
Bay.
Discussions between the Company and the MDEQ occurred in 2004 and early 2005 regarding how to proceed with off-site corrective action under the
License, resulting in the execution of the Framework for an Agreement between the State of Michigan (the “State”) and The Dow Chemical Company (the
“Framework”) on January 20, 2005. The Framework committed the Company to propose a remedial investigation work plan by the end of 2005, conduct
certain studies, and take certain immediate interim remedial actions in the City of Midland and along the Tittabawassee River.
Characterization and feasibility study work has been conducted since 2003 and the results of such work have been supplied to the MDEQ as provided
for under the License. On June 15, 2009, Dow submitted a report to the MDEQ that consolidated soil and sediment sampling data, as well as other data,
collected under sampling work plans approved by the MDEQ in 2006, 2007 and 2008. Additional feasibility studies are ongoing under MDEQ oversight.
Removal Actions
From July 2007 through February 2009, the Company and the U.S. Environmental Protection Agency (“EPA”) negotiated and entered into six removal
orders under Section 106 of the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). The CERCLA removal orders
required soil and sediment removal; paving of roads, driveways and a parking lot; cleaning of homes; and further assessment of some area soil in areas
along the Saginaw and Tittabawassee Rivers. The work under all removal orders has been completed.
EPA CERCLA Special Notice Process
On October 31, 2008, the EPA informed the Company that the Company would receive a Special Notice Letter (“Letter”) offering to enter into negotiations
for an administrative order on consent (“AOC”) for the Company to conduct or fund a remedial investigation, a feasibility study and a remedial design
for the Tittabawassee River, Saginaw River and Saginaw Bay. On November 18, 2008, the Company entered into a Confidentiality Agreement with the
EPA and the MDEQ regarding the Letter negotiations. On December 15, 2008, the Company received the Letter from the EPA, proposing that the
Company enter into negotiations on an AOC to perform a remedial investigation, a feasibility study, an engineering evaluation, a cost analysis and a
remedial design for the Tittabawassee River, Saginaw River and Saginaw Bay. The Letter also included a demand for $1.8 million for the EPA’s response
costs through October 31, 2008. Following the EPA’s provision of documentation of its past costs to the Company, the Company invoked the dispute
resolution provision in the removal orders regarding the EPA past response costs and is negotiating a resolution of the disputed costs with the EPA.
On December 22, 2008, the Company indicated it was willing to enter into negotiations, which commenced. On February 13, 2009, the Company
made a proposal to the EPA to perform the work. The Company was notified by the EPA on June 2, 2009 that the EPA accepted the Company’s
February 13, 2009 letter as a Good Faith Offer and negotiations were completed on September 25, 2009. Following the Company’s execution of the AOC,
the EPA and the MDEQ issued the AOC for public comment on October 19, 2009. The public comment period on the AOC ended December 17, 2009.
On January 14, 2010, the EPA and the State executed the AOC, making it effective as of January 21, 2010.
The AOC requires the Company to perform a remedial investigation, a feasibility study, an engineering evaluation, a cost analysis and a remedial
design for the Tittabawassee River, Saginaw River and Saginaw Bay, and pay the oversight costs of the EPA and the State, but defers the payment of the
EPA and the State’s past costs for subsequent negotiation under another order. The Tittabawassee River and the first six miles of the Saginaw River are
designated as the first Operable Unit for purposes of the investigative and feasibility study work and the work will be performed in a largely upriver to
downriver sequence for between five and seven geographic segments of the Tittabawassee and Upper Saginaw Rivers. The remainder of the Saginaw River
and Saginaw Bay are designated as a second Operable Unit and that work may also be geographically segmented. The AOC does not obligate the
Company to perform removal or remedial action; such work can only be required by a separate order.
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