Sunoco 2008 Annual Report Download - page 27

composition of refined products. Certain of these laws and regulations also require assessment or remediation
efforts at many of our facilities and at formerly owned or third-party sites. Environmental laws and regulations
may impose liability on us for the conduct of third parties, or for actions that complied with applicable
requirements when taken, regardless of negligence or fault. Environmental laws and regulations are subject to
frequent change, and often become more stringent over time. Of particular significance to us are:
•Limitations on sulfur content of gasoline and diesel fuels: The U.S. Environmental Protection Agency,
or EPA, adopted rules under the Clean Air Act that phased in limits on the sulfur content of gasoline
beginning in 2004 and the sulfur content of on-road diesel fuel beginning in mid-2006. Our capital
spending to comply with these rules was completed in 2006 and amounted to $755 million. We are also
incurring higher operating costs as we continue to produce the low-sulfur fuels. In May 2004, the EPA
adopted another rule which is phasing in limits on the allowable sulfur content in off-road diesel fuel
that began in June 2007. This rule largely relates to operations at our Tulsa refinery.
•National Ambient Air Quality Standards: National Ambient Air Quality Standards for ozone and fine
particles promulgated by the EPA have resulted in identification of non-attainment areas throughout
the country, including Texas, Pennsylvania, Ohio, New Jersey and West Virginia, where we operate
facilities. Areas designated as “moderate” non-attainment, including Philadelphia and Houston, would
be required to meet the ozone requirements by 2010, before currently mandated federal control
programs take effect. In January 2009, the EPA issued a finding that the Philadelphia and Houston
State Implementation Plans, or SIPs, failed to demonstrate attainment by the 2010 deadline. This
finding is expected to result in more stringent offset requirements, and could result in other negative
consequences. Regulatory programs, when established to implement the EPA’s air quality standards,
could have an impact on us and our operations. While the potential financial impact cannot be
reasonably estimated until the EPA promulgates regulatory programs to attain the standards, and the
states, as necessary, develop and implement revised SIPs to respond to the new regulations, it is
possible that the new regulations will result in increased costs to us.
•Natural resource damages: Certain federal and state government regulators have sought compensation
from companies like us for natural resource damages as an adjunct to remediation programs. Because
we are involved in a number of remediation sites, a substantial increase in natural resource damage
claims could result in substantially increased costs to us.
•Greenhouse gas emissions: Through the operation of our refineries, chemical plants, marketing
facilities and coke plants, our operations emit greenhouse gases, or GHG, including carbon dioxide.
There are various legislative and regulatory measures to address GHG emissions which are in various
stages of review, discussion or implementation. These include federal and state actions to develop
programs for the reduction of GHG emissions. While it is currently not possible to predict the impact,
if any, that these issues will have on us or the industry in general, they could result in increases in costs
to operate and maintain our facilities, as well as capital outlays for new emission control equipment at
these facilities. In addition, regulations limiting GHG emissions or carbon content of products, which
target specific industries such as petroleum refining or chemical or coke manufacturing could adversely
affect our ability to conduct our business and also may reduce demand for our products.
We also are subject to liabilities resulting from our current and past operations, including legal and
administrative proceedings related to product liability, leaks from pipelines and underground storage tanks,
premises-liability claims, allegations of exposures of third parties to toxic substances and general environmental
claims.
Compliance with current and future environmental laws and regulations likely will require us to make
significant expenditures, increasing the overall cost of operating our businesses, including capital costs to
construct, maintain and upgrade equipment and facilities. To the extent these expenditures are not ultimately
reflected in the prices of our products or services, our operating results would be adversely affected. Our failure
to comply with these laws and regulations could also result in substantial fines or penalties against us or orders
that could limit our operations and have a material adverse effect on our business or results of operations.
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