Sunoco 2010 Annual Report Download - page 31

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addition, the public has certain statutory rights to comment upon and otherwise impact the permitting
process, including through court intervention. Over the past few years, the length of time needed to
bring a new surface mine into production has increased because of the increased time required to obtain
necessary permits. The slowing pace at which permits are issued or renewed for new and existing
mines has materially impacted production in certain regions, primarily in Central Appalachia, but could
also affect Northern Appalachia and other regions in the future.
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. Resolving such liabilities may result in the assessment of sanctions requiring the payment of monetary
fines and penalties, incurrence of costs to conduct corrective actions or pursue investigatory and remedial
activities, payment of damages in settlement of claims and suits, and issuance of injunctive relieve or orders that
could limit some or all of our operations and have a material adverse effect on our business or results of
operations. 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.
Product liability claims and litigation could adversely affect our business and results of operations.
Product liability is a significant commercial risk. Substantial damage awards have been made in certain
jurisdictions against manufacturers and resellers based upon claims for injuries caused by the use of or exposure
to various products. Failure of our products to meet required specifications could result in product liability claims
from our shippers and customers and we may be required to change or modify our product specifications, which
can be costly and time consuming. There can be no assurance that product liability claims against us would not
have a material adverse effect on our business or results of operations.
Along with other refiners, manufacturers and sellers of gasoline, we are a defendant in numerous lawsuits
that allege MTBE contamination in groundwater. Plaintiffs, who include water purveyors and municipalities
responsible for supplying drinking water and private well owners, are seeking compensatory damages (and in
some cases injunctive relief, punitive damages and attorneys’ fees) for claims relating to the alleged manufacture
and distribution of a defective product (MTBE-containing gasoline) that contaminates groundwater, and general
allegations of product liability, nuisance, trespass, negligence, violation of environmental laws and deceptive
business practices. There has been insufficient information developed about the plaintiffs’ legal theories or the
facts that would be relevant to an analysis of the ultimate liability to us. These allegations or other product
liability claims against us could have a material adverse effect on our business or results of operations.
Federal and state legislation and/or regulation could have a significant impact on market conditions and/or
adversely affect our business and results of operations.
From time to time, new legislation or regulations are adopted by the federal government and various states
or other regulatory bodies. Any such federal or state legislation or regulations, including but not limited to any
potential environmental rules and regulations, tax legislation, energy policy legislation or legislation affecting
trade or commercial practices, could have a significant impact on market conditions and could adversely affect
our business or results of operations in a material way. For example, certain pending legislative and regulatory
proposals effectively could limit, or even eliminate, use of the LIFO inventory method for financial and income
tax purposes. Although the final outcome of these proposals cannot be ascertained at this time, the ultimate
impact to us of the transition from LIFO to another inventory method could be material.
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