Sunoco 2011 Annual Report Download - page 61

respectively. In 2010, the Company contributed $234 million to its funded defined benefit plans consisting of
$144 million of cash and 3.59 million shares of Sunoco common stock valued at $90 million. The Company
expects to make voluntary contributions of approximately $80 million during 2012 to its funded defined benefit
plans. At December 31, 2011, the projected benefit obligation for the Company’s funded pension plans
(excluding amounts attributable to SunCoke Energy), determined using a discount rate of 4.15 percent, exceeded
plan assets by approximately $160 million. The Company also has unfunded obligations for other defined benefit
plans which totaled $83 million at December 31, 2011. There is no legal requirement to pre-fund these plans
which are funded as benefit payments are made.
Effective June 30, 2010, pension benefits under the Company’s defined benefit pension plans were frozen
for most of the participants in these plans at which time the Company instituted a discretionary profit-sharing
contribution on behalf of these employees in its defined contribution plan. The Company expects that upon its
exit from the refining business, defined benefit pension plans will be frozen for all participants and no additional
benefits will be earned.
Environmental Matters
General
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 have required, and are
expected to continue to require, Sunoco to make significant expenditures of both a capital and an expense nature.
Pollution abatement capital outlays are expected to approximate $65 and $53 million in 2012 and 2013,
respectively.
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 13 to the Consolidated
Financial Statements (Item 8) and is incorporated herein by reference.
Regulatory Matters
Through the operation of its refining and marketing facilities, 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 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
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