Dow Chemical 2014 Annual Report Download - page 49

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The Dow Chemical Company and Subsidiaries
PART I, Item 3. Legal Proceedings.
LEGAL PROCEEDINGS
Asbestos-Related Matters of Union Carbide Corporation
Union Carbide Corporation (“Union Carbide”), a wholly owned subsidiary of the Company, is and has been involved in a large
number of asbestos-related suits filed primarily in state courts during the past four decades. These suits principally allege
personal injury resulting from exposure to asbestos-containing products and frequently seek both actual and punitive damages.
The alleged claims primarily relate to products that Union Carbide sold in the past, alleged exposure to asbestos-containing
products located on Union Carbide’s premises, and Union Carbide’s responsibility for asbestos suits filed against a former
Union Carbide subsidiary, Amchem Products, Inc.
It is the opinion of Dow’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.
For additional information, see Part II, Item 7. Other Matters, Asbestos-Related Matters of Union Carbide Corporation in
Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Note 14 to the Consolidated
Financial Statements.
Environmental Matters
The Company received an Administrative Complaint dated May 23, 2013 from the Texas Council of Environmental Quality
("TCEQ") alleging violations of various environmental requirements regulating air emissions from operations at its Freeport,
Texas, manufacturing facility. The TCEQ sought a fine in excess of $100,000 for a number of independent violations of air
permits and regulations. This Administrative Complaint was combined with other alleged violations of environmental
requirements at the Freeport, Texas, manufacturing facility, including allegations of violations related to the operation of the
Company’s wastewater treatment plant. The combined Administrative Complaint was settled on October 8, 2014 with the
Company agreeing to pay a total of $67,060, half of which provided funding for a Supplemental Environmental Project entitled
Houston-Galveston AERCO’s Clean Cities/Clean Vehicles.
Dow AgroSciences LLC ("DAS"), a wholly owned subsidiary of the Company, received two separate notices from the U.S.
Environmental Protection Agency ("EPA"), the first dated April 16, 2014 and the second dated May 27, 2014, seeking civil
penalties for alleged violations by supplemental distributors of certain DAS products of various requirements under the Federal
Insecticide, Fungicide, and Rodenticide Act (FIFRA) regulating production and labeling of pesticides. In each matter, the EPA
is seeking to collect a civil penalty from DAS, as the primary registrant, in excess of $100,000. DAS resolved the first matter
with the EPA in December 2014 and agreed to pay a $137,280 civil penalty as part of the settlement. Discussions between DAS
and the applicable EPA Regional Office handling the second matter remain ongoing.
Dow Benelux B.V. ("Dow Benelux"), a Netherlands-based wholly owned subsidiary of the Company, received a summons
dated July 20, 2012 from the Public Prosecutor in The Netherlands to appear before the criminal section of the District Court in
Breda, The Netherlands (which venue was subsequently changed to the District Court of Middelburg) (the "Court"). The
allegations contained in the summons relate to seven process safety incidents and environmental spills that occurred between
2005 and 2008 at Dow Benelux's Terneuzen manufacturing facility. The Public Prosecutor alleges that each of the incidents
constitutes a violation of certain Netherlands safety procedures and environmental regulations, notably Section 5 of the Major
Accidents Decree 1999 and/or Section 18.18 of the Environmental Act. In addition, five of the incidents allegedly also
constitute a violation of Section 173a of the Dutch Criminal Code. The trial in the first instance on this matter was held from
January 14, 2014 through February 7, 2014. On March 24, 2014, the Court issued a guilty verdict and imposed a
Euro 1.8 million fine against Dow Benelux. The Court's judgment is subject to an appeal with the Court of Appeal in Den
Bosch, and Dow Benelux has filed a notice of appeal. A new and independent trial will be held by the Court of Appeal. No date
has been set for this new trial.