Dow Chemical 2015 Annual Report Download - page 116

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NOTE 15 – COMMITMENTS AND CONTINGENT LIABILITIES
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, 2015, the Company had
accrued obligations of $670 million for probable environmental remediation and restoration costs, including $74 million for the
remediation of Superfund sites. These obligations are included in "Accrued and other current liabilities" and "Other noncurrent
obligations" in the consolidated balance sheets. 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, 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.
The following table summarizes the activity in the Company's accrued obligations for environmental matters for the years
ended December 31, 2015 and 2014:
Accrued Obligations for Environmental Matters
In millions 2015 2014
Balance at January 1 $ 706 $ 722
Additional accruals 230 228
Charges against reserve (233) (219)
Foreign currency impact (33) (25)
Balance at December 31 $ 670 $ 706
The amounts charged to income on a pretax basis related to environmental remediation totaled $218 million in 2015,
$227 million in 2014 and $203 million in 2013. Capital expenditures for environmental protection were $49 million in 2015,
$78 million in 2014 and $102 million in 2013.
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 was renewed and replaced
by the MDEQ on September 25, 2015, and 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. The Company also submitted and had approved by the MDEQ, amendments to the Work Plan. As of
December 31, 2014, remediation was completed on all 132 properties that tested above the remediation criteria, and this
completion is noted in the License.
Tittabawassee and Saginaw Rivers, Saginaw Bay
The Company, the U.S. Environmental Protection Agency (“EPA”) and the State of Michigan ("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. These actions, to be conducted under the lead oversight of the EPA, will build