Dow Chemical 2011 Annual Report Download - page 52

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Litigation: The Company is party to a number of claims and lawsuits arising out of the normal course of business with
respect to commercial matters including product liability, governmental regulation and other actions.
Certain of the claims and lawsuits facing the Company purport to be class actions and seek damages in very large amounts. All
such claims are contested. With the exception of the possible effect of the asbestos-related liability of Union Carbide
Corporation (“Union Carbide”), described below, it is the opinion of the Company's management that the possibility is remote
that the aggregate of all such claims and lawsuits will have a material adverse impact on the Company's consolidated financial
statements.
Union Carbide is and has been involved in a large number of asbestos-related suits filed primarily in state courts during the
past three decades. At December 31, 2011, Union Carbide's asbestos-related liability for pending and future claims was
$668 million ($728 million at December 31, 2010) and its receivable for insurance recoveries related to the asbestos liability
was $40 million ($50 million at December 31, 2010). At December 31, 2011, Union Carbide also had receivables of
$178 million ($248 million at December 31, 2010) for insurance recoveries for defense and resolution costs. It is the opinion of
the Company's management that it is reasonably possible that the cost of Union Carbide disposing of its asbestos-related
claims, including future defense costs, could have a material impact on the Company's results of operations and cash flows for
a particular period and on the consolidated financial position of the Company.
Environmental Compliance: The costs of complying with evolving regulatory requirements could negatively impact the
Company's financial results. Actual or alleged violations of environmental laws or permit requirements could result in
restrictions or prohibitions on plant operations, substantial civil or criminal sanctions, as well as the assessment of strict
liability and/or joint and several liability.
The Company is subject to extensive federal, state, local and foreign laws, regulations, rules and ordinances relating to
pollution, protection of the environment, greenhouse gas emissions, and the generation, storage, handling, transportation,
treatment, disposal and remediation of hazardous substances and waste materials. At December 31, 2011, the Company had
accrued obligations of $733 million ($607 million at December 31, 2010) for probable environmental remediation and
restoration costs, including $69 million ($59 million at December 31, 2010) for the remediation of Superfund sites. This is
management's best estimate of the costs for remediation and restoration with respect to environmental matters for which the
Company has accrued liabilities, although it is reasonably possible that the ultimate cost with respect to these particular matters
could range up to approximately twice that amount. Costs and capital expenditures relating to environmental, health or safety
matters are subject to evolving regulatory requirements and depend on the timing of the promulgation and enforcement of
specific standards which impose the requirements. Moreover, changes in environmental regulations could inhibit or interrupt
the Company's operations, or require modifications to its facilities. Accordingly, environmental, health or safety regulatory
matters could result in significant unanticipated costs or liabilities.
Chemical Safety: Increased concerns regarding the safe use of chemicals in commerce and their potential impact on the
environment have resulted in more restrictive regulations from local, state and federal governments and could lead to
new regulations.
Concerns regarding the safe use of chemicals in commerce and their potential impact on health and the environment reflect a
growing trend in societal demands for increasing levels of product safety and environmental protection. These concerns could
manifest themselves in stockholder proposals, preferred purchasing and continued pressure for more stringent regulatory
intervention. These concerns could also influence public perceptions, the viability of the Company's products, the Company's
reputation and the cost to comply with regulations. In addition, terrorist attacks and natural disasters have increased concerns
about the security and safety of chemical production and distribution. These concerns could have a negative impact on the
Company's results of operations.
Local, state and federal governments continue to propose new regulations related to the security of chemical plant
locations and the transportation of hazardous chemicals, which could result in higher operating costs and interruptions in
normal business operations.