Sunoco 2010 Annual Report Download - page 102

The following table summarizes the changes in the accrued liability for environmental remediation activities
by category (in millions of dollars):
Refineries
Retail
Sites
Pipelines
and
Terminals
Chemicals
Facilities
Hazardous
Waste Sites Other Total
At December 31, 2007 .......... $35 $67 $12 $ 4 $ 3 $ 1 $122
Accruals ....................... 9 23 3 1 3 — 39
Payments ..................... (12) (23) (4) (1) (2) — (42)
Other ......................... — 2 2 — — — 4
At December 31, 2008 .......... $32 $69 $13 $ 4 $ 4 $ 1 $123
Accruals ....................... 7 20 4 — 1 — 32
Payments ..................... (9) (23) (5) — (2) — (39)
At December 31, 2009 .......... $30 $66 $12 $ 4 $ 3 $ 1 $116
Accruals ....................... 9 16 3 — — — 28
Payments ..................... (8) (19) (3) (1) — — (31)
Other ......................... — 2 — — — — 2
At December 31, 2010 .......... $31 $65 $12 $ 3 $ 3 $ 1 $115
Sunoco’s accruals for environmental remediation activities 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 reasonably 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, terms of consent agreements or remediation
permits with regulatory agencies 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, 2010, the aggregate of the estimated maximum additional reasonably possible losses,
which relate to numerous individual sites, totaled approximately $85 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 Resource 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 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.
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