Dow Chemical 2011 Annual Report Download - page 206

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The amounts charged to income on a pretax basis related to environmental remediation totaled $261 million in 2011,
$158 million in 2010 and $269 million in 2009. Capital expenditures for environmental protection were $170 million in 2011,
$173 million in 2010 and $219 million in 2009.
Midland Off-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
the City of Midland soils, the Tittabawassee River and Saginaw River sediment and floodplain soils, and the Saginaw Bay, and,
if necessary, undertake remedial action.
City of Midland
Matters related to the City of Midland remain under the primary oversight of the State of Michigan (the “State”) under the
License, and the Company and the State are in ongoing discussions regarding the implementation of the requirements of
the License.
Tittabawassee and Saginaw Rivers, Saginaw Bay
The Company, the U.S. Environmental Protection Agency (“EPA”) and the State entered into an administrative order on
consent (“AOC”), effective January 21, 2010, that requires the Company to conduct a remedial investigation, a feasibility
study and a remedial design for the Tittabawassee River, the Saginaw River and the Saginaw Bay, and pay the oversight
costs of the EPA and the State under the authority of the Comprehensive Environmental Response, Compensation, and
Liability Act (“CERCLA”). These actions, to be conducted under the lead oversight of the EPA, will build upon the
investigative work completed under the State Resource Conservation Recovery Act (“RCRA”) program from 2005 through
2009. The Tittabawassee River, beginning at the Midland Site and extending down to the first six miles of the Saginaw
River, are designated as the first Operable Unit for purposes of conducting the remedial investigation, feasibility study and
remedial design work. This work will be performed in a largely upriver to downriver sequence for eight geographic
segments of the Tittabawassee and upper Saginaw Rivers. The remainder of the Saginaw River and the Saginaw Bay are
designated as a second Operable Unit and the work associated with that unit may also be geographically segmented. The
AOC does not obligate the Company to perform removal or remedial action; that action can only be required by a separate
order. The Company and the EPA will be negotiating orders separate from the AOC that will obligate the Company to
perform remedial actions under the scope of work of the AOC. The Company and the EPA have entered into three separate
orders to perform limited remedial actions to implement early actions. In addition, the Company and the EPA have entered
into the first order to address remedial actions in the first of the eight geographic segments in the first Operable Unit.
Alternative Dispute Resolution Process
The Company, the EPA, the U.S. Department of Justice, and the natural resource damage trustees (which include the
Michigan Office of the Attorney General, the MDEQ, the U.S. Fish and Wildlife Service, the U.S. Bureau of Indian
Affairs, and the Saginaw-Chippewa tribe) have been engaged in negotiations to seek to resolve potential governmental
claims against the Company related to historical off-site contamination associated with the City of Midland, the
Tittabawassee and Saginaw Rivers and the Saginaw Bay. The Company and the governmental parties started meeting in
the fall of 2005 and entered into a Confidentiality Agreement in December 2005. The Company continues to conduct
negotiations under the Federal Alternative Dispute Resolution Act with all of the governmental parties, except the EPA
which withdrew from the alternative dispute resolution process on September 12, 2007.
On September 28, 2007, the Company and the natural resource damage trustees entered into a Funding and
Participation Agreement that addressed the Company’s payment of past costs incurred by the natural resource damage
trustees, payment of the costs of a trustee coordinator and a process to review additional cooperative studies that the
Company might agree to fund or conduct with the natural resource damage trustees. On March 18, 2008, the Company and
the natural resource damage trustees entered into a Memorandum of Understanding to provide a mechanism for the
Company to fund cooperative studies related to the assessment of natural resource damages. This Memorandum of
Understanding has been amended and extended until March 2013. On April 7, 2008, the natural resource damage trustees
released their “Natural Resource Damage Assessment Plan for the Tittabawassee River System Assessment Area.”
At December 31, 2011, the accrual for these off-site matters was $40 million (included in the total accrued obligation
of $733 million). At December 31, 2010, the Company had an accrual for these off-site matters of $32 million (included in
the total accrued obligation of $607 million).