Dow Chemical 2012 Annual Report Download - page 129

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NOTE 14 – COMMITMENTS AND CONTINGENT LIABILITIES
Dow Corning Credit Facility
The Company is a 50 percent shareholder in Dow Corning Corporation ("Dow Corning"). On June 1, 2004, the Company
agreed to provide a credit facility to Dow Corning as part of Dow Corning's Joint Plan of Reorganization. The aggregate
amount of the facility was originally $300 million; it was reduced to $100 million effective June 1, 2012, of which the
Company's share is $50 million. At December 31, 2012, no draws had been taken against the credit facility.
Environmental Matters
Introduction
Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the
liability can be reasonably estimated based on current law and existing technologies. At December 31, 2012, the Company had
accrued obligations of $754 million for probable environmental remediation and restoration costs, including $69 million 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. Consequently, it is reasonably
possible that environmental remediation and restoration costs in excess of amounts accrued could have a material impact on the
Company’s results of operations, financial condition and cash flows. It is the opinion of the Company’s management, however,
that the possibility is remote that costs in excess of the range disclosed will have a material impact on the Company’s results of
operations, financial condition or cash flows. Inherent uncertainties exist in these estimates primarily due to unknown
conditions, changing governmental regulations and legal standards regarding liability, and emerging remediation technologies
for handling site remediation and restoration. At December 31, 2011, the Company had accrued obligations of $733 million for
probable environmental remediation and restoration costs, including $69 million for the remediation of Superfund sites and
$50 million for environmental liabilities recognized in the fourth quarter of 2011 related to the Camaçari, Brazil site.
The following table summarizes the activity in the Company's accrued obligations for environmental matters for the years
ended December 31, 2012 and 2011:
Accrued Obligations for Environmental Matters
In millions 2012 2011
Balance at January 1 $ 733 $ 607
Additional accruals 203 286
Charges against reserve (176) (149)
Foreign currency impact (6) (11)
Balance at December 31 $ 754 $ 733
The amounts charged to income on a pretax basis related to environmental remediation totaled $197 million in 2012,
$261 million in 2011 and $158 million in 2010. Capital expenditures for environmental protection were $145 million in 2012,
$170 million in 2011 and $173 million in 2010.
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
The MDEQ, as a result of ongoing discussions with the Company regarding the implementation of the requirements of the
License, announced on February 16, 2012, a proposed plan to resolve the issue of dioxin contamination in residential soils
in Midland. As part of the proposed plan, the Company will sample soil at residential properties near the Midland site for
the presence of dioxins to determine where clean-up may be required. On March 6, 2012, the Company submitted an
Interim Response Activity Plan Designed to Meet Criteria ("Work Plan") to the MDEQ. On May 25, 2012, the Company
submitted a revision to the Work Plan to the MDEQ to address agency and public comments. The MDEQ approved the
Work Plan on June 1, 2012. Implementation of the Work Plan began on June 4, 2012. The Company submitted
amendments to the Work Plan to increase the number of properties to be sampled in 2012. The amendments were approved
by the MDEQ on July 23, 2012 and September 13, 2012.