Sunoco 2008 Annual Report Download - page 91

Over the years, Sunoco has sold thousands of retail gasoline outlets as well as refineries, terminals, coal
mines, oil and gas properties and various other assets. In connection with these sales, the Company has
indemnified the purchasers for potential environmental and other contingent liabilities related to the period prior
to the transaction dates. In most cases, the effect of these arrangements was to afford protection for the
purchasers with respect to obligations for which the Company was already primarily liable. While some of these
indemnities have spending thresholds which must be exceeded before they become operative, or limits on
Sunoco’s maximum exposure, they generally are not limited. The Company recognizes the fair value of the
obligations undertaken for all guarantees entered into or modified after January 1, 2003. In addition, the
Company accrues for any obligations under these agreements when a loss is probable and reasonably estimable.
The Company cannot reasonably estimate the maximum potential amount of future payments under these
agreements.
Sunoco is a party under agreements which provide for future payments to secure wastewater treatment
services at its Toledo refinery and coal handling services at its Indiana Harbor cokemaking facility.
The fixed and determinable amounts of the obligations under these agreements are as follows (in millions of
dollars):
Year ending December 31:
2009 ................................................................. $ 9
2010 ................................................................. 9
2011 ................................................................. 9
2012 ................................................................. 9
2013 ................................................................. 6
2014 through 2018 ...................................................... 18
Total ............................................................... 60
Less: Amount representing interest ........................................ (14)
Total at present value ................................................. $46
Payments under these agreements, including variable components, totaled $23, $21 and $21 million for the
years 2008, 2007 and 2006, respectively.
Environmental Remediation Activities
Sunoco is subject to extensive and frequently changing federal, state and local laws and regulations,
including, but not limited to, those relating to the discharge of materials into the environment or that otherwise
relate to the protection of the environment, waste management and the characteristics and composition of fuels.
As with the industry generally, compliance with existing and anticipated laws and regulations increases the
overall cost of operating Sunoco’s businesses, including remediation, operating costs and capital costs to
construct, maintain and upgrade equipment and facilities.
Existing laws and regulations result in liabilities and loss contingencies for remediation at Sunoco’s
facilities and at formerly owned or third-party sites. The accrued liability for environmental remediation is
classified in the consolidated balance sheets as follows (in millions of dollars):
December 31
2008 2007
Accrued liabilities ................................................. $ 36 $ 39
Other deferred credits and liabilities .................................. 87 83
$123 $122
83