Sunoco 2004 Annual Report Download - page 42

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owned facilities and third-party sites. At the Company’s major manufacturing facilities,
Sunoco has consistently assumed continued industrial use and a containment/remediation
strategy focused on eliminating unacceptable risks to human health or the environment.
The remediation accruals for these sites reflect that strategy. Accruals include amounts to
prevent off-site migration and to contain the impact on the facility property, as well as to
address known, discrete areas requiring remediation within the plants. Activities include
closure of RCRA solid waste management units, recovery of hydrocarbons, handling of
impacted soil, mitigation of surface water impacts and prevention of off-site migration.
Many of Sunoco’s current terminals are being addressed with the above containment/
remediation strategy. At some smaller or less impacted facilities and some previously di-
vested terminals, the focus is on remediating discrete interior areas to attain regulatory
closure.
Sunoco owns or operates certain retail gasoline outlets where releases of petroleum prod-
ucts have occurred. Federal and state laws and regulations require that contamination
caused by such releases at these sites and at formerly owned sites be assessed and re-
mediated to meet the applicable standards. The obligation for Sunoco to remediate this
type of contamination varies, depending on the extent of the release and the applicable
laws and regulations. A portion of the remediation costs may be recoverable from the re-
imbursement fund of the applicable state, after any deductible has been met.
Future costs for environmental remediation activities at the Company’s marketing sites
will also be influenced by the extent of MTBE contamination of groundwater, the cleanup
of which will be driven by thresholds based on drinking water protection. Though not all
groundwater is used for drinking, several states have initiated or proposed more stringent
MTBE cleanup requirements. Cost increases result directly from extended remedial oper-
ations and maintenance on sites that, under prior standards, could otherwise have been
completed. Cost increases will also result from installation of additional remedial or mon-
itoring wells and purchase of more expensive equipment because of the presence of MTBE.
While actual cleanup costs for specific sites are variable and depend on many of the factors
discussed above, expansion of similar MTBE remediation thresholds to additional states or
adoption of even more stringent requirements for MTBE remediation would result in fur-
ther cost increases.
In summary, total future costs for environmental remediation activities will depend upon,
among other things, the identification of any additional sites, the determination of the
extent of the contamination at each site, the timing and nature of required remedial ac-
tions, the technology available and needed to meet the various existing legal requirements,
the nature and terms of cost-sharing arrangements with other potentially responsible par-
ties, the availability of insurance coverage, the nature and extent of future environmental
laws, inflation rates and the determination of Sunoco’s liability at the sites, if any, in light
of the number, participation level and financial viability of other parties.
New Accounting Pronouncements
For a discussion of recently issued accounting pronouncements requiring adoption sub-
sequent to December 31, 2004, see Note 1 to the consolidated financial statements.
Forward-Looking Statements
Some of the information contained in this Annual Report to Shareholders contains
“forward-looking statements” (as defined in Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934). These forward-looking statements
discuss estimates, goals, intentions and expectations as to future trends, plans, events, re-
sults of operations or financial condition, or state other information relating to the Com-
pany, based on current beliefs of management as well as assumptions made by, and
information currently available to, Sunoco. Forward-looking statements generally will be
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