Sunoco 2010 Annual Report Download - page 64

expected to continue to require, Sunoco to make significant expenditures of both a capital and an expense nature.
The following table summarizes Sunoco’s expenditures for environmental projects and compliance activities (in
millions of dollars):
2010 2009 2008
Pollution abatement capital* .................................. $ 97 $176 $356
Remediation .............................................. 31 39 42
Operations, maintenance and administration .................... 160 217 210
$288 $432 $608
*Capital expenditures for pollution abatement include amounts to comply with the 2005 Consent Decree pertaining to certain
alleged Clean Air Act violations at the Company’s refineries. Pollution abatement capital outlays are expected to approximate $98
and $101 million in 2011 and 2012, respectively, excluding amounts attributable to the Toledo refinery after the expected closing
of the sale in the first quarter of 2011 and the Marcus Hook Consent Decree which may be delayed as a result of discussions with
government environmental authorities.
Remediation Activities
Information regarding remediation activities at Sunoco’s facilities and at formerly owned or third-party sites
is included in the discussion under “Environmental Remediation Activities” in Note 14 to the Consolidated
Financial Statements (Item 8) and is incorporated herein by reference.
Regulatory Matters
Through the operation of its refineries, chemical plants, marketing facilities, coke plants and coal mines,
Sunoco’s operations emit greenhouse gases (“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. Current proposals being considered by Congress include cap and trade legislation and carbon
taxation legislation. One current cap and trade bill proposes a system that would begin in 2012 which would
require the Company to provide carbon emission allowances for emissions at its manufacturing facilities as well
as emissions caused by the use of fuels it sells. The cap and trade program would require affected businesses to
buy emission credits from the government, other businesses or through an auction process. The exact amount of
such costs, as well as those that could result from any carbon taxation, would not be established until the future.
However, the Company believes that these costs could be material, and there is no assurance that the Company
would be able to recover them in the sale of its products. Other federal and state actions to develop programs for
the reduction of GHG emissions are also being considered. In addition, during 2009, the U.S. Environmental
Protection Agency (“EPA”) indicated that it intends to regulate carbon dioxide emissions. While it is currently
not possible to predict the impact, if any, that these issues will have on the Company or the industry in general,
they could result in increases in costs to operate and maintain the Company’s 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 the Company’s ability to conduct its business and also may reduce demand
for its products.
National Ambient Air Quality Standards (“NAAQS”) for ozone and fine particles promulgated by the EPA
have resulted in identification of non-attainment areas throughout the country, including Texas, Pennsylvania,
and Ohio, where Sunoco operates facilities. Areas designated by the EPA as “moderate” non-attainment for
ozone, including Philadelphia and the Houston/Galveston/Brazoria area, were required to meet the ozone
requirements by 2010 before currently mandated federal control programs were to take effect. In January 2009,
the EPA issued a finding that the Pennsylvania and Texas State Implementation Plans (“SIPs”) failed to
demonstrate attainment for the Philadelphia and Houston/Galveston/Brazoria airsheds by the 2010 deadline. This
finding is expected to result in more stringent offset requirements and could result in other negative
consequences. Texas petitioned the EPA to redesignate the Houston area as “severe” non-attainment for ozone
and in 2009 the EPA granted the petition. Under this designation, Houston’s SIP was due in 2010 and attainment
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