Lockheed Martin 2002 Annual Report Download - page 66

SEVENTY-THREE
Water Quality Control Board (the Regional Board) in connec-
tion with the Corporation’s former Lockheed Propulsion
Company facilities in Redlands, California. Under the orders,
the Corporation is investigating the impact and potential reme-
diation of regional groundwater contamination by perchlorates
and chlorinated solvents. The Regional Board has approved
the Corporation’s plan to maintain public water supplies with
respect to chlorinated solvents during this investigation, and
the Corporation continues to negotiate with local water pur-
veyors to implement this plan, as well as to address water sup-
ply concerns relative to perchlorate contamination. The
Corporation is also coordinating with the U.S. Air Force,
which is working with the aerospace and defense industry to
conduct preliminary studies of the potential health effects of
perchlorate exposure in connection with several sites across
the country, including the Redlands site. The results of these
studies are intended to assist state and federal regulators in set-
ting appropriate action levels for perchlorates in groundwater.
In January 2002, the State of California reduced its provisional
standard for perchlorate concentration in water from 18 parts
per billion (ppb) to 4 ppb, a move that neither industry nor the
Air Force believes is supported by the current studies.
Although this provisional standard does not create any
legally enforceable requirements for the Corporation at this
time, the Corporation has developed a preliminary remediation
plan that would meet the provisional standard if it were to
become final. Because this plan entails a long lead-time for
implementation, the Corporation has elected to begin imple-
menting this plan and recognize the increased costs that are
associated with the plan. The consolidated balance sheet at
December 31, 2002 includes a liability of approximately $185
million representing the Corporation’s estimate of the remain-
ing expenditures necessary to implement the remediation and
other work at the site over the next 30 years. This amount rep-
resents an approximate $100 million increase in the liability
since December 31, 2001. As at other sites, the Corporation is
pursuing claims against other potentially responsible parties
(PRPs), including the U.S. Government, for contribution to
site clean-up costs.
The Corporation has been conducting remediation activi-
ties to address soil and groundwater contamination by chlori-
nated solvents at its former operations in Great Neck, New
York which it acquired as part of its acquisition of Loral
Corporation in 1996. This work is being done pursuant to a
series of orders and agreements with the New York State
Department of Environmental Conservation beginning with a
1991 administrative order entered by Unisys Tactical Defense
Systems, a predecessor company at the site. Until the third
quarter of 2002, all of the remediation work associated with
this site had been performed on the site itself. In the third
quarter, the Corporation entered into negotiations with the
state of New York to implement an off-site interim remedial
measure intended to address an off-site plume of groundwater
contamination that was found to be moving more rapidly than
originally anticipated. This has led to an increase of approxi-
mately $50 million in the projected future costs for the site.
Total projected future costs are now estimated to be approxi-
mately $70 million through 2025. This amount is included in
the consolidated balance sheet at December 31, 2002. As at
other sites, the Corporation is pursuing claims against other
PRPs, including the U.S. Government, for contribution to site
clean-up costs.
Since 1990, the Corporation has been responding to vari-
ous consent decrees and orders relating to soil and regional
groundwater contamination in the San Fernando Valley associ-
ated with the Corporation’s former operations in Burbank and
Glendale, California. Among other things, these consent
decrees and orders obligate the Corporation to construct and
fund the operations of soil and groundwater treatment facilities
in Burbank and Glendale, California through 2018 and 2012,
respectively; however, responsibility for the long-term opera-
tion of these facilities was assumed by the respective localities
in 2001. The Corporation has been successful in limiting its
financial responsibility for these activities to date to its pro
rata share as a result of litigation and settlements with other
PRPs. In addition, under an agreement reached with the U.S.
Government in 2000, the Corporation will continue to be
reimbursed in an amount equal to approximately 50% of future
expenditures for certain remediation activities by the U.S.
Government in its capacity as a PRP under the Comprehensive
Environmental Response, Compensation and Liability Act.
The Corporation has recorded a liability of approximately $60
million representing its estimate of the total expenditures
required over the remaining terms of the consent decrees and
orders described above, net of the effects of the agreement.
The Corporation is involved in proceedings and potential
proceedings relating to environmental matters at other facili-
ties, including disposal of hazardous wastes and soil and water
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