Sunoco 2007 Annual Report Download - page 60

The following table summarizes the changes in the accrued liability for environmental remediation activities by category:
(Millions of Dollars) Refineries
Retail
Sites
Chemicals
Facilities
Pipelines
and Terminals
Hazardous
Waste Sites Other Total
At December 31, 2004 $ 48 $ 74 $ 5 $ 15 $ 4 $ 2 $148
Accruals 2 22 1 6 1 — 32
Payments (14) (25) (2) (7) (2) — (50)
Other — 7 (1) 1 — — 7
At December 31, 2005 $ 36 $ 78 $ 3 $ 15 $ 3 $ 2 $137
Accruals 6 19 1 2 1 — 29
Payments (9) (24) (1) (5) (2) (1) (42)
Other 1 (4) — — — — (3)
At December 31, 2006 $ 34 $ 69 $ 3 $ 12 $ 2 $ 1 $121
Accruals 13 19 2 5 2 — 41
Payments (12) (21) (1) (5) (2) — (41)
Other —— — — 1— 1
At December 31, 2007 $ 35 $ 67 $ 4 $12 $ 3 $ 1 $122
Sunoco’s accruals for environmental remediation activ-
ities reflect management’s estimates of the most likely
costs that will be incurred over an extended period to
remediate identified conditions for which the costs are
both probable and reasonably estimable. Engineering
studies, historical experience and other factors are used to
identify and evaluate remediation alternatives and their
related costs in determining the estimated accruals for
environmental remediation activities. Losses attributable
to unasserted claims are also reflected in the accruals to
the extent they are probable of occurrence and reason-
ably estimable.
Total future costs for the environmental remediation
activities identified above 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 actions,
the nature of operations at each site, the technology
available and needed to meet the various existing legal
requirements, the nature and terms of cost-sharing
arrangements with other potentially responsible parties,
the availability of insurance coverage, the nature and
extent of future environmental laws and regulations,
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 the other parties.
Management believes it is reasonably possible (i.e., less
than probable but greater than remote) that additional
environmental remediation losses will be incurred. At
December 31, 2007, the aggregate of the estimated
maximum additional reasonably possible losses, which
relate to numerous individual sites, totaled approximately
$100 million. However, the Company believes it is very
unlikely that it will realize the maximum reasonably
possible loss at every site. Furthermore, the recognition of
additional losses, if and when they were to occur, would
likely extend over many years and, therefore, likely would
not have a material impact on the Company’s financial
position.
Under various environmental laws, including the Re-
source Conservation and Recovery Act (“RCRA”) (which
relates to solid and hazardous waste treatment, storage
and disposal), Sunoco has initiated corrective remedial
action at its facilities, formerly owned facilities and third-
party sites. At the Company’s major manufacturing facili-
ties, 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, dis-
crete areas requiring remediation within the plants.
Activities include closure of RCRA solid waste manage-
ment units, recovery of hydrocarbons, handling of im-
pacted 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 pre-
viously divested 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 products have occurred. Fed-
eral and state laws and regulations require that con-
tamination caused by such releases at these sites and at
formerly owned sites be assessed and remediated to meet
the applicable standards. The obligation for Sunoco to
remediate this type of contamination varies, depending
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