Dow Chemical 2014 Annual Report Download - page 123

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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 ten-year credit facility to Dow Corning as part of Dow Corning's Joint Plan of Reorganization. The
aggregate amount available under the credit facility was originally $300 million, of which the Company's share was
$150 million. No advances were issued under the credit facility and it expired June 1, 2014.
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, 2014, the Company had
accrued obligations of $706 million for probable environmental remediation and restoration costs, including $78 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 two and a half times 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, 2013, the Company had accrued
obligations of $722 million for probable environmental remediation and restoration costs, including $73 million for the
remediation of Superfund sites.
The following table summarizes the activity in the Company's accrued obligations for environmental matters for the years
ended December 31, 2014 and 2013:
Accrued Obligations for Environmental Matters
In millions 2014 2013
Balance at January 1 $ 722 $ 754
Additional accruals 228 200
Charges against reserve (219) (222)
Foreign currency impact (25) (10)
Balance at December 31 $ 706 $ 722
The amounts charged to income on a pretax basis related to environmental remediation totaled $227 million in 2014,
$203 million in 2013 and $197 million in 2012. Capital expenditures for environmental protection were $78 million in 2014,
$102 million in 2013 and $145 million in 2012.
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
On March 6, 2012, the Company submitted an Interim Response Activity Plan Designed to Meet Criteria ("Work Plan") to
the MDEQ that involved the sampling of soil at residential properties near the Midland site for the presence of dioxins to
determine where clean-up may be required and then conducting remediation for properties that sample above the
remediation criteria. The MDEQ approved the Work Plan on June 1, 2012 and implementation of the Work Plan began on
June 4, 2012. During 2012 and 2013, the Company submitted and had approved by the MDEQ, amendments to the Work
Plan to sample properties in 2012 and 2013 that were originally scheduled for sampling in 2014 through 2017. On
March 14, 2014, the Company submitted a plan for properties to be sampled during 2014 ("2014 Plan"), as required by the
approved Work Plan. On June 12, 2014, the Company submitted a modified plan based on MDEQ comments. The 2014
Plan was approved on June 27, 2014. As of December 31, 2014, remediation has been completed on all 132 properties that
tested above the remediation criteria.